<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 4, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM F-1 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(Exact name of registrant as specified in its charter)
NOT APPLICABLE
(Translation of Registrant's name into English)
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<S> <C> <C>
REPUBLIC OF SINGAPORE 3674 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
60 WOODLANDS INDUSTRIAL PARK D
STREET 2, SINGAPORE 738406
(65) 362-2838
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
CHARTERED SEMICONDUCTOR MANUFACTURING, INC.
1450 MCCANDLESS DRIVE
MILPITAS, CALIFORNIA 95035
(408) 941-1100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C> <C>
CHRISTOPHER L. KAUFMAN, ESQ. CHRISTINA ONG, ESQ. RICHARD S. LINCER, ESQ.
MICHAEL W. STURROCK, ESQ. TAN TZE GAY, ESQ. DAVID W. HIRSCH, ESQ.
LATHAM & WATKINS ALLEN & GLEDHILL CLEARY, GOTTLIEB, STEEN & HAMILTON
20 CECIL STREET 36 ROBINSON ROAD 39TH FLOOR, BANK OF CHINA TOWER
#25-02/03/04 THE EXCHANGE #18-01 CITY HOUSE ONE GARDEN ROAD
SINGAPORE 049705 SINGAPORE 068877 CENTRAL, HONG KONG, S.A.R., CHINA
(65) 536-1161 (65) 225-1611 (852) 2521-4122
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(2) PER ORDINARY OFFERING PRICE(3) REGISTRATION
SHARE(3)(4) FEE
- ----------------------------------------------------------------------------------------------------------------------------
ORDINARY SHARES, PAR VALUE S$0.26 PER 287,500,000 $1.80 $517,500,000 $143,865
SHARE, INCLUDING ORDINARY SHARES
REPRESENTED BY AMERICAN DEPOSITARY
SHARES(1)
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</TABLE>
(1) American Depositary Shares evidenced by American Depositary Receipts
issuable upon deposit of the ordinary shares registered hereby are being
registered pursuant to a separate Registration Statement on Form F-6. Each
American Depositary Share will represent ten ordinary shares.
(2) Includes 25,000,000 ordinary shares being offered in Singapore and
75,000,000 ordinary shares being offered outside of the United States and
Canada. Also includes 37,500,000 ordinary shares (including ordinary shares
represented by American Depositary Shares) that the underwriters (including
the Singapore underwriters) have the option to purchase to cover
overallotments, if any.
(3) Estimated solely for the purpose of computing the amount of the registration
fee, in accordance with Rule 457(a) promulgated under the Securities Act.
(4) Represents the U.S. dollar equivalent of proposed maximum offering price per
ordinary share of $3.05 Singapore dollars based on an exchange rate of
$1.6940 Singapore dollars per $1.00 U.S. dollar on October 1, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 4, 1999
PROSPECTUS
225,000,000 ORDINARY SHARES
DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES
CHARTERED LOGO
S$ PER ORDINARY SHARE
US$ PER ADS
------------------
We are offering 225,000,000 ordinary shares, directly or in the form of
American Depositary Shares. Each American Depositary Share, or ADS, represents
the right to receive ten ordinary shares. The ADSs will be offered in U.S.
dollars and the ordinary shares will be offered in Singapore dollars. Of the
225,000,000 ordinary shares that we are offering, 150,000,000 are being offered
in the United States and Canada and 75,000,000 are being offered outside the
United States and Canada, in each case, directly or in the form of ADSs. We are
also offering 25,000,000 ordinary shares in Singapore through a separate
offering.
This is our initial public offering. We currently expect the initial public
offering price to be between US$16.00 and US$18.00 per ADS and S$2.71 and S$3.05
per ordinary share (the equivalent of US$1.60 and US$1.80 per ordinary share
based on an exchange rate of S$1.6940 to US$1.00 on October 1, 1999). We expect
the ADSs to be approved for quotation on the Nasdaq National Market under the
symbol "CHRT" and the ordinary shares to be approved for listing on the Stock
Exchange of Singapore Limited, in each case subject to official notice of
issuance.
------------------
INVESTING IN OUR ORDINARY SHARES AND ADSS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF THOSE RISKS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------
<TABLE>
<CAPTION>
PER ORDINARY
SHARE PER ADS TOTAL
-------------- -------------- --------------
<S> <C> <C> <C>
Public Offering Price S$ US$ US$
Underwriting Discount S$ US$ US$
Proceeds to Chartered (before expenses) S$ US$ US$
</TABLE>
We have granted the U.S., international and Singapore underwriters a 30-day
option to purchase from us up to an aggregate of 37,500,000 additional ordinary
shares, directly or in the form of ADSs, to cover overallotments, if any.
The underwriters are offering the ordinary shares and the ADSs subject to
various conditions. The underwriters expect to deliver the ordinary shares and
the ADSs to purchasers on or about , 1999.
------------------
SALOMON SMITH BARNEY CREDIT SUISSE FIRST BOSTON
HAMBRECHT & QUIST
SG COWEN
SOUNDVIEW TECHNOLOGY GROUP
, 1999
<PAGE> 3
[Description of inside cover artwork: The inside front cover will have our
logo and the logos of our customers, strategic and EDA/IP partners.]
<PAGE> 4
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
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PAGE
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PROSPECTUS SUMMARY.......................................... 3
RISK FACTORS................................................ 9
USE OF PROCEEDS............................................. 22
DIVIDEND POLICY............................................. 23
CAPITALIZATION.............................................. 24
EXCHANGE RATES.............................................. 26
DILUTION.................................................... 27
SELECTED FINANCIAL DATA..................................... 28
UNAUDITED PRO FORMA FINANCIAL INFORMATION................... 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 32
BUSINESS.................................................... 47
MANAGEMENT.................................................. 60
PRINCIPAL SHAREHOLDERS...................................... 70
RELATIONSHIP WITH SINGAPORE TECHNOLOGIES.................... 72
DESCRIPTION OF ORDINARY SHARES.............................. 75
DESCRIPTION OF AMERICAN DEPOSITARY SHARES................... 79
TAXATION.................................................... 86
SHARES ELIGIBLE FOR FUTURE SALE............................. 90
UNDERWRITING................................................ 92
LEGAL MATTERS............................................... 95
EXPERTS..................................................... 95
WHERE YOU CAN FIND MORE INFORMATION......................... 95
INDEX TO FINANCIAL STATEMENTS............................... F-1
ANNEX A: THE REPUBLIC OF SINGAPORE.......................... A-1
ANNEX B: THE SECURITIES MARKET OF SINGAPORE................. B-1
</TABLE>
UNTIL , 1999, ALL DEALERS THAT BUY, SELL OR TRADE THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
THIS PROSPECTUS HAS NOT BEEN REGISTERED AS A PROSPECTUS, NOR HAS IT BEEN
LODGED AS AN INFORMATION MEMORANDUM FOR THE PURPOSES OF SECTION 106D OF THE
COMPANIES ACT (CHAPTER 50) OF SINGAPORE, WITH THE REGISTRAR OF COMPANIES IN
SINGAPORE. ACCORDINGLY, THIS PROSPECTUS MAY NOT BE CIRCULATED OR DISTRIBUTED,
DIRECTLY OR INDIRECTLY, IN SINGAPORE. THE REGISTRAR OF COMPANIES TAKES NO
RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS.
2
<PAGE> 5
PROSPECTUS SUMMARY
This summary highlights certain information found in greater detail
elsewhere in this prospectus. In addition to this summary, we urge you to read
the entire prospectus carefully, especially the discussion of the risks of
investing in our ADSs or ordinary shares under "Risk Factors," before deciding
to buy our ADSs or ordinary shares. References in this prospectus to
"Chartered," "our company," "we," "our" and "us" refer to Chartered
Semiconductor Manufacturing Ltd, a limited liability company formed in the
Republic of Singapore, and its subsidiary.
THE COMPANY
Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and manufacturers of electronic systems. We focus on
providing foundry services to customers that serve high growth, technologically
advanced applications, including communications applications such as cable
modems, data networking and telecommunications equipment. Our top five customers
are Hewlett-Packard, Lucent Technologies, Level One Communications, Broadcom and
Conexant.
We offer a broad array of leading digital and analog technologies,
including standard complementary metal oxide silicon, or CMOS, mixed-signal and
embedded memory processes. We are also developing additional high performance
technologies such as advanced embedded memory technologies and specialized CMOS
for wireless applications. In order to augment our internal development efforts,
we have entered into technology alliances with leading semiconductor companies
such as Lucent and Motorola. Our alliance with Lucent includes an agreement to
jointly develop 0.18 micron (u) process geometries for high density, low power
and cost-effective applications. Our alliance with Motorola includes the
licensing and process transfer of Motorola's leading edge copper interconnect
technology for 0.15u, 0.13u and 0.10u process geometries.
We continue to expand the range of services we provide as our customers'
needs evolve. We partner with leading providers of semiconductor electronic
design automation, or EDA, software tools and intellectual property, or IP, and
design services. Our partnerships and range of services enable our customers to
integrate an increasing number of functions in their products while accelerating
time-to-market and reducing design and manufacturing risk. Our EDA development
and IP partners include Artisan Components, Avant!, Cadence, MIPS and Synopsys.
We also offer our customers turnkey services, which incorporate wafer
fabrication services and assembly and test, by partnering with assembly and test
providers, principally our sister company ST Assembly Test Services Ltd.
We currently own, or have an interest in, five fabrication facilities,
which are located in Singapore. Fabs 1, 2 and 3 are wholly-owned by our company.
Fab 5 is operated by Silicon Manufacturing Partners, known as SMP, which is
jointly-owned with a subsidiary of Lucent. Fab 6, known as Chartered Silicon
Partners, or CSP, is jointly-owned with an affiliate of the Government of
Singapore and a subsidiary of Hewlett-Packard. We plan to increase our total
production capacity from approximately 60,000 eight-inch equivalent wafers per
month in June 1999 to an estimated 134,000 eight-inch equivalent wafers per
month (which figure includes 100% of the production capacity of our
jointly-owned fabs) by December 2002.
We believe that Chartered is a trusted, customer-oriented service provider.
We have service operations in 12 cities in nine countries in North America,
Europe and Asia. All of our manufacturing operations are located in Singapore, a
politically and economically stable nation with laws that protect our customers'
proprietary technology.
We were incorporated in Singapore in 1987. We are 89.8% owned by Singapore
Technologies Pte Ltd and its affiliates (71.9% following the global offering,
assuming the underwriters do not exercise their overallotment option). The
remainder of our shares are owned by customers, directors, officers and
employees of our company and our affiliates. Singapore Technologies is one of
Singapore's largest industrial conglomerates and is indirectly wholly-owned by
the Government of Singapore.
3
<PAGE> 6
Our principal executive and registered offices are located at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406. Our telephone number is (65)
362-2838. Our internet address is www.charteredsemi.com. INFORMATION CONTAINED
ON OUR WEB SITES DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS.
Please see "Annex A -- The Republic of Singapore" for additional
information regarding the Republic of Singapore where we are located.
4
<PAGE> 7
THE GLOBAL OFFERING
THE GLOBAL OFFERING........... The global offering consists of the U.S.
offering, the international offering and the
Singapore offering, each of which is described
below. We intend to complete a restructuring of
our capital prior to closing the global
offering. Please see "Capitalization" for
additional information regarding our capital
restructuring. Unless we indicate otherwise,
all share information and financial data in
this prospectus gives effect to the capital
restructuring. Following the global offering, a
total of 1,253,610,131 ordinary shares
(including ordinary shares represented by ADSs)
will be issued and outstanding.
U.S. OFFERING................. An offering in the United States and Canada of
150,000,000 ordinary shares, directly or in the
form of ADSs.
INTERNATIONAL OFFERING........ An offering outside the United States and
Canada of 75,000,000 ordinary shares, directly
or in the form of ADSs. The international
offering will occur at the same time as the
U.S. offering. In this prospectus, we
collectively refer to the U.S. offering and the
international offering as the Combined
Offering.
SINGAPORE OFFERING............ A public offering in Singapore of 25,000,000
ordinary shares. The Singapore offering will be
underwritten and will occur at the same time as
the Combined Offering.
RESERVED SHARES............... Up to 12,500,000 ordinary shares (including
ordinary shares represented by ADSs) offered in
the global offering are subject to priority
allocation to our employees and business
associates and to directors, officers and
employees of our affiliates.
OFFERING PRICE................ We currently expect the initial public offering
price to be between US$16.00 and US$18.00 per
ADS and S$2.71 and S$3.05 per ordinary share.
USE OF PROCEEDS FROM THE
GLOBAL OFFERING............... The net proceeds of the global offering will be
used to fund a portion of our capital
expenditure requirements in connection with the
expansion of our manufacturing facilities, to
make equity contributions to our jointly-owned
fabs, for working capital and for general
corporate purposes. Please see "Use of
Proceeds" for further discussion of how we
intend to use the proceeds from the global
offering.
OVERALLOTMENT OPTIONS......... We have granted our U.S., international and
Singapore underwriters a 30-day option to
purchase up to an aggregate of 37,500,000
additional ordinary shares (including ordinary
shares represented by ADSs) in the global
offering, solely to cover overallotments, if
any. Unless we indicate otherwise, all
information in this prospectus assumes the
underwriters have not exercised their
overallotment option.
SHARES OUTSTANDING AFTER THE
GLOBAL OFFERING............... 1,253,610,131 ordinary shares (including
ordinary shares represented by ADSs) will be
outstanding after the global offering. If the
underwriters exercise their overallotment
option
5
<PAGE> 8
in full, 1,291,110,131 ordinary shares
(including ordinary shares represented by ADSs)
will be outstanding.
AMERICAN DEPOSITARY SHARES.... Each ADS represents ten ordinary shares. The
ADSs are evidenced by American Depositary
Receipts, or ADRs. Please see "Description of
American Depositary Shares" for a summary of
the material features of the ADSs and ADRs.
LISTING....................... We expect the ADSs to be approved for quotation
on the Nasdaq National Market under the symbol
"CHRT" and the ordinary shares to be approved
for listing on the Stock Exchange of Singapore
Limited, in each case subject to official
notice of issuance.
6
<PAGE> 9
SUMMARY FINANCIAL AND OTHER DATA
You should read the following summary financial data in conjunction with
our consolidated financial statements and the related notes, "Selected Financial
Data," "Unaudited Pro Forma Financial Information" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. Our financial statements are reported in U.S.
dollars and presented in accordance with U.S. generally accepted accounting
principles, or U.S. GAAP, for the fiscal years ended December 31, 1994, 1995,
1996, 1997 and 1998 and for the six month periods ended June 30, 1998 and 1999.
The pro forma data set forth below reflect a subsequent change to our strategic
alliance agreement relating to CSP that results in CSP being consolidated and
presents our balance sheet data as if such change had occurred on June 30, 1999.
The pro forma as adjusted data set forth below adjust the pro forma data to give
effect to the issuance by our company of 250,000,000 ordinary shares in the
global offering (including ordinary shares represented by ADSs), and the
application of the net proceeds from such offering at an assumed initial public
offering price of $17.00 per ADS and S$2.88 per ordinary share.
When we refer to "Singapore dollars" and "S$" in this prospectus, we are
referring to Singapore dollars, the legal currency of Singapore. When we refer
to "U.S. dollars," "dollars," "$" and "US$" in this prospectus, we are referring
to United States dollars, the legal currency of the United States. For your
convenience, we have included in this prospectus translations of certain
Singapore dollar amounts into U.S. dollars amounts. These translations should
not be construed as a representation that those Singapore dollar or U.S. dollar
amounts could have been, or could be, converted into U.S. dollars or Singapore
dollars, as the case may be, at any particular rate, the rate stated below, or
at all.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -------------------
1994 1995 1996(1) 1997 1998(2)(3) 1998 1999(4)
-------- -------- -------- --------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.................................. $152,373 $287,026 $406,936 $ 379,761 $ 422,622 $232,771 $294,738
Gross profit (loss).......................... 57,877 99,858 117,501 11,240 (17,046) 8,666 47,481
Operating income (loss)...................... 31,758 51,107 42,171 (78,573) (160,177) (40,796) (28,532)
Net income (loss)............................ 32,512 54,882 47,476 (119,621) (190,006) (60,266) (48,520)
Net income (loss) per ordinary share:
Basic...................................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Diluted.................................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Shares used in per ordinary share
calculation:
Basic...................................... 305,412 418,661 488,296 490,407 784,541 685,871 985,816
Diluted.................................... 305,412 418,661 488,824 490,407 784,541 685,871 985,816
Net income (loss) per ADS:
Basic...................................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
Diluted.................................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
ADSs used in per ADS calculation:
Basic...................................... 30,541 41,866 48,830 49,041 78,454 68,587 98,582
Diluted.................................... 30,541 41,866 48,882 49,041 78,454 68,587 98,582
OTHER DATA:
Wafers shipped (8-inch equivalent)............. 132 186 254 344 440 214 327
Depreciation and amortization.................. $ 34,958 $ 61,109 $115,545 $ 173,762 $ 226,903 $103,577 $142,617
Capital expenditures........................... $144,467 $218,674 $481,230 $ 410,551 $ 279,368 $215,725 $ 89,802
</TABLE>
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<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 47,548 $ 53,431 $ 457,069
Working capital (deficit)................................... (49,633) (49,483) 354,155
Total assets................................................ 1,229,847 1,340,278 1,743,916
Short-term borrowings and current portion of long-term
debt...................................................... 87,601 87,601 87,601
Current installments of obligations under capital leases.... 4,914 4,914 4,914
Obligations under capital leases, excluding current
installments.............................................. 10,698 10,698 10,698
Other long-term debt........................................ 364,903 440,903 440,903
Shareholders' equity........................................ 556,339 556,339 959,977
</TABLE>
- ---------------
(1) In 1996, gross profit and operating income included $23.2 million relating
to a reduction in accrued liabilities for a change in estimate of cost to
obtain certain licenses. Please see note 22(g) to our consolidated financial
statements.
(2) Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Please see note 2(e) to our
consolidated financial statements.
(3) In 1998 we recorded a charge of $31.8 million relating to the write-down of
equipment in connection with the termination of a development program.
Please see note 8 to our consolidated financial statements.
(4) In the first six months of 1999, we recorded a charge of $6.5 million in
connection with the termination of a development program. Please see note 8
to our consolidated financial statements.
8
<PAGE> 11
RISK FACTORS
An investment in our ADSs or ordinary shares involves a high degree of
risk. You should carefully consider the following information about these risks,
together with the other information contained in this prospectus, including our
consolidated financial statements and related notes, before you decide to buy
our ADSs or ordinary shares. If any of the following risks actually occur, our
business, results of operations and financial condition would likely suffer. In
any such case, the market price of our ADSs or ordinary shares could decline,
and you may lose all or part of the money you paid to buy our ADSs or ordinary
shares.
RISKS RELATED TO OUR FINANCIAL CONDITION
WE HAVE A HISTORY OF LOSSES AND NEGATIVE CASH FLOWS AND THIS MAY CONTINUE.
Since our inception in 1987, we have incurred significant operating losses
and negative cash flows. This was true even in years in which our revenues
increased. For example, in 1998, revenue increased 11.3% over 1997 but operating
losses were 203.9% higher. The increase in revenue in 1998 was driven by higher
shipment volumes but was offset by a 12.0% decline from 1997 in our average
selling price of silicon wafers, higher production costs on increased volume and
under utilization of capacity at our fabrication facilities.
As of June 30, 1999, we had a retained deficit of approximately $293.6
million. We cannot assure you that our operating losses or negative cash flows
will not continue or increase in the future or that we will become profitable.
Please see "Selected Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for information regarding our
financial condition.
WE NEED TO CONTINUOUSLY IMPROVE OUR DEVICE YIELDS, MAINTAIN HIGH CAPACITY
UTILIZATION AND OPTIMIZE THE TECHNOLOGY MIX OF OUR SILICON WAFER PRODUCTION TO
ACHIEVE OUR PROFIT TARGETS.
The key factors that affect our profit margin are our ability to:
- continuously improve our device yields;
- maintain high capacity utilization; and
- optimize the technology mix of our silicon wafer production.
The term "device yields" means the actual number of usable semiconductor
devices on a wafer in relation to the total number of devices on the wafer. Our
device yields directly affect our ability to attract and retain customers, as
well as the price of our services.
The term "capacity utilization" means the actual number of silicon wafers
we are processing at a fabrication facility, or fab, in relation to the total
number of wafers we have the capacity to process. Our capacity utilization
affects our operating results because a large percentage of our operating costs
are fixed. For example, in 1996, 1997 and 1998, a worldwide overcapacity of
semiconductor wafer supply resulted in lower utilization rates at our fabs. This
had a negative effect on our company during such period. Other factors
potentially affecting capacity utilization rates are the complexity and mix of
the wafers produced, overall industry conditions, operating efficiencies, the
level of customer orders, mechanical failure, disruption of operations due to
expansion of operations or relocation of equipment and fire or natural disaster.
Because the price of wafers varies significantly, the mix of wafers
produced affects revenue and profitability. The value of a wafer is determined
by the complexity of the device on the wafer. Production of devices with higher
level functionality and greater system-level integration requires more
manufacturing steps than the production of less complex devices and commands
higher wafer prices.
If we are unable to continuously improve our device yields, maintain high
capacity utilization or optimize the technology mix of our wafer production, we
may not be able to achieve our profit targets in which case the market price of
our ADSs or ordinary shares could fall.
9
<PAGE> 12
OUR OPERATING RESULTS FLUCTUATE FROM QUARTER-TO-QUARTER WHICH MAKES IT DIFFICULT
TO PREDICT OUR FUTURE PERFORMANCE.
Our revenues, expenses and operating results have varied significantly in
the past and may fluctuate significantly from quarter-to-quarter in the future
due to a number of factors, many of which are outside our control. These factors
include, among others:
- the cyclical nature of both the semiconductor industry and the markets
served by our customers;
- shifts by integrated device manufacturers, or IDMs, between internal and
outsourced production;
- our customers' adjustments in their inventory;
- the loss of a key customer or the postponement of an order from a key
customer;
- the rescheduling and cancellation of large orders;
- the timing and volume of orders relative to our available production
capacity;
- our ability to obtain raw materials on a timely and economic basis;
- environmental events or industrial accidents such as fires;
- currency and interest rate fluctuations that may not be adequately
hedged; and
- technological changes.
Due to the factors noted above and other risks discussed in this section,
many of which are beyond our control, you should not rely on quarter-to-quarter
comparisons to predict our future performance. Unfavorable changes in any of the
above factors may seriously harm our company. In addition, it is possible that
in some future periods our operating results may be below the expectations of
public market analysts and investors. In this event, the price of our ADSs or
ordinary shares may underperform or fall.
WE EXPECT TO INCUR SUBSTANTIAL CAPITAL EXPENDITURES IN CONNECTION WITH OUR
GROWTH PLANS AND MAY REQUIRE ADDITIONAL FINANCING THAT MAY NOT BE AVAILABLE.
Our business and the nature of our industry require us to make substantial
capital expenditures leading to a high level of fixed costs. We expect to incur
significant capital expenditures in connection with our growth plans. We are
currently expanding and equipping three fabs, two of which are jointly-owned
with third parties, and expect to require additional financing to complete the
equipping. These capital expenditures, including the expenditures for the three
fabs being expanded and equipped, will be made in advance of sales. Given the
fixed cost nature of our business, we may incur operating losses if our revenue
does not adequately offset the level of our capital expenditures, which occurred
in 1996, 1997 and 1998. Additionally, our actual expenditures may exceed our
planned expenditures for a variety of reasons, including changes in our growth
plan, our process technology, market conditions, interest rates and other
factors. We expect to finance our capital expenditure requirements with the
proceeds of the global offering, additional debt and equity financing and cash
from operations. We anticipate that Chartered Silicon Partners, or CSP, our
strategic alliance that owns and will operate Fab 6, will need to raise at least
an additional $450 million of debt during the first half of 2000 for the
financing of Fab 6. In addition, we may require additional financing to fund our
current growth plan. Currently, a substantial portion of our borrowings is
guaranteed by our controlling shareholder, Singapore Technologies Pte Ltd, or
ST, and its affiliates. Following our initial public offering, we may not
receive similar credit guarantees. We cannot assure you that any additional
financing we may need will be available or, if available, will be available on
terms satisfactory to us.
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WE HAVE A HIGH LEVEL OF DEBT. IF WE ARE UNABLE TO MAKE INTEREST AND PRINCIPAL
PAYMENTS ON OUR DEBT, IT COULD SERIOUSLY HARM OUR COMPANY.
We have now and will continue to have a significant amount of debt. Our
high level of debt and the covenants contained in our financing documents could
have important consequences to you. For example, they could:
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to pursue our growth plan;
- require us to seek the lender's consent prior to paying dividends on our
ordinary shares;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing the availability of
our cash flow to fund capital expenditures, working capital and other
general corporate purposes; and
- limit our flexibility in planning for, or reacting to, changes in our
business and the semiconductor industry.
We cannot assure you that we will be able to make interest and principal
payments on debt incurred in connection with our growth if the average selling
prices or demand for our semiconductor wafers are lower than expected.
RISKS RELATED TO OUR OPERATIONS
THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY AND THE PERIODIC OVERCAPACITY
THAT RESULTS FROM THIS MAY SERIOUSLY HARM OUR COMPANY.
The semiconductor industry has historically been highly cyclical and, at
various times, has experienced significant economic downturns characterized by
production overcapacity, reduced product demand, and rapid erosion of average
selling prices. Historically, companies in the semiconductor industry have
expanded aggressively during periods of increased demand. As a result, periods
of overcapacity in the semiconductor industry have frequently followed periods
of increased demand. We expect this pattern to be repeated in the future. In
addition, the markets for semiconductors are characterized by rapid
technological change, evolving industry standards, intense competition and
fluctuations in end-user demand. Our operating results for 1996, 1997 and 1998
were seriously harmed by a downturn in the semiconductor market. Future
downturns in the semiconductor industry may be severe and could seriously harm
our company.
A DECREASE IN DEMAND FOR COMMUNICATIONS EQUIPMENT AND PERSONAL COMPUTERS MAY
SIGNIFICANTLY DECREASE THE DEMAND FOR OUR SERVICES.
A significant percentage of our sales revenue is derived from customers who
use our manufacturing services to make semiconductors for communications
equipment and personal computers. Any significant decrease in the demand for
communications equipment or personal computers may decrease the demand for our
services and could seriously harm our company. In addition, the declining
average selling price of communications equipment and personal computers places
significant pressure on the prices of the components that are used in this
equipment. If the average selling prices of communications equipment and
personal computers continue to decrease, the pricing pressure on components
produced by our company may reduce our revenue and therefore reduce our gross
profit margin significantly.
WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR
REVENUES.
We have been largely dependent on a small number of customers for a
substantial portion of our business. Our top ten customers accounted for 65.7%
and 62.8% of our total net revenue in 1997 and 1998, respectively and 65.0%
during the first six months of 1999. In 1998, our two largest customers
accounted for approximately 9.6% and 9.3% of our total net revenue,
respectively. During the first six months of 1999,
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our two largest customers accounted for 12.4% and 10.0% of our total net
revenue, respectively. We expect that we will continue to be dependent upon a
relatively limited number of customers for a significant portion of our revenue.
We cannot assure you that revenue generated from these customers, individually
or in the aggregate, will reach or exceed historical levels in any future
period. Loss or cancellation of business from, significant changes in scheduled
deliveries to, or decreases in the prices of services sold to, any of these
customers could seriously harm our company. Please see "Business -- Customers
and Markets" for additional information regarding our customers.
OUR CUSTOMERS DO NOT PLACE PURCHASE ORDERS FAR IN ADVANCE. THEREFORE, WE DO NOT
HAVE ANY SIGNIFICANT BACKLOG.
Our customers generally do not place purchase orders far in advance. In
addition, due to the cyclical nature of the semiconductor industry, our
customers' purchase orders have varied significantly from period-to-period. As a
result, we do not typically operate with any significant backlog. The lack of a
significant backlog makes it difficult for us to forecast our net revenue in
future periods. Moreover, our expense levels are based in part on our
expectations of future revenue and we may be unable to adjust costs in a timely
manner to compensate for revenue shortfalls. We expect that in the future our
revenue in any quarter will continue to be substantially dependent upon purchase
orders received in that quarter. We cannot assure you that any of our customers
will continue to place orders with us in the future at the same levels as in
prior periods.
WE MAY NOT BE ABLE TO IMPLEMENT NEW TECHNOLOGY AS IT BECOMES AVAILABLE WHICH MAY
AFFECT OUR ABILITY TO PRODUCE ADVANCED PRODUCTS AT COMPETITIVE PRICES.
The semiconductor industry is rapidly developing and the technology used is
constantly evolving. If we do not anticipate the technology evolution and
rapidly adopt new and innovative technology, we may not be able to produce
sufficiently advanced products at competitive prices. There is a risk that our
competitors may adopt new technology before we do, resulting in our loss of
market share. If we do not continue to produce the most advanced products at
competitive prices, our customers may use the services of our competitors
instead of our services, which could seriously harm our company.
WE DEPEND ON OUR TECHNOLOGY PARTNERS TO ADVANCE OUR PORTFOLIO OF PROCESS
TECHNOLOGIES.
Enhancing our manufacturing process technologies is critical to our ability
to provide services for our customers. We intend to continue to advance our
process technologies through internal research and development efforts and
technology alliances with leading semiconductor suppliers. Although we have an
internal research and development team focused on developing new semiconductor
manufacturing process technologies, we are dependent on our technology partners
to advance our portfolio of process technologies. We currently have joint
development and technology sharing agreements with Lucent and Hewlett-Packard,
and a technology transfer and licensing agreement with Motorola. If we are
unable to continue our technology alliances with Lucent, Hewlett-Packard and
Motorola on mutually beneficial economic terms, or are unable to enter into new
technology alliances with other leading semiconductor suppliers, we may not be
able to continue providing our customers with leading edge process technologies,
which could seriously harm our company. Please see "Business -- Research and
Development" for additional information regarding our internal research and
development efforts.
WE DEPEND ON OUR STRATEGIC ALLIANCES RELATING TO FAB 5 AND FAB 6. TERMINATION OF
EITHER OF THESE ALLIANCES COULD SERIOUSLY HARM OUR COMPANY.
We currently have two strategic alliances relating to the development and
operation of Fab 5 and Fab 6. Silicon Manufacturing Partners, or SMP, which will
operate Fab 5, is jointly-owned with a subsidiary of Lucent. CSP, which will own
and operate Fab 6, is jointly-owned with EDB Investments Pte Ltd and a
subsidiary of Hewlett-Packard. We believe our alliances with these companies
give us access to select leading edge process technologies, moderate our
development costs and capital expenditures and increase our fab utilization
rates. The termination of either of these alliances could
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seriously harm our company. Please see "Business -- Chartered Silicon Partners"
and "-- Silicon Manufacturing Partners" for a more detailed description of these
alliances.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IN OUR INDUSTRY.
The worldwide semiconductor foundry industry is highly competitive. We
compete with dedicated foundry service providers such as Taiwan Semiconductor
Manufacturing Corporation, or TSMC, and United Microelectronics, or UMC, as well
as the foundry operation services of some IDMs such as International Business
Machines, or IBM. IDMs principally manufacture and sell their own proprietary
semiconductor products, but may offer foundry services. Our competitors have
greater access to capital and substantially greater production, research and
development, marketing and other resources than we do. As a result, these
companies may be able to compete more aggressively over a longer period of time
than we can.
A number of semiconductor manufacturers, including our primary competitors,
have recently announced plans to increase their manufacturing capacity and, as a
result, we expect that there will be a significant increase in worldwide
semiconductor capacity over the next five years. If growth in demand for this
capacity fails to match the growth in supply, or occurs more slowly than
anticipated, there may be more intense competition and pressure on the pricing
of our services may result. Any significant increase in competition may erode
our profit margins and weaken our earnings.
The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development quality,
available capacity, device yields, customer service and price. We cannot assure
you that we will be able to compete successfully in the future, which could
seriously harm our company.
OUR BUSINESS DEPENDS IN PART ON OUR ABILITY TO OBTAIN AND PRESERVE INTELLECTUAL
PROPERTY RIGHTS.
Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology. We currently hold
147 patents worldwide, 114 of which are U.S. patents, related to our production
processes. We intend to continue to file patent applications when appropriate to
protect our proprietary technologies. The process of seeking patent protection
may take a long time and be expensive. We cannot assure you that patents will be
issued from pending or future applications or that, if patents are issued, they
will not be challenged, invalidated or circumvented or that the rights granted
under the patents will provide us with meaningful protection or any commercial
advantage. In addition, we cannot assure you that the Asian countries in which
we market our products, such as Taiwan and China, will protect our intellectual
property rights to the same extent as the United States. Please see
"Business -- Intellectual Property" for a more detailed description of our
proprietary technology.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES.
Our ability to compete successfully depends on our ability to operate
without infringing the proprietary rights of others. We have no means of knowing
what patent applications have been filed in the United States until they are
granted. Although we are not currently a party to any material litigation
involving patent infringement, the semiconductor industry is characterized by
frequent litigation regarding patent and other intellectual property rights. As
is typical in the semiconductor industry, we have from time to time received
communications from third parties asserting patents that cover certain of our
technologies and alleging infringement of certain intellectual property rights
of others. We expect to receive similar communications in the future. In the
event any third party were to make a valid claim against us or our customers we
could be required to:
- discontinue using certain process technologies which could cause us to
stop manufacturing certain semiconductors;
- pay substantial monetary damages;
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- seek to develop non-infringing technologies, which may not be feasible;
or
- seek to acquire licenses to the infringed technology which may not be
available on commercially reasonable terms, if at all.
Our company could be seriously harmed by such developments. Litigation,
which could result in substantial costs to us and diversion of our resources,
may also be necessary to enforce our patents or other intellectual property
rights or to defend us against claimed infringement of the rights of others. If
we fail to obtain necessary licenses or if litigation relating to patent
infringement or other intellectual property matters occurs, it could seriously
harm our company.
RISKS RELATING TO MANUFACTURING
WE MAY EXPERIENCE DIFFICULTY IN ACHIEVING ACCEPTABLE DEVICE YIELDS, PRODUCT
PERFORMANCE AND DELIVERY TIMES AS A RESULT OF MANUFACTURING PROBLEMS.
The process technology for the manufacture of semiconductor wafers is
highly complex, requires advanced and costly equipment and is continuously being
modified in an effort to improve device yields and product performance.
Microscopic impurities such as dust and other contaminants, difficulties in the
production process or defects in the key materials and tools used to manufacture
a particular wafer can cause a percentage of the wafers to be rejected or
individual semiconductors on specific wafers to be non-functional, which in each
case negatively affects our device yields. We have, from time to time,
experienced production difficulties that have caused delivery delays, lower than
expected device yields and the replacement of certain vendors of manufacturing
equipment used in our production processes. We may also experience difficulty
achieving acceptable device yields, product performance and product delivery
times in the future as a result of manufacturing problems. These problems may
result from, among other things, capacity constraints, construction delays,
increasing production at new facilities, upgrading or expanding existing
facilities or changing our process technologies. Any of these problems could
seriously harm our company.
WE DEPEND ON OUR SUPPLIERS OF RAW MATERIALS AND EQUIPMENT AND DO NOT TYPICALLY
HAVE LONG-TERM SUPPLY CONTRACTS WITH THEM.
We depend on our suppliers of raw materials. To maintain competitive
manufacturing operations, we must obtain from our suppliers, in a timely manner,
sufficient quantities of quality materials at acceptable prices. We obtain most
of our materials, including critical materials such as raw silicon wafers, from
a limited number of suppliers. We purchase all of our materials on a blanket
purchase order basis. With the exception of one multi-year contract for the
purchase of raw wafers, we do not have long-term contracts with any of our
suppliers. From time to time, vendors have extended lead times or limited the
supply of required materials to us because of capacity constraints.
Consequently, from time to time, we have experienced difficulty obtaining
quantities of raw materials we need on a timely basis.
In addition, from time to time, we may reject materials that do not meet
our specifications, resulting in declines in output or device yields. We cannot
assure you that we will be able to obtain sufficient quantities of raw materials
and other supplies of an acceptable quality. If our ability to obtain sufficient
quantities of raw materials and other supplies in a timely manner is
substantially diminished or if there are significant increases in the costs of
raw materials, it could seriously harm our company.
We also depend on a limited number of manufacturers and vendors that make
and sell the complex equipment we use in our manufacturing processes. In periods
of high market demand, the lead times from order to delivery of this equipment
could be as long as 12 to 18 months. If there are delays in the delivery of this
equipment or if there are increases in the cost of this equipment, it could
seriously harm our company. Please see "Business -- Equipment and Materials" for
additional information regarding our relationships with our suppliers of
materials and equipment.
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WE DEPEND ON ST ASSEMBLY TEST SERVICES LTD FOR MOST OF OUR SEMICONDUCTOR
ASSEMBLY AND TESTING REQUIREMENTS.
Semiconductor assembly and testing are complex processes which involve
significant technological expertise and specialized equipment. Although we are
in the process of evaluating additional sources of supply, we currently depend
on our affiliate ST Assembly Test Services Ltd, or STATS, for almost all of the
assembly and test services we offer our customers. We do not have a long-term
contract with STATS and retain its services on a purchase order basis. STATS
may, from time to time, experience production interruption due to, among other
things, technical problems occurring during the assembly and testing processes.
Because STATS is our major provider of these services, any prolonged
interruption in STATS' operations or the termination of our affiliation with
STATS could seriously harm our company.
WE ARE SUBJECT TO THE RISK OF LOSS DUE TO FIRE BECAUSE THE MATERIALS WE USE IN
OUR MANUFACTURING PROCESSES ARE HIGHLY FLAMMABLE.
We use highly flammable materials such as silane and hydrogen in our
manufacturing processes and are therefore subject to the risk of loss arising
from fires. Although we have implemented industry acceptable risk management
controls at our manufacturing locations, the risk of fire associated with these
materials cannot be completely eliminated and, in the past, we have had minor
interruptions in production as a result of fire. We maintain insurance policies
to guard against losses caused by fire. While we believe our insurance coverage
for damage to our property and disruption of our business due to fire is
adequate, we cannot assure you that it would be sufficient to cover all of our
potential losses. If any of our fabs were to be damaged or cease operations as a
result of a fire, it would temporarily reduce manufacturing capacity and
seriously harm our company.
OUR FAILURE TO COMPLY WITH CERTAIN ENVIRONMENTAL REGULATIONS COULD SERIOUSLY
HARM OUR COMPANY.
We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations,
if we fail to use, discharge or dispose of hazardous materials appropriately,
our company could be subject to substantial liability or could be required to
suspend or adversely modify our manufacturing operations. In addition, we could
be required to pay for the cleanup of our properties if they are found to be
contaminated even if we are not responsible for the contamination. We maintain
insurance policies to guard against losses resulting from environmental harm
caused by our company. While we believe our insurance coverage is adequate, we
cannot assure you that it would be sufficient to cover all our potential losses.
RISKS RELATING TO OUR INFRASTRUCTURE
WE DEPEND ON KEY PERSONNEL AND, DUE TO THE STRONG DEMAND IN SINGAPORE FOR
SKILLED LABOR, MAY HAVE DIFFICULTY ATTRACTING SUFFICIENT NUMBERS OF SKILLED
EMPLOYEES.
Our success depends to a significant extent upon the continued service of
our key senior executives and our engineering, marketing, sales, manufacturing,
support and other personnel. In addition, in connection with our growth plans,
we are likely to need a greater number of experienced engineers and other
employees in the future. The competition for skilled employees is intense. Due
to the current shortage of experienced personnel in Singapore, we must recruit
our personnel internationally. This is more expensive than hiring personnel
locally, and therefore increases our operating costs. As of June 30, 1999, a
majority of our total number of employees were citizens of countries other than
Singapore. We expect demand for personnel in Singapore to increase significantly
in the future as new wafer fabrication facilities are established in Singapore.
If we were to lose the services of any of our existing key personnel without
adequate replacements, or were unable to attract and retain new experienced
personnel as we grow, it could seriously harm our company. We do not carry "key
person" life insurance on any of our personnel.
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WE MAY NOT BE ABLE TO MANAGE OUR GROWTH, WHICH COULD SERIOUSLY HARM OUR COMPANY.
We have experienced and are currently experiencing a period of significant
growth. This growth has placed, and the future growth will continue to place, a
significant strain on our managerial, technical, financial, production,
operational and other resources. In particular, by expanding our manufacturing
facilities and equipping new facilities we may create additional capacity at our
fabs, which, if not utilized, would reduce our profitability and could seriously
harm our company.
THE YEAR 2000 PROBLEM MAY SERIOUSLY HARM OUR COMPANY.
Many currently installed computer systems and software products are coded
to accept only two-digit year entries in the date code field. Consequently, on
January 1, 2000, many of these systems could malfunction because they may not be
able to distinguish twenty-first century dates from twentieth century dates. In
1997, we organized a Year 2000 committee to focus on, among other things, Year
2000 readiness of our information technology systems, facility equipment,
production equipment, fab support areas and vendors. Our information technology
systems have been assessed and we have established a timeline to upgrade and
test all of our equipment, including quality and reliability assurance, research
and development and facility equipment. We have communicated with our equipment
suppliers to understand whether the equipment we have purchased from them is
Year 2000 ready. We have also worked with our raw material suppliers to
understand whether the information technology systems used by them will be Year
2000 ready. We have identified several potential problems relating to Year 2000.
We believe that the most likely worst case scenario would be an external power
surge or dip, or a power trip which could cause our equipment to malfunction. An
equipment malfunction could cause the semiconductors we are processing at the
time of the malfunction to be misprocessed. In addition, certain machines may
fail despite having been tested to be Year 2000 ready. We are currently
preparing a contingency plan to address this worst case scenario. If we are
unable to develop such a plan, or if we or our suppliers fail to make the
necessary modifications and upgrades in a timely manner, the Year 2000 problem
could seriously harm our company.
RISKS RELATED TO INVESTMENTS IN A CONTROLLED CORPORATION
SINGAPORE TECHNOLOGIES WILL CONTINUE TO CONTROL OUR COMPANY FOLLOWING COMPLETION
OF THE GLOBAL OFFERING AND ITS INTERESTS MAY CONFLICT WITH THE INTERESTS OF OUR
OTHER SHAREHOLDERS.
ST and its affiliates will beneficially own approximately 71.9% of our
outstanding ordinary shares following completion of the global offering, or
69.8% if the underwriters exercise their overallotment option in full. As a
result, ST will be able to exercise control over many matters requiring approval
by our shareholders, including the election of directors and approval of
significant corporate transactions.
ST also provides us with financing, guarantees some of our debt and enters
into forward foreign exchange contracts with us relating to some of our
equipment purchase commitments with foreign vendors. While we believe that ST
will continue to provide us credit and other support, ST has no obligation to do
so and the availability and amount of its support will depend on various
factors, including our ability to raise funds without such support and the
expenses relating to such fundraising.
After completion of the global offering, we will continue to have
contractual and other business relationships with ST and its affiliates and may
engage in transactions from time to time that are material to us. Although the
Audit Committee of our Board of Directors will review all material transactions
between our company and ST, circumstances may arise in which the interests of ST
and its affiliates could conflict with the interests of our other shareholders.
Because ST and its affiliates own a significant portion of our ordinary shares,
they could delay or prevent a change in control of our company, even if a
transaction of that nature would be beneficial to our other shareholders. Our
Articles of Association, and the Articles of Association we will adopt prior to
closing the global offering, do not and will not contain a provision requiring
that ST and its affiliates own at least a majority of our ordinary shares.
Please see
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"Relationship with Singapore Technologies" for additional information regarding
our relationship with ST and its affiliates.
RISKS RELATED TO INVESTMENT IN A FOREIGN CORPORATION
WE OPERATE INTERNATIONALLY AND ARE THEREFORE AFFECTED BY PROBLEMS IN OTHER
COUNTRIES.
Our principal customers are located in the United States and Taiwan and our
principal suppliers are located in the United States, Japan, Korea and Germany.
As a result, we are affected by economic and political conditions in those
countries, including:
- fluctuations in the value of currencies;
- changes in labor conditions;
- longer payment cycles;
- greater difficulty in collecting accounts receivable;
- burdens and costs of compliance with a variety of foreign laws;
- political and economic instability;
- increases in duties and taxation;
- imposition of restrictions on currency conversion or the transfer of
funds;
- limitations on imports or exports;
- expropriation of private enterprises; and
- reversal of the current policies (including favorable tax and lending
policies) encouraging foreign investment or foreign trade by our host
countries.
The geographical distances between Asia, the Americas and Europe also
create a number of logistical and communications challenges. Although we have
not experienced any serious harm in connection with our international
operations, we cannot assure you that such problems will not arise in the
future.
EXCHANGE RATE FLUCTUATIONS MAY AFFECT THE VALUE OF OUR ADSS OR ORDINARY SHARES.
Our financial statements are prepared in U.S. dollars. Our net revenue is
generally denominated in U.S. dollars and our operating expenses are generally
incurred in U.S. dollars and Singapore dollars. Our capital expenditures are
generally denominated in U.S. dollars, Japanese yen, Singapore dollars and other
currencies. Although we hedge a portion of the resulting net foreign exchange
position through the use of forward exchange contracts, we are still affected by
fluctuations in exchange rates among the U.S. dollar, the Japanese yen, the
Singapore dollar and other currencies. We are particularly affected by
fluctuations in the exchange rate between the U.S. dollar and the Singapore
dollar. For example, substantially all of our revenue and approximately 76.0% of
our cost of revenue is denominated in U.S. dollars. If the Singapore dollar
strengthens against the U.S. dollar by 2.0%, our cost of revenue will increase
by 0.5%, likewise, if the Singapore dollar weakens against the U.S. dollar by
2.0%, our cost of revenue will decrease by 0.5%. Any significant fluctuation in
exchange rates may harm our company. In addition, fluctuations in the exchange
rate between the U.S. dollar and the Singapore dollar will affect the U.S.
dollar value of our ordinary shares and ADSs, and the value of any cash
dividends if paid in U.S. or Singapore dollars.
ECONOMIC CONDITIONS IN THE ASIA PACIFIC REGION MAY HAVE A NEGATIVE IMPACT ON OUR
REVENUE.
A significant portion of our revenue is derived from sales to customers
whose semiconductors are used in products that are sold in Japan, Taiwan and
other countries in East and Southeast Asia. In 1998, many countries in Asia
experienced considerable currency volatility and depreciation, high interest
rates and declining asset values. As a result, there was a general decline in
business and consumer spending and a
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decrease in economic growth as compared with prior years. Although Singapore was
not materially affected by these events, our results of operations in 1998 were
affected by overall regional economic conditions because demand for
semiconductor products generally rises as the overall level of economic activity
increases and falls as activity decreases. Our results of operations could be
further impacted if the economic environment in these countries fails to improve
or worsens in 1999 or 2000.
OUR PUBLIC SHAREHOLDERS MAY HAVE MORE DIFFICULTY PROTECTING THEIR INTERESTS THAN
THEY WOULD AS SHAREHOLDERS OF A U.S. CORPORATION.
Our corporate affairs are governed by our Memorandum and Articles of
Association and by the laws governing corporations incorporated in Singapore.
The rights of our shareholders and the responsibilities of the members of our
Board of Directors under Singapore law may be different from those applicable to
a corporation incorporated in the United States. Therefore, our public
shareholders may have more difficulty in protecting their interests in
connection with actions taken by our management, members of our Board of
Directors or our controlling shareholders than they would as shareholders of a
corporation incorporated in the United States. For example, controlling
shareholders in United States corporations are subject to fiduciary duties while
controlling shareholders in Singapore corporations are not subject to such
duties. Please see "-- Singapore Technologies will continue to control our
company following completion of the global offering and its interests may
conflict with the interests of our other shareholders" for a discussion relating
to our controlling shareholders, ST and its affiliates.
IT MAY BE DIFFICULT FOR YOU TO ENFORCE ANY JUDGMENT OBTAINED IN THE UNITED
STATES AGAINST US OR OUR AFFILIATES.
Our company is incorporated under the laws of the Republic of Singapore.
Many of our directors and executive officers, and some of the experts named in
this prospectus, reside outside the United States. In addition, virtually all of
our assets and the assets of those persons are located outside the United
States. As a result, it may be difficult to enforce in or out of the United
States any judgment obtained in the United States against us or any of these
persons, including judgments based upon the civil liability provisions of the
United States securities laws. In addition, in original actions brought in
courts in jurisdictions located outside the United States, it may be difficult
for investors to enforce liabilities based upon United States securities laws.
We have been advised by Allen & Gledhill, our Singapore legal counsel, that
judgments of U.S. courts based on the civil liability provisions of the federal
securities laws of the United States are not enforceable in Singapore courts.
Allen & Gledhill has also advised us that there is doubt as to whether Singapore
courts will enter judgments in original actions brought in Singapore courts
based solely upon the civil liability provisions of the federal securities laws
of the United States.
SINGAPORE LAW CONTAINS PROVISIONS THAT COULD DISCOURAGE A TAKEOVER OF OUR
COMPANY.
The Companies Act (Chapter 50) of Singapore and the Singapore Code on
Takeovers and Mergers contain certain provisions that may delay, deter or
prevent a future takeover or change in control of our company. Any person
acquiring an interest, either on his or her own or together with parties acting
in concert with him or her, in 25% or more of our voting shares must extend a
takeover offer for the remaining voting shares in accordance with the Singapore
Code on Takeovers and Mergers. A takeover offer is also required to be made if a
person holding between 25% and 50% (both inclusive) of the voting rights (either
on his or her own or together with parties acting in concert with him or her)
acquires an additional 3% of our voting shares in any 12-month period. The
preceding provisions may discourage or prevent certain types of transactions
involving an actual or threatened change of control of our company. This may
harm you because a transaction of that kind may allow you to sell your shares at
a price above the prevailing market price.
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<PAGE> 21
RISKS RELATED TO OUR ADSS AND ORDINARY SHARES AND OUR TRADING MARKET
THERE HAS BEEN NO PRIOR MARKET FOR OUR ADSS OR ORDINARY SHARES AND THE GLOBAL
OFFERING MAY NOT RESULT IN AN ACTIVE OR LIQUID MARKET FOR THESE SECURITIES.
Prior to the global offering, there has not been a public market for our
ADSs or ordinary shares. We expect the ADSs to be approved for quotation on the
Nasdaq National Market, subject to official notice of issuance. The Singapore
stock exchange has approved our application to list our ordinary shares, subject
to official notice of issuance. However, we cannot assure you that an active
public market will develop or be sustained after the global offering. The
initial public offering price for the ordinary shares and the ADSs will be
determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market. Investors may not be able to resell their ordinary shares or
ADSs at or above the initial public offering price. The financial markets in the
United States and other countries have experienced significant price and volume
fluctuations and market prices of technology companies have been and continue to
be extremely volatile. Volatility in the price of our ordinary shares and ADSs
may be caused by factors outside of our control and may be unrelated or
disproportionate to our operating results. In the past, following periods of
volatility in the market price of a public company's securities, securities
class action litigation has often been instituted against that company. Such
litigation could result in substantial costs and a diversion of our management's
attention and resources.
THE SINGAPORE SECURITIES MARKET IS RELATIVELY SMALL AND MORE VOLATILE THAN U.S.
MARKETS AND MAY CAUSE THE MARKET PRICE OF OUR ADSS AND ORDINARY SHARES TO
FLUCTUATE.
The Stock Exchange of Singapore Limited is relatively small and more
volatile than stock exchanges in the United States and certain other European
countries. As of June 30, 1999, there were 308 Singapore companies listed on the
Main Board of the Singapore stock exchange and the aggregate market
capitalization of listed equity securities of these companies was approximately
US$226 billion. For the year ended December 31, 1998, the average daily equity
trading value on the Singapore stock exchange (including shares traded on the
CLOB International trading system) was approximately US$229 million, with an
annualized aggregate trading value of approximately US$57 billion. The
relatively small market capitalization of, and trading volume on, the Singapore
stock exchange may cause the market price of securities of Singapore companies,
including our ADSs and our ordinary shares, to fluctuate in both the domestic
and the international markets. Please see "Annex B -- The Securities Market of
Singapore" for additional information regarding the Singapore securities market.
NEW INVESTORS IN OUR COMPANY WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.
The purchase price of the ordinary shares and ADSs offered by this
prospectus will be substantially higher than the net tangible book value of our
outstanding ordinary shares. Investors who purchase ordinary shares or ADSs in
the global offering will therefore experience immediate and significant dilution
in the tangible net book value of their investment. Based on the anticipated
initial public offering price of our ordinary shares and ADSs, we expect our
current shareholders to have an aggregate unrealized gain of approximately $885
million as a result of the global offering. Please see "Dilution" for additional
information regarding the dilutive effect of the global offering.
THE GLOBAL OFFERING MAY NOT RESULT IN AN ACTIVE OR LIQUID MARKET FOR OUR ADSS OR
ORDINARY SHARES.
We cannot predict the extent to which the global offering will result in
the development of an active, liquid public trading market for our ADSs or
ordinary shares offered by this prospectus or how liquid that market will be.
Active, liquid trading markets generally result in lower price volatility and
more efficient execution of buy and sell orders for investors. Liquidity of a
securities market is often a function of the volume of the underlying shares
that are publicly held by unrelated parties. Although ADS holders are entitled
to withdraw the ordinary shares underlying the ADSs from the depositary at any
time, there is no public market for our ordinary shares in the United States.
19
<PAGE> 22
YOUR VOTING RIGHTS WITH RESPECT TO THE ADSS ARE LIMITED BY THE TERMS OF THE
DEPOSIT AGREEMENT FOR THE ADSS.
Holders may exercise voting rights with respect to the ordinary shares
represented by ADSs only in accordance with the provisions of the deposit
agreement relating to the ADSs. There are no provisions under Singapore law or
under our Articles of Association that limit ADS holders' ability to exercise
their voting rights through the depositary with respect to the underlying
ordinary shares. However, there are practical limitations upon the ability of
ADS holders to exercise their voting rights due to the additional procedural
steps involved in communicating with such holders. For example, our Articles of
Association require us to notify our shareholders at least 14 days in advance of
any annual general meeting unless a special resolution is to be passed at that
meeting, in which case at least 21 days' notice must be given. Our ordinary
shareholders will receive notice directly from us and will be able to exercise
their voting rights by either attending the meeting in person or voting by
proxy.
ADS holders, by comparison, will not receive notice directly from us.
Rather, in accordance with the deposit agreement, we will provide the notice to
the depositary, which will in turn, as soon as practicable thereafter, mail to
holders of ADSs:
- the notice of such meeting;
- voting instruction forms; and
- a statement as to the manner in which instructions may be given by
holders.
To exercise their voting rights, ADS holders must then instruct the
depositary how to vote their shares. Because of this extra procedural step
involving the depositary, the process for exercising voting rights will take
longer for ADS holders than for holders of ordinary shares. ADSs for which the
depositary does not receive timely voting instructions will not be voted at any
meeting.
Except as described in this prospectus, holders will not be able to
exercise voting rights attaching to the ADSs. Please see "Description of
Ordinary Shares" for additional information relating to our ordinary shares.
YOUR ABILITY TO PARTICIPATE IN ANY RIGHTS OFFERING OF OUR COMPANY IS LIMITED.
We may, from time to time, distribute rights to our shareholders, including
rights to acquire securities under the deposit agreement relating to the ADSs.
The depositary will not offer rights to holders unless both the rights and the
securities to which such rights relate are either exempt from registration under
the Securities Act or are registered under provisions of the Securities Act.
However, we are under no obligation to file a registration statement with
respect to any such rights or underlying securities or to endeavor to cause such
a registration statement to be declared effective. Accordingly, holders of our
ordinary shares may be unable to participate in rights offerings by us and may
experience dilution of their holdings as a result.
THE FUTURE SALES OF SECURITIES BY OUR COMPANY OR EXISTING SHAREHOLDERS MAY HURT
THE PRICE OF OUR ADSS AND OUR ORDINARY SHARES.
The market price of our ADSs could decline as a result of sales of a large
number of ordinary shares or ADSs after the global offering or the perception
that such sales could occur. Such sales also might make it more difficult for us
to sell ordinary shares in the future at a time and at a price that we deem
appropriate. Upon completion of the global offering, we will have an aggregate
of 1,253,610,131 ordinary shares issued and outstanding (including ordinary
shares represented by ADSs). ST and its affiliates will own, directly and
indirectly, 900,966,624 ordinary shares constituting approximately 71.9% of the
outstanding ordinary shares. The 250,000,000 ordinary shares sold in the global
offering (including ordinary shares represented by ADSs) will be freely
tradable, other than ordinary shares purchased by our affiliates. The remaining
1,003,610,131 ordinary shares will be "restricted securities" and may be sold in
the United States only pursuant to a registration statement under the Securities
Act or an exemption from the
20
<PAGE> 23
registration requirements of the Securities Act. We have, and each of our
directors, executive officers and equity investor customers, ST and its
affiliates and certain other existing shareholders, has agreed that he, she or
it will not offer, sell or agree to sell, directly or indirectly, or otherwise
dispose of any ordinary shares without the prior written consent of Salomon
Smith Barney Inc. for a period of 180 days from the date of this prospectus,
subject to certain exceptions. Please see "Underwriting" and "Shares Eligible
for Future Sale" for additional information regarding resale restrictions.
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS MAY NOT BE REALIZED
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of the risks faced by us
described above and elsewhere in this prospectus. We undertake no obligation
after the date of this prospectus to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.
21
<PAGE> 24
USE OF PROCEEDS
The net proceeds from the global offering, after deducting underwriting
discounts and the estimated offering expenses payable by us, are estimated to be
approximately $403.6 million, or $464.7 million if the underwriters exercise
their overallotment option in full, assuming an initial public offering price of
$17.00 per ADS and S$2.88 per ordinary share. We intend to use the proceeds from
the global offering for the following purposes:
- to fund approximately $230 million in capital expenditures in connection
with the expansion of our manufacturing facilities;
- to make approximately $170 million in equity contributions to SMP and
CSP;
- for working capital; and
- for general corporate purposes.
We may also use a portion of the proceeds for strategic investments and
acquisitions. While we have from time to time had preliminary discussions
regarding potential investments and acquisitions in the ordinary course of our
business, we do not currently have any agreements or understandings to make any
such investment or acquisition. Please see "Management's Discussion and Analysis
of Financial Condition and Results of Operation" for information regarding our
future liquidity needs.
Except as indicated above, we have not yet determined the amount of net
proceeds to be used specifically for the purposes specified above. Accordingly,
management will have significant flexibility in applying the net proceeds of the
global offering. Pending any use, as described above, we intend to invest the
net proceeds in high quality, interest-bearing instruments.
22
<PAGE> 25
DIVIDEND POLICY
In December 1995 and January 1997, we paid a cash dividend on our ordinary
shares in an amount equivalent to US$87,000 and US$93,000, respectively, for the
purpose of qualifying our ordinary shares as "trustee stock" eligible for
investment by account holders of the Central Provident Fund, a mandatory
employee pension plan administered by the Government of Singapore. Except for
these dividends, we have not, since our inception, declared or paid any cash
dividends on our ordinary shares. We do not currently anticipate paying any cash
dividends in 1999. We may, by ordinary resolution, declare dividends at a
general meeting, but we may not pay dividends in excess of the amount
recommended by our Board of Directors. Our Board of Directors may also declare
interim dividends without seeking shareholder approval. We must pay all
dividends out of our profits or pursuant to Section 69 of the Companies Act of
Singapore. In making its recommendation, our Board of Directors will consider,
among other things, our future earnings, operations, capital requirements and
general financial condition, as well as general business conditions and other
factors which our Board of Directors may determine are appropriate. Some of our
loan agreements restrict the payment of dividends without the consent of the
lender. We currently intend to retain future earnings, if any, to finance the
expansion of our business.
23
<PAGE> 26
CAPITALIZATION
The following table sets forth, as of June 30, 1999, the capitalization of
our company on an actual, pro forma and pro forma as adjusted basis. The pro
forma data set forth below reflect a subsequent change to our strategic alliance
agreement relating to CSP that results in CSP being consolidated and presents
our balance sheet data as if such change had occurred on June 30, 1999. The pro
forma as adjusted data set forth below adjust the pro forma data to give effect
to the issuance of 250,000,000 ordinary shares in the global offering (including
ordinary shares represented by ADSs), and the application of the net proceeds
from such offering at an assumed initial public offering price of $17.00 per ADS
and S$2.88 per ordinary share. You should read this information in conjunction
with:
- our consolidated financial statements and the related notes included
elsewhere in this prospectus; and
- "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............................. $ 47,548 $ 53,431 $ 457,069
========== ========== ==========
Short-term borrowings, including current portion of
long-term debt...................................... $ 87,601 $ 87,601 $ 87,601
Long-term debt........................................ 364,903 440,903 440,903
Shareholders' equity:
Ordinary shares, S$0.26 par value per share,
3,076,923,079 shares authorized; 1,001,425,308
shares issued and outstanding, actual;
1,251,425,308 shares issued and outstanding, as
adjusted....................................... 221,636 221,636 259,543
Subscription receivables......................... (12,731) (12,731) (12,731)
Additional paid-in capital....................... 694,752 694,752 1,060,483
Unearned compensation............................ (982) (982) (982)
Accumulated other comprehensive income (loss).... (52,696) (52,696) (52,696)
Retained deficit................................. (293,640) (293,640) (293,640)
---------- ---------- ----------
Total shareholders' equity.................. 556,339 556,339 959,977
---------- ---------- ----------
Total capitalization................... $1,008,843 $1,084,843 $1,488,481
========== ========== ==========
</TABLE>
In connection with the global offering, we are restructuring our capital.
We intend to complete the capital restructuring prior to closing the global
offering.
We currently have two classes of ordinary shares, "A" ordinary shares and
"B" ordinary shares, each with a par value of S$0.4888. The "A" ordinary shares
and "B" ordinary shares have identical rights in all respects and rank equal
with one another, except that holders of "B" ordinary shares have a priority in
repayment of our paid-up capital in the event of a winding up of our company.
In connection with the capital restructuring, we will:
- issue one additional fully paid "A" ordinary share for every 20 partly
paid "A" ordinary shares and cancel the partly paid shares;
- cancel all unissued "A" ordinary shares and "B" ordinary shares;
- cancel the special rights attached to the "B" ordinary shares;
- redesignate the "A" ordinary shares and "B" ordinary shares as one class
of ordinary shares;
24
<PAGE> 27
- effect a share split such that each ordinary share with a par value of
S$0.4888 is sub-divided into 1.88 ordinary shares with a par value of
S$0.26;
- adopt new Articles of Association; and
- issue new ordinary shares in connection with the global offering which
will rank equal in all respects with the then existing ordinary shares.
At an extraordinary general meeting of our shareholders on September 13,
1999, the first stage of the capital restructuring was approved. The first stage
of the restructuring was approved by the High Court of Singapore and took effect
on September 30, 1999. An extraordinary general meeting of our shareholders will
be held on October 14, 1999 at which the final stage of the capital
restructuring is expected to be approved. The capital restructuring will become
effective upon such approval.
25
<PAGE> 28
EXCHANGE RATES
Fluctuations in the exchange rate between the Singapore dollar and the U.S.
dollar will affect the U.S. dollar equivalent of the Singapore dollar price of
the ordinary shares on the Singapore stock exchange and, as a result, are
expected to affect the market price of the ADSs. These fluctuations will also
affect the U.S. dollar conversion by the depositary of any cash dividends paid
in Singapore dollars on the ordinary shares represented by ADSs or any other
distribution received by the depositary in connection with the payment of
dividends on the ordinary shares. Currently, there are no restrictions in
Singapore on the conversion of Singapore dollars into U.S. dollars and vice
versa.
The following table sets forth, for the fiscal years indicated, information
concerning the exchange rates between Singapore dollars and U.S. dollars based
on the average of the noon buying rate in the City of New York on the last
business day of each month during the period for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one
U.S. dollar.
<TABLE>
<CAPTION>
S$ PER US$1.00
NOON BUYING RATE
----------------------------------------
FISCAL YEAR ENDED DECEMBER 31, AVERAGE(1) LOW HIGH PERIOD END
------------------------------ ---------- ---- ---- ----------
<S> <C> <C> <C> <C>
1994............................................... 1.53 1.46 1.61 1.46
1995............................................... 1.42 1.39 1.47 1.42
1996............................................... 1.41 1.40 1.43 1.40
1997............................................... 1.49 1.40 1.71 1.61
1998............................................... 1.67 1.58 1.80 1.65
1999 (through June 30, 1999)....................... 1.71 1.66 1.74 1.70
</TABLE>
- ---------------
(1) The average of the daily Noon Buying Rates on the last business day of each
month during the year.
Unless we indicate otherwise, all translations from Singapore dollars to
U.S. dollars contained in this prospectus have been based on the noon buying
rate in the City of New York on June 30, 1999 for cable transfers in Singapore
dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The noon buying rate on June 30, 1999 was S$1.70 per $1.00.
26
<PAGE> 29
DILUTION
The net tangible book value of our company as of June 30, 1999 was $552.4
million or $0.55 per ordinary share, the equivalent of $5.52 per ADS. Net
tangible book value per ordinary share is determined by dividing our net
tangible book value (total tangible assets less total liabilities) as of June
30, 1999 by the number of outstanding ordinary shares at that date.
Based on the issuance by us of 250,000,000 ordinary shares in the global
offering (including ordinary shares represented by ADSs), at an initial public
offering price of $1.70 per ordinary share (or $17.00 per ADS), after deducting
underwriting discounts and estimated offering expenses paid by us, the net
tangible book value of our company as of June 30, 1999 would have been $0.76 per
ordinary share (the equivalent of $7.63 per ADS). This represents an immediate
increase in net tangible book value of $0.21 per ordinary share (the equivalent
of $2.11 per ADS) to our existing shareholders and an immediate dilution in net
tangible book value of $0.94 per ordinary share (the equivalent of $9.37 per
ADS) to new investors. The following table illustrates this per ordinary share
and per ADS dilution:
<TABLE>
<CAPTION>
PER SHARE PER ADS
--------- -------
<S> <C> <C> <C> <C>
Assumed initial public offering price per ordinary share and
per ADS................................................... $1.70 $17.00
Net tangible book value per ordinary share and per ADS as of
June 30, 1999............................................. $0.55 $5.52
Increase in net tangible book value per ordinary share and
per ADS attributable to new
public investors.......................................... 0.21 2.11
----- -----
Net tangible book value per ordinary share and per ADS after
the global offering....................................... 0.76 7.63
----- ------
Dilution in net tangible book value per ordinary share and
per ADS to new public investors........................... $0.94 $ 9.37
===== ======
</TABLE>
The following table summarizes as of June 30, 1999, the total number of
ordinary shares purchased from us, the total consideration paid to us and the
average price paid per ordinary share by our existing shareholders and by our
new public investors in the global offering. For purposes of this table, we have
assumed that all new public investors purchase ordinary shares rather than ADSs.
<TABLE>
<CAPTION>
ORDINARY SHARES
PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT ORDINARY SHARE
------- ------- -------- ------- --------------
(IN MILLIONS, EXCEPT PERCENTAGE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Existing shareholders................ 1,001.4 80.0% $ 904.0 68.0% $0.90
New public investors................. 250.0 20.0% $ 425.0 32.0% $1.70
------- ----- -------- ----- -----
Total...................... 1,251.4 100.0% $1,329.0 100.0% $1.06
======= ===== ======== ===== =====
</TABLE>
The tables above assume:
- the underwriters have not exercised their overallotment option; and
- outstanding share options have not been exercised.
To the extent that the overallotment or outstanding share options are
exercised there will be further dilution to new investors. Please see
"Management" for a description of our share option plans.
27
<PAGE> 30
SELECTED FINANCIAL DATA
You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The selected financial data for the
fiscal years ended December 31, 1994 and 1995 are derived from our audited
financial statements, however, we have not included our audited financial
statements for those periods in this prospectus. The selected financial data for
the fiscal years ended December 31, 1996, 1997 and 1998 and the six month
periods ended June 30, 1998 and 1999 are derived from our audited financial
statements included elsewhere in this prospectus which have been audited by
KPMG, independent accountants. Our financial statements are prepared in
accordance with U.S. GAAP for the fiscal years ended December 31, 1994, 1995,
1996, 1997 and 1998 and the six month periods ended June 30, 1998 and 1999.
Historical results are not indicative of the results to be expected in the
future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -------------------
1994 1995 1996(1) 1997 1998(2)(3) 1998 1999(4)
-------- -------- -------- --------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue....................... $152,373 $287,026 $406,936 $ 379,761 $ 422,622 $232,771 $294,738
Cost of revenue................... 94,496 187,168 289,435 368,521 439,668 224,105 247,257
-------- -------- -------- --------- --------- -------- --------
Gross profit (loss)............... 57,877 99,858 117,501 11,240 (17,046) 8,666 47,481
Operating expenses:
Research and development........ 4,737 9,069 13,018 26,553 43,419 20,642 22,955
Fab start-up costs.............. 8,381 11,236 13,132 10,908 1,455 1,455 --
Sales and marketing............. 3,557 5,550 16,233 20,184 31,872 13,609 20,568
General and administrative...... 9,444 20,097 32,615 30,144 37,389 15,089 22,701
Costs incurred on termination of
development program........... -- -- -- -- 31,776 -- 6,500
Stock-based compensation........ -- 2,799 332 2,024 (2,780) (1,333) 3,289
-------- -------- -------- --------- --------- -------- --------
Total operating
expenses............... 26,119 48,751 75,330 89,813 143,131 49,462 76,013
-------- -------- -------- --------- --------- -------- --------
Operating income (loss)........... 31,758 51,107 42,171 (78,573) (160,177) (40,796) (28,532)
Other income (expense):
Equity in loss of SMP and CSP... -- -- -- (1,272) (20,434) (6,829) (17,988)
Other income (loss)............. 1,319 2,982 3,850 4,860 4,680 330 650
Interest income................. 929 2,944 973 179 1,690 811 1,207
Interest expense................ (3,562) (1,297) (1,144) (12,782) (20,137) (10,100) (9,094)
Exchange gain (loss)............ 2,318 (22) 1,963 (31,678) 5,237 (3,139) 5,065
-------- -------- -------- --------- --------- -------- --------
Income (loss) before income
taxes........................... 32,762 55,714 47,813 (119,266) (189,141) (59,723) (48,692)
Income tax benefit (expense)...... (251) (832) (337) (355) (865) (543) 172
-------- -------- -------- --------- --------- -------- --------
Net income (loss)................. $ 32,762 $ 54,882 $ 47,476 $(119,621) $(190,006) $(60,266) $(48,520)
======== ======== ======== ========= ========= ======== ========
Net income (loss) per common
share:
Basic........................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Diluted......................... $ 0.11 $ 0.13 $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
======== ======== ======== ========= ========= ======== ========
Shares used in per share
calculation:
Basic........................... 305,412 418,661 488,296 490,407 784,541 685,871 985,816
Diluted......................... 305,412 418,661 488,824 490,407 784,541 685,871 985,816
Net income (loss) per ADS:
Basic........................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
Diluted......................... $ 1.06 $ 1.31 $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
======== ======== ======== ========= ========= ======== ========
ADSs used in per ADS calculation:
Basic........................... 30,541 41,866 48,830 49,041 78,454 68,587 98,582
Diluted......................... 30,541 41,866 48,882 49,041 78,454 68,587 98,582
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
---------------------------------------------------------- JUNE 30,
1994 1995 1996 1997 1998 1999
-------- -------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 664 $ 2,273 $ 2,736 $ 23,785 $ 99,619 $ 47,548
Working capital (deficit).............. (33,632) (30,010) (199,149) (328,927) 13,099 (49,633)
Total assets........................... 362,280 607,318 1,036,810 1,278,968 1,321,510 1,229,847
Short-term borrowings and current
portion of long-term debt............ 83,473 28,456 29,156 10,591 52,128 87,601
Current installments of obligations
under capital leases................. - 3,620 3,842 4,078 4,329 4,914
Obligations under capital leases,
excluding current installments....... - 25,665 21,823 17,745 13,414 10,698
Other long-term debt................... 28,767 16,961 65,934 273,008 419,545 364,903
Shareholders' equity................... 182,876 374,717 465,274 310,806 601,246 556,339
</TABLE>
- ---------------
(1) In 1996, gross profit and operating income included $23.2 million relating
to a reduction in accrued liabilities for a change in estimate of cost to
obtain certain licenses. Please see note 22(g) to our consolidated financial
statements.
(2) Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Please see note 2(e) to our
consolidated financial statements.
(3) In 1998 we recorded a charge of $31.8 million relating to the write-down of
equipment in connection with the termination of a development program.
Please see note 8 to our consolidated financial statements.
(4) In the first six months of 1999, we recorded a charge of $6.5 million in
connection with the termination of a development program. Please see note 8
to our consolidated financial statements.
29
<PAGE> 32
UNAUDITED PRO FORMA FINANCIAL INFORMATION
We believe that recent changes to our strategic alliance agreement with
respect to CSP will have a material impact on the basis of presentation of our
financial information. U.S. GAAP generally requires consolidation of all
majority owned (greater than 50%) subsidiaries. However, as a result of certain
provisions contained in the strategic alliance agreement, the minority
shareholders of CSP were deemed to have substantive participative rights which
overcame the presumption that we should consolidate CSP. Therefore, CSP has
historically been accounted for under the equity method in our financial
statements. As a result of an amendment to the strategic alliance agreement, we
will treat CSP as a consolidated subsidiary from October 1, 1999 forward. Please
see "Business -- Strategic Alliances -- Chartered Silicon Partners" for a
discussion of this amendment.
The unaudited pro forma consolidated balance sheet as of June 30, 1999 and
unaudited pro forma consolidated statement of operations for the year ended
December 31, 1998 and the six months ended June 30, 1999 have been prepared
based on our historical consolidated financial statements after giving effect to
the subsequent change to our strategic alliance agreement relating to CSP that
resulted in CSP being consolidated. The unaudited pro forma financial
information presents our financial condition as if such change had occurred on
June 30, 1999 and presents our results of operations data as if such change had
occurred on January 1, 1998.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 SIX MONTHS ENDED JUNE 30, 1999
------------------------------------ ------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenues....................... $ 422,622 $ 422,622 $294,738 $ (605) $294,133
Cost of revenue.................... 439,668 439,668 247,257 247,257
--------- --------- -------- --------
Gross profit (loss)................ (17,046) (17,046) 47,481 46,876
Operating Expenses: Research and
development...................... 43,419 $ 4,668 48,087 22,955 4,256 27,211
Fab start-up costs............... 1,455 6,911 8,366 -- 6,239 6,239
Sales and marketing.............. 31,872 31,872 20,568 20,568
General and administrative....... 37,389 37,389 22,701 514 23,215
Costs incurred on termination of
development program........... 31,776 31,776 6,500 6,500
Stock-based compensation......... (2,780) (2,780) 3,289 3,289
--------- --------- -------- --------
Total operating
expenses............... 143,131 154,710 76,013 87,022
Operating income (loss)............ (160,177) (171,756) (28,532) (40,146)
Other income (expense):
Equity in loss of CSP and SMP.... (20,434) 5,577 (14,857) (17,988) 5,937 (12,051)
Other income (loss).............. 4,680 4,680 650 650
Interest income.................. 1,690 1,562 3,252 1,207 83 1,290
Interest expense................. (20,137) (20,137) (9,094) (9,094)
Exchange gain (loss)............. 5,237 (513) 4,724 5,065 (89) 4,976
--------- --------- -------- --------
Income (loss) before income
taxes............................ (189,141) (194,094) (48,692) (54,375)
Income tax benefit (expense)....... (865) (406) (1,271) 172 (21) 151
--------- --------- -------- --------
Income (loss) before minority
interests........................ (190,006) (195,365) (48,520) (54,224)
Minority interest in loss of CSP... -- 5,359 5,359 -- 5,704 5,704
--------- --------- -------- --------
Net income (loss).................. $(190,006) $(190,006) $(48,520) $(48,520)
========= ========= ======== ========
</TABLE>
30
<PAGE> 33
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 47,548 $ 5,883 $ 53,431
Accounts receivable
Trade..................................................... 86,274 6,558 92,832
Others.................................................... 7,073 979 8,052
Amounts due from ST and ST affiliates....................... 2,137 440 2,577
Amounts due from CSP and SMP................................ 10,441 (6,787) 3,654
Inventories................................................. 26,943 26,943
Prepaid expenses............................................ 2,468 395 2,863
---------- ----------
Total current assets.............................. 182,884 190,352
---------- ----------
Investment in CSP and SMP................................... 60,376 (28,220) 32,156
Other assets................................................ 41,505 41,505
Technology license agreements............................... 3,974 9,167 13,141
Property, plant and equipment, net.......................... 941,108 122,016 1,063,124
---------- ----------
Total Assets...................................... $1,229,847 $1,340,278
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
Trade..................................................... $ 5,656 $ 5,656
Fixed asset purchases..................................... 32,458 $ 3,910 36,368
Current installments of obligations under capital leases.... 4,914 4,914
Current installments of long-term debt...................... 86,391 86,391
Bank overdrafts............................................. 1,210 1,210
Accrued operating expenses.................................. 87,612 3,885 91,497
Amounts due to ST and ST affiliates......................... 8,574 (609) 7,965
Income taxes payable........................................ 793 132 925
Other current liabilities................................... 4,909 4,909
---------- ----------
Total current liabilities......................... 232,517 239,835
Obligations under capital leases, excluding current
installments.............................................. 10,698 10,698
Long-term debt, excluding current installments.............. 364,903 76,000 440,903
Customer deposits........................................... 42,805 42,805
Other liabilities........................................... 22,585 22,585
---------- ----------
Total liabilities................................. 673,508 756,826
Minority interest........................................... -- 27,113 27,113
Share capital
Ordinary shares of S$0.26 each............................ 221,636 221,636
Subscription receivables.................................... (12,731) (12,731)
Additional paid-in capital.................................. 694,752 694,752
Unearned compensation....................................... (982) (982)
Accumulated other comprehensive income (loss)............... (52,696) (52,696)
Retained earnings (deficit)................................. (293,640) (293,640)
---------- ----------
Total shareholders' equity........................ 556,339 556,339
---------- ----------
Total liabilities and shareholders' equity........ $1,229,847 $1,340,278
========== ==========
</TABLE>
31
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from those projected
in the forward-looking statements. Factors that might cause future results to
differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed below and elsewhere in this
prospectus, particularly in "Risk Factors."
OVERVIEW
Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and manufacturers of electronic systems. We operate
three wholly-owned fabs in Singapore and hold interests in two strategic
alliances for fabs in Singapore. We hold a 51% equity interest in CSP, which
owns and will operate Fab 6, and a 49% equity interest in SMP, which operates
Fab 5. We account for SMP on a minority interest equity basis.
U.S. GAAP generally requires consolidation of all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions contained in
our strategic alliance agreement with respect to CSP the minority shareholders
of CSP are deemed to have substantive participative rights which would overcome
the presumption that we should consolidate CSP. Therefore, CSP has been
historically accounted for under the equity method in our financial statements.
As a result of an amendment to the strategic alliance agreement, we will treat
CSP as a consolidated subsidiary from October 1, 1999 forward. Please see
"Business -- Strategic Alliances -- Chartered Silicon Partners" for a discussion
of this amendment.
We are 89.8% owned by ST and its affiliates (71.9% following the global
offering). We have a service agreement with ST pursuant to which we currently
pay ST an annual management fee for certain management and corporate support
services. This fee is based on certain percentages of capital employed, sales,
manpower and payroll. We expect to amend the service agreement prior to closing
the global offering to convert from a formula based fee arrangement to a service
based fee arrangement.
According to the World Semiconductor Trade Statistics, the traditional
long-term growth rate for the worldwide semiconductor industry has been more
than 15%. However, the semiconductor industry is highly cyclical. Fabs can take
several years to plan, construct and begin operations. Therefore, during periods
of favorable market conditions, semiconductor manufacturers often begin building
new fabs in response to anticipated demand growth for semiconductors. In
addition, upon operation, fabs increase production volumes rapidly. As a result,
large amounts of semiconductor manufacturing capacity typically become available
during the same time period. Absent growth in demand, this sudden increase in
supply results in semiconductor manufacturing overcapacity, which leads to sharp
drops in semiconductor prices.
From 1996 through the second quarter of 1998, a number of sectors of the
semiconductor industry were in a state of overcapacity resulting in sharp
declines in the average selling price of semiconductor wafers and completed
semiconductor devices. However, since the third quarter of 1998, global
semiconductor demand has been growing at an accelerated pace.
Semiconductor manufacturing is very capital intensive in nature. A high
percentage of the cost of a fab is fixed, therefore increases or decreases in
capacity utilization rates can have a significant effect on profitability. The
unit cost of wafer fabrication generally decreases as fixed charges, such as
depreciation expense on the facility and semiconductor manufacturing equipment,
are allocated over a larger number of units produced.
Because the price of wafers varies significantly, the mix of wafers
produced affects revenue and profitability. The value of a wafer is determined
by the complexity of the device on the wafer. Production
32
<PAGE> 35
of devices with higher level functionality and greater system-level integration
requires more manufacturing steps and commands higher wafer prices.
Since prices for wafers of a given level of technology decline over the
product life cycle, a fab must continue to migrate to increasingly sophisticated
technologies to maintain the same level of profitability. This requires
continuous capital investment.
In our first two fabs, we initially focused on manufacturing semiconductor
wafers for the computer industry. Production commenced in Fab 1 in 1989 and in
Fab 2 in 1995. We achieved profitability in 1993 and continued to increase our
profitability through the first half of 1996. Conditions in the semiconductor
industry began to deteriorate in the second half of 1996. At the same time, our
capacity utilization declined from 90.7% in the first half of 1996 to 57.2% in
the second half of 1996 and average selling price per wafer declined
significantly. Consistent with our long-term view of the growth of the
semiconductor industry, we continued to invest in new process technologies and
the expansion of our manufacturing capacity. During 1997, Fab 3 commenced
production and we entered into strategic alliances to form CSP and SMP. Because
we begin amortizing the capitalized costs associated with a new fab as soon as
the fab commences operation, we incur large depreciation expenses related to the
fab prior to the time the fab reaches volume production. In addition, we expense
all non-capitalized costs as incurred related to the start-up of the fab such as
personnel training costs and payroll and employee related costs.
Our production generally begins upon receipt of purchase orders from our
customers. Some of our customers are entitled to a discount on a fixed number of
wafers per period. Sales subject to these discounts were approximately 16% of
total revenue during the first six months of 1999.
Our 1995 and 1997 share ownership plans are accounted for in accordance
with variable plan accounting. As a consequence, we recognize share compensation
expense for options granted to employees under these plans. For each reporting
period, compensation cost for shares granted under these plans to employees is
recorded over the requisite vesting periods based on the current market value of
our ordinary shares at the end of the relevant period. We recognized
approximately $3.3 million of related compensation expense during the six months
ended June 30, 1999. We expect to terminate these plans prior to closing the
global offering and replace any unpaid portion of partly paid shares under these
plans with share options under our 1999 plan. These options will have the same
exercise price and vesting schedule as the replaced partly paid shares. If the
plans are not so amended, then we will continue to account for them as variable
plans.
In addition, we account for our 1999 plan as a fixed option plan. Reported
share compensation expense represents the difference between the exercise price
of employee share option grants and the deemed fair value of our ordinary shares
at the date of the grant, amortized over the vesting period of the applicable
options.
Effective July 1, 1998, we changed our functional currency from the
Singapore dollar to the U.S. dollar. Significant changes in economic facts
necessitated this change in functional currency. These changes included
increased financing in U.S. dollars along with increasing sales to companies
based outside of Singapore, principally in the United States. In addition, there
continues to be less financial dependence by us on our parent.
The change in functional currency was recognized through the translation of
Singapore dollar amounts of our non-monetary assets, principally property, plant
and equipment at June 30, 1998, to U.S. dollars on July 1, 1998 with those U.S.
dollar amounts becoming the accounting basis for those assets at July 1, 1998
and for subsequent periods. The $52.7 million cumulative translation adjustment
at July 1, 1998 in shareholders' equity prior to the change remains as a
separate component of accumulated comprehensive income. Please see note 2(e) to
our consolidated financial statements for additional information regarding our
change in functional currency.
33
<PAGE> 36
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of
net revenue for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ----------------
1996 1997 1998 1998 1999
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue.................................... 71.1 97.0 104.0 96.3 83.9
----- ----- ----- ----- -----
Gross profit (loss)................................ 28.9 3.0 (4.0) 3.7 16.1
Operating Expenses:
Research and development......................... 3.2 7.0 10.3 8.9 7.8
Fab start-up costs............................... 3.2 2.9 0.3 0.6 --
Sales and marketing.............................. 4.0 5.3 7.5 5.8 7.0
General and administrative....................... 8.0 7.9 8.8 6.5 7.7
Costs incurred on termination of development
program....................................... -- -- 7.5 -- 2.2
Stock-based compensation......................... 0.1 0.5 (0.7) (0.6) 1.1
----- ----- ----- ----- -----
Total operating expenses...................... 18.5 23.6 33.7 21.2 25.8
----- ----- ----- ----- -----
Operating income (loss)............................ 10.4 (20.6) (37.7) (17.5) (9.7)
Other income (expense):
Equity in loss of SMP and CSP.................... -- (0.3) (4.8) (2.9) (6.1)
Other income (loss).............................. 0.9 1.3 1.1 0.1 0.2
Interest income.................................. 0.2 0.0 0.4 0.3 0.4
Interest expense................................. (0.3) (3.4) (4.8) (4.3) (3.1)
Exchange gain (loss)............................. 0.5 (8.3) 1.2 (1.3) 1.7
----- ----- ----- ----- -----
Income (loss) before income taxes.................. 11.7 (31.3) (44.6) (25.6) (16.6)
Income tax benefit (expense)....................... (0.1) (0.1) (0.2) (0.2) 0.0
----- ----- ----- ----- -----
Net income (loss).................................. 11.6% (31.4)% (44.8)% (25.8)% (16.6)%
===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1999
Net revenue. We generate revenue primarily from fabricating semiconductor
wafers. In addition, we derive revenue from associated subcontracted assembly
and test services. Revenue is recognized upon shipment of goods to our
customers. Substantially all revenue is in U.S. dollars. Net revenue increased
26.6%, from $232.8 million in the first half of 1998 to $294.7 million in the
first half of 1999. This increase in revenue was due primarily to an increase in
the number of wafers shipped resulting from increased worldwide market demand
and additional manufacturing capacity in our fabs. The number of eight-inch
equivalent wafers shipped increased from 213,500 in the first half of 1998 to
327,300 in the first half of 1999, an increase of 113,800 or 53.3%. Of the
increase, 25.0% resulted from the sale of semiconductor wafers with line
geometries of 0.35 micron, or 0.35u, and below and 31.4% was derived from the
sale of print head chips which commenced shipment in the second half of 1998 and
ceased production in July 1999. We do not expect the cessation in production of
print head chips to have a material impact on our results of operations, capital
resources or cash flows, as the net revenue from sales of such chips was only
4.5% of our total net revenue in the first half of 1999.
Average selling prices decreased from $1,090 per wafer in the first half of
1998 to $900 per wafer in the first half of 1999 due primarily to the lower
selling price for the less complex print head chips and worldwide declines in
average selling prices of semiconductor wafers. Excluding print head chips, the
average selling price per wafer for the first half of 1999 was $965.
Cost of revenue and gross profit (loss). Cost of revenue includes
depreciation expense, attributed overhead, cost of materials and subcontracted
expenses for assembly and test services. Cost of revenue increased 10.3% from
$224.1 million in the first half of 1998 to $247.3 million in the first half of
1999,
34
<PAGE> 37
principally due to the incremental depreciation on additional equipment
installed to increase capacity of Fab 3 and an increase in production volumes.
Cost per wafer decreased from $1,050 in the first half of 1998 to $755 in the
first half of 1999. A significant portion of this decline was due to the lower
cost of wafers for print head chips, as well as an improvement in capacity
utilization from 73.8% to 94.8% and a slightly reduced cost of materials per
wafer. These factors resulted in an improvement in gross margins from 3.7% in
the first half of 1998 to 16.1% in the first half of 1999.
Research and development expenses. Research and development expenses
consist primarily of salaries and benefits for research and development
personnel, depreciation of research and development equipment and material
expenses for development wafers. Research and development expenses increased by
11.2% from $20.6 million in the first half of 1998 to $23.0 million in the first
half of 1999. This was due principally to expenses for the development of 0.25u
and 0.18u process technologies, as well as other advanced processes. We expect
our research and development expenses to increase in the future as we continue
to develop new process technologies.
Fab start-up costs. Fab start-up costs constitute all expenses (other than
capitalized interest related to acquisition or construction of property, plant
and equipment) in connection with the establishment of new fabs and operations.
There were no fab start-up costs in the first half of 1999 compared to $1.5
million in the first half of 1998 due primarily to start-up activities for print
head operations.
Sales and marketing expenses. Sales and marketing expenses consist
primarily of salaries and benefits for sales and marketing personnel, contract
expenses paid to providers of EDA software, expenses associated with overseas
offices, wafer samples, promotions and receivables provisions. Sales and
marketing expenses increased by 51.1% from $13.6 million in the first half of
1998 to $20.6 million in the first half of 1999, due principally to costs of
expanding our EDA partnership program. Sales and marketing expenses as a
percentage of net sales increased from 5.8% to 7.0% over these same periods.
General and administrative expenses. General and administrative expenses
consist primarily of salaries and benefits for administrative personnel,
depreciation of non-production equipment and recruitment and training expenses.
General and administrative expenses increased 50.4% from $15.1 million in the
first half of 1998 to $22.7 million in the first half of 1999. The increase was
due primarily to higher administrative headcount which resulted in higher
payroll and staff related expenses. Administrative, payroll and other expenses
relating to the print head chip business (that previously were allocated to fab
start-up costs) also contributed to the increase in general and administrative
expenses following the commencement of production in the second half of 1998.
Cost relating to termination of development program. During 1998, we
decided to discontinue a technology transfer and licensing arrangement related
to a development program. The program involved the transfer of two generation
(geometry) process technologies from the licensor and further enhancing them for
application by us. The process technologies were intended for a specific market
requiring embedding applications on to memory chips. The program started in
mid-1997 and by the later half of 1998, extreme weakness and volatility of the
market and adverse customer perceptions on the cost of the application, together
with customer views of the long and complicated product development cycle, led
to difficulties in both Chartered and the licensor fulfilling the original
intent of the agreement. All program transfer, development and marketing
activities were terminated in 1998.
In connection with the discontinuation of this development program, certain
equipment previously purchased and yet to be placed into service was identified
by management in 1998 as redundant and to be disposed of in the near term. We
recorded a $31.8 million loss in 1998 to reduce the carrying amount of certain
identified equipment and a technology license agreement to their estimated fair
value less costs to sell. This loss comprised $30.9 million for the write-down
of plant and equipment to fair value less costs to sell and $0.8 million to
reduce the carrying amount of the related technology license agreement to zero.
The equipment was unique to or specifically configured to the requirements of
the transferred process technologies and could not be re-deployed effectively.
The technology license agreement written off represented the unamortized amount
paid in 1997 for the acquisition of the technology. As of
35
<PAGE> 38
December 31, 1998, management did not expect to incur any further costs with
respect to the decision to discontinue the development program.
In February 1999, we reached an agreement in principle with the licensor to
terminate the program. As part of the settlement, we paid the licensor $6.5
million. The termination agreement was signed in August 1999. No further
payments will be made with respect to this program.
Other income. Other income increased from $0.3 million in the first half
of 1998 to $0.7 million in the first half of 1999 due to the increase in grants
received from the Government of Singapore for both research and development and
staff training.
Interest income. Interest income increased from $0.8 million in the first
half of 1998 to $1.3 million in the first half of 1999 due to higher cash
balances.
Interest expense. Interest expense decreased from $10.1 million in the
first half of 1998 to $9.1 million in the first half of 1999 due to lower
interest rates.
Exchange gain (loss). Exchange gains and losses result from movements in
the exchange rates of foreign currencies between the date a monetary asset or
liability arises and the balance sheet date or the date of settlement, to the
extent it has not been hedged. We recognized an exchange loss of $3.1 million in
the first half of 1998 and an exchange gain of $5.1 million in the first half of
1999 primarily related to currency fluctuations between the U.S. dollar and the
Singapore dollar.
Income tax benefit (expense). Each of our fabs has been exempted from
income tax on profits from the sale of manufactured goods for ten years
following the date specified production milestones are achieved. Currently, we
pay tax only on interest income. We had a provision for taxes of $0.5 million in
the first half of 1998 compared with a net tax refund of $0.2 million, which
included a tax refund of $0.8 million offset by a charge of $0.6 million, in the
first half of 1999. The tax refund was for allowed interest expense that was
offset against interest income for the period from 1992 to 1995.
Equity in loss of SMP and CSP. Our share of the losses in SMP and CSP was
$6.8 million in the first half of 1998 and $18.0 million in the first half of
1999. This increase in loss represents the increase in start-up activities for
Fab 5 and Fab 6 during the first half of 1999. Fab 5 and Fab 6 have not yet
commenced volume production.
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
Net revenue. Net revenue increased 11.3%, from $379.8 million in 1997 to
$422.6 million in 1998. This increase in revenue was due primarily to an
increase in the number of wafers shipped. The number of eight-inch equivalent
wafers shipped increased from 344,100 in 1997 to 439,700 in 1998, an increase of
95,600 or 27.8%. This was primarily the result of increased shipment of 0.35u
products and, to a lesser extent, the sale of print head chips.
The increase in wafers shipped was offset by a 12.9% decrease in average
selling prices, from $1,104 per wafer in 1997 to $961 per wafer in 1998. This
decrease was due primarily to worldwide semiconductor overcapacity and a
resulting decrease in average prices.
Cost of revenue and gross profit (loss). Cost of revenue increased 19.3%
from $368.5 million in 1997 to $439.7 million in 1998, principally due to higher
depreciation cost as a result of additional capacity installed in Fabs 1, 2 and
3. The increase in the number of wafers produced resulted in average cost per
wafer decreasing 6.6% from $1,071 in 1997 to $1,000 in 1998. We suffered a gross
loss of $17.0 million in 1998 compared with gross profit of $11.2 million in
1997. This was the result of declining average selling price and higher cost of
revenue including higher depreciation cost.
Research and development expenses. The 63.5% increase in research and
development expenses from $26.6 million in 1997 to $43.4 million in 1998 was due
primarily to activities in improving process technology and the development of
new technology, in particular the development of 0.25u and 0.35u process
technologies. To support these activities, we increased the number of personnel
engaged in
36
<PAGE> 39
research and development by 28 during 1998. In addition, we moved our research
and development operations from Fab 2, which was in commercial production, to
Fab 3, which was then being equipped with our latest production equipment and
was only producing a limited number of wafers. This caused a significant
increase in absorption of fixed costs by our research and development activity.
Fab start-up costs. Fab start-up costs decreased 86.7% from $10.9 million
in 1997 to $1.5 million in 1998. Fab 3 commenced operations in August 1997,
after which Fab 3 expenses were no longer classified as start-up costs.
Sales and marketing expenses. Sales and marketing expenses increased by
57.9% from $20.2 million in 1997 to $31.9 million in 1998 as we expanded our EDA
partnership programs, increased our presence in Europe and the eastern United
States and increased our use of wafer samples for prospective business. As a
percentage of net revenue, sales and marketing expenses increased from 5.3% in
1997 to 7.5% in 1998.
General and administrative expenses. General and administrative expenses
increased 24.0% from $30.1 million in 1997 to $37.4 million in 1998. As a
percentage of net revenue, general and administrative expenses increased from
7.9% in 1997 to 8.8% in 1998. This increase was due to administrative, payroll
and other expenses in connection with the commencement of production in Fab 3 in
1997.
Cost relating to termination of development program. In connection with
the discontinuation of the development program described above under "-- Six
months ended June 30, 1998 and June 30, 1999 -- Cost relating to termination of
development program," certain equipment previously purchased and yet to be
placed into service was identified by management in 1998 as redundant and to be
disposed of in the near term. We recorded a $31.8 million loss in 1998 to reduce
the carrying amount of certain identified equipment and technology license
agreements to their estimated fair value less costs to sell. This loss comprised
$30.9 million for the write-down of plant and equipment to fair value less costs
to sell and $0.8 million to reduce the carrying amount of the related technology
license agreement to zero. The equipment was unique to or specifically
configured to the requirements of the transferred process technologies and could
not be re-deployed effectively. The technology license agreement written off
represented the unamortized amount paid in 1997 for the acquisition of the
technology. As of December 31, 1998, management did not expect to incur any
further costs with respect to the decision to discontinue the development
program.
In 1999, as a result of subsequent discussions with the licensor regarding
the termination of the development program, we recorded a $6.5 million charge
representing a final cash settlement amount that allowed an in-principle
agreement to be reached on the termination of the license agreement. The
termination agreement was signed in August 1999. No further payments will be
made with respect to this program.
Equity in loss of SMP and CSP. Our share of the losses in SMP and CSP was
$20.4 million in 1998 compared to $1.3 million in 1997. The increase in loss was
primarily attributable to pre-operating costs for SMP and CSP. SMP was formed in
January 1998 and CSP was formed in March 1997.
Interest income. Interest income increased from $0.2 million in 1997 to
$1.7 million in 1998 due to the additional equity investments in March and
October 1998 by existing shareholders. This capital was temporarily deposited in
fixed rate interest bearing accounts, before being drawn down for the repayment
of indebtedness and purchase of new equipment.
Interest expense. Interest expense increased 57.5% from $12.8 million in
1997 to $20.1 million in 1998 due primarily to the higher level of borrowings to
finance the expansion of Fab 3. Outstanding loan balances increased from $282.2
million at December 31, 1997 to $468.6 million at December 31, 1998.
Exchange gain (loss). In 1997, we incurred a loss of $31.7 million due to
the significant strengthening of the U.S. dollar against the Singapore dollar
and its effect on our U.S. dollar denominated liabilities. In 1998, we
recognized an exchange gain of $5.2 million in 1998 in a period of relative
stability between the U.S. dollar and the Singapore dollar, primarily as a
result of the amortization of gains on certain hedging transactions.
37
<PAGE> 40
Income tax benefit (expense). Income tax expense increased from $0.4
million in 1997 to $0.9 million in 1998 due primarily to an increase in non-tax
exempt interest income.
YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1997
Net revenue. Net revenue decreased 6.7% from $406.9 million in 1996 to
$379.8 million in 1997. This was primarily due to a reduction in average selling
price per wafer from $1,603 in 1996 to $1,104 in 1997. This decrease was caused
by overcapacity in the worldwide semiconductor market.
The decrease in revenue caused by lower average selling prices was
substantially offset by a 35.5% increase in the number of eight-inch equivalent
wafers shipped, from 253,900 in 1996 to 344,100 in 1997.
Cost of revenue and gross profit. Cost of revenue increased 27.3% from
$289.4 million in 1996 to $368.5 million in 1997. The main increase came from
depreciation as a result of increased production capacity at Fab 2. Cost per
wafer decreased from $1,140 in 1996 to $1,071 in 1997, a decrease of 6.1%.
Gross profit decreased 90.4%, from $117.5 million in 1996 to $11.2 million
in 1997 due to declining average selling prices and higher costs of revenue,
offset to a limited extent by a decrease in per wafer costs. In 1996, 19.8% of
gross profit, representing $23.2 million, was attributable to a reduction in the
reserves for technology liabilities. We use numerous manufacturing processes
that are developed internally or licensed from third parties. We have no means
of knowing what patent applications have been filed in various countries until
they are granted. As is typical in the semiconductor industry, third parties
have from time to time asserted patents that cover certain of our technologies
and alleged infringement of certain intellectual property rights.
We accrue for probable and estimable technology liabilities expected to be
incurred at each balance sheet date. Such accruals are estimated on the basis of
our historical experience in dealing with such claims, and are established when
we have been approached by or are negotiating with third parties with the
intention of entering into licensing arrangements.
Beginning in 1995, we established a strategy to deal aggressively with
technology claims. We modified our business processes to limit the impact and
likelihood of such claims, and at the same time took advantage of a capacity
shortage in the wafer industry to establish business relationships with
potential claimants. Also, the establishment of our own patent portfolio further
strengthened our negotiating position. As a result, a number of expected claims
for which accruals had been previously established did not materialize, and we
released the accruals for technology liabilities of $23.2 million in 1996.
Gross margin decreased from 28.9% in 1996 to 3.0% in 1997.
Research and development expenses. There was a 104.0% increase in research
and development expenses from $13.0 million in 1996 to $26.6 million in 1997. As
a percentage of net revenue, research and development expenses increased from
3.2% to 7.0%. This increase was primarily due to efforts related to improvement
of existing process technologies and the development of new process
technologies.
Fab start-up costs. Fab start-up costs decreased from $13.1 million in
1996 to $10.9 million in 1997. For both 1996 and 1997, the majority of fab
start-up costs expenses were related to start-up costs at Fab 3. Fab 3 began
commercial production in August 1997, at which point the Fab 3 costs were no
longer classified as fab start-up costs.
Sales and marketing expenses. Sales and marketing expenses increased by
24.3% from $16.2 million in 1996 to $20.2 million in 1997. As a percentage of
net revenue, sales and marketing expense increased from 4.0% to 5.3% . The
increase was primarily due to the establishment of overseas offices in Japan,
Israel and Germany during the second half of 1996.
General and administrative expenses. General and administrative expenses
decreased 7.6% from $32.6 million in 1996 to $30.1 million in 1997. This expense
reduction was a result of lower bonus
38
<PAGE> 41
payments in 1997 compared to 1996. As a percentage of net revenue, general and
administrative expenses decreased from 8.0% to 7.9%.
Equity in loss of SMP and CSP. Our share of the losses in CSP was $1.3
million in 1997, which was primarily attributable to pre-operating costs.
Interest income. Interest income declined from $1.0 million in 1996 to
$0.2 million in 1997 primarily due to lower average cash balances in 1997.
Interest expense. Interest expense net of capitalized interest increased
from $1.1 million in 1996 to $12.8 million in 1997 due to higher borrowing
related to the expansion of wafer capacity. Outstanding loans increased from
$95.1 million at December 31, 1996 to $282.2 million at December 31, 1997.
Exchange gain (loss). We recognized an exchange gain of $2.0 million in
1996 in a period of relative stability between the U.S. dollar and the Singapore
dollar. In 1997, we incurred a loss of $31.7 million due to the significant
strengthening of the U.S. dollar against the Singapore dollar and its effects on
our U.S. dollar denominated liabilities.
Income tax benefit (expense). Income tax expense increased from $0.3
million in 1996 to $0.4 million in 1997.
QUARTERLY RESULTS
The following table sets forth certain unaudited consolidated financial
information, including as a percentage of net revenue, for the eight fiscal
quarters ended June 30, 1999. We believe that all necessary adjustments,
consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the selected quarterly information when
read in conjunction with our consolidated financial statements and the related
notes included elsewhere in the prospectus. Our results of operations have
varied and may continue to vary significantly from quarter-to-quarter and are
not necessarily indicative of the results of any future period. In addition, in
light of our recent growth, we believe that period-to-period comparisons should
not be relied upon as an indication of future performance.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
SEP. 30, DEC. 31, MAR. 31, JUN. 30, SEP. 30, DEC. 31, MAR. 31, JUN. 30,
1997 1997 1998 1998 1998 1998 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............................ $ 86.9 $157.8 $145.7 $ 87.1 $ 83.9 $106.0 $130.8 $163.9
Cost of revenue........................ 85.7 116.1 115.5 108.6 103.2 112.4 118.1 129.1
------ ------ ------ ------ ------ ------ ------ ------
Gross profit (loss).................... 1.2 41.7 30.2 (21.5) (19.3) (6.4) 12.7 34.8
Operating expenses:
Research and development............. 8.0 9.3 9.4 11.3 13.3 9.5 12.1 10.9
Fab start-up costs................... 3.0 (1.4) 0.9 0.6 0.0 0.0 -- 0.0
Sales and marketing.................. 4.8 7.6 4.3 9.3 8.8 9.5 10.1 10.5
General and administrative........... 8.7 3.2 6.5 8.6 7.8 14.5 10.3 12.4
Costs incurred on termination of
development program................ -- -- -- -- -- 31.8 6.5 --
Stock-based compensation............. 0.5 0.5 (0.7) (0.7) (0.7) (0.7) 1.6 1.6
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses....... 25.0 19.2 20.4 29.1 29.2 64.6 40.6 35.4
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)................ (23.8) 22.5 9.8 (50.6) (48.5) (71.0) (27.9) (0.6)
Other income (expense):
Equity in loss of SMP and CSP........ (0.4) (0.6) (0.9) (5.9) (7.4) (6.2) (8.5) (9.5)
Other income (loss).................. 1.1 1.3 0.0 0.3 1.9 2.4 0.3 0.3
Interest income...................... 0.0 0.1 0.5 0.3 0.1 0.7 0.7 0.5
Interest expense..................... (3.3) (6.0) (5.7) (4.4) (5.3) (4.7) (4.6) (4.5)
Exchange gain (loss)................. (12.8) (15.9) (1.3) (1.8) 6.6 1.8 5.5 (0.5)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes...... (39.2) 1.4 2.4 (62.1) (52.6) (77.0) (34.5) (14.3)
Income tax benefit (expense)........... 0.0 (0.1) (0.3) (0.3) (0.1) (0.2) (0.4) 0.5
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)...................... $(39.2) $ 1.3 $ 2.1 $(62.4) $(52.7) $(77.2) $(34.9) $(13.8)
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET REVENUES
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue........................ 98.5 73.6 79.3 124.7 123.0 106.0 90.3 78.8
------ ------ ------ ------ ------ ------ ------ ------
Gross profit (loss).................... 1.5 26.4 20.7 (24.7) (23.0) (6.0) 9.7 21.2
Operating expenses:
Research and development............. 9.2 5.9 6.4 12.9 15.8 9.0 9.2 6.6
Fab start-up costs................... 3.4 (0.9) 0.6 0.6 0.0 0.0 0.0 0.0
Sales and marketing.................. 5.6 4.8 3.0 10.6 10.5 8.9 7.7 6.4
General and administrative........... 10.0 2.0 4.4 9.9 9.3 13.7 7.9 7.6
Costs incurred on termination of
development program................ -- -- -- -- -- 30.0 5.0 --
Stock-based compensation............. 0.6 0.3 (0.5) (0.8) (0.9) (0.7) 1.3 1.0
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses....... 28.8 12.1 13.9 33.2 34.7 60.9 31.1 21.6
------ ------ ------ ------ ------ ------ ------ ------
Operating income (loss)................ (27.3) 14.3 6.8 (57.9) (57.7) (66.9) (21.4) (0.4)
Other income (expense):
Equity in loss of SMP and CSP........ (0.4) (0.4) (0.6) (6.8) (8.8) (5.8) (6.5) (5.8)
Other income (loss).................. 1.3 0.8 0.0 0.4 2.3 2.3 0.2 0.2
Interest income...................... 0.0 0.1 0.3 0.4 0.2 0.7 0.5 0.3
Interest expense..................... (3.8) (3.8) (3.9) (5.0) (6.3) (4.5) (3.5) (2.7)
Exchange gain (loss)................. (14.7) (10.1) (0.9) (2.1) 7.9 1.7 4.2 (0.3)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes...... (44.9) 0.9 1.7 (71.0) (62.4) (72.5) (26.5) (8.7)
Income tax benefit (expense)........... 0.0 (0.1) (0.2) (0.3) (0.1) (0.2) (0.3) 0.3
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)...................... (44.9)% 0.8% 1.5% (71.3)% (62.5)% (72.7)% (26.8)% (8.4)%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
The worldwide semiconductor industry suffered from reduced demand in the
second and third quarters of 1998, due in part to excess inventories. As a
result, we shipped fewer wafers during these periods, at lower average selling
prices. Industry demand began to increase in the fourth quarter of 1998 and has
continued to increase in each of the quarters of 1999. Our wafer shipments
increased significantly during each of these periods. These increases have
resulted in higher net revenues, despite decreases in average selling price per
wafer.
Gross margins improved in each of the quarters beginning in the third
quarter of 1998, primarily due to higher capacity utilization.
Research and development costs vary from quarter-to-quarter as the level of
our research and development activity varies based on, among other things, the
commencement and termination of specific programs.
General and administrative expenses increased in the second through fourth
quarters of 1998 as we increased infrastructure and management resources to
support future growth.
In 1998, we recorded a charge of $31.8 million relating to the termination
of a development program. In the first six months of 1999, we recorded a charge
of $6.5 million in connection with the termination of a development program.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our cash requirements primarily through capital infusions
from, and loans guaranteed by, ST. To date, we have raised approximately $722
million from ST and $182 million through equity financing from equity investor
customers, strategic partners and stock purchases by employees.
At June 30, 1999, our principal sources of liquidity included $47.5 million
in cash and cash equivalents and $119.0 million of unutilized banking and credit
facilities consisting of short-term advances and bank guarantees.
Net cash provided by operating activities totaled $156.9 million in 1998
and $95.8 million in the six months ended June 30, 1999. The $156.9 million of
cash generated in 1998 was attributable to a decrease in accounts receivable and
inventories and an increase in accrued operating expenses, as well as cash
generated by other operating activities. The $95.8 million of cash generated in
the first six months of 1999 is attributable to a decrease in inventories and an
increase in accrued operating expenses, as well as other
40
<PAGE> 43
cash generated by operating activities, offset by an increase in accounts
receivable and decreases in other current liabilities and amounts due to ST and
its affiliates.
Net cash used in investing activities totaled $358.6 million in 1998 and
$114.7 million in the six months ended June 30, 1999. Through June 30, 1999, our
investing activities have consisted primarily of capital expenditures totaling
$279.4 million in 1998 and $89.8 million in the six months ended June 30, 1999.
Capital expenditures have been principally comprised of the purchase of
semiconductor equipment for the equipping of fabs. We have also had significant
cash outflows relating to our investment in SMP and CSP.
Net cash provided by financing activities totaled $284.9 million in 1998,
net cash used was $33.5 million in the six months ended June 30, 1999. Cash
generated from financing activities in 1998 was principally generated from the
issuance of ordinary shares totaling $492.9 million, offset by the repayment of
loans and reduction of customer deposits. In the six months ended June 30, 1999,
cash outflow from financing activities was principally due to the return of
customer deposits.
We have an oral multi-currency $100 million short-term credit facility with
ST. Interest on the facility accrues at the monthly average interest rate of
three specific banks as indicated by ST. The current monthly average interest
rate for Singapore dollar borrowings under the facility is 2.43%. Borrowings are
unsecured. As of June 30, 1999, there were $1.9 million of unsecured borrowings
outstanding under this facility.
As of June 30, 1999, we had three loans for capital expenditures and
equipment with outstanding principal amounts of $40.6 million, $176.0 million
and $176.0 million. Each of the loans is denominated in Singapore dollars and we
fully hedge both interest and principal payments against fluctuations in foreign
exchange rates. The loans bear interest at rates between 4.0 and 4.25%. The
three loan agreements are unsecured and guaranteed by ST.
- The first loan matures on September 1, 2003. Interest is payable
semiannually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1997.
- The second loan matures on September 1, 2005. Interest is payable
semiannually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1999.
- The third loan matures on September 1, 2002. Interest is payable
semi-annually and principal will be amortized in equal semi-annual
installments commencing on September 1, 1999.
As of June 30, 1999, we had two bank loans with outstanding amounts of
S$50.0 million (U.S.$29.3 million) each. The loans are due February 13, 2002 and
June 17, 2002, respectively. The loans carry interest rates of 2.0% above the
bank's first tier savings rate and 1.0% above the arithmetic mean of SIBOR for
deposits quoted by specified banks to the lender, respectively. Interest is
payable semi-annually in Singapore dollars for both loans. The loans are
unsecured. During 1998, we entered into foreign currency forward contracts to
hedge the principal and interest cash flows related to all of our Singapore
dollar borrowings.
Our affiliate CSP has a term loan facility of $143.2 million with several
banks and financial institutions for capital expenditures and equipment. At June
30, 1999, $76.0 million had been drawn on this facility. The loan matures June
30, 2002 and carries an interest rate of 0.5625% above the arithmetic mean of
SIBOR rates for U.S. dollars deposits quoted by specified banks to the lender.
Interest is payable semi-annually in U.S. dollars and principal will be
amortized in four equal semi-annual installments commencing December 31, 2000.
Borrowings under this facility are unsecured.
We have been awarded cumulative grants from various agencies of the
Government of Singapore totaling $56.4 million at June 30, 1999. The grants
support research and development activities and training activities and are paid
to reimburse us for specified research and development expenses, training costs
and achievement of certain milestones. At June 30, 1999, $16.1 million had been
disbursed under these grants. The grants are disbursed based on the amount of
expenditures incurred. There are no conditions attached to the grants other than
completion of the project to which the grant relates and the certification of
the costs incurred.
41
<PAGE> 44
We anticipate use of proceeds from this offering primarily to fund equity
contributions to our joint ventures, capital expenditures in connection with the
expansion of our manufacturing facilities, for working capital and general
corporate purposes.
We expect our aggregate capital expenditures, including CSP and investments
in SMP, to be approximately $530 million in the second half of 1999 and
approximately $770 million in 2000 (CSP accounted for on a consolidated basis).
We expect that CSP will fund a portion of these expenditures through the
incurrence of at least $450 million of debt during the first half of 2000. We
believe that the net proceeds of the global offering, together with cash on
hand, cash equivalents and credit facilities with our equipment vendors will be
sufficient to meet our working capital needs for at least the next 12 months.
Thereafter, we may require additional funds to support our working capital
requirements or for other purposes and may seek to raise additional funds
through public or private equity financing or from other sources. There can be
no assurance that additional financing will be available at all or, if
available, that such financing will be obtainable on terms favorable to us or
that any additional financing will not be dilutive.
YEAR 2000 READINESS
IMPACT OF THE YEAR 2000 COMPUTER PROBLEM
The Year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
STATE OF READINESS
As of August 1999, more than 99% of our fab equipment and internal systems
had been tested and upgraded and found to be Year 2000 ready.
We have received assurances from our third-party vendors that all material
business and manufacturing systems supplied by them and used by us are Year 2000
ready. We are in the final stages of our testing and expect to complete it prior
to closing the global offering. We do not believe that we have any significant
systems that contain embedded chips that are not Year 2000 ready. Our internal
operations and business are also dependent upon the computer-controlled systems
of third parties such as our equipment manufacturers, suppliers, customers and
other service providers. If our manufacturers, suppliers, vendors, partners,
customers and service providers fail to correct their Year 2000 problems, these
failures could result in an interruption in, or a failure of, our normal
business activities or operations. If a Year 2000 problem occurs, it may be
difficult to determine which party's products have caused the problem. These
failures could interrupt our operations and damage our relationships with our
customers. Due to the general uncertainty regarding the readiness of third-party
manufacturers, suppliers and vendors, we are unable to determine at this time
whether Year 2000 failures could harm our business and our financial results.
EXPENSES
Based on our assessment to date, we anticipate that expenses associated
with testing and remediating our internal systems will be approximately $3.0
million.
RISKS
Failures of our internal systems to be Year 2000 ready could temporarily
prevent us from processing orders, issuing invoices and developing products and
could require us to devote significant resources to correcting these problems.
Due to the general uncertainty regarding the Year 2000 readiness of third-party
42
<PAGE> 45
suppliers and vendors, we are unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on our business,
results of operations or financial condition.
Contingency plan. We have identified several potential problems relating
to the millennium cross-over. We believe the worst case scenario would be an
external related power surge or dip, or a power trip which could cause our
equipment to malfunction. An equipment malfunction could cause the
semiconductors we are processing at the time of the malfunction to be
misprocessed. In addition, certain machines may fail despite having been
previously tested to be Year 2000 ready. To mitigate these problems, we plan to
shut down all of our information technology applications and databases and stop
all of our production equipment from 10:00 p.m. December 31, 1999 until 12:30
a.m. January 1, 2000. Over the last few days of 1999, we will perform thorough
backups of all of our applications and databases. We will make hard copies of
certain critical finance and manufacturing reports. We have established a team
of management, critical fab operations staff, information technology staff and
vendors that will be in our factories during the millennium cross-over to handle
any problems that may arise.
All of our fab operations and support organizations are developing
contingency plans to address the Year 2000 problem. Each fab will have an
operations command center during the millennium cross-over that will monitor and
track any Year 2000 related issues. There will be a central Year 2000 command
center that will consolidate all of our Year 2000 issues. All of these
contingency plans are being compiled and reviewed by management.
All of our raw material suppliers have agreed to increase the amount of
buffer stock kept at their warehouses from 1.5 months to 2 months supply. This
will help mitigate any potential Year 2000 problems at the supplier level.
SPECIAL TAX STATUS
We have been granted pioneer status under the Economic Expansion Incentives
(Relief from Income Tax) Act (Chapter 86) of Singapore for:
- the manufacture of large scale integrated circuits at Fab 1 for a
ten-year period beginning January 1, 1991;
- the manufacture of integrated circuits using submicron (smaller than one
micron) technology at Fab 2 for a ten-year period beginning July 1, 1996;
and
- the manufacture of integrated circuits using submicron technology at Fab
3 for a ten-year period beginning January 1, 1998.
We have also been granted post-pioneer status under the Economic Expansion
Incentives (Relief from Income Tax) Act for the manufacture of integrated
circuits using submicron technology at Fab 2 for a five-year period beginning
July 1, 2006 and development and expansion company status for the manufacture of
integrated circuits using submicron technology at Fab 3 for a five-year period
beginning January 1, 2008.
During the period for which our pioneer status is effective, subject to our
compliance with certain conditions, income from our pioneer trade (that is, sale
of integrated circuits) is exempt from Singapore income tax. During the periods
for which our post-pioneer status and development and expansion company status
are effective, subject to our compliance with certain conditions, income from
our post-pioneer trade and development and expansion is taxed at a concessionary
rate of 10%. The income tax exempt profits arising from the pioneer trade may be
distributed as tax-exempt dividends, and holders of ordinary shares are not
subject to Singapore income tax on such dividends. Please see
"Taxation -- Singapore Taxation -- Dividend Distribution" for information
regarding the taxation of dividends. Losses accumulated before the pioneer
status period cannot be carried forward. Losses accumulated in the pioneer
status period may be carried forward and may be offset against profits from the
same pioneer trade arising after the expiration of the pioneer status period,
subject to our compliance with certain conditions. Profits arising during
pioneer status offset any accumulated pioneer loss carryforward balance. Without
this exemption from income tax
43
<PAGE> 46
or the concessionary tax rate of 10%, we would be subject to income tax at the
applicable corporate income tax rate (which is currently 26%). Interest income
is not exempt from taxation during the pioneer status period or entitled to the
concessionary tax rate during the post-pioneer status period or the development
and expansion company status period.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133, as recently amended, is effective
for fiscal years beginning after June 15, 2000. This statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. We believe the adoption of SFAS 133 will not have a material effect
on our financial position or results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to financial market risks derives primarily from the changes
in interest rates and foreign exchange rates. To mitigate these risks, the
Company utilizes derivative financial instruments, the application of which is
primarily for hedging purposes and not for speculative purposes.
INTEREST RATE RISK
Our cash equivalents and short-term investments are exposed to financial
market risk due to fluctuation in interest rates, which may affect our interest
income and the fair market value of our investments. We manage the exposure to
financial market risk by performing ongoing evaluations of our investment
portfolio and investing in short-term investment-grade corporate securities.
These securities are highly liquid and generally mature within 12 months from
our purchase date. Due to the short maturities of our investments, the carrying
value approximates the fair value. In addition, we do not use our investments
for trading or other speculative purposes.
We are exposed to interest rate risk on our existing floating rate debt and
as additional debt financing is periodically needed due to the capital
expenditures associated with our new fabs. The interest rate that we will be
able to obtain on debt financing will depend on market conditions at that time,
and may differ from the rates we have secured on our current debt.
44
<PAGE> 47
As of June 30, 1999, our debt obligations are as follows:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
--------------------------------------------------------------------------------------------------
EXPECTED MATURITY DATE
(IN THOUSANDS) WEIGHTED
----------------------------------------------------------------- FAIR INTEREST
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE RATE
-------- -------- -------- -------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHORT-TERM DEBT
Singapore dollar at
floating rate...... $ 3,087 $ 3,087 $ 3,087 3.83%
LONG-TERM DEBT
Singapore dollar at
fixed rate(1)...... 43,195 $ 86,391 $ 86,391 $ 86,391 $ 36,104 $ 54,154 392,626 385,740 4.11
Singapore dollar at
floating rate(1)... 58,668 58,668 58,668 3.19
-------- -------- -------- -------- -------- -------- -------- --------
Total Debt
Maturing.... $ 46,282 $ 86,391 $ 86,391 $145,059 $ 36,104 $ 54,154 $454,381 $447,495
======== ======== ======== ======== ======== ======== ======== ========
ACCOUNTS PAYABLE
U.S. dollar.......... $ 25,311
Singapore
dollar(1).......... 2,956
Japanese yen(1)...... 9,126
Others............... 721
--------
Total.......... $ 38,114
========
</TABLE>
- ---------------
(1) We have entered into forward foreign currency contracts related to these
amounts to exchange the related cash flows to U.S. dollars. Please see
"-- Foreign Currency Risk" below.
86.4% of our outstanding debt obligations bear fixed interest rates. We
have no cash flow or earnings exposure due to market interest rate changes for
our fixed debt obligations. 13.6% of our outstanding debt obligations bear
floating interest rates. We have cash flow and earnings exposure due to market
interest rate changes for our floating debt obligations. A half percentage point
change in interest rates would affect our interest payments by 3% annually.
FOREIGN CURRENCY RISK
Our foreign currency exposures give rise to market risk associated with
exchange rate movements against the Japanese yen, the Singapore dollar and the
U.S. dollar, our functional currency. Substantially all of our revenue was
denominated in U.S. dollars during the six months ended June 30, 1999 and as a
result, we have relatively little foreign currency exchange risk with respect to
any of our revenue. During the six months ended June 30, 1999, approximately 24%
of our cost of revenue was denominated in Singapore dollars. In addition,
approximately 40% of our capital expenditures were denominated in U.S. dollars,
approximately 32% were denominated in Japanese yen and approximately 28% were
denominated in Singapore dollars. In addition, a substantial part of our debt is
denominated in foreign currency, primarily Singapore dollars.
To protect against reductions in value and the volatility of future cash
flows caused by changes in foreign exchange rates, we utilize currency forward
contracts to minimize the impact of foreign currency fluctuations on our results
of operations. We utilize, from time to time, currency forward contracts to
hedge specific currency risks related to equipment purchase commitments,
primarily in Japanese yen. In addition, we minimize our currency risk by
purchasing certain raw materials and equipment in U.S. dollars and borrowing in
U.S. dollars. Prior to July 1, 1998, our exposure to foreign currency risk was
viewed as exposure to non-Singapore dollar assets and liabilities. On July 1,
1998, we changed our functional currency to the U.S. dollar as described in note
2(e) to our consolidated financial statements. In
45
<PAGE> 48
connection with the change, we entered into foreign currency forward contracts
to mitigate the effects to us of exchange rate fluctuations between the U.S.
dollar and the Singapore dollar related to our non-U.S. dollar denominated
borrowings. The table below provides information about our derivative financial
instruments and presents the information in U.S. dollar equivalents.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
------------------------------------------------------------------------------------
EXPECTED MATURITY DATES (IN THOUSANDS)
------------------------------------------------------------------------------------
FAIR
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
------- -------- -------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FORWARD EXCHANGE AGREEMENTS
(Receive Y/Pay US$)
Contract Amount............... $ 4,362 $ 5,728 $ 8,106 $ 18,196 $(4,226)
Average Contractual Exchange
Rate........................ 117.05 78.35 76.22
(Receive S$/Pay US$) Contract
Amount...................... 51,788 101,568 97,247 $148,370 $38,245 $55,701 492,918 39,529
Average Contractual Exchange
Rate........................ 1.7290 1.7404 1.7541 1.7606 1.7538 1.7401
------- -------- -------- -------- ------- ------- -------- -------
Total Contract Amount..... $56,150 $107,296 $105,353 $148,370 $38,245 $55,701 $511,114 $35,303
======= ======== ======== ======== ======= ======= ======== =======
</TABLE>
As of June 30, 1999, the extent of our forward foreign currency contract
transactions were as follows:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-----------------------------------------------------
CARRYING
CARRYING AMOUNT AMOUNT HEDGED PERCENTAGE HEDGED
--------------- ------------- -----------------
<S> <C> <C> <C>
ACCOUNTS PAYABLE
Japanese yen............................... $ 9,141 $ 4,217 46.1%
Singapore dollars.......................... 2,956 -- --
Others..................................... 721 -- --
Capital lease
Japanese yen............................... 13,979 13,979 100.0
Foreign currency debt
Singapore dollar........................... 454,381 451,294 99.3
Future interest payable on debt
Singapore dollar........................... 41,623 41,623 100.0
--------------- ------------- -----------------
Total.............................. $522,801 $511,113 97.7%
=============== ============= =================
</TABLE>
46
<PAGE> 49
BUSINESS
COMPANY
Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and manufacturers of electronic systems. We focus on
providing foundry services to customers that serve high growth, technologically
advanced applications, including communications applications such as cable
modems, data networking and telecommunications equipment. Our top five customers
are Hewlett-Packard, Lucent Technologies, Level One Communications, Broadcom and
Conexant.
We currently own, or have an interest in, five fabs, which are located in
Singapore. We have service operations in 12 cities in nine countries in North
America, Europe and Asia. We were incorporated in Singapore in 1987. We are
89.8% owned by ST and its affiliates (71.9% following the global offering). ST
is one of Singapore's largest industrial conglomerates and is indirectly
wholly-owned by the Government of Singapore. Please see "Relationship with
Singapore Technologies" for additional information regarding ST.
INDUSTRY BACKGROUND
Semiconductors are critical components used in an increasingly wide variety
of applications, such as computer systems, communications equipment and systems,
automobiles, consumer products and industrial automation and control systems. As
performance has increased and size and cost have decreased, the use of
semiconductors in these applications has grown significantly. According to the
Semiconductor Industry Association, or SIA, increased sales of communication
semiconductors used in applications such as computer modems, networks, cellular
phones and Internet and electronic commerce hardware and appliances will drive
growth in the semiconductor industry during the next several years. The SIA
estimates that worldwide semiconductor device market revenue will grow from
$125.6 billion in 1998 to $215.7 billion in 2002.
Historically, the semiconductor industry was composed primarily of
companies which designed and manufactured semiconductors in their own
fabrication facilities. These companies are known as integrated device
manufacturers, or IDMs. In the mid-1980s, fabless semiconductor companies, which
focused on design and marketing and utilized external manufacturing capacity,
began to emerge. Fabless companies initially relied on the excess capacity
provided by IDMs. As the semiconductor industry continued to grow, fabless
companies and IDMs began to seek reliable and dedicated sources of wafer
fabrication services. This need is being met by the development of independent
companies, known as foundries, that focus primarily on providing wafer
fabrication services to semiconductor suppliers.
THE GROWTH OF THE SEMICONDUCTOR FOUNDRY INDUSTRY
Semiconductor suppliers presently face increasing demands to offer new
products that provide higher performance and greater functionality at lower
prices. To compete successfully, they must also minimize the time it takes to
bring a product to market. High performance semiconductors, which contain
millions of transistors, are extraordinarily challenging to design and even more
challenging to manufacture. Additionally, these high performance semiconductors
can only be produced in fabs that employ the most advanced semiconductor process
technologies.
According to a Dataquest report in May 1999, the cost of a state-of-the-art
fab has grown from approximately $200 million in 1983 to $1.8 billion in 1999.
Today, only large and well-capitalized companies can support the substantial
technology and investment requirements of building state-of-the-art fabs. In
addition, for companies to justify the enormous cost of a new fab, a high level
of capacity utilization is essential to ensure that fixed costs are fully
absorbed. These trends have led to the rapid growth in demand for advanced
semiconductor manufacturing services provided by semiconductor foundries.
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<PAGE> 50
Foundry services are now utilized by nearly every major semiconductor
company in the world. Dataquest estimates in a July 1999 report that in 1998
IDMs comprised 93% of the worldwide semiconductor market. Historically, IDMs
have used foundry services for their incremental manufacturing needs. Given the
mounting pressure on them to improve profit margins and accelerate
time-to-market, we expect IDMs to utilize foundries more extensively in the
future for their core manufacturing needs. For example, IDMs such as Motorola
and Toshiba have recently announced their intentions to outsource an increasing
proportion of their manufacturing needs. In addition, Dataquest estimates in an
August 1999 report that demand from fabless semiconductor companies for foundry
services will grow from $3.6 billion in 1998 to $8.5 billion in 2003.
Manufacturers of electronic systems, or systems companies, who design
semiconductors for use in their own products are also beginning to utilize
foundry services. According to an August 1999 Dataquest report, the growth of
the foundry market is expected to outpace growth of the semiconductor industry
overall, with foundry services expected to grow from $5.3 billion in 1998 to
$13.6 billion in 2003, representing a compound annual growth rate of over 20%.
THE REQUIREMENTS OF A FULL SERVICE FOUNDRY
As demand for foundry services has grown, many semiconductor suppliers are
seeking highly committed partners that meet their manufacturing technology
requirements. These partners must be able to provide the following:
Systems Integration Expertise. In recent years, business and consumer
demand for high performance data transmission, processing and storage has
increased dramatically. Fueling this demand has been growth in the data
communications, telecommunications, wireless and consumer markets. This has
resulted in greater demand for faster, smaller semiconductors that integrate an
increasing number of functions onto a single device at a lower cost. This need
for increased system-level integration requires semiconductor foundries to offer
specialized expertise in a number of areas. These include the integration of
logic, which processes data, and memory, which stores data, into a single device
and mixed-signal technologies which translate data between analog and digital
form.
Leading Edge Process Technologies. Semiconductor foundries must also
provide a range of manufacturing process technologies from standard CMOS to
technologies that enable extremely fast transmission and processing speeds, such
as specialized CMOS for wireless applications and the use of copper interconnect
for very high speed devices. Foundries must also continue to offer smaller
process geometries which allows for the integration of more functions in the
same size device or more devices per wafer.
Long-Term Relationships. As foundries become more integral to the overall
manufacturing strategies of their customers, it has become increasingly
important for foundries to form long-term relationships with them. Semiconductor
suppliers and systems companies need assurance that their foundry suppliers will
continue to provide sufficient advanced manufacturing capacity to keep pace with
their customers' growth, and develop and make available advanced process
technologies capable of producing next generation products.
Security. When using foundry services, semiconductor suppliers, systems
companies and their partners entrust highly valuable and proprietary
intellectual property to the foundries manufacturing their devices. These
customers demand foundry partners who understand the importance of protecting
intellectual property.
THE CHARTERED SOLUTION
Chartered is one of the world's leading independent semiconductor
foundries. We provide comprehensive wafer fabrication services and technologies
to semiconductor suppliers and systems companies and enable seamless integration
of the semiconductor design and manufacturing processes. By doing so, we enable
our customers to bring high performance, highly-integrated products to market
rapidly and cost effectively.
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<PAGE> 51
We enable system-level integration for our customers, many of which serve
high growth markets. For example, to meet the needs of customers serving the
communications markets, we offer a broad array of leading digital and analog
technologies, including standard CMOS, mixed-signal and embedded memory
processes. We are also developing additional leading high performance
technologies such as advanced embedded memory technologies and specialized CMOS
for wireless applications. In order to augment our internal development efforts,
we have entered into strategic alliances and technology alliances with leading
semiconductor companies such as Lucent and Motorola. SMP, our strategic alliance
with a subsidiary of Lucent, operates Fab 5. Our technology alliance with Lucent
includes an agreement to jointly develop 0.18u process geometries for high
density, low power and cost-effective applications. Our technology alliance with
Motorola includes the licensing and process transfer of Motorola's leading edge
copper interconnect HiPerMOS technology for 0.15u, 0.13u and 0.10u process
geometries.
We partner with leading providers of EDA, software tools, design
intellectual property, or IP, and design services to enable our customers to
integrate system-level functionality in their products with accelerated
time-to-market and reduced design and manufacturing risk. Our partners' EDA
tools, design IP and processes are proven and have been validated for
Chartered's manufacturing processes. Our EDA development and IP partners include
Artisan Components, Avant!, Cadence, MIPS and Synopsys. We also partner with
assembly and test providers, principally STATS, to offer our customers turnkey
services, which incorporate wafer fabrication, assembly and test. Our turnkey
service enables our customers to interface solely with Chartered for the entire
manufacturing process, from wafer manufacturing to drop shipment of completed
devices directly to their customers.
We believe that Chartered is a trusted, customer-oriented service provider.
We have service operations in 12 cities in nine countries in North America,
Europe and Asia. In addition, our proprietary Customer On-Line Access System
provides our customers with easy, secure access through the Internet to
information pertaining to the services we render for them, including the status
of their wafers in our manufacturing process. All of our manufacturing
operations are located in Singapore, a politically and economically stable
nation with laws that protect our customers' proprietary technology.
BUSINESS STRATEGY
Our objective is to be the leading worldwide, full service provider of
wafer foundry services to semiconductor suppliers and systems companies focused
on high growth applications that require a high degree of system-level
integration. Key elements of our strategy include:
FOCUS ON SEMICONDUCTOR DEVICES FOR HIGH GROWTH APPLICATIONS SUCH AS
COMMUNICATIONS
We are focused on providing foundry services to customers that serve high
growth applications and require a high degree of functional integration. These
customers compete based on differentiated products, rapid time-to-market and
device performance, as opposed to suppliers of less complex commodity
semiconductor products, which compete primarily on price and manufacturing
capacity. Many of our customers, including Broadcom, Conexant, Hewlett-Packard,
Level One, Lucent, Motorola and PMC-Sierra, use our services to manufacture
their communications products for applications such as cable modems, wireless,
Gigabit Ethernet, ATM and ADSL.
PROVIDE A COMPLETE RANGE OF SERVICES
We are continuing to expand our range of services so that we can
effectively meet our customers' evolving needs. Our goal is to seamlessly
integrate the design and manufacturing process with a wide array of services,
tools and technologies. The services we currently make available to our
customers, in conjunction with our partners, include an increasing number of EDA
design tools, design IP and process technologies that have been validated for
our manufacturing process. We also offer our customers full turnkey services
which include wafer fabrication, assembly and test.
49
<PAGE> 52
INCREASE FOUNDRY CAPACITY
We intend to expand our production capacity to meet the anticipated needs
of our customers. We plan to increase our total production capacity from
approximately 60,000 eight-inch equivalent wafers per month in June 1999 to an
estimated 134,000 eight-inch equivalent wafers per month (which figure includes
100% of the production capacity of our jointly-owned fabs) by December 2002. We
believe that increasing our foundry capacity is critical to ensuring that we can
satisfy our customers' volume requirements as they continue to grow.
OFFER LEADING PROCESS TECHNOLOGY
We intend to continually expand our portfolio of process technologies
through internal development, technology alliances, strategic alliances and
licensing agreements. We believe that offering leading process technologies is
critical to attracting and retaining customers that design highly sophisticated
semiconductors. We are currently developing new digital and mixed-signal
technologies, such as specialized CMOS for wireless communications applications
and additional embedded memory technologies. Our research and development team
is comprised of 197 professionals, 55 of whom have Ph.D.s. We are jointly
developing 0.18u copper and aluminum processes with Lucent for high density, low
power and cost-effective applications. Our alliance with Motorola includes the
technology transfer and licensing of Motorola's leading edge copper interconnect
HiPerMOS technology for 0.15u 0.13u and 0.10u processes.
ENHANCE AND EXPAND ALLIANCES
We intend to leverage and expand our existing alliances and to establish
new alliances with leading companies that offer complementary technologies,
products and services. We believe that our alliances with semiconductor
technology leaders and providers of design tools, intellectual property and
assembly and test services have given us access to select leading edge system
technologies. These alliances have also enhanced our development efforts and
increased our fab utilization rates. We also believe that by establishing these
alliances and working closely with IDMs such as Lucent and Motorola, who are
also customers, we are better positioned to win future business with them.
MANUFACTURING FACILITIES
We currently own or have an interest in five fabs which are located in
Singapore. Fabs 1, 2 and 3 are wholly-owned and operated by our company. Fab 5
is operated by SMP which we jointly own with a
50
<PAGE> 53
subsidiary of Lucent. Fab 6, which we jointly own with EDB Investments and a
subsidiary of Hewlett-Packard, is currently being equipped and will be operated
by CSP. We do not have a Fab 4.
<TABLE>
<CAPTION>
FAB 1 FAB 2 FAB 3 FAB 5 FAB 6
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
PRODUCTION COMMENCED......... 1989 1995 1997 1999 Expected 2000
CURRENT OUTPUT(1)............ 23,000 wafers(2) 35,000 wafers per 8,500 wafers per 2,000 wafers per --
per month month month month
ESTIMATED FULL CAPACITY(3)... 23,000 wafers(2) 40,000 wafers per 20,000 wafers per 26,000 wafers per 35,000 wafers per
per month; month; expected month; expected month; expected month; expected
achieved 1995 1999 2000 2000 2002
WAFER SIZE................... Six-inch (150mm) Eight-inch Eight-inch Eight-inch Eight-inch
(200mm) (200mm) (200mm) (200mm)
PROCESS TECHNOLOGIES......... 1.2 to 0.5u 0.6 to 0.3u(4) 0.35 to 0.22u(4) 0.25 to 0.15u(4) 0.25 to 0.13u(4)
MANUFACTURING TECHNOLOGIES... Digital; Analog; Digital; Analog; Digital; SRAM; 0.25u Digital; High performance,
ROM; EEPROM(5) SRAM; Flash ROM(5) BiCMOS; Analog; high-density
Memory(5) eSRAM(5) CMOS; high
density SRAM(5)
CLEAN ROOM................... 35,000 sq. ft. 70,000 sq. ft. 46,000 sq. ft. 46,000 sq. ft. 85,000 sq. ft.
Class 10(6) Class-1 Class-1 Class-1 Class-1
SMIF(6) SMIF(6) SMIF(6) SMIF(6)
</TABLE>
- ---------------
(1) Current output is as of June 30, 1999.
(2) Equivalent to 13,000 eight-inch wafers per month.
(3) Estimated capacity is based on our current and anticipated process
technology mix, which may vary and includes, with respect to Fab 5 and Fab
6, capacity to which our strategic partners are entitled. Please see
"-- Strategic Alliances" for additional information regarding our alliances
with these partners.
(4) These numbers are preliminary and their successful implementation depend on
various factors, including our ability to achieve advances in process
technology or to obtain access to advanced process technology developed by
others. These fabs can be retrofitted to achieve smaller geometries than
those shown above.
(5) ROMs are read-only memory devices. EEPROMs are electronically erasable
programmable read-only devices. SRAMs are static random access memory
devices. eSRAMs are embedded static random access memory devices.
(6) Class 10 means a standard of air purity under which the amount of dust is
limited to fewer than ten particles of dust per cubic foot of air. Class 1
means a standard of air purity under which the amount of dust is limited to
fewer than one particle of dust per cubic foot of air. SMIF means standard
mechanical interface.
All of our fabs in production currently operate 24 hours per day, seven
days per week. Maintenance at each of the fabs is performed concurrently with
production.
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<PAGE> 54
The following table sets forth information regarding the total wafer output
by each of our fabs during the past five years:
<TABLE>
<CAPTION>
TOTAL OUTPUT(1)
(IN THOUSANDS)
---------------------------------------
FAB 1995 1996 1997 1998 1999(2)
--- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Fab 1.......................................... 159 140 103 142 100
Fab 2(3)....................................... 27 114 220 265 195
Fab 3(3)....................................... -- -- 21 33 33
Fab 5(3)....................................... -- -- -- -- 2
</TABLE>
- ---------------
(1) Total output of revenue generating eight-inch equivalents for the fiscal
year end.
(2) Output figures for 1999 are as of June 30, 1999.
(3) Fab 2 commenced production in 1995, Fab 3 commenced production in 1997 and
Fab 5 commenced production in 1999.
QUALITY ASSURANCE PROGRAMS
We have implemented systems to ensure high quality service to customers and
manufacturing reliability at our facilities in Singapore. Our in-house
laboratory is equipped with advanced analytical tools and provides the necessary
equipment and resources for our research and development and engineering staff
to continuously enhance product quality and our manufacturing processes. Our
quality assurance staff is comprised of engineers, technicians and other
employees who monitor and control our manufacturing processes.
Our production facilities in Singapore have been certified by the
International Standards Organization, or ISO, to meet ISO 9002 standards. ISO
9002 standards set forth what is required to ensure the production of quality
products and services. There are a total of 20 requirements, including
management responsibility, quality systems, and process control. The ISO
certification process involves periodically subjecting production processes and
quality management systems to stringent third-party review and verification. Our
customers often look to an ISO certification as a threshold indication of our
quality control standards.
STRATEGIC ALLIANCES
CHARTERED SILICON PARTNERS
In March 1997, we entered into the CSP strategic alliance with
Hewlett-Packard Europe B.V., a subsidiary of Hewlett-Packard, or HP Europe, and
EDB Investments Pte Ltd relating to the joint ownership of Fab 6. We, HP Europe
and EDB Investments have a 51%, 30% and 19% equity interest in CSP,
respectively. We are obligated to make a total of S$367.2 million ($215.4
million) in equity contributions to CSP through the end of 2000. We and HP
Europe also each have an option to purchase additional shares in CSP from EDB
Investments at a formula-driven price. Pursuant to an agreement with CSP,
Hewlett-Packard is required to purchase a minimum number of wafers per year and
is entitled to purchase a maximum number of wafers per year from CSP. If HP
Europe's ownership interest in CSP changes, the number of wafers Hewlett-Packard
is required to purchase, as well as the number of wafers it is entitled to
purchase, changes accordingly.
CSP's Board of Directors is comprised of seven directors. As long as we own
at least 50% of CSP, we can elect four of the directors. HP Europe can elect two
directors as long as it owns more than 15% of CSP and EDB Investments can elect
one director as long as it holds any ownership interest in CSP.
Pursuant to our agreement, the CSP strategic alliance continues
indefinitely until it is terminated by either party upon the transfer by the
party of its entire interest in CSP. Neither we nor HP Europe may transfer our
interests in CSP until 2001. Before any transfer can occur, the non-transferring
party may exercise a right of first refusal with respect to the transferred
interests. Upon a serious, uncured default,
52
<PAGE> 55
the non-defaulting party has the right to purchase all of the defaulting party's
interest for fair value, as defined in the agreement. Upon a change of control
of a party, the other parties have the right to purchase, at fair value, all of
such party's interest.
CSP owns and will operate Fab 6. Pursuant to a service support agreement,
we provide CSP with management and corporate support services including
accounting, financial, sales and marketing. Under this agreement, CSP is
allocated a portion of our costs in providing such services. Although such
agreement may be terminated by either party in certain instances, we expect the
services support agreement to remain in place during the term of this strategic
alliance.
Pursuant to a technology transfer and license agreement, both we and
Hewlett-Packard contribute the process technologies needed by CSP. Such process
technologies are licensed to CSP for its own use and CSP cannot sublicense them
to others. In addition, we and Hewlett-Packard cross-license the rights to use
such technologies to one another. These cross-licenses allow our respective
companies and subsidiaries to use the process technologies and related
intellectual property licensed to CSP in our respective manufacturing facilities
for our general businesses even if such uses are not related to CSP.
U.S. GAAP generally requires consolidation at all majority owned (greater
than 50%) subsidiaries. However, as a result of certain provisions contained in
the strategic alliance agreement, the minority shareholders of CSP are deemed to
have substantive participative rights which would overcome the presumption that
we should consolidate CSP. Therefore, CSP has been historically accounted for
under the equity method in our financial statements. As a result of the
amendment described below, we will treat CSP as a consolidated subsidiary from
October 1, 1999 forward.
Effective October 1, 1999, we, HP Europe and EDB Investments amended our
strategic alliance agreement. The amendment eliminated some of CSP's minority
shareholders' approval rights over CSP's annual business plan. It also increased
the thresholds for asset dispositions, borrowings and capital expenditures that
would require the approval of CSP's minority shareholders. We believe that these
changes eliminate CSP's minority shareholders' substantive participating rights
in CSP.
SILICON MANUFACTURING PARTNERS
In December 1997, we entered into the SMP strategic alliance with Lucent
Technologies Microelectronics Pte Ltd, or Lucent Microelectronics, relating to
the joint ownership of Fab 5. Lucent Microelectronics has a 51% equity interest
in SMP and we have a 49% equity interest. We are obligated to make S$208.3
million ($122.2 million) in equity contributions to SMP through the end of 2000.
SMP's Board of Directors is comprised of five directors, three of which are
elected by Lucent Microelectronics and two of which are elected by us. We also
nominate the chairman of the Board of Directors and the general manager, while
Lucent Microelectronics names the financial controller.
SMP operates Fab 5, which is adjacent to our Fab 3 building. SMP owns the
equipment used in Fab 5 and leases the space in Fab 3 from us. Please see
"Relationship with Singapore Technologies" for a description of this lease.
Pursuant to our agreement, we are each required to purchase a specified
percentage of Fab 5's output. However, if one party does not purchase its share
of wafers, the other party is entitled to utilize that unused capacity. In the
event such other party does not utilize the unused capacity, the party who does
not purchase its entitlement will be required to compensate SMP for any costs it
incurs in connection with such unused capacity.
Pursuant to our agreement, the SMP strategic alliance continues
indefinitely until it is terminated. Neither party may terminate the alliance
until 2006, at which time a party must give two years advance notice in order to
terminate. In addition, the parties may only transfer their interests to their
respective affiliates. Upon our dissolution, winding up or liquidation, Lucent
Microelectronics can purchase all of our interests in SMP for fair value, as
defined in the agreement. Upon our serious, uncured breach, Lucent
Microelectronics has the right to sell all of its interest in SMP to us for the
higher of fair value and the value of its interest based on SMP's net book
value, as defined in the agreement. Upon Lucent Microelectronics' dissolution,
winding up or liquidation, we have the right to purchase all of its interest in
53
<PAGE> 56
SMP for fair value. Upon Lucent Microelectronics' serious, uncured breach, we
have the right to purchase all of its interest in SMP for 90% of fair value.
Upon a change of control of a party, the other party has the right to purchase,
at fair value, all of such party's interest in SMP.
Pursuant to a services support agreement, we provide SMP management and
corporate support services such as accounting, financial and human resources.
Under this agreement, SMP is allocated a portion of our costs in providing such
services. Although such agreement may be terminated by either party in certain
instances, we expect the services agreement to remain in place during the term
of this strategic alliance.
Pursuant to a technology transfer and license agreement, both we and Lucent
Microelectronics contribute the process technologies needed by SMP. Such process
technologies are licensed to SMP for its own use and SMP cannot sublicense them
to others. We and Lucent Microelectronics categorize our licensed technologies
as restricted and unrestricted technologies. We and Lucent cross-license the
unrestricted technologies to one another. These cross-licenses allow our
respective companies and subsidiaries to use certain process technologies and
related intellectual property licensed to SMP in our respective manufacturing
facilities for our general businesses even if such uses are not related to SMP.
We do not cross-license the restricted technologies with one another, which
means that only SMP can use such restricted process technologies and
intellectual property.
WAFER FABRICATION SERVICES
OVERVIEW
Wafer fabrication is an intricate process that requires many distinct
steps. Each step in the manufacturing process must be completed with extreme
accuracy in order for finished semiconductor devices to work as intended. The
processes required to take raw wafers and turn them into finished semiconductor
devices are accomplished through a series of steps that can be summarized as
follows:
Circuit Design. Producing a semiconductor begins with designing the layout
of the semiconductor's components and designating the interconnections between
each component on the semiconductor. The result is a pattern of components and
connections that defines the function of the semiconductor. In highly complex
circuits, there may be more than 35 layers of electronic patterns.
We do not design semiconductors for our customers. If requested, we assist
our customers in the design process by providing them with access to our
partners' EDA tools, design IP and design services which are proven and have
been qualified for our manufacturing processes. Our design engineers assist our
customers during the development process to ensure that their designs can be
successfully manufactured in volume.
Mask Making. The design for each layer of a semiconductor is imprinted on
a photographic negative, called a semiconductor mask. The mask is the blueprint
for each specific layer of the semiconductor. We do not manufacture masks for
our customers.
Wafer Fabrication. Transistors and other circuit elements comprising a
semiconductor are formed by repeating a series of processes in which a
photosensitive material is deposited on the wafer and exposed to light through
the mask. The unwanted material is then etched away, leaving only the desired
circuit pattern on the wafer. This process is repeated for each mask layer. The
final step in the wafer fabrication process is to visually and electronically
inspect each individual semiconductor, known as wafer probe, in order to
identify the operable semiconductors for assembly.
We provide all aspects of the wafer fabrication process except for wafer
probe, which we outsource principally to STATS. All steps in the wafer
manufacturing process are controlled by our computer-integrated manufacturing,
or CIM, system. The CIM system allows us to monitor equipment performance, wafer
processing steps, and the wafers themselves throughout the fabrication process.
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<PAGE> 57
Assembly and Test. After fabrication, the wafers are transferred to
assembly and test facilities. Assembly protects the semiconductor, facilitates
its integration into electronic systems and enables the dissipation of heat.
Following assembly, each semiconductor's functionality, voltage, current and
timing are tested. After testing, the completed semiconductor is either shipped
to the semiconductor supplier or directly to its final destination. We outsource
assembly and test services to independent assembly and test providers, primarily
STATS.
MANUFACTURING PROCESSES
We manufacture semiconductors using CMOS, bipolar and BiCMOS processes.
CMOS is the most widely used process technology because it requires lower power
than other technologies and allows dense placement of components onto a single
semiconductor. The low power consumption and high density characteristics of the
CMOS process allow the continued development of high performance semiconductors
that are smaller and faster. Bipolar technology enables very high speed but is
used only in analog semiconductors. BiCMOS process technology combines bipolar's
attribute of high speed with the high density and low power consumption of CMOS.
We use CMOS or a combination of CMOS and BiCMOS for the fabrication of logic,
mixed-signal and memory semiconductors.
We manufacture a variety of semiconductors for a full range of end market
applications including communications, computing, and consumer electronics.
Examples of the types of semiconductors we manufacture are as follows:
Logic. All digital electronic systems, such as computing devices, are
controlled by logic semiconductors, which process data. Microcontrollers,
microprocessors, digital signal processors, and graphics chipsets are all
logic devices. We manufacture logic semiconductors primarily for the
computing, consumer and communications markets.
Mixed-Signal. Mixed-signal semiconductors combine analog and digital
devices on a single semiconductor to process both analog signals and
digital data. Mixed-signal semiconductors are used in applications
including wireless equipment, fiber optic communications and data
networking. We make mixed-signal semiconductors using both CMOS and BiCMOS
processes.
Memory. Memory devices store data and can be manufactured as
stand-alone devices or embedded in system semiconductors, which combine a
number of functions, such as logic and memory components. We manufacture
stand-alone memory devices including EPROM, EEPROM, ROM, SRAM and Flash
memory and embedded memory including eSRAM, eEEPROM, and eFLASH memories.
Memory is used in a range of products from computers and mobile phones to
"smart" chip cards.
TURNKEY SERVICES
Although we are an independent foundry specializing in wafer fabrication,
we offer our customers the option to purchase from us finished semiconductor
products that have been assembled and tested. We principally subcontract
assembly and testing of the fabricated semiconductors to STATS. Testing includes
wafer probe and final testing of assembled semiconductors. After final testing,
the semiconductors are returned to the customer or drop-shipped according to our
customers' specifications.
CUSTOMERS AND MARKETS
We manufactured semiconductors for over 125 different customers in each of
1998 and the first six months in 1999. Our top five customers accounted for
approximately 43.3% and 44.7% of our revenue in 1998 and the first six months in
1999, respectively. In 1998, no customer individually accounted for more than
10% of our revenue. In the first six months in 1999, Hewlett-Packard and Lucent
each accounted for more than 10% of our revenue.
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<PAGE> 58
The following table sets forth our top five customers for the first six
months of 1999 in order of revenue:
<TABLE>
<CAPTION>
CUSTOMER REPRESENTATIVE PRODUCTS OR APPLICATIONS
-------- ---------------------------------------
<S> <C>
Hewlett-Packard....................................... Computer peripherals and networking
Lucent................................................ Communication ASICs, DSPs, LAN ICs
Level One Communications.............................. Ethernet Transceivers
Broadcom.............................................. Cable modem/set-top box, Ethernet
Conexant.............................................. xDSL and datacom
</TABLE>
We categorize a sale geographically based on the country in which the
customer is headquartered. The following table sets forth the geographical
distribution, by percentage, of our net sales for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------
SIX MONTHS ENDED
1997 1998 JUNE 30, 1999
---- ---- ----------------
<S> <C> <C> <C>
REGION
United States............................................... 52% 63% 78%
Asia/Pacific................................................ 47 35 18
Europe...................................................... 1 2 4
--- --- ---
Total..................................................... 100% 100% 100%
=== === ===
</TABLE>
We expect that the majority of our sales will continue to be made to
companies headquartered in the United States or to overseas affiliates of United
States companies. All of our sales are direct sales to our customers with
delivery in Singapore. We provide customer support in the United States through
a wholly-owned subsidiary located in Milpitas, California which has additional
offices in Irvine, California; Boston, Massachusetts and Austin, Texas. We also
maintain customer support offices in Hsin-Chu, Taiwan; Tokyo, Japan; Paris,
France; London, England; Munich, Germany; Tel Aviv, Israel and Shanghai, China.
Our customers generally do not place their purchase orders far in advance.
As a result, we do not typically operate with any significant backlog.
We currently allocate a portion of our wafer manufacturing capacity to
certain customers under several types of agreements. Some of these customers
have invested equity in us, placed deposits to secure wafer capacity, or prepaid
for our services. We are also obligated to make available capacity to customers
under certain other agreements.
CUSTOMER SERVICE
We focus on providing a high level of customer service in order to attract
customers and maintain their ongoing loyalty. Our culture emphasizes
responsiveness to customer needs, flexibility and delivery accuracy. Our
customer-oriented approach is especially evident in two prime functional areas
of customer interaction, customer design development and manufacturing services.
We emphasize very close interaction with customers throughout the design
development and prototyping process. We provide for an account manager to be
assigned early in the design development process who coordinates an account team
composed of local marketing, EDA, silicon engineering, third-party partner and
customer service/logistical support. The local account team is supported by
additional marketing and customer engineering staff in Singapore.
After the design moves into manufacturing production, ongoing customer
support is provided through all phases of the manufacturing process. The local
account manager teams with a dedicated customer service representative, along
with marketing and customer engineering support teams at the factory.
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In 1996, we introduced our Customer On-Line Access System, through which
our customers are provided secure access via the Internet to critical
manufacturing data as their products move through the fab. We are currently
developing our eFab(TM) system which will provide our customers information
access, data exchange and e-commerce functionality over the Internet. eFab(TM)
will implement a solution based on industry standards that will enable effective
and timely communication of manufacturing data between our information systems
and those of our customers and suppliers.
RESEARCH AND DEVELOPMENT
The semiconductor industry is characterized by rapid technological changes.
We believe effective research and development is essential to our success. Our
research and development activities are focused on developing new CMOS
manufacturing process technologies. In 1996, 1997 and 1998, we invested
approximately $13.0 million, $26.6 million and $43.4 million, respectively, in
research and development. Those investments represented approximately 3.2%, 7.0%
and 10.3% of our net sales for the respective period. As of June 30, 1999, we
employed 197 professionals in our research and development department, 55 of
whom have Ph.Ds.
We also enter into technology license and cross-license agreements. Our
technology alliances with leading semiconductor suppliers have contributed to
our development of new process technologies. For example, we have joint
development and technology sharing agreements with Lucent and Hewlett-Packard
and a technology transfer and licensing agreement with Motorola. We intend to
expand our existing relationships and establish new relationships to further
develop new technologies.
We are currently involved in several process technology development
projects. We are working to develop mixed-signal, core logic and embedded memory
(SRAM and Flash). We are jointly developing 0.18u copper and aluminum processes
with Lucent for high density, low power and cost-effective applications. Our
alliance with Motorola includes the technology transfer and licensing of
Motorola's leading edge copper interconnect HiPerMOS technology for 0.15u, 0.13u
and 0.10u processes.
We have received research grants totaling $56.4 million from various
agencies of the Government of Singapore. These grants provide funding for a
portion of our research and development related capital expenditures and for the
training and staffing costs associated with some of our process technology
development programs. Funds from these grants are disbursed upon the achievement
of program milestones. As of June 30, 1999, $16.1 million of the grants
currently in effect has been disbursed to us.
EQUIPMENT AND MATERIALS
We depend on a limited number of manufacturers that make and sell the
complex equipment that we use in our manufacturing processes. The principal
pieces of equipment we use to manufacture semiconductors are steppers, tracks,
etchers, furnaces, wet stations and implanters and sputtering, chemical vapor
deposition and chemical mechanical planarization equipment. In periods of high
market demand, the lead times from order to delivery of such equipment can be as
long as 12 to 18 months. We seek to manage this process through early
reservation of appropriate delivery slots and constant communication with our
suppliers.
Our manufacturing processes use highly specialized materials, including
silicon wafers, chemicals, gases, targets and masks. We depend on our suppliers
of these materials and seek to have more than one supplier for our material
requirements. To maintain competitive manufacturing operations, we must obtain
from our suppliers, in a timely manner, sufficient quantities of quality
materials at acceptable prices. We source most of our materials, including
critical items such as silicon wafers, from a limited group of suppliers. We
have a multi-year contract with MEMC Electronics Materials Inc. to purchase raw
wafers, pursuant to which we have made deposits to secure future supply. We
purchase all of our materials on a blanket purchase order basis and are
currently in negotiations with certain key suppliers to develop long-term
contracts. For those materials that are wholly procured from one source, we
identify and qualify alternative sources of supply. We have agreements with key
material suppliers under which they hold inventory on consignment for us. We are
not under any obligation to purchase inventory that is held on
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consignment until we actually use it. We typically work with our suppliers to
forecast our raw material requirements one to three years in advance, although
pricing commitments are made on a semi-annual basis.
INTELLECTUAL PROPERTY
Our success depends in part on our ability to obtain patents, licenses and
other intellectual property rights covering our production processes. To that
end, we have acquired certain patents and patent licenses and intend to continue
to seek patents on our production processes. We have not federally registered
any of our trademarks or copyrights, but are in the process of doing so. As of
June 30, 1999, we had filed an aggregate of 469 patent applications worldwide,
241 of which had been filed in the United States. Of the 241 applications filed
in the United States, 114 had been issued as of June 30, 1999 and 17 had been
allowed but not issued. Those 17 patents will be issued if and when we pay the
applicable issuance fee. Our issued patents have expiration dates ranging from
2011 to 2017. All of the allowed and pending patents will expire after 2018. We
have also entered into various patent licenses and cross-licenses with major
semiconductor companies. We may choose to renew our present licenses or to
obtain additional technology licenses in the future. There can be no assurance
that any such licenses could be obtained on commercially reasonable terms.
Our ability to compete also depends on our ability to operate without
infringing the proprietary rights of others. The semiconductor industry is
generally characterized by frequent litigation regarding patent and other
intellectual property rights. We market products in several countries in Asia,
such as Taiwan and China, which may not protect our intellectual property rights
to the same extent as the United States. We have from time to time received
communications from third parties asserting patents that cover certain of our
technologies and alleging infringement of certain intellectual property rights
of others. We expect that we will receive similar communications in the future.
Irrespective of the validity or the successful assertion of such claims, we
could incur significant costs and devote significant management resources to the
defense of these claims which could seriously harm our company. There is no
material litigation currently pending against us.
COMPETITION
The worldwide semiconductor foundry industry is highly competitive. Our
principal competitors are TSMC, UMC and IBM. Our competitors may have greater
access to capital and substantially greater production, research and
development, marketing and other resources than we do. As a result, these
companies may be able to compete more aggressively over a longer period of time
than we can. In addition, several new dedicated foundries have commenced
operations and compete directly with us. Any significant increase in competition
may erode our profit margins and weaken our earnings.
A number of semiconductor manufacturers, including our primary competitors,
have recently announced plans to increase their manufacturing capacity and, as a
result, we expect that there will be a significant increase in worldwide
semiconductor capacity during the next five years. If growth in demand for this
capacity fails to match the growth in supply occur or occurs more slowly than
anticipated, there may be more intense competition and pressure on the pricing
of our services may result.
The principal elements of competition in the wafer foundry market include
technical competence, time-to-market, research and development, quality,
available capacity, device yields, customer service and price.
ENVIRONMENTAL MATTERS AND COMPLIANCE
We have implemented an extensive environmental management system. This
system is third party certified through internationally recognized ISO 14001.
This system enables our operations to identify applicable environmental
regulations and assist in evaluating compliance status. Programs are established
at manufacturing locations to ensure that all accidental spills and discharges
are properly addressed.
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We are subject to a variety of laws and governmental regulations in
Singapore relating to the use, discharge and disposal of toxic or otherwise
hazardous materials used in our production process. While we believe that we are
currently in compliance in all material respects with such laws and regulations
and have management systems in place to continue to be in compliance, if we fail
to use, discharge or dispose of hazardous materials appropriately, we could
subject our company to substantial liability or could be required to suspend or
adversely modify our manufacturing operations. In addition, we could be liable
for remedial measures if our properties were found to be contaminated even if we
were not responsible for such contamination.
EMPLOYEES
As of June 30, 1999, we had 3,319 employees, with 1,108 in process and
equipment engineering, 1,185 in manufacturing operations, 500 in manufacturing
support, 197 in research and development and 329 in administration, marketing
and finance. We consider our relationship with our employees to be good. In
addition, certain corporate support services, such as treasury, cash management,
internal audit, training, executive resources and corporate secretarial
services, are carried out by employees of ST on our behalf. Please see
"Relationship with Singapore Technologies" for a discussion of the services
provided to us by ST.
We provide our employees with customary compensation and benefit plans,
including an employee bonus plan and an employee share ownership plan. Please
see "Management -- Compensation" for a discussion of those compensation plans.
Our employees are not covered by any collective bargaining agreements. We
have not experienced any strikes or work stoppages by our employees.
INSURANCE
We maintain industrial special risk insurance for our facilities, equipment
and inventories. The insurance for fabs (including our strategic alliance fabs)
and their equipment covers physical damage and consequential losses from natural
disaster, business interruption and certain other risks up to their respective
policy limits except for exclusions as defined in the policy. We also maintain
public liability insurance for losses to others arising from our business
operations and carry insurance for business interruption resulting from such
events. Our insurance policies covering public liability and actions by
employees are held by ST through its group insurance policy. We pay our pro rata
share of the costs of such policies based on the industrial all risk amount
insured and the number of its employees, respectively. Some of our insurance
coverage is provided through affiliates of ST. Some of our insurance coverage
for Fab 5 is under Lucent's global group insurance program.
While we believe that our insurance coverage is adequate, significant
damage to any of our production facilities, whether as a result of fire or other
causes, could seriously harm our company. We do not insure against the loss of
key personnel.
LEGAL PROCEEDINGS
We are not involved in any legal proceedings that we believe would be
harmful to our company.
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MANAGEMENT
The following table sets forth, as of September 15, 1999, the name, age and
position of each director and executive officer of our company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
BOARD OF DIRECTORS
Ho Ching(1)............................... 46 Chairman of the Board
Lim Ming Seong(1)(3)...................... 52 Deputy Chairman of the Board
Barry Waite............................... 51 Director
Sum Soon Lim(1)(2)(3)..................... 56 Director
James H. Van Tassel(3).................... 70 Director
Aubrey C. Tobey(1)(2)..................... 73 Director
Robert Edmund La Blanc(2)................. 65 Director
Andre Borrel(1)(3)........................ 63 Director
Charles E. Thompson(1).................... 70 Director
Koh Beng Seng(2).......................... 48 Director
Tsugio Makimoto........................... 62 Director
Premod Paul Thomas(4)..................... 42 Alternate Director to Sum Soon Lim
Liow Voon Kheong(4)(5).................... 48 Alternate Director to Lim Ming Seong
EXECUTIVE OFFICERS
Barry Waite............................... 51 President and Chief Executive Officer
Chia Song Hwee............................ 36 Chief Financial Officer
Robert Baxter............................. 44 Senior Vice President, Business Operations
John Docherty............................. 47 Senior Vice President, Manufacturing Operations
Brian Klene............................... 41 Vice President, Strategic Development
John Martin............................... 56 Vice President, Technology Development
Lau Chi Kwan.............................. 48 Vice President, Quality, Reliability and Assurance
Justin Lim................................ 42 Vice President, Information Technology
Tan Seng Chai............................. 37 Vice President, Human Resources
Michael J. Rekuc.......................... 50 President, North America
</TABLE>
- ---------------
(1) Member of the Executive Resource and Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Budget Committee.
(4) Under our Articles of Association, a director is entitled to designate an
alternate director to take his place when he is absent from a meeting. An
alternate director, when serving in place of an absent director, may
exercise all of the powers and authority of the absent director, except the
power to appoint an alternate director. When not acting in place of an
absent director for whom he has been appointed alternate director, an
alternate director is not entitled to attend, participate or vote in any
board meetings.
(5) Liow Voon Kheong was nominated as an alternate director by EDB Investments
Pte Ltd. We have granted EDB Investments the right to nominate an alternate
director for so long as EDB Investments owns any of our ordinary shares.
BIOGRAPHICAL INFORMATION
HO CHING
Ho Ching has served on our Board of Directors since November 1987 and as
our Chairman of the Board since August 1995. Ms. Ho is the President and Chief
Executive Officer of Singapore Technologies Pte Ltd, our controlling
shareholder, Chairman of Singapore Technologies Engineering Ltd and Vice
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Chairman of SembCorp Industries Ltd. Ms. Ho also serves on the boards of
directors of various companies in the Singapore Technologies group. Before
joining Singapore Technologies in 1987, Ms. Ho was with the Ministry of Defence
of Singapore where she held various senior positions. Ms. Ho received a Master
of Science (Electrical Engineering) Degree from Stanford University. For her
public service, she was awarded the Public Service Star in 1996.
LIM MING SEONG
Lim Ming Seong has served on our Board of Directors since November 1987 and
as our Deputy Chairman of the Board since August 1995. Mr. Lim is the Group
Director of Singapore Technologies Pte Ltd, Deputy Chairman of ST Assembly Test
Services Ltd and Chairman of CSE Systems & Engineering Ltd. After joining
Singapore Technologies in December 1986, Mr. Lim has held various senior
positions in the Singapore Technologies group. Prior to joining Singapore
Technologies, Mr. Lim was with the Ministry of Defence of Singapore. Mr. Lim
received his Bachelor of Science (Honors) in Mechanical Engineering from the
University of Toronto and his Diploma in Business Administration from the
University of Singapore. Mr. Lim also participated in the Advanced Management
Programs at INSEAD and Harvard University.
BARRY WAITE
Barry Waite has served on our Board of Directors and as our President and
Chief Executive Officer since May 1998. Mr. Waite has more than 29 years of
experience in the semiconductor industry. Prior to joining our company, Mr.
Waite held various positions at Motorola Inc. Semiconductor Products Sector,
including Senior Vice President and General Manager of its microprocessor and
memory technology group and Senior Vice President and General Manager of the
European, Middle East and Africa region. Mr. Waite was with Texas Instruments
from 1970 to 1982. Mr. Waite has been Chairman of Silicon Manufacturing Partners
Pte Ltd and Chartered Silicon Partners Pte Ltd since May 1998. Mr. Waite
received his BA (Economics) (Honours) Degree from the University of Sheffield,
England and is an Officer of the Order of the British Empire.
SUM SOON LIM
Sum Soon Lim has served on our Board of Directors since February 1994 and
is currently a part time corporate advisor to Singapore Technologies Pte Ltd.
Prior to accepting his position with Singapore Technologies, Mr. Sum had worked
with the Singapore Economic Development Board, DBS Bank, J.P. Morgan Inc.,
Overseas Union Bank and Nuri Holdings (S) Pte Ltd, a private investment holding
company. Mr. Sum is also a member of the Securities Industry Council. Mr. Sum
received his B.Sc (Honors) in Production Engineering from the University of
Nottingham, England.
JAMES H. VAN TASSEL
James H. Van Tassel has served on our Board of Directors since June 1993.
He is a consultant in the semiconductor industry and has been involved in the
electronics and microelectronics industry since 1960. From 1980 to 1991, Dr. Van
Tassel was Vice President (Microelectronics) with NCR Corporation. Dr. Van
Tassel received his Bachelor of Science degree from the University of Wisconsin
at La Crosse, and his Master of Science Degree (Inorganic Chemistry) and Doctor
of Philosophy from Texas Technological University.
AUBREY C. TOBEY
Aubrey C. Tobey has served on our Board of Directors since March 1998 and
is currently the President of ACT International providing consultancy in the
management and marketing of high technology. From 1983 to 1987, Mr. Tobey was
Vice President of Micronix Corporation and from 1965 to 1983 was Corporate Vice
President at GCA Corporation. Mr. Tobey was with Arthur D. Little, Inc., a
management, science and technology consulting firm from 1959 to 1965. Mr. Tobey
received his Bachelor
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of Science degree in Mechanical Engineering from Tufts University and his Master
of Science degree in Mechanical Engineering from the University of Connecticut.
ROBERT EDMUND LA BLANC
Robert Edmund La Blanc has served on our Board of Directors since May 1998
and is the President of Robert E. La Blanc Associates, Inc., an information
technologies consulting and investment banking firm. From 1979 to 1981, Mr. La
Blanc was Vice Chairman of Continental Telecom, Inc. and from 1969 to 1979, a
General Partner of Salomon Brothers Inc. Mr. La Blanc has also held various
senior positions within companies in the telecommunications industry including
AT&T, Bell Telephone Laboratories and New York Telephone Company. Mr. La Blanc
received his B.E.E. from Manhattan College and his MBA from New York University.
Mr. La Blanc also is a graduate of the Operating Engineers Program at Bell
Telephone Laboratories and the USAF Communications Officers School.
ANDRE BORREL
Andre Borrel has served on our Board of Directors since July 1998 and is
currently working as a consultant in the semiconductor industry. Prior to
joining Chartered, Mr. Borrel was Senior Vice Present and General Manager of
Communications, Power and Signal Technology Group at Motorola Inc. Mr. Borrel is
also an Officer of the French National Order of Merit and holds a Master Degree
in Electronics from "Ecole Nationale Superieure des Telecommunications" in
Paris, France.
CHARLES E. THOMPSON
Charles E. Thompson has served on our Board of Directors since September
1998 and is currently working as a consultant in the information
technology/semiconductor technology industry. From 1973 to 1996, Mr. Thompson
was World Marketing Senior Vice President at Motorola Inc. Prior thereto, Mr.
Thompson was Computer Department Sales Director at General Electric. Mr.
Thompson received his Bachelor of Science in Mathematics from the University of
Washington.
KOH BENG SENG
Koh Beng Seng has served on our Board of Directors since February 1999. He
is currently Senior Advisor to Asia Pulp & Paper Co. Ltd and an advisor to the
International Monetary Fund. Mr. Koh is active in the financial services sector
and was with the Monetary Authority of Singapore from 1973 to 1998, where he
served as Deputy Managing Director from 1988 to 1998. Mr. Koh received his
Bachelor of Commerce (First Class Honors) from Nanyang University and his MBA
from Columbia University. Mr. Koh was awarded an Overseas Postgraduate
Scholarship by the Monetary Authority of Singapore in 1978. In 1987, the
President of the Republic of Singapore awarded him a Meritorious Service Medal.
TSUGIO MAKIMOTO
Tsugio Makimoto has served on our Board of Directors since September 1999
and has 40 years of working experience in the semiconductor industry. Dr.
Makimoto has worked for Hitachi Ltd since 1959 where he has held various senior
positions, including Executive Managing Director in 1993 and Senior Executive
Managing Director in 1997. Dr. Makimoto is currently Hitachi's Corporate Chief
Technologist. Dr. Makimoto is a member of the Advisory Committee of the NAIST
(Nara Institute of Science and Technology) and the International Advisory Panel
of the NSTB (National Science and Technology Board) of Singapore. Dr. Makimoto
is also a visiting professor at Toyo University.
PREMOD PAUL THOMAS
Premod Paul Thomas was appointed to our Board of Directors as the Alternate
Director to Sum Soon Lim in July 1999. Mr. Thomas is Director (Finance) of
Singapore Technologies Pte Ltd. Before joining Singapore Technologies Pte Ltd he
was with Tirtamas Group, Jakarta, as Group Executive Advisor from 1995 to 1998
and with Bank of America from 1983 to 1995. Mr. Thomas received his B.Com.
(First
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Class Honors) from Loyola College, India in 1977. He is a Certified Associate of
the Indian Institute of Bankers, Bombay, and has an MBA from the Indian
Institute of Management, Ahmedabad.
LIOW VOON KHEONG
Liow Voon Kheong was appointed to our Board of Directors as the Alternate
Director to Lim Ming Seong in July 1998. Mr. Liow was previously an Alternate
Director from May 1995 to July 1998. Mr. Liow is presently Assistant Managing
Director (Operations) of the Singapore Economic Development Board, General
Manager of EDB Investments Pte Ltd, Director/General Manager of EDB Ventures Pte
Ltd and EDB Ventures 2 Pte Ltd and General Manager of PLE Investments Pte Ltd.
Mr. Liow started his career with the Singapore Economic Development Board in
1976. He received his B.E. (Electrical & Electronics) and his Diploma in
Business Administration from the University of Singapore.
CHIA SONG HWEE
Chia Song Hwee has served as our Chief Financial Officer since December
1997 and served as our Director of Finance from April 1996 to December 1997. Mr.
Chia has more than 12 years of experience in financial accounting and has
overall responsibility for our company's finance and legal matters. From May
1992 through December 1994, Mr. Chia was Regional Financial Controller (Asia and
Middle East) for Anadrill Technical Services, Inc. From January 1995 to April
1996, Mr. Chia was Regional Controller (Asia, Australia and Middle East) for
Sedco Forex Technical Services, Inc. Mr. Chia has been an Alternate Director on
the Board of Directors of Chartered Silicon Partners Pte Ltd since July 1998 and
was appointed to its Board of Directors in April 1999. He has also been an
Alternate Director on the Board of Directors of Silicon Manufacturing Partners
Pte Ltd since October 1998. Mr. Chia received his Bachelor of Business
(Accountancy), with distinction, from Edith Cowan University, Australia and is a
Certified Practicing Accountant by the Australian Society of CPAs.
MICHAEL J. REKUC
Michael J. Rekuc has served as President of our North American operations
since March 1999. From 1976 until March 1999, Mr. Rekuc held sales, management
and director positions in the semiconductor product sector of Motorola Inc. His
most recent positions at Motorola Inc. included worldwide responsibilities as
global sales director for wireless subscriber systems and a two year role as
vice president and sales director for PC, computing and peripherals. Mr. Rekuc
holds a BSc in Electrical Engineering from Lawrence University of Michigan.
ROBERT BAXTER
Robert Baxter has served as our Senior Vice President, Business Operations
since July 1998 with overall responsibility for regional sales, worldwide
marketing, customer engineering and EDA teams in planning and executing business
strategies. Mr. Baxter has more than 23 years of working experience in the
semiconductor industry. He started his career with Texas Instruments in 1976 and
later joined Motorola Corporation in 1982. Prior to joining Chartered, Mr.
Baxter was Vice President and General Manager of Motorola's Advanced Digital
Consumer Division based in Tokyo. He also ran Microcontroller Business Divisions
based in Europe and in Austin, Texas for Motorola Inc. He has served on the
Board of Directors of Chartered Silicon Partners Pte Ltd since October 1998. Mr.
Baxter holds a BSc (Hons) in Applied Physics and Electronics from Durham
University, United Kingdom.
JOHN DOCHERTY
John Docherty has served as our Senior Vice President, Manufacturing
Operations since September 1998 and has overall responsibility for wafer fab
manufacturing operations, and leading our fab operations, turnkey services and
supply management activities. Mr. Docherty has more than 24 years experience in
the semiconductor industry. Prior to joining Chartered, Mr. Docherty was the
Vice President and Director of European Manufacturing for Motorola Inc.'s wafer
fabrication facilities in Scotland and France.
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Mr. Docherty has served on the Boards of Directors of Chartered Silicon Partners
Pte Ltd and Silicon Manufacturing Partners Pte Ltd since October 1998. Mr.
Docherty graduated from Napier University, Edinburgh, United Kingdom and holds a
Business Diploma from Strathclyde University, Glasgow.
BRIAN KLENE
Brian Klene has served as our Vice President, Strategic Development since
October 1998 and has overall responsibility for strategic business development
and planning activities and intellectual property management. Mr. Klene has also
served as Vice President, Worldwide Marketing. Mr. Klene has more than 20 years
of working experience in the semiconductor and communications industry. Prior to
joining Chartered, Mr. Klene was Executive Vice President of Sales and Marketing
at Micron Technology and was with IBM from 1979 to 1989. Mr. Klene received an
MBA from the University of Southern California and his BA from The Citadel.
JOHN MARTIN
John Martin has served as our Vice President, Technology Development since
January 1998 and has overall responsibility for our internal and external
technology development activities. Dr. Martin has more than 25 years of
experience in the semiconductor industry. He began his semiconductor career with
Rockwell International Microelectronics in 1973. From 1981 to 1997, Dr. Martin
held various positions in Motorola Inc.'s Semiconductor Products Sector. Dr.
Martin holds a Ph.D. in Inorganic Chemistry from the University of Arkansas and
a BA (Chemistry) from DePauw University.
LAU CHI KWAN
Lau Chi Kwan has served as our Vice President, Reliability and Quality
Assurance since January 1998 and has overall responsibility for our quality
operations, total quality management and quality engineering support, which
includes failure analysis and reliability engineering. From 1994 to 1997, Dr.
Lau was our Yield Engineering Manager and subsequently our Research and
Development Director. Dr. Lau has 23 years of experience in the semiconductor
industry, largely in research and development. Prior to joining Chartered, Dr.
Lau was a project manager for Hewlett-Packard's Circuit Technology Business
Division. He began his career in 1976 with Microwave Acoustics Lab of the
University of Southern California and subsequently continued his research and
engineering work at Texas Instruments for three years and Hewlett-Packard for 11
years. Dr. Lau received a BSc from the University of Hawaii and MSc from the
University of Wisconsin. Dr. Lau received his Ph.D. from the University of
Southern California.
JUSTIN LIM
Justin Lim has served as our Vice President, Information Technology since
February 1998 and has overall responsibility for the development and application
of information technology for our business, operational and strategic needs. Dr.
Lim has 16 years of experience in the semiconductor industry, largely in
information technology support and development work. He began his career in 1983
with Fairchild Semiconductor which was later acquired by National Semiconductor
Pte Ltd in 1988. Dr. Lim was with National Semiconductor from 1988 to 1995. From
1995 to 1998, Dr. Lim was the Director of Services for FASTech Integration Asia
for three years. Dr. Lim received his Ph.D. in Electrical Engineering from the
University of Swansea, UK in 1983 after obtaining his BSC (Electro-Mechanical
Eng) (1st Class Hons) there in 1980. He also holds a MBA from the National
University of Singapore.
TAN SENG CHAI
Seng Chai Tan has served as our Vice President, Human Resources since July
1999 and has overall responsibility for the development and implementation of
policies and processes in our human resource management system. From October
1997 to June 1999, Mr. Tan was our Human Resource Director. Mr. Tan joined our
company as human resource manager in April 1996. He has more than 12 years of
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experience in the semiconductor industry. He began his career at National
Semiconductor in 1987 where he held various positions in engineering, production
and human resource management. Mr. Tan later joined Creative Technology Ltd in
1994 and prior to joining Chartered, he was Creative's Senior Manager, Human
Resource. Mr. Tan holds a Bachelor of Engineering (Hons) from the National
University of Singapore in 1987 and a MSc (Industrial and System Eng) from the
National University of Singapore in 1991.
BOARD COMPOSITION AND COMMITTEES
Our Articles of Association set the minimum number of directors at two. We
currently have 11 directors and two alternate directors. A portion of our
directors are elected at each annual general meeting of shareholders. The number
of directors retiring and eligible to stand for reelection each year varies, but
generally it is equal to one-third of the board, with the directors who have
been in office longest since their reelection or appointment standing for
reelection. Our Chief Executive Officer and President will not be required to
stand for reelection as a director while he or she is in office. Because ST and
its affiliates will own approximately 71.9% of our outstanding ordinary shares
upon completion of the global offering, it will be able to control actions over
many matters requiring approval by our shareholders, including the election of
directors.
The Executive Resource and Compensation Committee, or ERCC, of our Board of
Directors oversees executive compensation and development in our company with
the goal of building capable and committed management teams through competitive
compensation, focused management and progressive policies which can attract,
motivate and retain a pool of talented executives to meet our current and future
growth plans. Specifically, the ERCC:
- establishes compensation policies for key executives;
- approves salary reviews, bonuses and incentives for key executives;
- approves share incentives, including share options and share ownership
for executives;
- approves key appointments and reviews succession plans for key positions;
and
- oversees the development of key executives and younger executives.
The members of the ERCC are Ms. Ho (chairman) and Messrs. Borrel, Lim,
Thompson, Sum and Tobey.
The Audit Committee of our Board of Directors consists of four members, of
which a majority may not be officers or employees of our company. The Audit
Committee reviews, acts on and reports to the Board of Directors regarding
various auditing and accounting matters, including the scope and results of
annual audits and the recommendation of our independent auditors. The Audit
Committee also reviews all material transactions between us and the Singapore
Technologies group. Please see "Relationship with Singapore Technologies" for a
description of our relationship with ST. The members of the Audit Committee are
Messrs. Sum (chairman), Koh, La Blanc and Tobey.
The Budget Committee of our Board of Directors is responsible for reviewing
our annual budget and our quarterly financial performance in relation to our
budget. The members of the Budget Committee are Messrs. Borrel (chairman), Lim,
Van Tassel and Sum.
DIRECTOR AND OFFICER COMPENSATION
The aggregate compensation we paid to all of our directors and executive
officers for services rendered to us and our subsidiaries during the fiscal year
ended December 31, 1998 was approximately $3.8 million.
The aggregate amount we set aside or accrued for all of our directors and
executive officers to provide for pension, retirement or similar benefits during
the fiscal year ended December 31, 1998 was approximately $5.0 million.
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ISSUANCES OF PARTLY PAID SHARES AND SHARE OPTIONS
As of July 31, 1999, a total of 23,631,303 partly paid ordinary shares and
options to purchase ordinary shares were issued and outstanding. Of such amount,
17,557,286 were partly paid shares and 6,074,017 were options.
The 17,557,286 partly paid ordinary shares were issued under our 1995 and
1997 share ownership plans. The subscription price of these partly paid ordinary
shares ranges from S$0.93 to S$1.38 per share. The expiration dates of the
installment payments for these partly paid shares range from November 2002 to
April 2009. Holders of partly paid shares have the same voting rights as holders
of fully paid shares. Of the 17,557,286 partly paid shares, 2,460,762 are held
by Singapore Technologies Semiconductors Pte Ltd, or ST Semiconductors. ST
Semiconductors purchased these shares from individual holders pursuant to its
rights under our 1995 and 1997 share ownership plans. Please see "Employee
Benefit Plans" for additional information regarding ST Semiconductors' rights to
purchase ordinary shares.
The 6,074,017 options to purchase ordinary shares were granted under our
1999 share option plan and are currently outstanding. The exercise price of each
option is S$0.93. The expiration dates of the options range from April 2004 to
April 2009. Contemporaneously with the closing of the global offering, we plan
to issue to our officers, directors and employees options under our 1999 share
option plan to purchase approximately 20,000,000 ordinary shares, including
8,560,000 to our President and Chief Executive Officer and 3,010,000 to our
other directors and executive officers. The exercise price of such options will
be the same as the initial public offering price of our ordinary shares, except
for options issuable for approximately 2,100,000 ordinary shares that will have
exercise prices below the initial public offering price (for which we will
accrue a compensation charge).
As of July 31, 1999, our officers and directors held a total of 5,388,080
partly paid ordinary shares and options to purchase ordinary shares. Of such
amount, 988,880 were partly paid shares and 4,399,200 were options to purchase
ordinary shares.
When we refer to the number of issued and outstanding ordinary shares in
this prospectus, we include the 17,557,286 partly paid shares.
In connection with our capital restructuring discussed under
"Capitalization" above, we expect to replace any unpaid portion of the
17,557,286 partly paid shares with share options under our 1999 share plan.
EMPLOYEE BENEFIT PLANS
1995 EMPLOYEES' SHARE OWNERSHIP SCHEME
Effective as of September 28, 1995, we adopted our 1995 Employees' Share
Ownership Scheme. The 1995 scheme, as amended, generally provides for the grant
of options to subscribe for ordinary shares. The objectives of the 1995 scheme
are to motivate, retain and recognize employees and directors whose
contributions have been essential to our well-being and prosperity and who have
contributed to our growth.
The 1995 scheme is administered by a committee of our Board of Directors.
The committee may, in its discretion, grant options under the 1995 scheme to our
employees, and employees of certain of our affiliates, who are at least 21 years
of age and who have at least 12 months' service with us. The committee may also
grant options under the 1995 scheme to our directors and directors of some of
our affiliates. The committee determines the number of shares a participant may
be offered under the 1995 scheme. The maximum number of shares which may be
offered to individual participants under the 1995 scheme is 25% of the total
number of shares which may be issued pursuant to the exercise of options under
the 1995 scheme. Options granted under the 1995 scheme may only be transferred
with the prior approval of the committee.
The subscription price for each share which may be purchased upon exercise
of an option shall be determined by the committee but shall not be less than
S$0.80. The subscription price is payable in two installments, the first of
which constitutes 5% of the aggregate subscription price for the shares and the
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second of which constitutes 95% of the aggregate subscription price for the
shares. The first installment must be paid at the time the option is exercised
and the second installment must be paid over a period between the second and
fifth years following the date the option is granted. If a participant fails to
pay the second installment on or before the seventh anniversary of the date the
option was granted, the participant will be required to sell all such shares to
ST Semiconductors, or its nominee, at a price equal to the greater of 5% of the
market value of such shares, as determined by the committee in good faith, or 5%
of the net asset value of such shares.
An option may be exercised, in whole or in part, within 30 days from the
date it is granted. Options which have not been exercised at the expiration of
such period will lapse immediately and no longer be exercisable. An option will
immediately lapse, to the extent unexercised, upon a termination of the
participant's employment or directorship, the participant's bankruptcy or any
event which deprives the participant the ownership of such option, or in the
event of the participant's gross misconduct. Unexercised options will also lapse
upon the winding-up of our business.
If a participant's employment or directorship is terminated or in the event
of a participant's bankruptcy, the participant will be entitled to retain those
shares which he or she has purchased and fully paid for under the 1995 scheme.
With respect to shares which have not been fully paid for, the participant will
be required to sell such shares to ST Semiconductors or its nominee as described
above or, if approved by the committee, will be permitted to pay the outstanding
balance of the subscription price for such shares.
Participants may not sell or otherwise transfer or otherwise dispose of any
share which has not been paid up in full. In addition, a participant who wishes
to sell or otherwise transfer fully paid shares must first offer to sell all
such shares to ST Semiconductors or its nominee at a price equal to the greater
of the market value of such shares as determined by the committee in good faith
or the net asset value of such shares. ST Semiconductors will have a right of
first refusal to purchase such shares. ST Semiconductors, or its nominee, will
cease to have any right of first refusal under the 1995 scheme at such time as
our ordinary shares become listed on any stock exchange.
The aggregate nominal amount of shares over which the committee may grant
options on any date, when added to the nominal amount of shares issued and
issuable in respect of all options granted under the 1995 scheme, may not exceed
10% of our issued share capital on the day preceding that date, provided that
the aggregate number of shares which may be issued pursuant to the exercise of
options granted under the 1995 scheme shall not exceed 45,000,000 (subject to
adjustment as provided in the 1995 scheme).
In the event of certain corporate transactions or changes in our
capitalization, the committee may make appropriate adjustments to the
subscription price for the shares subject to unexercised options, the nominal
amount, class and/or number of shares subject to unexercised options, and/or the
nominal amount, class and/or number of shares over which options may be granted
under the 1995 scheme.
The committee may terminate the 1995 scheme upon the listing of our
ordinary shares on a stock exchange. If our ordinary shares are listed, the
committee may determine that all unexercised options will lapse and become null
and void and/or that the unpaid second installment of any share will become due
and payable. The committee may modify the provisions of the 1995 scheme,
provided that no modification may adversely alter any option granted prior to
such modification except with the consent of certain participants in the 1995
scheme.
The 1995 scheme is governed by, and construed in accordance with, the laws
of Singapore and participants in the 1995 scheme agree to submit to the
exclusive jurisdiction of the courts of Singapore.
We expect to terminate the 1995 scheme prior to the consummation of the
global offering and replace any unpaid portion of partly paid shares with share
options under our 1999 Stock Option Plan. These options will have the same
exercise price and vesting schedule as the replaced options.
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1997 EMPLOYEES' SHARE OWNERSHIP SCHEME
Effective as of November 27, 1997, we adopted our 1997 Employees' Share
Ownership Scheme. The provisions of the 1997 scheme, as amended, are
substantially similar to those described above with respect to the 1995 scheme
adopted, except as follows:
- The first installment of the subscription price under the 1997 scheme
will be paid at the time the option is exercised and the second
installment will be paid by the tenth anniversary of the date the option
was granted, provided that the participant may elect to pay the second
installment over a period of five years following the date on which the
option was granted. If a participant fails to pay the second installment
on or before the tenth anniversary of the date the option was granted,
the participant will be required to sell all such shares to ST
Semiconductors or its nominee at a price equal to the greater of 5% of
the market value of such shares as determined by the committee in good
faith or 5% of the net asset value of such shares.
- Under the 1997 scheme, the aggregate nominal amount of shares over which
the committee may grant options on any date, when added to the nominal
amount of shares issued and issuable in respect of all options granted
under the 1997 scheme and all options or other subscription rights
granted by us under other share incentive or option schemes or
agreements, may not exceed 10% of our issued share capital on the day
preceding that date.
We expect to terminate the 1997 scheme prior to the consummation of the global
offering and replace any unpaid portion of partly paid shares with share options
under our 1999 Stock Option Plan. These options will have the same exercise
price and vesting schedule as the replaced options.
1999 SHARE OPTION PLAN
Effective as of March 30, 1999, we adopted our 1999 Share Option Plan. The
purpose of the plan is to offer selected individuals an opportunity to acquire
or increase a proprietary interest in our company by purchasing our ordinary
shares. Options granted under the 1999 plan may be nonstatutory options or
incentive share options intended to qualify under Section 422 of the United
States Internal Revenue Code.
The 1999 plan is administered by the ERCC. Our employees, outside directors
and consultants are eligible to receive option grants except as follows:
- employees of our affiliates and our outside directors and consultants are
not eligible for the grant of incentive share options; and
- employees, outside directors and consultants of our affiliates who are
residents of the United States are not eligible for the grant of options.
An individual who owns more than 10% of the total combined voting power of
all classes of our outstanding shares is not eligible for the grant of options
unless:
- the exercise price of the option is at least 110% of the fair market
value of a share on the date of grant; and
- in the case of an incentive stock option, such option by its terms is not
exercisable after the expiration of five years from the date of grant.
The aggregate number of shares that may be issued under the 1999 plan and
under all of our other share incentive and option schemes or agreements may not
exceed 107,200,000 shares (subject to adjustment pursuant to the plan). If an
outstanding option expires for any reason or is cancelled or otherwise
terminated, the shares allocable to the unexercised portion of such option will
again be available for the purposes of the plan and all other share incentive
and option schemes approved by the ERCC.
The exercise price of an incentive stock option shall not be less than 100%
of the fair market value of a share on the date of grant. The exercise price of
a nonstatutory option shall not be less than 85% of the
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fair market value of a share on the date of grant. In no event will the exercise
price for a share be below the par value of that share.
Options granted to persons other than officers, outside directors and
consultants shall become exercisable at least as rapidly as 20% per year over
the five year period commencing on the date of grant. The exercisability of
options outstanding under the 1999 plan may be fully or partially accelerated
under certain circumstances such as a change in control of our company, as
defined in the 1999 plan. In addition, outstanding options will accelerate by 12
months upon the closing of the global offering if the optionee's service has not
been terminated and his or her option agreement does not provide otherwise.
Each grant under the 1999 plan is evidenced by a share option agreement and
the term of options granted may not exceed 10 years from the date of grant. If
the optionee's service with us is terminated, the optionee's outstanding
options, to the extent then exercisable, remain exercisable for a specified
period (which is based on the reason for the termination) following the date of
termination. All options which are not exercisable at the date of termination
lapse when the optionee's service terminates.
The ERCC may modify, extend or assume outstanding options or may accept the
cancellation of outstanding options in return for the grant of new options for
the same or a different number of shares and at the same or a different exercise
price. No modification of an option shall, without the consent of the optionee,
impair the optionee's rights or increase the optionee's obligations under such
option.
Options are generally not transferable under the plan. Shares issued upon
the exercise of an option are subject to such rights of first refusal as the
ERCC may determine.
In the event of certain changes in our capitalization, our Board of
Directors will make appropriate adjustments in one or more of the number of
shares available for future grants under the 1999 plan, the number of shares
covered by each outstanding option or the exercise price of each outstanding
option. If we are a party to a merger or consolidation, outstanding options will
be subject to the agreement of merger or consolidation.
The 1999 plan will terminate automatically on March 30, 2009. The ERCC may
amend, suspend or terminate the 1999 plan at any time and for any reason,
provided that any amendment which increases the number of shares available for
issuance under the 1999 plan, or which materially changes the class of persons
who are eligible for the grant of incentive share options, will be subject to
the approval of our shareholders.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our ordinary shares as of June 30, 1999, based on an
aggregate of 1,001,425,308 ordinary shares outstanding as of such date, and as
adjusted to reflect the sale of the ordinary shares offered hereby, by:
- each person or group of affiliated persons who is known by us to
beneficially own 10% or more of our ordinary shares;
- each of our directors;
- our chief executive officer; and
- all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
ORDINARY SHARES ORDINARY SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO THE GLOBAL AFTER THE GLOBAL
OFFERING(1) OFFERING(1)(2)
--------------------- ---------------------
BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
---------------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Singapore Technologies Pte Ltd(3)................ 499,116,151 49.8 499,116,151 39.8
Singapore Technologies Semiconductors
Pte Ltd(3)..................................... 400,767,854 40.0 400,767,854 32.1
Ho Ching......................................... - * - *
Lim Ming Seong................................... - * - *
Barry Waite(4)................................... 940,000 * 940,000 *
Sum Soon Lim(5).................................. 94,433 * 94,433 *
James H. Van Tassel(6)........................... 82,329 * 82,329 *
Aubrey C. Tobey(7)............................... 37,600 * 37,600 *
Robert E. La Blanc(7)............................ 37,600 * 37,600 *
Andre Borrel(7).................................. 37,600 * 37,600 *
Charles E. Thompson(7)........................... 37,600 * 37,600 *
Koh Beng Seng.................................... - * - *
All directors and executive officers as a group
(19 persons)(8)................................ 2,165,322 * 2,165,322 *
</TABLE>
- ---------------
* Less than 1% of total.
(1) Gives effect to the ordinary shares issuable within 60 days of June 30, 1999
upon the exercise of all options and other rights beneficially owned by the
indicated shareholders on that date. Beneficial ownership is determined in
accordance with the rules of the SEC and includes voting and investment
power with respect to ordinary shares. Unless otherwise indicated, the
persons named in the table have sole voting and sole investment control with
respect to all ordinary shares beneficially owned.
(2) Assumes the issuance of 250,000,000 ordinary shares (including ordinary
shares represented by ADSs) and the underwriters' overallotment option is
not exercised.
(3) Temasek Holdings (Private) Limited, the principal holding company of the
Government of Singapore, owns 77.6% of Singapore Technologies Pte Ltd, or
ST, and 100% of Singapore Technologies Holdings Pte Ltd, or ST Holdings. ST
Holdings owns 22.4% of ST which, in turn, owns 100% of Singapore
Technologies Semiconductors Pte Ltd, or ST Semiconductors. Temasek may be
deemed to beneficially own the shares directly owned by ST and ST
Semiconductors because it is the parent of ST and ST Holdings. All of the
ordinary shares owned by ST are fully paid. Of the 400,767,854 ordinary
shares owned by ST Semiconductors, 398,329,182 are fully paid and 2,438,672
are partly paid.
(4) Represents ordinary shares that were issued after June 30, 1999 pursuant to
a contractual entitlement arising prior to June 30, 1999, all of which are
fully paid.
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(5) Of the 94,433 ordinary shares owned by Mr. Sum, 41,793 are fully paid and
52,640 are partly paid.
(6) Represents ordinary shares owned by Mr. Van Tassel, all of which are fully
paid.
(7) Represents 37,600 ordinary shares owned by each of Messrs. Tobey, La Blanc,
Borrel and Thompson, all of which are partly paid.
(8) Does not include Mr. Tsugio Makimoto who was appointed to our Board of
Directors on September 15, 1999.
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RELATIONSHIP WITH SINGAPORE TECHNOLOGIES
WHAT IS THE SINGAPORE TECHNOLOGIES GROUP
Singapore Technologies Pte Ltd, or ST, is a holding company for a group of
high-technology companies. ST is 22.4% owned by Singapore Technologies Holdings
Pte Ltd, or ST Holdings. ST and ST Holdings are 77.6% and 100% owned,
respectively, by Temasek Holdings (Private) Limited through which the corporate
investments of the Government of Singapore are held. Temasek is owned by the
Minister for Finance (Incorporated) of Singapore. ST owns 100% of Singapore
Technologies Semiconductors Pte Ltd, or ST Semiconductors. ST and ST
Semiconductors currently hold a 49.8% and 40% interest in our company,
respectively. ST Semiconductors holds interests in our sister companies, STATS
and Tritech Microelectronics Ltd (for which provisional liquidators were
appointed effective September 1, 1999), or Tritech. In 1998, our revenues
represented 12% of ST's revenues and our assets represented 22% of ST's assets.
ST has five principal business groups: engineering, technology,
infrastructure, property and financial services. ST has three operating
subsidiaries that are engaged in the semiconductor business, namely:
- Chartered Semiconductor Manufacturing Ltd;
- STATS; and
- Tritech (under provisional liquidation).
STATS specializes in assembly and testing of semiconductors. Tritech, which
is expected to be liquidated prior to closing the global offering, was in the
business of designing, developing and marketing application specific standard
products as well as customer specific semiconductors. ST may in the future
establish other subsidiaries, or form strategic alliances with companies, which
are engaged in the semiconductor business.
ST and its affiliates will beneficially own approximately 71.9% of our
outstanding ordinary shares upon completion of the global offering, or 69.8% if
the underwriters exercise their overallotment option in full. As a result, it
will be able to control actions over many matters requiring approval by our
shareholders, including the election of directors and approval of significant
corporate transactions. In addition, Ms. Ho and Messrs. Lim, Sum, Koh and Liow,
each a member of our Board of Directors (other than Mr. Liow who serves as an
alternate member), serve as directors of companies in the Singapore Technologies
group. Ms. Ho and Mr. Lim, each a member of our Board of Directors, are employed
by companies in the Singapore Technologies group.
In 1996, our Board of Directors established an Audit Committee that, among
other things, reviews all material transactions between us and the Singapore
Technologies group. Please see "Management -- Board Composition and Committees"
for a summary of the function and composition of the Audit Committee. Mr. Sum,
the chairman of the Audit Committee, also serves as a consultant to ST and
serves as a director for other ST affiliates.
After completion of the global offering, we will continue to have
contractual and other business relationships with ST and its affiliates and we
may engage in material transactions with ST from time to time. Although our
Audit Committee will review all material transactions between our company and
the Singapore Technologies group, conflicts of interest may arise between us in
certain circumstances. We are not obligated to conduct any business with members
of the ST group if the costs of doing so are greater than for unaffiliated third
parties.
FINANCIAL SUPPORT PROVIDED TO US BY SINGAPORE TECHNOLOGIES GROUP
Through its subsidiary, ST Treasury Services Ltd, ST currently provides us
with short-term financing and guarantees some of our debt. Certain of our loan
agreements require ST to own at least a majority of our outstanding ordinary
shares. ST Treasury Services Ltd has also in the past provided loans to us and
has entered into forward foreign exchange contracts with us to provide a hedge
for certain of our
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equipment purchase commitments with foreign vendors. As of June 30, 1999, $1.9
million of our short-term financing was provided by ST at a weighted average
interest rate of 2.43% and approximately $216.6 million of our debt was
guaranteed by ST at no cost. In addition, $75.1 million, $71.6 million and $29.3
million of our debt was guaranteed by The Bank of Tokoyo-Mitsubishi, Ltd, Royal
Bank of Canada and The Dai-ichi Kangyo Bank, Ltd, respectively, at the request
of ST, at a weighted average cost to us of 0.29%.
In addition, from time to time we advance funds to, or borrow funds from,
ST Treasury Services Ltd. (and from ST prior to the second half of 1998). In
general, advances to and borrowings from ST and ST Treasury bear interest at
rates comparable to the rates offered by commercial banks in Singapore, are
unsecured and are repayable within three to six months on a renewable basis. The
amount of interest income received from ST in 1996, 1997 and 1998 was $0.9
million, $0.2 million and $0.8 million, respectively. The amount of interest
income received from ST Treasury in 1998 was $0.9 million. The amount of
interest expense paid to ST was $4.2 million, $12.7 million and $6.6 million in
1996, 1997, 1998, respectively. The amount of interest expense paid to ST
Treasury in 1998 was $2.3 million. The average rate of interest payable in 1996,
1997 and 1998 to ST and ST Treasury for our Singapore dollar denominated
borrowings was 3.83%, 4.89% and 7.13%, respectively, and 5.84%, 6.06% and 6.33%,
respectively, for our U.S. dollar denominated borrowings.
We have also entered into an oral multi-currency credit facility with ST
Treasury in connection with our borrowing arrangements with it. Under this
facility, ST Treasury has agreed to make available to us funds of up to $100
million. We may, upon notice to ST Treasury, draw down at any time any amount
available under the facility. We are not restricted in our utilization of drawn
funds. Funds drawn under the facility are required to be repaid within one year
of the date on which they are drawn. Payment schedules and directions will be as
agreed to by us and ST Treasury at the time of the draw down. Unless otherwise
agreed to, amounts drawn under the facility are unsecured and neither we nor ST
Treasury are subject to conditions or events of default. Interest on drawn funds
accrues at a rate based on the monthly average interest rate of three banks, as
chosen by ST Treasury. The current monthly average interest rate for Singapore
dollar borrowings under the agreement is 2.43%. As of June 30, 1999, there were
$1.9 million of unsecured borrowings outstanding under this facility.
While ST has historically provided credit and other support to us, ST has
no obligation to continue doing so and the availability and amount of such
support will depend on various factors, including our ability to raise funds
without such support and the expenses relating to such fundraising.
CORPORATE SERVICES PROVIDED TO US BY SINGAPORE TECHNOLOGIES
In March 1997, we entered into a service agreement with ST pursuant to
which it provides us with services and support which are tangible as well as
intangible in nature. The services provided by ST include management and
corporate support services, such as treasury, cash management, internal audit,
training, executive resources and corporate secretarial services. In addition,
ST is able to offer us the benefits of a global network and the "Singapore
Technologies" name and ST's wide spectrum of industries provide us with
operational and financial leverages in our dealings with external third parties.
In return for those services, support and benefits, we currently pay ST an
annual management fee based on certain percentages of capital employed, sales,
manpower and payroll. We expect to amend the service agreement prior to the
consummation of the global offering to convert from a formula based fee
arrangement to a service based fee arrangement. In addition, we reimburse ST for
the third-party costs and expenses it incurs on our behalf.
In 1996, 1997 and 1998, we paid management fees to ST of $4.4 million, $5.7
million and $4.9 million, respectively. In addition, we reimbursed ST for costs
and expenses incurred on our behalf, principally certain of our payroll expenses
paid through ST. Those reimbursements totaled $5.9 million, $5.6 million and
$5.7 million in 1996, 1997 and 1998, respectively.
The service agreement expires in the event we cease to be a subsidiary of
ST. It can be terminated by ST upon our prolonged failure to pay the management
fees due to ST. The management fees we pay ST
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under the service agreement are not itemized to allow us to compare them with
similar services provided by unrelated third parties. We also believe that we
derive economic benefits from the corporate services and support ST provides us.
For example, ST guarantees a portion of our debt without fees or covenants and
provides standby credit facilities without charge. In addition, we have used
ST's leverage to secure loans and terms (including interest rates and covenants)
that we would not otherwise have obtained.
In the event that the service agreement is terminated, however, we will be
required to provide the corporate services previously provided by ST either
internally or obtain them from third parties and the cost to us could be greater
than that charged by ST.
OTHER TRANSACTIONS WITH THE SINGAPORE TECHNOLOGIES GROUP
We transact business with ST and its affiliates in the normal course of our
respective businesses. We recorded sales to Tritech of $32.7 million, $20.8
million and $6.2 million in 1996, 1997 and 1998, respectively. These sales
represented 8%, 5.5% and 1.5% of our net sales for the respective periods. We
have not made any sales to Tritech since it was placed under judicial management
on July 2, 1999.
We paid STATS $8.4 million, $13.3 million and $22.7 million in 1996, 1997
and 1998, respectively, for services rendered in those years. We also paid
affiliates of ST $2.3 million, $3.0 million and $1.4 million in 1996, 1997 and
1998, respectively, for services rendered in those years. We purchased $8.7
million, $1.0 million and $0.9 million in assets from affiliates of ST in 1996,
1997 and 1998, respectively. We also paid ST Construction and ST Architects
$50.8 million, $2.6 million and $1.1 million in 1996, 1997 and 1998,
respectively, for construction costs rendered in those years.
Fabs 2 and 3 and our corporate offices are located on land leased to ST by
Jurong Town Corporation, or JTC, a statutory board established by the Government
of Singapore to develop and manage industrial estates in Singapore. These leases
run until 2024 with conditional options to extend for another 30 years. We have
entered into sub-leases with ST for the entire term of the leases for Fabs 2 and
3. The sub-leases for Fab 2 and Fab 3 require us to make rental payments to ST
at rates equal to the rent paid by ST to JTC for the subject land through 2006
for Fab 2 and 2024 for Fab 3. The rental rates may be re-negotiated thereafter.
In total, we paid ST $1.4 million, $2.1 million and $1.6 million, respectively,
in lease payments for 1996, 1997 and 1998.
CSP leases the land on which Fab 6 is located from ST, which in turn leases
it from JTC. The agreement provides for the land to be leased to ST until 2027,
with a conditional option to extend for an additional 30 years. CSP makes rental
payments to ST at rates equal to the rent paid by ST to JTC for the subject land
through 2027. CSP paid ST $0.5 million and $0.9 million in lease payments for
1997 and 1998, respectively.
Some of our insurance coverage is held under various insurance policies
which are negotiated and maintained by ST but billed directly to us. This
enables us to benefit from the group rates negotiated by ST.
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DESCRIPTION OF ORDINARY SHARES
Set forth below is a description of our share capital and a brief summary
of the basic rights and privileges of our shareholders conferred by our Articles
of Association and the laws of Singapore. This description is only a summary and
is qualified by reference to Singapore law and our Articles of Association, as
amended, a copy of which is filed as an exhibit to the registration statement of
which this prospectus is a part. This description assumes that the capital
restructuring has been completed. Please see "Capitalization" for information
regarding the capital restructuring.
ORDINARY SHARES
Our authorized capital is S$800,000,000.540 consisting of 3,076,923,079
ordinary shares of par value S$0.26 each. We have only one class of shares,
namely, the ordinary shares, which have identical rights in all respects and
rank equally with one another. Our Articles of Association provide that we may
issue shares of a different class with preferential, deferred, qualified or
other special rights, privileges or conditions as our Board of Directors may
determine and may issue preference shares which are, or at our option are,
subject to redemption, subject to certain limitations. Our directors may issue
shares at a premium. If shares are issued at a premium, a sum equal to the
aggregate amount or value of the premium will, subject to certain exceptions, be
transferred to a share premium account.
As of October 1, 1999, 1,003,610,131 ordinary shares were issued and
outstanding. All of our ordinary shares are in registered form. We may, subject
to the provisions of the Companies Act and the rules of the Singapore stock
exchange, purchase our own ordinary shares. However, we may not, except in
circumstances permitted by the Companies Act, grant any financial assistance for
the acquisition or proposed acquisition of our own ordinary shares.
NEW ORDINARY SHARES
New ordinary shares may only be issued with the prior approval in a general
meeting of our shareholders. The approval, if granted, will lapse at the
conclusion of the annual general meeting following the date on which the
approval was granted. Our shareholders have given us general authority to issue
any remaining approved but unissued ordinary shares prior to our next annual
general meeting. Subject to the foregoing, the provisions of the Companies Act
and any special rights attached to any class of shares currently issued, all new
ordinary shares are under the control of our Board of Directors who may allot
and issue the same with such rights and restrictions as it may think fit. Our
shareholders are not entitled to pre-emptive rights under the Articles of
Association or Singapore law.
SHAREHOLDERS
Only persons who are registered in our register of shareholders and, in
cases in which the person so registered is The Central Depository (Pte) Limited,
or the CDP, the persons named as the depositors in the depository register
maintained by the CDP for our ordinary shares, are recognized as shareholders.
We will not, except as required by law, recognize any equitable, contingent,
future or partial interest in any ordinary share or other rights for any
ordinary share other than the absolute right thereto of the registered holder of
the ordinary share or of the person whose name is entered in the depository
register for that ordinary share. We may close the register of shareholders for
any time or times if we provide the Registrar of Companies and Business of
Singapore at least 14 days' notice. However, the register may not be closed for
more than 30 days in aggregate in any calendar year. We typically close the
register to determine shareholders' entitlement to receive dividends and other
distributions for no more than 10 days a year.
TRANSFER OF ORDINARY SHARES
There is no restriction on the transfer of fully paid ordinary shares
except where required by law. Our Board of Directors may only decline to
register any transfer of ordinary shares which are not fully paid shares or
ordinary shares on which we have a lien. Ordinary shares may be transferred by a
duly signed instrument of transfer in any form acceptable to our Board of
Directors. Our Board of Directors may also
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decline to register any instrument of transfer unless, among other things, it
has been duly stamped and is presented for registration together with the share
certificate and such other evidence of title as they may require. We will
replace lost or destroyed certificates for ordinary shares if we are properly
notified and if the applicant pays a fee which will not exceed S$2 and furnishes
any evidence and indemnity that our Board of Directors may require.
GENERAL MEETINGS OF SHAREHOLDERS
We are required to hold an annual general meeting every year. Our Board of
Directors may convene an extraordinary general meeting whenever it thinks fit
and must do so if shareholders representing not less than 10% of the total
voting rights of all shareholders request in writing that such a meeting be
held. In addition, two or more shareholders holding not less than 10% of our
issued share capital may call a meeting. Unless otherwise required by law or by
our Articles of Association, voting at general meetings is by ordinary
resolution, requiring an affirmative vote of a simple majority of the votes cast
at that meeting. An ordinary resolution suffices, for example, for the
appointment of directors. A special resolution, requiring the affirmative vote
of at least 75% of the votes cast at the meeting, is necessary for certain
matters under Singapore law, including the voluntary winding up of the company,
amendments to our Memorandum and Articles of Association, a change of our
corporate name and a reduction in our share capital, share premium account or
capital redemption reserve fund. We must give at least 21 days' notice in
writing for every general meeting convened for the purpose of passing a special
resolution. Ordinary resolutions generally require at least 14 days' notice in
writing. The notice must be given to every shareholder who has supplied us with
an address in Singapore for the giving of notices and must set forth the place,
the day and the hour of the meeting and, in the case of special business, the
general nature of that business.
VOTING RIGHTS
A shareholder is entitled to attend, speak and vote at any general meeting,
in person or by proxy. A proxy need not be a shareholder. A person who holds
ordinary shares through the CDP book-entry clearance system will only be
entitled to vote at a general meeting as a shareholder if his name appears on
the depository register maintained by CDP 48 hours before the general meeting.
Except as otherwise provided in our Articles of Association, two or more
shareholders holding at least 33 1/3% of our issued and outstanding ordinary
shares must be present in person or by proxy to constitute a quorum at any
general meeting. Under our Articles of Association, on a show of hands, every
shareholder present in person and each proxy shall have one vote, and on a poll,
every shareholder present in person or by proxy shall have one vote for each
ordinary share held. A poll may be demanded in certain circumstances, including
by the chairman of the meeting or by any shareholder present in person or by
proxy and representing not less than 10% of the total voting rights of all
shareholders having the right to attend and vote at the meeting or by any two
shareholders present in person or by proxy and entitled to vote.
DIVIDENDS
We may, by ordinary resolution, declare dividends at a general meeting, but
we may not pay dividends in excess of the amount recommended by our Board of
Directors. We must pay all dividends out of our profits or pursuant to Section
69 of the Companies Act. Our Board of Directors may also declare an interim
dividend. All dividends are paid pro rata among the shareholders in proportion
to the amount paid up on each shareholder's ordinary shares, unless the rights
attaching to an issue of any ordinary share provides otherwise. Unless otherwise
directed, dividends are paid by cheque or warrant sent through the post to each
shareholder at his registered address. Notwithstanding the foregoing, our
payment to the CDP of any dividend payable to a shareholder whose name is
entered in the depository register shall, to the extent of payment made to the
CDP, discharge us from any liability to that shareholder in respect of that
payment.
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BONUS AND RIGHTS ISSUE
Our Board of Directors may, with the approval of our shareholders at a
general meeting, capitalize any reserves or profits (including profit or monies
carried and standing to any reserve or to the share premium account) and
distribute the same as bonus shares credited as paid-up to the shareholders in
proportion to their shareholdings. Our Board of Directors may also issue rights
to take up additional ordinary shares to shareholders in proportion to their
shareholdings. Such rights are subject to any conditions attached to such issue.
TAKEOVERS
The Companies Act and the Singapore Code on Takeovers and Mergers regulate
the acquisition of ordinary shares of public companies and contain certain
provisions that may delay, deter or prevent a future takeover or change in
control of our company. Any person acquiring an interest, either on his own or
together with parties acting in concert with him, in 25% or more of our voting
shares must extend a takeover offer for the remaining voting shares in
accordance with the provisions of the Singapore Code on Takeovers and Mergers.
"Parties acting in concert" include a company and its related and associated
companies, a company and its directors (including their relatives), a company
and its pension funds, a person and any investment company, unit trust or other
fund whose investment such person manages on a discretionary basis, and a
financial advisor and its client in respect of shares held by the financial
advisor and shares in the client held by funds managed by the financial advisor
on a discretionary basis. An offer for consideration other than cash must be
accompanied by a cash alternative at not less than the highest price paid by the
offeror or parties acting in concert with the offeror within the preceding 12
months. A mandatory takeover offer is also required to be made if a person
holding, either on his own or together with parties acting in concert with him,
between 25% and 50% of the voting shares acquires additional voting shares
representing more than 3% of the voting shares in any 12 month period.
LIQUIDATION OR OTHER RETURN OF CAPITAL
If our company liquidates or in the event of any other return of capital,
holders of ordinary shares will be entitled to participate in any surplus assets
in proportion to their shareholdings, subject to any special rights attaching to
any other class of shares.
INDEMNITY
As permitted by Singapore law, our Articles of Association provide that,
subject to the Companies Act, we will indemnify our Board of Directors and
officers against any liability incurred in defending any proceedings, whether
civil or criminal, which relate to anything done or omitted to have been done as
an officer, director or employee. We may not indemnify directors and officers
against any liability which by law would otherwise attach to them in respect of
any negligence, default, breach of duty or breach of trust of which they may be
guilty in relation to our company.
LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES
Except as described in "-- Voting Rights" and "-- Takeovers" above, there
are no limitations imposed by Singapore law or by our Articles of Association on
the rights of non-resident shareholders to hold or vote ordinary shares.
MINORITY RIGHTS
The rights of minority shareholders of Singapore-incorporated companies are
protected under Section 216 of the Companies Act, which gives the Singapore
courts a general power to make any order,
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upon application by any shareholder of our company, as they think fit to remedy
any of the following situations:
- our affairs are being conducted or the powers of our Board of Directors
are being exercised in a manner oppressive to, or in disregard of the
interests of, one or more of our shareholders; or
- we take an action, or threaten to take an action, or the shareholders
pass a resolution, or threaten to pass a resolution, which unfairly
discriminates against, or is otherwise prejudicial to, one or more of our
shareholders, including the applicant.
Singapore courts have wide discretion as to the reliefs they may grant and
those reliefs are in no way limited to those listed in the Companies Act itself.
Without prejudice to the foregoing, Singapore courts may:
- direct or prohibit any act or cancel or vary any transaction or
resolution;
- regulate our affairs in the future;
- authorize civil proceedings to be brought in the name of, or on behalf
of, the company by a person or persons and on such terms as the court may
direct;
- provide for the purchase of a minority shareholder's shares by our other
shareholders or by our company and, in the case of a purchase of shares
by us, a corresponding reduction of our share capital;
- provide that our Memorandum or Articles of Association be amended; or
- provide that our company be wound up.
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DESCRIPTION OF AMERICAN DEPOSITARY SHARES
ADSs represent ownership interests in securities that are on deposit with a
depositary bank. Citibank, N.A., located at 111 Wall Street, New York, New York
10043, will act as the depositary bank for our ADSs. ADSs are normally
represented by certificates that are commonly known as American Depositary
Receipts, or ADRs. The depositary typically appoints a custodian to safekeep the
securities on deposit. In this case, our custodian is Citibank Nominees
Singapore Pte Ltd, located at 300 Tampines Avenue #07-00, Tampinas Junction,
Singapore 529653.
We have appointed Citibank, N.A. as our depositary pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the SEC under cover
of a registration statement on Form F-6. You may obtain a copy of the deposit
agreement from the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Citicorp Investment Bank (Singapore) Limited, an
affiliate of Citibank, N.A., is acting as a co-lead manager and underwriter in
the Singapore offering and is receiving customary compensation in connection
with such transaction.
The following is a summary description of the ADSs and your rights as an
owner of ADSs. Please note that your rights and obligations as an owner of ADSs
will be determined by the deposit agreement and not by this summary. We urge you
to review the deposit agreement in its entirety as well as the form of ADR
attached to the deposit agreement.
Each ADS represents ten ordinary shares on deposit with the custodian bank.
An ADS also represents any other property received by the depositary or the
custodian on behalf of the owner of the ADS that has not been distributed to the
owners of ADSs because of legal restrictions or practical considerations.
If you become an owner of an ADS, you will become a party to the deposit
agreement and therefore will be bound to its terms and to the terms of the ADR
that represents your ADSs. The deposit agreement and the ADR specify our rights
and obligations as well as your rights and obligations as owner of ADSs and
those of the depositary bank. As an ADS holder you appoint the depositary to act
on your behalf in certain circumstances. Although the deposit agreement is
governed by New York law, our obligations to the holders of our ordinary shares
will continue to be governed by the laws of Singapore, which may be different
from the laws in the United States.
As an owner of ADSs, you may hold your ADSs either by means of an ADR
registered in your name or through a brokerage or safekeeping account. If you
decide to hold your ADSs through your brokerage or safekeeping account, you must
rely on the procedures of your broker or bank to assert your rights as ADS
owner. Please consult with your broker or bank to determine what those
procedures are. This summary description assumes you have opted to own the ADSs
directly by means of an ADR registered in your name.
ISSUANCE OF ADSS UPON DEPOSIT OF ORDINARY SHARES
The depositary may create ADSs on your behalf if you or your broker deposit
ordinary shares with the custodian. The depositary will deliver these ADSs to
the person you indicate only after you pay any applicable issuance fees and any
charges and taxes payable for the transfer of the ordinary shares to the
custodian.
The issuance of ADSs may be delayed until the depositary or the custodian
receives confirmation that all required approvals have been given and that the
ordinary shares have been duly transferred to the custodian. The depositary will
only issue ADSs in whole numbers.
When you make a deposit of ordinary shares, you will be responsible for
transferring good and valid title to the depositary. As such, you will be deemed
to represent and warrant that:
- your ordinary shares are duly authorized, validly issued, fully paid,
non-assessable and legally obtained;
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- all preemptive and similar rights, if any, with respect to your ordinary
shares have been validly waived or exercised;
- you are duly authorized to deposit the ordinary shares;
- your ordinary shares presented for deposit are free and clear of any
lien, encumbrance, security interest, charge, mortgage or adverse claim
and are not, and the ADSs issuable upon such deposit will not be,
"restricted securities" (as defined in the deposit agreement); and
- the ordinary shares presented for deposit have not been stripped of any
rights or entitlements.
If any of the representations or warranties are incorrect in any way, we
and the depositary may, at your cost and expense, take any and all actions
necessary to correct the consequences of the misrepresentations.
WITHDRAWAL OF ORDINARY SHARES UPON CANCELLATION OF ADSS
As a holder of ADSs, you will be entitled to present your ADSs to the
depositary for cancellation and then receive the underlying ordinary shares at
the custodian's offices. In order to withdraw the ordinary shares represented by
your ADSs, you will be required to pay to the depositary the fees for
cancellation of ADSs and any charges and taxes payable upon the transfer of the
ordinary shares being withdrawn. You assume the risk for delivery of all funds
and securities upon withdrawal. Once canceled, the ADSs will not have any rights
under the deposit agreement.
If you hold an ADR registered in your name, the depositary bank may ask you
to provide proof of identity and genuineness of any signature and certain other
documents as the depositary bank may deem appropriate before it will cancel your
ADSs. The withdrawal of the ordinary shares represented by your ADSs may be
delayed until the depositary receives satisfactory evidence of compliance with
all applicable laws and regulations. As noted above, the depositary bank will
only accept ADSs for cancellation that represent a whole number of securities on
deposit.
You will have the right to withdraw the ordinary shares represented by your
ADSs at any time subject to:
- temporary delays that may arise because the transfer books for the
ordinary shares or the ADSs are closed or when ordinary shares are
immobilized as a result of a shareholders' meeting or a payment of
dividends, if any;
- your obligation to pay fees, taxes and similar charges; and
- restrictions imposed because of laws or regulations applicable to ADSs or
the withdrawal of securities on deposit.
The deposit agreement may not be modified to impair your right to withdraw
the securities represented by your ADSs except to comply with mandatory
provisions of law.
DIVIDENDS AND DISTRIBUTIONS
As a holder, you generally have the right to receive the distributions we
make on the securities deposited with the custodian bank. Your receipt of these
distributions may be limited, however, by practical considerations and legal
limitations. Holders will receive such distributions under the terms of the
deposit agreement in proportion to the number of ADSs held as of a specified
record date.
DISTRIBUTIONS OF CASH
Whenever we make a cash distribution for the securities on deposit with the
custodian, we will notify the depositary. Upon receipt of such notice, the
depositary will arrange for the funds to be converted into U.S. dollars and for
the distribution of the U.S. dollars to holders.
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The conversion into U.S. dollars will take place only if practicable and if
the U.S. dollars are transferable to the United States. The amounts distributed
to holders will be net of the fees, expenses, taxes and governmental charges
payable by holders under the terms of the deposit agreement. The depositary will
apply the same method for distributing the proceeds of the sale of any property,
such as undistributed rights, held by the custodian in respect of securities on
deposit.
DISTRIBUTIONS OF ORDINARY SHARES
Whenever we make a free distribution of ordinary shares for the securities
on deposit with the custodian, we will notify the depositary bank. Upon receipt
of such notice, the depositary bank will either distribute to holders new ADSs
representing the ordinary shares deposited or modify the ADS-to-ordinary share
ratio, in which case each ADS you hold will represent rights and interests in
the additional ordinary shares so deposited. Only whole new ADSs will be
distributed. Fractional entitlements will be sold and the proceeds of such sale
will be distributed as in the case of a cash distribution.
The distribution of new ADSs or the modification of the ADS-to-ordinary
share ratio upon a distribution of ordinary shares will be made net of the fees,
expenses, taxes and governmental charges payable by holders under the terms of
the deposit agreement. In order to pay such taxes or governmental charges, the
depositary bank may sell all or a portion of the new ordinary shares so
distributed.
New ADSs will not be distributed if it would violate a law (i.e., the U.S.
securities laws) or if it is not operationally practicable. If the depositary
bank does not distribute new ADSs as described above, it will use its best
efforts to sell the ordinary shares received and will distribute the proceeds of
the sale as in the case of a distribution of cash.
ELECTIVE DISTRIBUTIONS
Whenever we intend to distribute a dividend payable at the election of
shareholders, either in cash or in additional shares, we will give prior notice
of the distribution to the depositary and will indicate whether we wish the
distribution to be made available to you. In such case, we will assist the
depositary in determining whether such distribution is lawful and reasonably
practical.
The depositary will make the election available to you only if it is
reasonably practical and if we have provided the depositary all of the
documentation contemplated in the deposit agreement. In such case, the
depositary will establish procedures to enable you to elect to receive either
cash or additional ADSs, in each case as described in the deposit agreement.
If the election is not made available to you, you will receive either cash
or additional ADSs, depending on what a shareholder in Singapore would receive
for failing to make an election, as more fully described in the deposit
agreement.
DISTRIBUTIONS OF RIGHTS
Whenever we intend to distribute rights to purchase additional ordinary
shares, we will give prior notice to the depositary and we will assist the
depositary in determining whether it is lawful and reasonably practicable to
distribute rights to purchase additional ADSs to holders.
The depositary will establish procedures to distribute rights to purchase
additional ADSs to holders and to enable such holders to exercise such rights if
it is lawful and reasonably practicable to make the rights available to holders
of ADSs. Upon the exercise of any such rights, you may have to pay fees,
expenses, taxes and other governmental charges to subscribe for the new ADSs.
Please note that the depositary bank is not obligated to establish procedures to
facilitate the distribution and exercise of such rights.
The depositary will not distribute the rights to you if:
- we do not request that the rights be distributed to you or we ask that
the rights not be distributed to you; or
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- we fail to deliver satisfactory documents to the depositary bank, such as
opinions addressing the lawfulness of the transaction; or
- it is not reasonably practicable to distribute the rights.
The depositary will sell any rights that are not exercised or not
distributed if such sale is lawful and reasonably practicable. The proceeds of
the sale will be distributed to holders as in the case of a cash distribution.
If the depositary bank is unable to sell the rights, it will allow the rights to
lapse, in which case you will receive no value for such rights.
OTHER DISTRIBUTIONS
Whenever we intend to distribute property other than cash, ordinary shares
or rights to purchase additional ordinary shares, we will notify the depositary
bank in advance and will indicate whether we wish such distribution to be made
to you. If so, we will assist the depositary bank in determining whether such
distribution to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute such property to you and if
we provide the depositary bank all of the documentation contemplated in the
deposit agreement, it will distribute the property to you in a manner it deems
practicable.
The distribution will be made net of fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit agreement. In order to
pay such taxes and governmental charges, the depositary may sell all or a
portion of the property received.
The depositary will not distribute the property to you and will sell the
property if:
- we do not request that the property be distributed to you or if we ask
that the property not be distributed to you; or
- we do not deliver satisfactory documents to the depositary bank; or
- the depositary determines that all or a portion of the distribution to
you is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case
of a cash distribution.
REDEMPTION
Whenever we decide to redeem any of the securities on deposit with the
custodian, we will notify the depositary. If it is reasonably practicable and if
we provide the depositary bank all of the documentation contemplated in the
deposit agreement, the depositary will mail notice of the redemption to the
holders.
The custodian will be instructed to surrender the shares being redeemed
against payment of the applicable redemption price. The depositary will convert
the redemption funds received into U.S. dollars upon the terms of the deposit
agreement and will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the depositary. You
may have to pay fees, expenses, taxes and other governmental charges upon the
redemption of your ADSs. If less than all ADSs are being redeemed, the ADSs to
be retired will be selected by lot or on a pro rata basis, as the depositary may
determine.
CHANGES AFFECTING ORDINARY SHARES
The ordinary shares held on deposit for your ADSs may change from time to
time. For example, there may be a change in nominal or par value, a split-up,
cancellation, consolidation or reclassification of such ordinary shares or a
recapitalization, reorganization, merger, consolidation or sale of assets.
If any such change were to occur, your ADSs would, to the extent permitted
by law, represent the right to receive the property received or exchanged in
respect of the ordinary shares held on deposit. The depositary bank may in such
circumstances deliver new ADSs to you or call for the exchange of your
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existing ADSs for new ADSs. If the depositary bank may not lawfully distribute
such property to you, the depositary bank may sell such property and distribute
the net proceeds to you as in the case of a cash distribution.
VOTING RIGHTS
As a holder, you generally have the right under the deposit agreement to
instruct the depositary bank to exercise the voting rights for the ordinary
shares represented by your ADSs. The voting rights of holders of ordinary shares
are described under the heading "Description of Ordinary Shares" in this
prospectus.
The depositary will mail to you any notice of shareholders' meeting
received from us, together with information explaining how to instruct the
depositary to exercise the voting rights of the securities represented by ADSs.
If the depositary timely receives voting instructions from a holder of
ADSs, it will endeavor to vote the securities represented by the holder's ADSs
in accordance with such voting instructions.
Please note that the ability of the depositary to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure you that you will receive voting
materials in time to enable you to return voting instructions to the depositary
in a timely manner. Securities for which no voting instructions have been
received will not be voted.
FEES AND CHARGES
As an ADS holder, you will be required to pay the following service fees to
the depositary:
<TABLE>
<CAPTION>
SERVICE FEES
------- --------------------------
<S> <C>
Issuance of ADSs............................................ Up to 5c per ADS issued
Cancellation of ADSs........................................ Up to 5c per ADS canceled
Exercise of rights to purchase additional ADSs.............. Up to 5c per ADS issued
Distribution of stock or other free distributions........... Up to 5c per ADS held
Distribution of cash upon sale of rights and other
entitlements.............................................. Up to 2c per ADS held
</TABLE>
As an ADS holder, you will also be responsible to pay certain fees and
expenses incurred by the depositary bank and certain taxes and governmental
charges such as:
- fees for the transfer and registration of ordinary shares (i.e., upon
deposit and withdrawal of ordinary shares);
- expenses incurred for converting foreign currency into U.S. dollars;
- expenses for cable, telex and fax transmissions and for delivery of
securities; and
- taxes and duties upon the transfer of securities (i.e., when ordinary
shares are deposited or withdrawn from deposit).
We have agreed to pay certain other charges and expenses of the depositary.
Please note that the fees and charges you may be required to pay may vary over
time and may be changed by us and by the depositary. You will receive prior
notice of such changes.
AMENDMENTS AND TERMINATION
We may agree with the depositary to modify the deposit agreement at any
time without your consent. Except in very limited circumstances enumerated in
the deposit agreement, we have agreed to give holders 30 days' prior notice of
any modifications that would prejudice any of their substantial rights under the
deposit agreement.
You will be bound by any modifications to the deposit agreement if you
continue to hold your ADSs after the modifications to the deposit agreement
become effective. The deposit agreement cannot be
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amended to prevent you from withdrawing the ordinary shares represented by your
ADSs, except as permitted by law.
We have the right to direct the depositary to terminate the deposit
agreement. Similarly, the depositary may in certain circumstances on its own
initiative terminate the deposit agreement. In either case, the depositary must
give notice to the holders at least 30 days before termination.
Upon termination of the deposit agreement, the following will occur:
- for a period of six months after termination, you will be able to request
the cancellation of your ADSs and the withdrawal of the ordinary shares
represented by your ADSs and the delivery of all other property held by
the depositary in respect of those ordinary shares on the same terms as
prior to the termination. During such six month period, the depositary
bank will continue to collect all distributions received on the ordinary
shares on deposit (i.e., dividends) but will not distribute any such
property to you until you request the cancellation of your ADSs; and
- after the expiration of such six month period, the depositary may sell
the securities held on deposit. The depositary will hold the proceeds
from such sale and any other funds then held for the holders of ADSs in a
non-interest bearing account. At that point, the depositary will have no
further obligations to holders other than to account for the funds then
held for the holders of ADSs still outstanding.
BOOKS OF DEPOSITARY
The depositary will maintain ADS holder records at its depositary office.
You may inspect these records at the depositary's office during regular business
hours but solely for the purpose of communicating with other holders in the
interest of business matters relating to the ADSs and the deposit agreement.
The depositary will maintain in New York facilities to record and process
the issuance, cancellation, combination, split-up and transfer of ADRs. These
facilities may be closed from time to time, to the extent not prohibited by law.
LIMITATIONS ON OBLIGATIONS AND LIABILITIES
The deposit agreement limits our obligations and the depositary's
obligations to you. We and the depositary are obligated only to take the actions
specifically stated in the deposit agreement without negligence or bad faith.
Please note the following:
- The depositary disclaims any liability for any failure to carry out
voting instructions, for any manner in which a vote is cast or for the
effect of any vote, provided it acts in good faith and in accordance with
the terms of the deposit agreement.
- The depositary disclaims any liability for any failure to determine the
lawfulness or practicality of any action, for the content of any document
forwarded to you on our behalf or for the accuracy of any translation of
such a document, for the investment risks associated with investing in
ordinary shares, for the validity or worth of the ordinary shares, for
any tax consequences that result from the ownership of ADSs, for the
credit worthiness of any third party, for allowing any rights to lapse
under the terms of the deposit agreement, for the timeliness of any of
our notices or for our failure to give notice.
- We and the depositary will not be obligated to perform any act that is
inconsistent with the terms of the deposit agreement.
- We and the depositary disclaim any liability if we are prevented or
forbidden from acting on account of any law or regulation, any provision
of our Memorandum and Articles of Association, any provision of any
securities on deposit or by reason of any act of God or war or other
circumstances beyond our control.
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- We and the depositary disclaim any liability by reason of any exercise
of, or failure to exercise, any discretion provided for the deposit
agreement or in our Memorandum and Articles of Association or in any
provisions of securities on deposit.
- We and the depositary further disclaim any liability for any action or
inaction in reliance on the advice or information received from legal
counsel, accountants, any person presenting ordinary shares for deposit,
any holder of ADSs or authorized representative thereof, or any other
person believed by either of us in good faith to be competent to give
such advice or information.
- We and the depositary also disclaim liability for the inability by a
holder to benefit from any distribution, offering, right or other benefit
which is made available to holders ordinary shares but is not, under the
terms of the deposit agreement, made available to you.
- We and the depositary may rely without any liability upon any written
notice, request or other document believed to be genuine and to have been
signed or presented by the proper parties.
PRE-RELEASE TRANSACTIONS
The depositary may, under certain circumstances, issue ADSs before
receiving a deposit of ordinary shares or release ordinary shares before
receiving ADSs. These transactions are commonly referred to as "pre-release
transactions." The deposit agreement limits the aggregate size of pre-release
transactions and imposes a number of conditions on such transactions (i.e., the
need to receive collateral, the type of collateral required, the representations
required from brokers, etc.). The deposit agreement requires that the ADSs be
fully collateralized before any ADSs are pre-released. The depositary may retain
the compensation received from the pre-release transactions.
TAXES
You will be responsible for the taxes and other governmental charges
payable on the ADSs and the securities represented by the ADSs. We, the
depositary and the custodian may deduct from any distribution the taxes and
governmental charges payable by holders and may sell any and all property on
deposit to pay the taxes and governmental charges payable by holders. You will
be liable for any deficiency if the sale proceeds do not cover the taxes that
are due.
The depositary may refuse to issue ADSs, to deliver, transfer, split and
combine ADRs or to release securities on deposit until all taxes and charges are
paid by the applicable holder. The depositary and the custodian may take
reasonable administrative actions to obtain tax refunds and reduced tax
withholding for any distributions on your behalf. However, you may be required
to provide to the depositary bank and to the custodian proof of taxpayer status
and residence and such other information as the depositary and the custodian may
require to fulfill legal obligations. You are required to indemnify us, the
depositary and the custodian for any claims with respect to taxes based on any
tax benefit obtained by you.
FOREIGN CURRENCY CONVERSION
The depositary will arrange for the conversion of all foreign currency
received into U.S. dollars if such conversion is practical, and it will
distribute the U.S. dollars in accordance with the terms of the deposit
agreement. You may have to pay fees and expenses incurred in converting foreign
currency, such as fees and expenses incurred in complying with currency exchange
controls and other governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any
required approvals are denied or not obtainable at a reasonable cost or within a
reasonable period, the depositary may take the following actions in its
discretion:
- convert the foreign currency to the extent practical and lawful and
distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practical;
- distribute the foreign currency to holders for whom the distribution is
lawful and practical; and
- hold the foreign currency, without liability for interest, for the
applicable holders.
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TAXATION
SINGAPORE TAXATION
The following discussion describes the material Singapore income tax, stamp
duty and estate duty consequences of the purchase, ownership and disposal of the
ordinary shares or ADSs (collectively the "securities") to a holder of the
securities that is not resident in Singapore. This discussion, insofar as it
relates to matters of Singapore tax law, constitutes the opinion of Allen &
Gledhill, Singapore tax advisor to Chartered. This discussion does not purport
to be a comprehensive description of all of the tax considerations that may be
relevant to a decision to purchase, own or dispose of the securities and does
not purport to deal with the tax consequences applicable to all categories of
investors.
This discussion is based on tax laws in effect in Singapore and on
administrative and judicial interpretations of these tax laws, as of the date of
this prospectus, all of which are subject to change, possibly on a retroactive
basis.
INCOME TAX
General. Non-resident corporate taxpayers are subject to income tax on
income that is accrued in or derived from Singapore, and on foreign income
received in Singapore, subject to certain exceptions. A non-resident individual
is subject to income tax on the income accrued in or derived from Singapore.
Subject to the provisions of any applicable double taxation treaty,
non-resident taxpayers who derive certain types of income from Singapore are
subject to a withholding tax on that income at a rate of 26%, or generally 15%
in the case of interest, royalty and rental of movable equipment.
A corporation will be regarded as being resident in Singapore if the
control and management of its business is exercised there (for example, if the
corporation's board of directors meets and conducts the business of the
corporation in Singapore). An individual will be regarded as being resident in
Singapore in a year of assessment if, in the preceding year, he or she was
physically present in Singapore or exercised an employment in Singapore (other
than as a director of a company) for 183 days or more, or if he or she resides
in Singapore.
Dividend Distributions. If we pay dividends on the ordinary shares or ADSs
out of the tax exempt income received because of our pioneer status or out of
our income subject to a concessionary tax rate, if any, such dividends will be
free of Singapore tax in the hands of the holders of the ordinary shares and
ADSs. Please see "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Special Tax Status" for a discussion of our pioneer
status.
Where the dividend is declared out of the above tax exempt income or income
subject to tax at a concessionary rate, we would have to obtain agreement from
the Inland Revenue Authority of Singapore confirming the amount of income
available for distribution of tax exempt dividends. Before this agreement has
been obtained, the Comptroller of Income Tax in Singapore may issue a
provisional assessment of our tax exempt income, and we will be able to
distribute tax exempt dividends based on this provisional assessment. Exempt
dividends paid by us in excess of our finalized tax exempt income will be deemed
distributed out of our ordinary income and will be subject to the treatment
outlined below.
We pay tax on our non-tax exempt income at the prevailing corporate tax
rate, which is currently 26%. This tax paid by us is in effect imputed to, and
deemed paid on behalf of, our shareholders. Thus, if we pay dividends on our
ordinary shares out of our non-tax exempt income, our shareholders receive the
dividends net of the tax paid by us. Dividends received by either a resident or
non-resident of Singapore are not subject to withholding tax. Shareholders are
taxed in Singapore on the gross amount of dividends, which is the cash amount of
the dividend plus an amount normally equivalent to the corporate income tax rate
paid by us on the dividend. The tax paid by us effectively becomes available to
shareholders as a tax credit to offset the Singapore income tax liability on
their overall income, including the gross amount of dividends.
A non-resident shareholder is effectively taxed on non-tax exempt dividends
at the corporate income tax rate. Thus, because tax deducted from the dividend
and paid by us at the corporate income tax rate is
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<PAGE> 89
in effect imputed to, and deemed paid on behalf of, our shareholders (as
discussed in the preceding paragraph), no further Singapore income tax will be
imposed on the net dividend received by a non-resident holder of ordinary shares
or ADSs. Further, the non-resident shareholder will normally not receive any tax
refund from the Inland Revenue Authority of Singapore.
No comprehensive tax treaty currently exists between Singapore and the
United States.
Gains on Disposal of the Ordinary Shares or ADSs. Singapore does not
impose tax on capital gains. However, gains or profits may be construed to be of
an income nature and subject to tax, especially if they arise from activities
which the Inland Revenue Authority of Singapore regards as the carrying on of a
trade in Singapore, or if they are short-term gains from the sale of real
property or shares in unlisted companies with substantial real property or real
property-related assets in Singapore. Thus, any gains or profits from the
disposal of the ordinary shares or ADSs are not taxable in Singapore unless the
seller is regarded as carrying on a trade in securities in Singapore, in which
case the disposal profits would be taxable as trading profits rather than
capital gains.
STAMP DUTY
There is no stamp duty payable in respect of the issuance and holding of
new ordinary shares or ADSs. Where existing ordinary shares or ADSs evidenced in
certificated form are acquired in Singapore, stamp duty is payable on the
instrument of transfer of the ordinary shares or ADSs at the rate of S$2.00 for
every S$1,000 of the consideration for, or market value of, the ordinary shares
or ADSs, whichever is higher. The stamp duty is borne by the purchaser unless
there is an agreement to the contrary. Where an instrument of transfer is
executed outside Singapore or no instrument of transfer is executed, no stamp
duty is payable on the acquisition of existing ordinary shares or ADSs. Stamp
duty may be payable if the instrument of transfer is received in Singapore.
ESTATE DUTY
In the case of an individual who is not domiciled in Singapore, Singapore
estate duty is imposed on the value of most movable and immovable properties
situated in Singapore. Thus, an individual holder of the ordinary shares who is
not domiciled in Singapore at the time of his or her death will be subject to
Singapore estate duty on the value of any ordinary shares held by the individual
upon the individual's death. Such a shareholder will be required to pay
Singapore estate duty to the extent that the value of the ordinary shares, and
any other assets subject to Singapore estate duty, exceeds S$600,000. Unless
other exemptions apply to the other assets (for example, the separate exemption
limit for residential properties), any excess will be taxed at a rate equal to
5% on the first S$12 million of the individual's Singapore chargeable assets and
thereafter at a rate equal to 10%. However, an individual who holds ADSs and is
not domiciled in Singapore at the time of his or her death should not be subject
to Singapore estate tax duty on such ADSs because such ADSs are registered
outside Singapore and hence should not be considered as movable properties in
Singapore.
Prospective purchasers or ordinary shares or ADSs who are individuals,
whether or not domiciled in Singapore, should consult their own tax advisors
regarding the Singapore estate duty consequences of their investment.
UNITED STATES FEDERAL TAXATION
The following is a summary of the opinion of Latham & Watkins as to the
material U.S. federal income and estate tax consequences that may be relevant to
a U.S. holder with respect to the acquisition, ownership and disposition of
ordinary shares or ADSs. For purposes of this summary, a "U.S. holder" includes
the following:
- citizens or residents of the United States for United States federal
income tax purposes,
- corporations or other entities created or organized under the laws of the
United States or of any political subdivision thereof,
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<PAGE> 90
- persons otherwise subject to United States federal income taxation on
their worldwide income regardless of its source,
- estates the income of which is subject to United States federal income
taxation regardless of source,
- any trust the administration of which is subject to the primary
supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial
decisions of the trust, or, if the trust was in existence on August 20,
1996, has elected to continue to be treated as a United States person, or
- any other person that is subject to U.S. federal income tax on a net
income basis in respect of an investment in ordinary shares or ADSs.
This summary deals only with ordinary shares and ADSs held as capital
assets (within the meaning of section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code")) and does not address the tax consequences applicable to
holders that may be subject to special tax rules, including without limitation
financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding ordinary shares or ADSs as
a hedge against currency risks or as a position in a "straddle" or "conversion
transaction" or other integrated investment transaction for tax purposes,
persons whose "functional currency" is not the U.S. dollar, or holders of 10% or
more, by voting power or value, of the stock of our company. It also does not
deal with holders other than original purchasers (except where otherwise
specifically noted). This summary is based upon the Code, existing temporary and
proposed Treasury Regulations, Internal Revenue Service ("IRS") rulings and
judicial decisions as now in effect and as currently interpreted and does not
take into account possible changes in such tax laws or interpretations, any of
which may be applied retroactively and could affect the tax consequences
described below. This summary further is based in part on the assumption that
each obligation in the deposit agreement and any related agreement will be
performed in accordance with its terms.
EACH PROSPECTIVE PURCHASER SHOULD CONSULT A TAX ADVISOR WITH RESPECT TO THE
U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACQUIRING, OWNING OR
DISPOSING OF ORDINARY SHARES OR ADSS.
OWNERSHIP OF ADSS
For U.S. federal income tax purposes, U.S. holders of ADSs will be treated
as the owners of the ordinary shares represented by such ADSs.
DIVIDENDS
Distributions of cash or property (other than ordinary shares, if any,
distributed pro rata to all shareholders of our company, including holders of
ADSs) with respect to ordinary shares will be included in income by a U.S.
holder as foreign source dividend income at the time of receipt, which in the
case of a U.S. holder of ADSs generally will be the date of receipt by the
depositary, to the extent such distributions are made from the current and
accumulated earnings and profits of our company. Such dividends will not be
eligible for the dividends received deduction generally allowed to corporate
U.S. holders. To the extent, if any, that the amount of any distribution by our
company exceeds our company's current and accumulated earnings and profits as
determined under U.S. federal income tax principles, it will be treated first as
a tax-free return of the U.S. holder's tax basis in the ordinary shares or ADSs
and thereafter as capital gain.
A U.S. holder will not be eligible for a foreign tax credit against its
U.S. federal income tax liability for Singapore dividend distribution taxes paid
by our company. U.S. holders should be aware that dividends paid by our company
generally will constitute "passive income" or, in the case of certain U.S.
holders, "financial services income" for purposes of the foreign tax credit.
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If dividends are paid in Singapore dollars, the amount of the dividend
distribution includible in the income of a U.S. holder will be the U.S. dollar
value of the payments made in Singapore dollars, determined at a spot exchange
rate between Singapore dollars and U.S. dollars on the date such dividend is
includible in the income of the U.S. holder, regardless of whether the payment
is in fact converted into U.S. dollars. Generally, gain or loss, if any,
resulting from currency exchange fluctuations during the period from the date
the dividend is paid to the date such payment is converted into U.S. dollars
will be treated as ordinary income or loss.
Sale or exchange of ordinary shares or ADSs. A U.S. holder generally will
recognize gain or loss on the sale or exchange of ordinary shares or ADSs equal
to the difference between the amount realized on such sale or exchange and the
U.S. holder's tax basis in the ordinary shares or ADSs, as the case may be. Such
gain or loss will be capital gain or loss, and will be long-term capital gain or
loss if the ordinary shares or ADSs, as the case may be, were held for more than
one year. Gain or loss, if any, recognized by a U.S. holder generally will be
treated as U.S. source passive income or loss for U.S. foreign tax credit
purposes.
ESTATE TAXES
An individual shareholder who is a citizen or resident of the United States
for U.S. federal estate tax purposes will have the value of the ordinary shares
or ADSs owned by such holder included in his or her gross estate for U.S.
federal estate tax purposes. An individual holder who actually pays Singapore
estate tax with respect to the ordinary shares or ADSs will, however, be
entitled to credit the amount of such tax against his or her U.S. federal estate
tax liability, subject to certain conditions and limitations.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS
In general, information reporting requirements will apply to payments of
dividends in respect of the ordinary shares or ADSs or the proceeds received on
the sale, exchange or redemption of the ordinary shares or ADSs by a paying
agent within the United States to a non-corporate (or other exempt) U.S. holder,
and a 31 percent backup withholding tax may apply to such amounts if the U.S.
holder fails to provide an accurate taxpayer identification number to the paying
agent. Amounts withheld as backup withholding will be creditable against the
U.S. holder's United States federal income tax liability.
The above summary is not intended to constitute a complete analysis of all
tax consequences relating to ownership of ordinary shares or ADSs. You should
consult your tax advisor concerning the tax consequences of your particular
situation.
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<PAGE> 92
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the global offering, there has not been any public market for our
ADSs or ordinary shares, and no prediction can be made as to the effect, if any,
that market sales of ADSs or ordinary shares or the availability of ADSs for
sale will have on the market price of the ADSs prevailing from time to time.
Nevertheless, sales of substantial amounts of ADSs in the public market, or the
perception that such sales could occur, could adversely affect the market price
of ADSs and could impair our future ability to raise capital through the sale of
our equity securities. Please see "Risk Factors -- The future sales of
securities by our company or existing shareholders may hurt the price of our
ADSs and our ordinary shares."
Upon the closing of the global offering, we will have an aggregate of
1,253,610,131 ordinary shares issued and outstanding (including ordinary shares
represented by ADSs), assuming the underwriters do not exercise their
overallotment option and without taking into account the exercise of any
outstanding share options . The 250,000,000 ordinary shares sold in the global
offering (including ordinary shares represented by ADSs) will be freely tradable
in the United States, except that any shares held by "affiliates" as defined
under Rule 144 under the Securities Act may only be sold in compliance with the
limitations described below. The remaining 1,003,610,131 ordinary shares will be
deemed "restricted securities" as defined under Rule 144. Restricted securities
may be sold in the public market only if registered or if they qualify for an
exemption from registration under the Securities Act, including Rule 144 or
Regulation S. The ordinary shares sold in the global offering may be deposited
with the depositary and, subject to the terms of the deposit agreement, ADSs
representing these ordinary shares will be issued.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of 1.0% of the then
outstanding ordinary shares (including ordinary shares represented by ADSs)
(approximately 12,536,101 shares immediately after completion of the global
offering) or the average weekly trading volume in the ordinary shares (including
ordinary shares represented by ADSs) during the four calendar weeks preceding
the date on which notice of such sale is filed, subject to certain restrictions.
In addition, a person who is not deemed to have been an affiliate of our company
at any time during the 90 days preceding a sale and who has beneficially owned
the shares proposed to be sold for at least two years would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above. Certain resales may be permitted pursuant to Sections 903 and 904 of
Regulation S even if the Rule 144 holding periods are not satisfied. ST and ST
Semiconductors may be deemed affiliates of our company. Therefore, sales by them
in the United States of the 900,966,624 ordinary shares owned by them following
the global offering may continue to be subject to the volume limitations of Rule
144.
Each of our directors and executive officers, ST and its affiliates, our
equity investor customers and certain other existing shareholders who will
collectively hold an aggregate of 982,988,916 ordinary shares after the global
offering will be subject to lock-up agreements following the completion of the
global offering. Pursuant to the lock-up agreements, these shareholders will
agree that they will not, without the prior written consent of Salomon Smith
Barney Inc., offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or announce the offering of, any ordinary shares or ADSs
or any securities convertible into or exercisable or exchangeable for, ordinary
shares or ADSs for a period of 180 days from the date of this prospectus, other
than ordinary shares disposed of as bona fide gifts approved by Salomon Smith
Barney Inc. and shares subject to priority allocation in the global offering.
Following the 180 day lock-up period, the ordinary shares held by these
shareholders will be eligible for resale, subject to the registration
requirements under the Securities Act. Please see "Underwriting" for additional
information regarding resale restrictions.
In addition, we have agreed not to sell or otherwise dispose of any
ordinary shares or securities convertible into or exchangeable for ordinary
shares during the 180-day period following the date of the prospectus, without
the prior written consent of Salomon Smith Barney Inc. The foregoing does not
prevent us, however, from issuing the ordinary shares, directly or in the form
of ADSs, subject to the
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underwriters' overallotment option or issuing shares pursuant to our 1999 Share
Option Plan or 1997 or 1995 Employee Share Ownership Schemes. We intend to file
a registration statement on Form S-8 under the Securities Act within 90 days of
the closing of the global offering to register all of the ordinary shares that
are or may become subject to options under our 1999 Share Option Plan, thus
permitting the resale of such ordinary shares by nonaffiliates in the public
market without restriction under the Securities Act. Concurrently with the
closing of the global offering, we also intend to grant our officers, directors
and employees options under our 1999 share option plan to purchase approximately
20,000,000 ordinary shares, including 8,560,000 to our President and Chief
Executive Officer and 3,010,000 to our other directors and executive officers.
The exercise price of such options will be the same as the initial public
offering price of our ordinary shares, except for options for approximately
2,100,000 ordinary shares that will have exercise prices below the initial
public offering price (for which we are accruing a compensation charge). In
addition, we may issue ordinary shares in connection with any acquisition of
another company if the terms of such issuance provide that such ordinary shares
shall not be resold prior to the expiration of the 180-day period referenced in
the preceding sentence. Please see "Risk Factors -- The future sales of
securities by our company or existing shareholders may hurt the price of our
ADSs and our ordinary shares."
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UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement to
be dated as of the date of the final prospectus, each of the U.S. underwriters
named below, for whom Salomon Smith Barney Inc., Credit Suisse First Boston
Corporation, Hambrecht & Quist LLC, SG Cowen Securities Corporation and
SoundView Technology Group, Inc. are acting as the U.S. representatives, has
severally agreed to purchase, and we have agreed to sell to such U.S.
underwriter, the number of ordinary shares (including ordinary shares
represented by ADSs) set forth opposite the name of such U.S. underwriter.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS ORDINARY SHARES
----------------- ---------------
<S> <C>
Salomon Smith Barney Inc....................................
Credit Suisse First Boston Corporation......................
Hambrecht & Quist LLC.......................................
SG Cowen Securities Corporation.............................
SoundView Technology Group, Inc.............................
--------
Total.....................................................
========
</TABLE>
Subject to the terms and conditions stated in a separate underwriting
agreement to be dated as of the date of the final prospectus, each of the
international underwriters named below, for whom Salomon Brothers International
Limited, Credit Suisse First Boston (Singapore) Limited, Hambrecht & Quist LLC,
Societe Generale, SoundView Technology Group, Inc., Overseas Union Bank Limited
and Vickers Ballas & Company Pte Ltd are acting as the international
representatives, has severally agreed to purchase, and we have agreed to sell to
such international underwriter, the number of ordinary shares (including
ordinary shares represented by ADSs) set forth opposite the name of such
international underwriter.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS ORDINARY SHARES
-------------------------- ---------------
<S> <C>
Salomon Brothers International Limited......................
Credit Suisse First Boston (Singapore) Limited..............
Hambrecht & Quist LLC.......................................
Societe Generale............................................
SoundView Technology Group, Inc.............................
Overseas Union Bank Limited.................................
Vickers Ballas & Company Pte Ltd............................
-------
Total.....................................................
=======
</TABLE>
Subject to the terms and conditions stated in a Singapore management and
underwriting agreement to be dated as of the date of the final prospectus, each
of the Singapore underwriters for whom Overseas Union Bank Limited is acting as
lead manager and underwriter and Citicorp Investment Bank (Singapore) Limited is
acting as co-lead manager and underwriter, has agreed to purchase and we have
agreed to sell to such Singapore underwriters 25,000,000 ordinary shares.
These offerings are part of a global offering that consists of:
- an offering of an aggregate of 150,000,000 ordinary shares, directly or
in the form of ADSs, in the United States and Canada;
- an offering of an aggregate of 75,000,000 ordinary shares, directly or in
the form of ADSs, outside the United States and Canada; and
- an offering of an aggregate of 25,000,000 ordinary shares in Singapore.
Salomon Smith Barney Inc. is acting as the sole book running manager for
the global offering.
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The U.S. underwriting agreement, the international underwriting agreement
and the Singapore management and underwriting agreement each provide that the
obligations of the underwriters to purchase the ordinary shares (including
ordinary shares represented by ADSs) included in the global offering are subject
to approval of certain legal matters by counsel and to certain other conditions.
The U.S., international and Singapore underwriters are obligated to purchase all
the ordinary shares (including ordinary shares represented by ADSs) pursuant to
their respective agreements (other than those covered by the overallotment
option described below) if they purchase any of them. The public offering price
and underwriting discount per ADS for the U.S. offering, the international
offering and (taking into account the number of ordinary shares comprised in an
ADS) the Singapore offering will be identical. The closing of the international
offering, the U.S. offering and the Singapore offering are conditioned upon each
other.
The U.S., international and Singapore underwriters propose to offer some of
the ordinary shares (including ordinary shares represented by ADSs) directly to
the public at the initial public offering price set forth on the cover page of
this prospectus and some of the ordinary shares (including ordinary shares
represented by ADSs) to certain dealers at the public offering price less a
concession not exceeding S$ per ordinary share ($ per ADS). The
underwriters may allow, and such dealers may reallow, a concession not exceeding
S$ per ordinary share ($ per ADS) on sales to certain other dealers.
If all the ordinary shares (including the ordinary shares represented by ADSs)
are not sold at the public offering price, the representatives may change the
public offering price and other selling terms. The representatives have advised
us that the underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.
Up to 12,500,000 ordinary shares (including ordinary shares represented by
ADSs) offered in the global offering are subject to priority allocation to our
employees and business associates and to directors, officers and employees of
our affiliates, or to persons who are otherwise associated with us and our
affiliates and who have advised us of their desire to purchase such shares.
We have granted the U.S., international and Singapore underwriters an
option, exercisable for 30 days from the date of this prospectus, to purchase up
to an aggregate of 37,500,000 additional ordinary shares (including ordinary
shares represented by ADSs) at the applicable initial public offering price,
less the underwriting discount. The underwriters may exercise this option solely
to cover overallotments, if any, in connection with this offering. To the extent
that such option is exercised, each U.S., international and Singapore
underwriter, as the case may be, will be obligated, subject to certain
conditions, to purchase an additional number of ordinary shares (including
ordinary shares represented by ADSs) proportionate to such U.S., international
or Singapore underwriter's initial commitment.
The U.S., international and Singapore underwriters have entered an
agreement in which they agree to restrictions on where and to whom they and any
dealer purchasing from them may offer ordinary shares or ADSs. The U.S.,
international and Singapore underwriters also have agreed that they may sell
ordinary shares or ADSs, including those subject to priority allocation, among
their respective underwriting syndicates. The number of ordinary shares or ADSs
actually allocated to each offering may differ from the amount offered due to
reallocation among the U.S. offering, the international offering and the
Singapore offering.
We, ST and its affiliates, our equity investor customers, all of our
executive officers and directors and certain other existing shareholders have
agreed that, for a period of 180 days from the date of this prospectus, they
will not, without the prior written consent of Salomon Smith Barney Inc. offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
or announce the offering of, any ordinary shares or ADSs or any securities
convertible into or exchangeable for ordinary shares or ADSs, other than
ordinary shares disposed of as bona fide gifts approved by Salomon Smith Barney
Inc. and shares subject to priority allocation in the global offering. Salomon
Smith Barney Inc. in its sole discretion may release any of the ordinary shares
subject to the lock-up at any time without notice. Salomon Smith Barney, Inc.
has advised us that it does not presently have any intention to release
prematurely any of the shares that are subject to the lockup agreement.
Prior to the global offering, there has been no public market for the
ordinary shares or the ADSs. Consequently, the initial public offering price for
the ordinary shares and the ADSs will be determined
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through negotiations between us and the representatives. Among the factors
considered in determining the initial public offering price will be our record
of operations, our current financial condition, our future prospects, our
markets, the economic conditions in and future prospects in the semiconductor
manufacturing industry, our management and currently prevailing general
conditions in the equity securities markets, including current market valuations
of publicly traded companies considered comparable to us. There can be no
assurance, however, that the prices at which the ordinary shares or the ADSs
will sell in the public market after this offering will not be lower than the
price at which they are sold by the underwriters or that an active trading
market in the ordinary shares or the ADSs will develop and continue after this
offering.
Application has been made to have the ADSs included for quotation on the
Nasdaq National Market under the symbol "CHRT" and for the ordinary shares to be
listed on the Stock Exchange of Singapore Limited.
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with the U.S. and international
offerings. These amounts are shown assuming the mid-point of the filing ranges
and both no exercise and full exercise of the underwriters' option to purchase
additional ordinary shares (including ordinary shares represented by ADSs).
<TABLE>
<CAPTION>
PAID BY CHARTERED
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per ADS..................................................... $ $
Per Ordinary Share..........................................
Total..................................................... $ $
</TABLE>
In connection with the Singapore offering, we have agreed to pay the
Singapore underwriters discounts and commissions of $0.03 per ordinary share for
a total of $850,000 ($977,500 if the overallotment option is exercised in full).
In connection with the global offering, Salomon Smith Barney Inc. and
Salomon Brothers International Limited, on behalf of the underwriters, may
purchase and sell ADSs or ordinary shares in the open market. These transactions
may include overallotment, covering transactions and stabilizing transactions.
Overallotment involves syndicate sales of ADSs or ordinary shares in excess of
the number of ADSs to be purchased by the underwriters in the global offering,
which creates a syndicate short position. Syndicate covering transactions
involve purchases of the ADSs or ordinary shares in the open market after
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of ADSs or
ordinary shares made for the purpose of preventing or retarding a decline in the
market price of the ADSs or ordinary shares while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from an underwriter when Salomon
Smith Barney Inc., in covering syndicate short positions or making stabilizing
purchases, repurchases ADSs or ordinary shares originally sold by that
underwriter.
Any of these activities may cause the price of the ADSs or the ordinary
shares to be higher than the price that otherwise would exist in the open market
in the absence of such transactions. Subject to compliance with applicable laws,
these transactions may be effected on the Nasdaq National Market, the Stock
Exchange of Singapore Limited, in the over-the-counter market or otherwise and,
if commenced, may be discontinued at any time.
We estimate that the total expenses of this offering will be $3.3 million.
We have agreed to reimburse the U.S., international and Singapore underwriters
for certain expenses incurred in connection with the global offering.
Some of the representatives have been retained to perform certain
investment banking and advisory services for us from time to time for which they
have received customary fees and expenses. The representatives may, from time to
time, engage in transactions with and perform services for us in the ordinary
course of business.
94
<PAGE> 97
We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the underwriters may be required to make in respect of
any of those liabilities.
LEGAL MATTERS
Certain matters in connection with the global offering will be passed upon
for our company by Latham & Watkins. The validity of the ordinary shares
represented by the ADSs offered hereby will be passed upon by Allen & Gledhill,
our Singapore counsel. Latham & Watkins may rely upon Allen & Gledhill with
respect to certain matters governed by Singapore law. Certain matters in
connection with the global offering will be passed upon on behalf of the
underwriters by Cleary, Gottlieb, Steen & Hamilton, counsel for the
underwriters.
EXPERTS
We have included our consolidated financial statements as of December 31,
1997 and 1998 and June 30, 1998 and 1999, and for the years ended December 31,
1996, 1997 and 1998, and the six month periods ended June 30, 1998 and 1999, in
this prospectus and the related registration statement on Form F-1 in reliance
upon the report of KPMG, independent accountants, appearing elsewhere in this
prospectus, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-1, which
includes amendments, exhibits, schedules and supplements with respect to the
ADSs and the underlying ordinary shares offered by this prospectus. Although
this prospectus, which is a part of the registration statement, contains all
material information included in the registration statement, part of the
registration statement has been omitted from this prospectus as permitted by the
SEC. A related registration statement on Form F-6 has also been filed with the
SEC to register the ADSs as represented by the ADRs. For further information
with respect to our company and the ADSs offered by this prospectus, please
refer to these registration statements. Statements contained in this prospectus
as to the contents of any contract or other document referred to in this
prospectus are not necessarily complete, and where the contract or other
document is an exhibit to the registration statement, each such statement is
qualified in all respects by the provisions of the applicable exhibit, to which
reference is now made.
Upon completion of our global offering, we will be subject to the
information requirements of the Securities Exchange Act of 1934, as amended,
applicable to foreign private issuers. As a result, we will be required to file
reports, including annual reports on Form 20-F, reports on Form 6-K and other
information with the SEC. We also intend to submit to the SEC quarterly reports
on Form 6-K which will include unaudited quarterly financial information, for
the first three quarters of each fiscal year, in addition to our annual report
on Form 20-F which will include audited annual financial information. We intend
to file these reports within the same time periods that apply to the filing by
domestic issuers of quarterly reports on Form 10-Q and annual reports on Form
10-K. The SEC's rules generally require that domestic issuers file a quarterly
report on Form 10-Q within 45 days after the end of the first three fiscal
quarters and file an annual report on Form 10-K within 90 days after the end of
each fiscal year. These reports and other
95
<PAGE> 98
information filed or to be filed by us can be inspected and copied at the public
reference facilities maintained by the SEC at:
<TABLE>
<S> <C>
- - Judiciary Plaza - Seven World Trade Center
450 Fifth Street, N.W. 13th Floor
Room 1024 New York, New York 10048
Washington, D.C. 20549
</TABLE>
- Northwestern Atrium Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511
Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates.
The SEC maintains a website at www.sec.gov that contains reports, proxy and
information statements, and other information regarding registrants that make
electronic filings with the SEC using its EDGAR system. As a foreign private
issuer, we are not required to use the EDGAR system, but currently intend to do
so in order to make our reports available over the Internet.
Upon approval of the ADSs for quotation on the Nasdaq National Market, our
periodic reports and other information may also be inspected at the offices of
the Nasdaq National Market, Reports Section, 1735 K Street, Washington, D.C.
20006.
As a foreign private issuer, we will be exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements, and our
executive officers, directors and principal shareholders will be exempt from the
reporting and short-swing profit recovery provisions contained in Section 16 of
the Exchange Act.
We will furnish the depositary referred to under "Description of American
Depositary Shares" with annual reports, which will include annual audited
consolidated financial statements prepared in accordance with U.S. GAAP, and
quarterly reports, which will include unaudited quarterly consolidated financial
information prepared in accordance with U.S. GAAP. The depositary has agreed
with us that, at our request, it will promptly mail these reports to all
registered holders of ADSs. We will also furnish to the depositary all notices
of shareholders' meetings and other reports and communications that are made
generally available to our shareholders. The depositary will arrange for the
mailing of these documents to record holders of ADSs. Please see "Description of
American Depositary Shares" for further details on the responsibilities of the
depositary.
96
<PAGE> 99
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations and Comprehensive
Income (Loss)............................................. F-4
Consolidated Statements of Shareholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to the Financial Statements........................... F-8
</TABLE>
F-1
<PAGE> 100
When the capital restructuring referred to in note 26 of the notes to the
financial statements have been consummated, we will be in a position to render
the following report.
/s/ KPMG
Singapore
October 4, 1999
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:
We have audited the accompanying consolidated balance sheets of Chartered
Semiconductor Manufacturing Ltd and subsidiary as of December 31, 1997 and 1998
and June 30, 1998 and 1999, and the related consolidated statements of
operations and comprehensive income (loss), shareholders' equity and cash flows
for the years ended December 31, 1996, 1997 and 1998 and the six months ended
June 30, 1998 and 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Statements of Auditing Standards
issued by the Institute of Certified Public Accountants of Singapore ("ICPAS"),
which statements set forth standards which are substantially similar to
generally accepted auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Chartered Semiconductor Manufacturing Ltd and subsidiary as of December 31, 1997
and 1998, and June 30, 1998 and 1999, and the consolidated results of their
operations and their cash flows for the years ended December 31, 1996, 1997 and
1998 and the six months ended June 30, 1998 and 1999, in conformity with
generally accepted accounting principles in the United States of America.
KPMG
Singapore
August 12, 1999,
except as to Note 26,
which is as of [October 14], 1999
F-2
<PAGE> 101
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------- -----------------------
1997 1998 1998 1999
NOTE ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........................... 3 $ 23,785 $ 99,619 $ 14,450 $ 47,548
Accounts receivable
Trade............................................. 4 104,635 71,285 77,674 86,274
Others............................................ 4 26,717 12,703 9,216 7,073
Amounts due from ST and ST affiliates............... 21 2,843 2,591 1,497 2,137
Amounts due from CSP and SMP........................ 666 6,663 3,852 10,441
Inventories......................................... 5 59,262 29,476 36,934 26,943
Prepaid expenses.................................... 895 895 1,324 2,468
---------- ---------- ---------- ----------
Total current assets...................... 218,803 223,232 144,947 182,884
---------- ---------- ---------- ----------
Investment in CSP and SMP........................... 6 4,990 58,487 57,042 60,376
Other assets........................................ 25,250 50,905 32,154 41,505
Technology license agreements....................... 7 13,429 6,916 12,524 3,974
Property, plant and equipment, net.................. 9 1,016,496 981,970 1,081,840 941,108
---------- ---------- ---------- ----------
Total Assets.............................. $1,278,968 $1,321,510 $1,328,507 $1,229,847
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
Trade............................................. $ 13,074 $ 8,530 $ 5,013 $ 5,656
Fixed asset purchases............................. 98,943 22,829 43,945 32,458
Current installments of obligations under capital
leases............................................ 10 4,078 4,329 4,201 4,914
Current installments of long-term debt.............. 11 9,213 49,046 9,280 86,391
Bank overdrafts..................................... 13 1,378 3,082 5,043 1,210
Accrued operating expenses.......................... 12 61,458 84,918 54,838 87,612
Amounts due to ST and ST affiliates................. 21 336,254 10,607 138,563 8,574
Income taxes payable................................ 301 662 520 793
Other current liabilities........................... 14 23,031 26,130 70,384 4,909
---------- ---------- ---------- ----------
Total current liabilities................. 547,730 210,133 331,787 232,517
Obligations under capital leases, excluding current
installments...................................... 10 17,745 13,414 15,609 10,698
Long-term debt, excluding current installments...... 11 273,008 419,545 366,891 364,903
Customer deposits................................... 14 121,254 47,087 47,087 42,805
Other liabilities................................... 15 8,425 30,085 8,203 22,585
---------- ---------- ---------- ----------
Total liabilities......................... 968,162 720,264 769,577 673,508
Share capital
Ordinary shares of S$0.26 each.................... 17 143,384 221,433 190,996 221,636
Subscription receivable............................. (10,565) (12,341) (12,362) (12,731)
Additional paid-in capital.......................... 18 278,824 689,970 549,379 694,752
Unearned compensation............................... (1,821) - (1,007) (982)
Accumulated other comprehensive income (loss)....... (43,902) (52,696) (52,696) (52,696)
Retained deficit.................................... 19 (55,114) (245,120) (115,380) (293,640)
---------- ---------- ---------- ----------
Total shareholders' equity................ 310,806 601,246 558,930 556,339
Commitments and contingencies....................... 22
---------- ---------- ---------- ----------
Total liabilities and shareholders'
equity.................................. $1,278,968 $1,321,510 $1,328,507 $1,229,847
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 102
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net revenue...................................... $ 406,936 $ 379,761 $ 422,622 $ 232,771 $ 294,738
Cost of revenue.................................. (289,435) (368,521) (439,668) (224,105) (247,257)
--------- --------- --------- --------- ---------
Gross profit (loss).............................. 117,501 11,240 (17,046) 8,666 47,481
Operating Expenses:
Research and development....................... 13,018 26,553 43,419 20,642 22,955
Fab start-up costs............................. 13,132 10,908 1,455 1,455 --
Sales and marketing............................ 16,233 20,184 31,872 13,609 20,568
General and administrative..................... 32,615 30,144 37,389 15,089 22,701
Costs incurred on termination of development
program..................................... -- -- 31,776 -- 6,500
Stock-based compensation (note 23)............. 332 2,024 (2,780) (1,333) 3,289
--------- --------- --------- --------- ---------
Total operating expenses............... 75,330 89,813 143,131 49,462 76,013
--------- --------- --------- --------- ---------
Operating income (loss).......................... 42,171 (78,573) (160,177) (40,796) (28,532)
Equity in loss of CSP and SMP.................... -- (1,272) (20,434) (6,829) (17,988)
Other income..................................... 3,850 4,860 4,680 330 650
Interest income.................................. 973 179 1,690 811 1,207
Interest expense................................. (1,144) (12,782) (20,137) (10,100) (9,094)
Exchange gain (loss)............................. 1,963 (31,678) 5,237 (3,139) 5,065
--------- --------- --------- --------- ---------
Income (loss) before income taxes................ 47,813 (119,266) (189,141) (59,723) (48,692)
Income tax (expense) benefit..................... (337) (355) (865) (543) 172
--------- --------- --------- --------- ---------
Net income (loss)................................ $ 47,476 $(119,621) $(190,006) $ (60,266) $ (48,520)
========= ========= ========= ========= =========
Other comprehensive income (loss) -- foreign
currency translation........................... $ 4,622 $ (62,020) $ (8,794) $ (8,794) $ --
Comprehensive income (loss)...................... $ 52,098 $(181,641) $(198,800) $ (69,060) $ (48,520)
========= ========= ========= ========= =========
Net income (loss) per share and ADS:
Basic net income (loss) per share................ $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
Diluted net income (loss) per share.............. $ 0.10 $ (0.24) $ (0.24) $ (0.09) $ (0.05)
Basic net income (loss) per ADS.................. $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
Diluted net income (loss) per ADS................ $ 0.97 $ (2.44) $ (2.42) $ (0.88) $ (0.49)
Number of shares (in thousands) used in
computing:
- -- basic net income (loss) per share............. 488,296 490,407 784,541 685,871 985,816
- -- diluted net income (loss) per share........... 488,824 490,407 784,541 685,871 985,816
Number of ADS (in thousands) used in computing:
- -- basic net income (loss) per ADS............... 48,830 49,041 78,454 68,587 98,582
- -- diluted net income (loss) per ADS............. 48,882 49,041 78,454 68,587 98,582
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 103
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND SIX MONTHS ENDED JUNE 30, 1998 AND 199
IN THOUSANDS
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPRE- TOTAL
SUBSCRIP- ADDITIONAL UNEARNED RETAINED HENSIVE SHARE-
ORDINARY SHARES TION PAID-IN COMPEN- EARNINGS INCOME HOLDERS'
NO. RECEIVABLE CAPITAL SATION (DEFICIT) (LOSS) EQUITY
-------------------- ---------- ---------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996... 471,998 $138,559 $ (5,873) $215,539 $(1,236) $ 17,124 $ 13,496 $ 377,609
Net income................... -- -- -- -- -- 47,476 -- 47,476
Other changes in unearned
compensation, net.......... -- -- -- (152) 152 -- -- --
Issuance of shares........... 30,353 4,624 (5,070) 59,644 -- -- -- 59,198
Amortization of stock
compensation............... -- -- -- -- 332 -- -- 332
Foreign currency
translation................ -- -- -- -- -- -- 4,622 4,622
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1996....................... 502,351 143,183 (10,943) 275,031 (752) 64,600 18,118 489,237
Net loss..................... -- -- -- -- -- (119,621) -- (119,621)
Distribution................. -- -- -- -- -- (93) -- (93)
Payment of subscription
receivable................. -- -- 1,260 -- -- -- -- 1,260
Other changes in unearned
compensation, net.......... -- -- -- 3,093 (3,093) -- -- --
Issuance of shares........... 1,103 201 (882) 700 -- -- -- 19
Amortization of stock
compensation............... -- -- -- -- 2,024 -- -- 2,024
Foreign currency
translation................ -- -- -- -- -- -- (62,020) (62,020)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1997....................... 503,454 143,384 (10,565) 278,824 (1,821) (55,114) (43,902) 310,806
Net loss..................... -- -- -- -- -- (60,266) -- (60,266)
Payment of subscription
receivable................. -- -- 176 -- -- -- -- 176
Other changes in unearned
compensation, net.......... -- -- -- (2,147) 2,147 -- -- --
Issuance of shares........... 293,036 47,612 (1,973) 272,702 -- -- -- 318,341
Amortization of stock
compensation............... -- -- -- -- (1,333) -- -- (1,333)
Foreign currency
translation................ -- -- -- -- -- -- (8,794) (8,794)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at June 30, 1998..... 796,490 190,996 (12,362) 549,379 (1,007) (115,380) (52,696) 558,930
Net loss..................... -- -- -- -- -- (129,740) -- (129,740)
Call on partly paid shares... -- -- 1,017 -- -- -- -- 1,017
Other changes in unearned
compensation, net.......... -- -- -- (2,454) 2,454 -- -- --
Issuance of shares........... 203,617 30,437 (996) 143,045 -- -- -- 172,486
Amortization of stock
compensation............... -- -- -- -- (1,447) -- -- (1,447)
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at December 31,
1998....................... 1,000,107 221,433 (12,341) 689,970 -- (245,120) (52,696) 601,246
Net loss..................... -- -- -- -- -- (48,520) -- (48,520)
Call on partly paid shares... -- -- 286 -- -- -- -- 286
Other changes in unearned
compensation, net.......... -- -- -- 4,271 (4,271) -- -- --
Issuance of shares........... 1,318 203 (676) 511 -- -- -- 38
Amortization of stock
compensation............... -- -- -- -- 3,289 -- -- 3,289
--------- -------- -------- -------- ------- --------- -------- ---------
Balance at June 30, 1999..... 1,001,425 $221,636 $(12,731) $694,752 $ (982) $(293,640) $(52,696) $ 556,339
========= ======== ======== ======== ======= ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 104
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss).................. $ 47,476 $(119,621) $(190,006) $ (60,266) $ (48,520)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Equity in loss of CSP and SMP.... -- 1,272 20,434 6,829 17,988
Depreciation and amortization.... 115,545 173,762 226,903 103,577 142,617
Foreign exchange (gain) loss on
financing activities.......... (1,822) 41,734 (4,843) (1,267) (4,314)
(Gain) loss on disposal of
property, plant and
equipment..................... (219) 623 7,342 1,404 3,426
Costs on termination of
development program........... -- -- 31,776 -- --
Stock-based compensation......... 332 2,024 (2,780) (1,333) 3,289
Others........................... (1,434) (491) 475 (198) (1,120)
Change in operating working
capital:
Accounts receivable.............. 17,492 (106,390) 36,545 37,683 (14,216)
Amounts due from ST and ST
affiliates.................... (13,343) 3,166 257 1,346 454
Amounts due from CSP and SMP..... -- (666) (6,663) (2,977) (3,778)
Inventories...................... (17,740) (22,664) 28,069 22,763 2,533
Prepaid expenses................. 438 129 164 (421) (1,573)
Trade accounts payable........... (3,294) 7,189 (4,408) (8,157) (2,874)
Accrued operating expenses....... (9,823) 23,091 27,550 (9,642) 2,694
Other current liabilities........ (35,091) (1,532) (17,967) 1,118 1,398
Amounts due to ST and ST
affiliates.................... (1,309) 4,346 3,696 6,994 (3,910)
Advances to suppliers.............. (10,255) (18,875) 61 961 1,623
Income taxes payable............... (3,126) 116 325 219 131
--------- --------- --------- --------- ---------
Net cash (used in) provided by
operating activities............. 83,827 (12,787) 156,930 98,633 95,848
--------- --------- --------- --------- ---------
</TABLE>
F-6
<PAGE> 105
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of property,
plant and equipment.............. $ 5 $ 256 $ 2,246 $ 297 $ 3,513
Purchase of property, plant and
equipment........................ (481,230) (410,551) (279,368) (215,725) (89,802)
Technology license fees paid....... (5,579) (5,878) (7,790) (2,500) (8,500)
Investment in CSP and SMP.......... -- (6,108) (73,678) (58,628) (19,877)
--------- --------- --------- --------- ---------
Net cash used in investing
activities....................... (486,804) (422,281) (358,590) (276,556) (114,666)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Bank overdrafts.................... (3,593) (1,502) 1,643 3,593 (1,872)
Customer deposits, net............. 53,927 79,755 (60,851) (27,931) (27,001)
Loans from ST and ST affiliates
-- borrowings.................... 523,533 824,288 410,051 242,097 5,195
-- repayments.................... (315,193) (681,235) (738,400) (446,782) (3,318)
Long term debt
-- borrowings.................... 73,758 258,245 193,900 96,513 --
-- repayments.................... (19,848) (25,615) (8,993) (4,640) (4,664)
Issuance of shares by the
Company.......................... 59,198 1,279 492,909 318,517 324
Capital lease payments............. (3,605) (3,407) (5,317) (2,012) (2,131)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities............. 368,177 451,808 284,942 179,355 (33,467)
--------- --------- --------- --------- ---------
Net (decrease) increase in cash and
cash equivalents................. (34,800) 16,740 83,282 1,432 (52,285)
Effect of exchange rate changes on
cash and cash equivalents........ (61) (19) (7,448) (10,767) 214
Cash at the beginning of the
period........................... 41,925 7,064 23,785 23,785 99,619
--------- --------- --------- --------- ---------
Cash at the end of the period...... $ 7,064 $ 23,785 $ 99,619 $ 14,450 $ 47,548
========= ========= ========= ========= =========
Supplemental Cash Flow Information:
Interest paid (net of amounts
capitalized)..................... $ 1,360 $ 9,597 $ 25,451 $ 3,471 $ 12,126
Income taxes paid.................. 3,463 206 285 304 880
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 106
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
1. BUSINESS AND ORGANIZATION
Chartered Semiconductor Manufacturing Ltd (the "Company") is an independent
semiconductor foundry providing wafer fabrication services and technologies. The
Company operates in Singapore and has service operations in nine countries in
North America, Europe and Asia. Its principal markets are the United States of
America, Taiwan, Europe and Japan.
The Company is a subsidiary of Singapore Technologies Pte Ltd ("ST"), which
is itself ultimately wholly-owned by Temasek Holdings (Private) Limited
("Temasek"). Temasek is the holding company through which the corporate
investments of the government of Singapore are held.
In March 1997, the Company, Hewlett-Packard Europe B.V. and EDB Investments
Pte Ltd formed Chartered Silicon Partners Pte Ltd ("CSP"), in which the Company
has a non-controlling 51% equity interest. In January 1998, the Company and
Lucent Technologies Microelectronics Pte Ltd formed Silicon Manufacturing
Partners Pte Ltd ("SMP"), in which the Company has a 49% equity interest. The
Company accounts for CSP and SMP on an equity investment basis. See Note 2(d).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States ("US GAAP")
consistently applied for all periods.
(b) USE OF ESTIMATES
The preparation of the consolidated financial statements in accordance with
US GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
(c) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements reflect the consolidated accounts of
Chartered Semiconductor Manufacturing Ltd and its majority owned and controlled
affiliates. Intercompany accounts and transactions have been eliminated in
consolidation.
(d) INVESTMENT IN CSP AND SMP
The equity accounting method is applied for the investment in CSP and SMP.
The Company's share of the results of their operations is included in the
consolidated statement of operations. The Company's equity interest in these
equity affiliates, including its share of accumulated post-formation results, is
included as investment in CSP and SMP in the consolidated balance sheet.
(e) FUNCTIONAL CURRENCY
Through June 30, 1998, the Company's functional currency was Singapore
dollars. Effective July 1, 1998, the Company changed its functional currency to
US dollars.
The Singapore dollar was the functional currency of the Company because,
historically, the Singapore dollar was the currency of primary economic
environment in which the operations of the Company were conducted. However,
significant changes in economic facts necessitated a change in the Company's
functional currency from the Singapore dollar to the US dollar. The Company's
business has changed in
F-8
<PAGE> 107
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
that a more significant portion of its revenue is derived from companies based
outside of Singapore, principally the United States. There continues to be less
financial dependence of the Company on its parent. There are ongoing changes in
sources of financing from Singapore dollars to US dollars. With more of the
Company's transactions and cash flows denominated in US dollars, the functional
currency changed effective July 1, 1998 from the Singapore dollar to the US
dollar.
Concurrently with the change in functional currency, the Company converted
the majority of its debt financing to US dollars by entering into forward
exchange contracts which had the effect of redenominating the non-US dollar
loans to US dollar loans.
The change in functional currency was recognized through the translation of
Singapore dollar amounts of the Company's non-monetary assets, principally
property, plant and equipment at June 30, 1998, to US dollars on July 1, 1998
with those US dollar amounts becoming the accounting basis for those assets at
July 1, 1998 and for subsequent periods. The $52,696 cumulative translation
adjustment at July 1, 1998 in shareholders' equity prior to the change remains
as a separate component of accumulated comprehensive income.
(f) FOREIGN CURRENCY TRANSACTIONS
Assets and liabilities which are denominated in foreign currencies are
converted into the functional currency at the rates of exchange prevailing at
the balance sheet date. Income and expenses are converted at the rates of
exchange at transaction dates prevailing during the year. Foreign currency
transaction gains or losses are included in results of operations, except as
described below with respect to forward foreign exchange contracts utilized as a
hedge against firm commitments.
(g) REVENUE RECOGNITION
Revenue represents the invoiced value of goods and services supplied,
excluding goods and services tax, less allowance for returns. Revenue is
recognized upon shipment of goods.
(h) GRANTS
Asset-related government grants consist of grants for the purchase of
equipment used for research and development activities. Asset-related grants are
presented in the consolidated balance sheet as deferred grants and are credited
to other income on the straight-line basis over the estimated useful lives of
the relevant assets.
Income-related government grants are subsidies of training and research and
development expenses. Income-related grants are credited to other income when it
becomes probable that expenditures already incurred will constitute qualifying
expenditures for purposes of reimbursement under the grants, which is typically
substantially concurrent with the expenditures. See Note 15.
(i) FAB START-UP COSTS
The Company expenses costs related to start-up activities, including fab
start-up costs, as they are incurred.
(j) RESEARCH AND DEVELOPMENT COSTS
Research and development costs, which are expensed as incurred, were
$13,018, $26,553 and $43,419 in 1996, 1997 and 1998, respectively, and $20,642
and $22,955 in the six months ended June 30, 1998 and 1999, respectively.
F-9
<PAGE> 108
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
(k) STOCK-BASED EMPLOYEE COMPENSATION
The Company measures stock-based employee compensation cost for financial
statement purposes in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"), and its related
interpretations and includes pro forma information in Note 23 in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". Compensation cost for stock options granted to
employees in connection with the Company's fixed option plan is measured as the
excess of fair market value of the stock subject to the option at the grant date
over the exercise price of the option. Compensation cost for options granted to
employees under the Company's variable option plans is recorded over the
requisite vesting periods based upon the current market value of the Company's
stock at the end of each period.
(l) INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the carrying amounts of
existing assets and liabilities in the financial statements and their respective
tax bases, and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded for loss carryforwards and
other deferred tax assets where it is more likely than not that such loss
carryforwards and deferred tax assets will not be realized.
(m) DERIVATIVES
Gains and losses on hedges of existing assets or liabilities are included
in the carrying amounts of those assets or liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains and losses related
to qualifying hedges of firm commitments are deferred and are recognized in
income or as adjustments of carrying amounts when the hedged transaction occurs.
Any contracts held or issued that do not meet the requirements of a hedge are
recorded at fair value in the balance sheet and any changes in that fair value
recognized in income.
(n) NET INCOME (LOSS) PER SHARE
The computation of basic net income (loss) and diluted net income (loss)
per share are presented in conformity with Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share" for all periods presented.
F-10
<PAGE> 109
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
The following is a reconciliation of the numerators and denominators of the
basic and diluted net income (loss) per share computations prepared in
accordance with SFAS No. 128.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1996 1997 1998
------------------------------------ ---------------------------- ----------------------------
PER PER PER
SHARE INCOME SHARE INCOME SHARE
INCOME SHARES AMOUNT (LOSS) SHARES AMOUNT (LOSS) SHARES AMOUNT
----------- ------------- ------ --------- ------- ------ --------- ------- ------
(NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic net income (loss) per
share..................... $47,476 488,296 $0.10 $(119,621) 490,407 $(0.24) $(190,006) 784,541 $(0.24)
======= ===== ========= ====== ========= ======
Effect of dilutive
securities
Stock options and shares
subject to repurchase..... 528 -- --
------- ------- -------
Diluted net income (loss)
per share................. $47,476 488,824 $0.10 $(119,621) 490,407 $(0.24) $(190,006) 784,541 $(0.24)
======= ======= ===== ========= ======= ====== ========= ======= ======
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------
1998 1999
------------------------------------ ---------------------------
PER PER
INCOME SHARE INCOME SHARE
(LOSS) SHARES AMOUNT (LOSS) SHARES AMOUNT
----------- ------------- ------ -------- ------- ------
(NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C> <C> <C> <C>
Basic net income (loss) per share....................... $(60,266) 685,871 $(0.09) $(48,520) 985,816 $(0.05)
======== ====== ======== ======
Effect of dilutive securities
Stock options and shares subject to repurchase.......... -- --
------- -------
Diluted net income (loss) per share..................... $(60,266) 685,871 $(0.09) $(48,520) 985,816 $(0.05)
======== ======= ====== ======== ======= ======
</TABLE>
For all the periods subsequent to 1996, the Company has excluded all
outstanding stock options and shares subject to repurchase by ST from the
calculation of diluted net income (loss) per share under SFAS No. 128 because
all such securities are anti-dilutive for those periods. The total number of
shares excluded from the calculations of diluted net income (loss) per share
were 13,156,240 and 27,015,600 for the years ended December 31, 1997 and 1998,
respectively, and 14,586,920 and 16,201,840 for the six months ended June 30,
1998 and 1999, respectively. All amounts have been restated to reflect the
impact of the capital restructuring described in Note 26.
(O) COMPREHENSIVE INCOME
On January 1, 1998, the Company applied SFAS No. 130, "Reporting
Comprehensive Income" with respect to reporting and presentation of
comprehensive income and its components in a full set of financial statements.
Comprehensive income (loss) consists of net income (loss) and foreign currency
translation adjustments and is presented in the consolidated statements of
operations and comprehensive income (loss).
(P) CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments that are readily
convertible into cash and have original maturities of three months or less.
F-11
<PAGE> 110
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
(q) INVENTORIES
Inventories are stated at the lower of cost, determined on the weighted
average basis, or market (net realizable value.
(r) TECHNOLOGY LICENSE AGREEMENTS
The Company has entered into technology license agreements requiring the
payment of licensing fees and royalties. The agreed fees and royalties are
recorded as a liability and an intangible asset. The intangible assets are
amortized to results of operations on the straight-line basis over their
estimated useful lives. See Note 7.
(s) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated on the straight-line method over the
following periods:
<TABLE>
<S> <C> <C>
Buildings.............................. - 20 years (or, if shorter, the remaining period of the
lease of the land on which the buildings are erected)
Mechanical and electrical - 10 years
installations........................
Equipment and machinery................ - 5 years
Office and computer equipment.......... - 2 to 5 years
</TABLE>
The Company capitalizes interest with respect to major assets under
installation and construction until such assets are ready for use. See Note 9
for details of capitalized interest. Repairs and replacements of a routine
nature are expensed, while those that extend the life of an asset are
capitalized.
Plant and equipment under capital leases are stated at the present value of
minimum lease payments. Plant and equipment held under capital leases and
leasehold improvements are amortized straight-line over the shorter of the lease
term or estimated useful life of the asset.
(t) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company reviews long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognised is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(u) OPERATING LEASES
Rental payments under operating leases are expensed on a straight-line
basis over the periods of the respective leases.
(v) CONCENTRATION OF RISK
The Company is an independent foundry that fabricates integrated circuits
on silicon wafers for customers in the semiconductor industry. The five largest
customers of the Company accounted for
F-12
<PAGE> 111
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
61%, 48% and 43% of net revenue in the years ended December 31, 1996, 1997 and
1998, respectively and 43% and 45% of net revenue in the six months ended June
30, 1998 and 1999, respectively (see Note 20). The Company believes that the
concentration of its credit risk in trade receivables is mitigated substantially
by its credit evaluation process, credit policies and credit control and
collection procedures.
In addition, certain of the Company's treasury management activities are
undertaken by ST or carried out together with other companies in the ST Group.
The Company participates in a pooled cash management arrangement and places
short-term advances with other companies in the ST Group. The Company also
contracts substantially all of its forward purchases of foreign exchange with
ST, where required for the purpose of hedging future foreign currency
commitments. See Notes 3 and 22(f).
(w) SEGMENT DISCLOSURES
Disclosures on business segments are made under SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information," which meets the
requirements of SAS 23 "Reporting Financial Information by Segment". Under SFAS
No. 131, a public company reports descriptive information about its reportable
operating segments. Operating segments, as defined, are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The Company operates in a
single reportable segment.
3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash at banks and in hand........................... $14,362 $ 6,747 $ 6,247 $13,015
Cash equivalents -- ST pooled cash.................. 9,423 92,872 8,203 34,533
------- ------- ------- -------
$23,785 $99,619 $14,450 $47,548
======= ======= ======= =======
</TABLE>
Certain of the Company's treasury management activities are undertaken by
ST or its affiliates. The Company participates in a pooled cash management
arrangement under which the Company may place surplus cash with ST as short-term
advances of less than three months.
4. ACCOUNTS RECEIVABLE
Trade accounts receivable at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------------
1997 1998 1998 1999
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Trade receivables.................................. $108,592 $76,264 $81,555 $95,718
Allowance for doubtful accounts.................... (3,957) (4,979) (3,881) (9,444)
-------- ------- ------- -------
$104,635 $71,285 $77,674 $86,274
======== ======= ======= =======
</TABLE>
F-13
<PAGE> 112
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Movements in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------- -------------------
1996 1997 1998 1998 1999
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Beginning................................ $ -- $ 7,175 $3,957 $3,957 $4,979
Utilized in period....................... (15) -- -- -- --
Charge (credit) for the period........... 7,493 (2,058) 993 (105) 4,465
Translation adjustment................... (303) (1,160) 29 29 --
------ ------- ------ ------ ------
Ending................................... $7,175 $ 3,957 $4,979 $3,881 $9,444
====== ======= ====== ====== ======
</TABLE>
Other receivables at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ----------------
1997 1998 1998 1999
------- ------- ------ ------
<S> <C> <C> <C> <C>
Advances to suppliers................................. $ 7,901 $ 4,944 $ 280 $ 87
Loans to employees.................................... 1,050 1,097 1,003 1,686
Deposits.............................................. 1,665 466 368 530
Receivable from research partners..................... 12,855 3,333 2,304 --
Others................................................ 3,246 2,863 5,261 4,770
------- ------- ------ ------
$26,717 $12,703 $9,216 $7,073
======= ======= ====== ======
</TABLE>
5. INVENTORIES
Inventories at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Raw materials....................................... $19,737 $ 6,279 $17,726 $ 1,899
Work in process..................................... 24,271 17,206 8,630 18,787
Consumable supplies and spares...................... 15,712 10,184 12,744 6,597
------- ------- ------- -------
59,720 33,669 39,100 27,283
Allowance for inventory obsolescence................ (458) (4,193) (2,166) (340)
------- ------- ------- -------
$59,262 $29,476 $36,934 $26,943
======= ======= ======= =======
</TABLE>
F-14
<PAGE> 113
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Movements in the allowance for inventory obsolescence are as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1996 1997 1998 1998 1999
-------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Beginning.................................. $ 20 $ 654 $ 458 $ 458 $ 4,193
Utilized in period......................... (2,751) (1,467) -- -- (3,859)
Charge for the period...................... 3,380 1,114 3,744 1,717 6
Translation adjustment..................... 5 157 (9) (9) --
------- ------- ------ ------ -------
Ending..................................... $ 654 $ 458 $4,193 $2,166 $ 340
======= ======= ====== ====== =======
</TABLE>
6. INVESTMENT IN CSP AND SMP
The investment in CSP and SMP at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- -------------------
1997 1998 1998 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Cost.............................................. $ 6,108 $ 79,786 $64,736 $ 99,663
Share of retained post-formation loss............. (1,272) (21,706) (8,101) (39,694)
Translation adjustments........................... 154 407 407 407
------- -------- ------- --------
$ 4,990 $ 58,487 $57,042 $ 60,376
======= ======== ======= ========
</TABLE>
CSP and SMP are semiconductor foundries providing wafer fabrication
services and technologies. The Company accounts for its 51% investment in CSP
and its 49% investment in SMP using the equity method. Because the minority
owners of CSP have certain approval or veto rights which allow them to
participate in management, CSP is not consolidated. Under the terms of the
shareholders agreements, the Company is committed to making an equity investment
in CSP of up to $215,429, of which $40,600 has been invested, and in SMP of up
to $122,200, of which $59,063 has been invested.
Under the shareholders' agreement with the majority shareholder of SMP, in
arriving at the share of net income attributable to the Company, the Company is
entitled to the margins from sales to customers directed to SMP by the Company,
after deducting 49% share of the overhead costs of SMP. Accordingly, SMP's net
results are not expected to be shared in the same ratio as the equity holding.
The Company accounts for its due share of SMP's net results in accordance with
the terms in the foregoing agreement.
CSP and SMP commenced recording of sales in the quarter ended June 30, 1999
which amounted to $17,894 and $3,512, respectively in that quarter.
F-15
<PAGE> 114
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Shown below is aggregated summarized financial information for CSP and SMP:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ---------------------
1997 1998 1998 1999
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Current assets.................................. $ 596 $ 21,151 $ 56,082 $ 22,680
Technology license agreements................... -- -- -- 9,167
Property, plant and equipment................... 12,992 240,574 169,804 329,919
Short-term debt................................. -- (75,460) (65,925) (122,475)
Other current liabilities....................... (3,804) (38,642) (46,268) (42,339)
Long-term debt.................................. -- (31,000) -- (76,000)
Shareholders' equity............................ 9,784 116,623 113,693 120,952
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
----------------------- -------------------
1996 1997 1998 1998 1999
---- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenue...................................... $-- $ -- $ -- $ -- $21,406
Gross loss....................................... -- -- -- -- 11,366
Operating loss................................... -- 2,571 42,430 12,719 34,703
Net loss......................................... -- 2,494 41,256 13,788 36,234
</TABLE>
7. TECHNOLOGY LICENSE AGREEMENTS
Technology license agreements at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Technology licenses, at cost.................... $ 31,660 $ 32,284 $ 34,412 $ 38,784
Accumulated amortization........................ (18,231) (25,368) (21,888) (34,810)
-------- -------- -------- --------
$ 13,429 $ 6,916 $ 12,524 $ 3,974
======== ======== ======== ========
</TABLE>
Future payments under the agreements are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Unconditional fixed obligations payable......... $ 36,750 $ 39,250 $ 39,250 $ 45,750
Total payments to date.......................... (22,980) (30,770) (25,480) (39,270)
-------- -------- -------- --------
13,770 8,480 13,770 6,480
-------- -------- -------- --------
Current installments (see note 14).............. 6,570 1,280 6,570 1,380
Non-current installments (see note 15).......... 7,200 7,200 7,200 5,100
-------- -------- -------- --------
$ 13,770 $ 8,480 $ 13,770 $ 6,480
======== ======== ======== ========
</TABLE>
8. DEVELOPMENT PROGRAM TERMINATION COSTS
During 1998, the Company discontinued its technology transfer and licensing
arrangement entered into for a development program which the Company decided to
terminate. In connection with the
F-16
<PAGE> 115
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
discontinuation of this development program, certain equipment previously
purchased and yet to be placed into production was identified by management in
1998 as redundant and to be disposed of in the near term. The Company recorded a
non-cash impairment loss of $30,938 to adjust the carrying value of such
equipment to $5,961, the estimated fair value of such equipment less selling
costs, and wrote off all unamortized technology license costs of $838. The
impaired equipment was removed from service for all purposes at the time the
impairment charge was recognized. The Company is in the process of evaluating
bids to purchase such equipment and expects to sell it before the end of 1999.
Additionally, the Company recorded a $6,500 charge for a final cash settlement
amount in 1999 for the termination of the licensing arrangement.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1997 and 1998 and June 30,
1998 and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
COST
Buildings................................. $ 93,782 $ 147,685 $ 146,671 $ 149,371
Mechanical and electrical installations... 198,641 268,606 260,008 266,233
Equipment and machinery................... 801,897 1,048,744 989,293 1,063,989
Office and computer equipment............. 59,336 63,112 64,072 64,322
Assets under installation and
construction............................ 215,738 11,555 70,897 75,011
---------- ---------- ---------- ----------
Total cost........................... 1,369,394 1,539,702 1,530,941 1,618,926
---------- ---------- ---------- ----------
ACCUMULATED DEPRECIATION
Buildings................................. 9,681 16,153 12,818 19,469
Mechanical and electrical installations... 41,273 70,502 54,627 81,374
Equipment and machinery................... 282,693 441,815 356,796 543,712
Office and computer equipment............. 19,251 29,262 24,860 33,263
---------- ---------- ---------- ----------
Total accumulated depreciation....... 352,898 557,732 449,101 677,818
---------- ---------- ---------- ----------
Property, plant and equipment (net)....... $1,016,496 $ 981,970 $1,081,840 $ 941,108
========== ========== ========== ==========
</TABLE>
Depreciation charged to results of operations amounted to $166,844 and
$219,900 for 1997 and 1998, and $100,054 and $133,174 for the six months ended
June 30, 1998 and 1999, respectively. Buildings consists of wafer plants,
including administrative offices, built on land licensed to ST and Technology
Parks Pte Ltd, and sub-leased to the Company. See Note 21.
Included in property, plant and equipment are assets acquired under capital
lease obligations with a cost and related accumulated depreciation of
approximately $25,300 and $11,900, respectively, at December 31, 1997, $24,000
and $16,000, respectively, at December 31, 1998, $25,600 and $14,600,
respectively, at June 30, 1998 and $24,000 and $18,500, respectively, at June
30, 1999.
Capitalized interest relating to property, plant and equipment amounted to
$6,300, $10,500 and $5,970 in the years ended December 31, 1996, 1997 and 1998,
respectively and $4,700 and $526 in the six months ended June 30, 1998 and 1999,
respectively.
F-17
<PAGE> 116
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
10. CAPITAL LEASES
Future minimum lease payments under the US dollar denominated capital
leases for equipment and machinery as of December 31, 1998 and June 30, 1999 are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ ------------------
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Payable in year ending December 31,
1998.............................................. $ 5,338 $ -- $ 2,669 $ --
1999.............................................. 5,363 5,363 5,363 2,694
2000.............................................. 6,387 6,387 6,387 6,387
2001.............................................. 8,106 8,106 8,106 8,106
------- ------- ------- -------
Total minimum lease payments........................ 25,194 19,856 22,525 17,187
Amounts representing interest at rates ranging from
5.90% to 6.06% per annum.......................... (3,371) (2,113) (2,715) (1,575)
------- ------- ------- -------
Present value of minimum lease payments............. 21,823 17,743 19,810 15,612
Less current installments of capital lease
obligations....................................... (4,078) (4,329) (4,201) (4,914)
------- ------- ------- -------
Obligations under capital leases, excluding current
installments...................................... $17,745 $13,414 $15,609 $10,698
======= ======= ======= =======
</TABLE>
The minimum lease payments are guaranteed by ST.
11. LONG-TERM DEBT
Long-term debt at December 31, 1997 and 1998 and June 30, 1998 and 1999
consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Singapore dollar loans at fixed rates of 4% to
4.25%......................................... $222,341 $408,277 $315,850 $392,626
Singapore dollar loans at floating rates........ 59,880 60,314 60,321 58,668
-------- -------- -------- --------
282,221 468,591 376,171 451,294
Less current installments....................... (9,213) (49,046) (9,280) (86,391)
-------- -------- -------- --------
Long-term debt, excluding current
installments.................................. $273,008 $419,545 $366,891 $364,903
======== ======== ======== ========
</TABLE>
All long-term debts are unsecured.
The fixed rate Singapore dollar loans are guaranteed by ST and contain
certain covenants which restrict the ability of the Company to pay dividends
without prior approval from the lender. The Company is not separately charged
for the guarantees by ST. The loans are repayable in semi-annual installments
and mature between 2002 and 2005.
The floating rate Singapore dollar loans comprise two loans of equal
amounts. Interest is charged at 2% above the lending bank's first tier savings
rate in respect of one loan (3.50% as of December 31, 1998; 3.13% as of June 30,
1999) and 1% above the arithmetic mean of Singapore inter-bank rates for
deposits quoted by specified banks to the lender (6.44% as of December 31, 1998;
3.25% as of June 30, 1999), respectively. The loans are repayable in June 2002
and February 2002 respectively. See note 22(f).
F-18
<PAGE> 117
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Annual maturities of long-term loans as of December 31, 1998 and June 30,
1999 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31, 1999.................... $ 49,046 $ 43,195
2000...................................................... 88,814 86,391
2001...................................................... 88,814 86,391
2002...................................................... 149,127 145,059
2003...................................................... 37,116 36,104
2004...................................................... 27,837 27,077
Thereafter................................................ 27,837 27,077
-------- --------
$468,591 $451,294
======== ========
</TABLE>
12. ACCRUED OPERATING EXPENSES
Accrued operating expenses at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:
<TABLE>
<CAPTION>
1997 1998 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Accrual for employee bonuses and related expenses... $19,680 $14,732 $14,386 $22,606
Accrual for vacation liability...................... 1,942 2,237 2,313 2,409
Accrual for technology costs (see Note 22(g))....... 5,847 7,853 6,920 9,819
Unbilled raw materials.............................. 27,458 52,113 17,985 39,099
Accrual for interest costs.......................... 3,891 5,971 4,822 5,789
Others.............................................. 2,640 2,012 8,412 7,890
------- ------- ------- -------
$61,458 $84,918 $54,838 $87,612
======= ======= ======= =======
</TABLE>
Movements in accrual for technology costs are as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- ------------------
1996 1997 1998 1998 1999
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Beginning................................... $ 27,505 $4,261 $5,847 $5,847 $7,853
Charge (credit) for the period.............. (23,244) 1,586 2,006 1,073 1,966
-------- ------ ------ ------ ------
Ending...................................... $ 4,261 $5,847 $7,853 $6,920 $9,819
======== ====== ====== ====== ======
</TABLE>
13. ADDITIONAL CREDIT FACILITIES AND BANK OVERDRAFTS
As of June 30, 1999, the Company has unutilized banking facilities of
approximately $20,923 for short-term advances and bankers' guarantees and an
unutilized facility with ST of approximately $98,123.
The weighted average rate of interest payable on the bank overdrafts was
7.0% and 6.0% as of December 31, 1997 and 1998, and 8.0% and 6.0% as of June 30,
1998 and 1999, respectively.
F-19
<PAGE> 118
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
14. OTHER CURRENT LIABILITIES
Other current liabilities at December 31, 1997 and 1998 and June 30, 1998
and 1999 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ -----------------
1997 1998 1998 1999
------- ------- ------- ------
<S> <C> <C> <C> <C>
Obligations payable under technology license
agreements......................................... $ 6,570 $ 1,280 $ 6,570 $1,380
Customer deposits.................................... 16,277 22,795 62,513 76
Others............................................... 184 2,055 1,301 3,453
------- ------- ------- ------
$23,031 $26,130 $70,384 $4,909
======= ======= ======= ======
</TABLE>
Deposits are received from customers to secure the allocation of agreed
levels of wafer capacity. These non-interest bearing deposits are refundable at
the end of the agreed period of such allocated capacity, typically about five
years.
15. OTHER LIABILITIES
Other liabilities at December 31, 1997 and 1998 and June 30, 1998 and 1999
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------- -----------------
1997 1998 1998 1999
------ ------- ------ -------
<S> <C> <C> <C> <C>
Obligations payable under technology license
agreements.......................................... $7,200 $ 7,200 $7,200 $ 5,100
Deferred grants (see below)........................... 1,225 2,873 1,003 1,753
Deferred gain on forward contracts.................... - 20,012 - 15,732
------ ------- ------ -------
$8,425 $30,085 $8,203 $22,585
====== ======= ====== =======
</TABLE>
The Company has obtained approval for funding of certain research and
development projects from the Economic Development Board of Singapore ("EDB"),
under the Research and Development Assistance Scheme ("RDAS") administered by
EDB. The program provides for funds to be disbursed to the Company over the
terms of the projects.
16. INCOME TAXES
The Company has been granted pioneer status under the Economic Expansion
Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore (the "Act"),
for sub-micron technology manufacturing in four of its fabs, effective for ten
years from January 1, 1991, July 1, 1996 and January 1, 1998, and the earlier of
initial fab production date and December 31, 1999, respectively.
During the pioneer status period, the Singapore-resident income from
pioneer trade is exempt from income tax, subject to compliance with the
conditions stated in the certificate and the Act. Income derived from
non-pioneer trade during the pioneer period, however, is subject to income tax
at the prevailing enacted rate of tax.
In addition, two fabs have been granted post-pioneer status, which entitles
them to a concessionary tax rate of 10% for five years after the expiration of
their pioneer status in 2007 and 2008, respectively.
The tax-exempt profits arising from the pioneer trade can be distributed as
tax-exempt dividends which are not subject to Singapore income tax in the hands
of the holders of ordinary shares. Losses arising in the pioneer status period
are available for carryforward to be offset against profits arising in
F-20
<PAGE> 119
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
subsequent periods, including profits arising after the pioneer status period.
Profits arising during the pioneer status period offset any accumulated pioneer
loss carryforward balance. Pioneer loss carryforwards are available
indefinitely, subject to more than 50% of the Company's equity staying with the
same shareholders from the incurrence of the tax loss to its utilization.
However, there is no consolidated group taxation offset allowed between the
fabs. As of June 30, 1999, the Company has pioneer loss carryforwards of
$176,762.
The income tax expense for the years ended December 31, 1996, 1997 and 1998
and the six months ended June 30, 1998 and 1999 represents income tax payable on
non-pioneer trade income, principally interest income.
A reconciliation of the expected tax expense at the statutory rate of tax
to the actual tax expense is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income taxes computed at Singapore
statutory tax rate of 26%............. $ 12,431 $(31,009) $(49,177) $(15,528) $(12,660)
Pioneer status relief................... (12,110) -- -- -- --
Pioneer losses not recognized as
deferred benefit...................... -- 30,534 45,893 14,551 9,804
Non-deductible investee losses.......... -- -- 3,561 1,268 3,150
Settlement of prior years' tax claims... -- -- -- -- (880)
All other items, net.................... 16 830 588 252 414
-------- -------- -------- -------- --------
Income tax expense (benefit)............ $ 337 $ 355 $ 865 $ 543 $ (172)
======== ======== ======== ======== ========
</TABLE>
The pioneer status relief had the effect of increasing net income per
ordinary share by $0.02 for the year ended December 31, 1996.
As of December 31, 1997 and 1998 and as of June 30, 1998 and 1999, there
are no material deferred tax assets or liabilities since profits during the
pioneer status period are not taxable and all temporary differences are expected
to reverse within the pioneer status period. Accordingly, no deferred tax assets
or liabilities have been recognized.
17. SHARE CAPITAL
The Company's authorized share capital at June 30, 1999 was comprised of
3,076,923,079 ordinary shares of Singapore dollars S$0.26 par value each.
Share capital at December 31, 1997 and 1998 and June 30, 1998 and 1999
consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Issued share capital............................ $ 82,223 $160,272 $129,835 $160,475
Capital reduction (see below)................... 61,161 61,161 61,161 61,161
-------- -------- -------- --------
$143,384 $221,433 $190,996 $221,636
======== ======== ======== ========
</TABLE>
F-21
<PAGE> 120
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
On November 6, 1992, the Company reorganized its paid-up share capital by
the extinguishment of accumulated losses of $61,161 against the paid-up share
capital in a capital reduction sanctioned by the High Court of Singapore. The
capital reduction does not qualify as a quasi-reorganization under US GAAP and
accordingly has not been reflected in the financial statements.
Under Singapore law, all increases in share capital (including rights
issues) require prior shareholders' approval. Singapore law does not provide for
the issue of shares of no par value and, except with court approval, prohibits
the issue of shares at a discount to par value.
As of 30 June, 1999, the Company had 16,350,063 outstanding partly-paid
shares issued at an average price of S$1.20 under employee stock plans. See note
23.
The partly paid ordinary shares were issued under the 1995 and 1997
Employees' Share Ownership Plans. The subscription price of these partly paid
ordinary shares range from Singapore dollars S$0.93 to S$1.38 per share. The
expiration dates of the installment payments for these partly paid ordinary
shares range from November 2002 to April 2009.
18. ADDITIONAL PAID-IN CAPITAL
Additional paid-in capital as of December 31, 1997 and 1998 and June 30,
1998 and 1999 represents principally the excess of proceeds received from issues
of share capital (net of the costs of issue) over the par value of shares
issued, which under Singapore law must be credited to the share premium account.
The share premium may only be applied in paying up unissued shares to be issued
to shareholders, paying up in whole or in part the balance unpaid on shares in
issue, in writing off preliminary expenses and share and debenture issue
expenses and by provision for premiums payable on the redemption of redeemable
preferred shares. The Company has not utilized any amounts in the share premium
account for the above mentioned purposes.
19. RETAINED EARNINGS
Singapore law allows dividends to be paid only out of profits of the
Company, determined in accordance with Singapore GAAP. Shareholders of ordinary
shares are not liable for Singapore income tax on dividends paid by the Company
out of its tax exempt profits from pioneer activities.
20. BUSINESS SEGMENT DATA AND MAJOR CUSTOMERS
The Company operates in a single reportable segment, providing wafer
foundry services. All of the Company's products are manufactured and delivered
in Singapore.
The following table presents revenues by country of domicile of customer:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
USA............................... $303,532 $198,288 $265,398 $127,825 $230,080
Taiwan............................ 65,927 140,799 134,171 94,529 40,356
Singapore......................... 34,900 25,385 6,409 3,056 1,416
Others............................ 2,577 15,289 16,644 7,361 22,886
-------- -------- -------- -------- --------
$406,936 $379,761 $422,622 $232,771 $294,738
======== ======== ======== ======== ========
</TABLE>
F-22
<PAGE> 121
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Revenues from major customers, as a percentage of total revenue, were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- --------------
1996 1997 1998 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Customer A......................................... 0.1% 1.0% 9.6% 3.3% 12.4%
Customer B......................................... 9.8 14.0 7.6 9.7 10.0
Customer C......................................... 25.7 10.4 1.0 1.4 0.7
Customer D......................................... 3.1 14.6 9.3 15.8 1.3
Others............................................. 61.3 60.0 72.5 69.8 75.6
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
The top five customers of the Company accounted for 61%, 48% and 43% of the
Company's net revenue in the years ended December 31, 1996, 1997 and 1998,
respectively and 43% and 45% of the Company's net revenue in the six months
ended June 30, 1998 and 1999, respectively.
As a result of such concentration of the customer base, loss or
cancellation of business from, or significant changes in scheduled deliveries or
decreases in the prices of products sold to, any of these customers could
materially and adversely affect the Company's results of operations or financial
position.
21. RELATED PARTY TRANSACTIONS
(a) ST
ST, one of Singapore's largest industrial conglomerates, is indirectly
wholly-owned by the Government of Singapore.
The Company transacts business with ST and its affiliates in the normal
course of their respective businesses, including ST Assembly Test Services Ltd
("STATS").
F-23
<PAGE> 122
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
In addition to the transactions with related parties disclosed in Notes 11,
the Company had the following significant transactions with related parties:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ST
Management fees.............................. $ 4,428 $ 5,719 $ 4,897 $2,306 $4,767
Reimbursement of expenses incurred on behalf
of the Company............................ 5,940 5,594 5,697 2,390 2,791
Rental for leasehold land from ST............ 1,435 2,128 2,020 740 1,164
Interest expense............................. 4,177 12,729 6,552 5,788 --
Affiliates of ST
Services purchased from STATS................ 8,376 13,261 22,700 7,964 8,648
Other services purchased..................... 2,297 3,034 1,362 1,484 717
Net revenue.................................. 33,597 20,917 6,247 1,713 1,313
Property, plant and equipment purchased...... 8,662 1,051 924 523 --
Other service income......................... 50 -- -- -- --
Building construction costs.................. 50,805 2,575 1,101 397 --
Interest expense............................. -- -- 2,310 -- 1
======= ======= ======= ====== ======
</TABLE>
The fabs of the Company are built on land held on long-term operating
leases from entities controlled by the Government of Singapore. Fab 1 is built
on land leased by the Company from Technology Parks Pte Ltd ("TPPL"), a private
company wholly-owned by Jurong Town Corporation ("JTC"), under a long-term lease
which expires in 2017, with an option, subject to certain conditions, to extend
by another 30 years. JTC is a statutory board established by the Singapore
government to develop and manage industrial estates in Singapore.
Fabs 2 and 3 occupy land leased by ST from JTC. The Company has entered
into sub-leases with ST in respect of the underlying land for the entire term of
the lease between ST and JTC. The leases expire in 2024 with an option, subject
to certain conditions, to extend for another 30 years. CSP's fab occupies land
leased by ST from JTC.
Rental rates on JTC and TPPL leases are subject to revisions at market
rates at periodic intervals in accordance with the rental agreements, with such
increases generally capped at 8% to 10% per annum.
ST provides management and corporate services to the Company. ST also
provides staff loans to senior management staff of the Company, including loans
related to subscription amounts associated with the employee share plans
described in Note 23. Management fees and expenses incurred on behalf of, or
allocated to, the Company by ST are charged to the Company under a service
agreement pursuant to which ST provides corporate support services to the
Company. The service agreement provides for the payment of an annual management
fee computed based on certain percentages of capital employed, revenue, manpower
and payroll. Short term financing is also provided by ST to the Company
(generally on 3 to 6 months renewable basis) using ST's cost competitive
corporate banking advantage in the banking community. Surplus funds are placed
with ST from time to time. Advances to and from ST bear interest at rates
comparable to rates offered by commercial banks in Singapore. The Company also
participates with ST in a cash management program managed by a bank. Under the
program, cash balances are pooled and daily cash surpluses or shortfalls may, on
a short-term basis, be lent to or borrowed from other ST
F-24
<PAGE> 123
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
affiliates participating in the arrangement at prevailing inter-bank rates. The
Company controls its bank accounts, subject to such program.
Tritech Microelectronics Ltd ("Tritech"), an ST affiliate and a fabless
designer of semiconductor products, was previously a major customer of the
Company. The sales to Tritech were made on substantially the same terms as those
available to third parties for similar products and volumes committed. The
Company has not made sales to Tritech since it was placed under judicial
management on July 2, 1999.
At December 31, 1997 and 1998 and June 30, 1998 and 1999, there were the
following amounts due from or to ST and its affiliates.
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------------
1997 1998 1998 1999
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Amounts due from ST
Other receivables.............................. $ -- $ -- $ -- $ 8
Amounts due from ST affiliates
Accounts receivable
Trade, net of allowance for doubtful
accounts.................................. 2,038 1,481 265 856
Others...................................... 805 1,110 1,232 1,273
-------- ------- -------- ------
$ 2,843 $ 2,591 $ 1,497 $2,137
======== ======= ======== ======
Amounts due to ST
Short-term debt................................ 326,799 -- 123,765 1,877
Other current liabilities...................... 4,713 4,654 10,030 411
Amounts due to ST affiliates
Accounts payable, trade........................ 3,249 4,916 4,238 5,278
Other current liabilities...................... 1,493 1,037 530 1,008
-------- ------- -------- ------
$336,254 $10,607 $138,563 $8,574
======== ======= ======== ======
</TABLE>
The weighted average rate of interest payable on the short-term debt from
ST was 4.63% as of December 31, 1997, and 6.00% and 2.43% as of June 30, 1998
and 1999, respectively.
(b) LEASES
Rental expense paid to ST for the years ended December 31, 1996, 1997 and
1998 was $1,435, $2,128 and $1,646, respectively, and $740 and $1,164 for the
six months ended June 30, 1998 and 1999, respectively.
F-25
<PAGE> 124
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Minimum future rental payments on non-cancellable operating leases of
factory land leased from ST as of December 31, 1998 and June 30, 1999 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31,
1999...................................................... $ 1,494 $ 726
2000...................................................... 1,494 1,453
2001...................................................... 1,494 1,453
2002...................................................... 1,494 1,453
2003...................................................... 1,494 1,453
2004...................................................... 1,494 1,453
Thereafter................................................ 28,697 27,844
------- -------
$37,601 $35,835
======= =======
</TABLE>
22. COMMITMENTS AND CONTINGENCIES
(a) LEASES
Rental expense, excluding amounts payable to ST disclosed in Note 21(a),
for the years ended December 31, 1996, 1997 and 1998 was $711, $2,058 and
$1,949, respectively, and $948 and $1,199 for the six months ended June 30, 1998
and 1999, respectively.
Minimum future rental payments on non-cancellable operating leases of
apartments, excluding amounts payable to ST disclosed in Note 21(b), as of
December 31, 1998 and June 30, 1999 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
<S> <C> <C>
Payable in year ending December 31,
1999...................................................... $1,794 $ 775
2000...................................................... 1,168 1,725
2001...................................................... 859 986
2002...................................................... 211 238
2003...................................................... 211 238
2004...................................................... 211 238
Thereafter................................................ 2,750 3,035
------ --------
$7,204 $ 7,235
====== ========
</TABLE>
(b) TECHNOLOGY PARTNER AGREEMENT
In addition to the technology license agreements described in Note 7, the
Company has entered into an agreement with a technology partner under which the
Company is required to allocate wafer capacity, as part of the consideration for
the process technology the partner transferred and licensed to the Company. The
agreement will expire in 2002.
F-26
<PAGE> 125
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
(c) SUBSCRIPTION AND PARTICIPATION AGREEMENTS
The Company entered into subscription and participation agreements with
seven customers (the "Equity Investor Customers"), a technology partner and an
investor to raise equity for the establishment of a fab. Under the agreements,
the Equity Investor Customers, technology partner and the investor subscribed
for shares with the right to subscribe for new shares pro-rata to their interest
in the Company. The technology partner has the right to subscribe for $6,000
worth of shares in the Company, at a subscription price and on terms to be
mutually agreed between the Company and the technology partner. These rights,
which are still unexercised, will terminate upon the termination of the
subscription agreement. The Company and the technology partner intend to
terminate the subscription rights upon the initial public offering of the
Company. As of December 31, 1998 and June 30, 1999, the Company had 72,470,983
shares outstanding under these agreements, which had been exercised between
$2.03 and $2.44 per share in cash. 69,339,367 of these shares were issued with
an option to require ST to repurchase outstanding shares at a purchase price
based on the net tangible asset value of the Company at the date of exercise of
the option. The option is exercisable after the tenth anniversary of the date of
the subscription agreement, where no initial public offering has taken place by
that date.
The agreements provide the Equity Investor Customers and technology partner
with rights to wafer capacity.
(d) DEPOSIT AGREEMENTS
The Company entered into deposit and supply agreements with six customers
under which the customers are required to maintain deposits with the Company to
secure wafer capacity. As of June 30, 1999, deposits held by the Company
amounted to $42,805. These agreements, expiring on December 31, 2000 and
December 31, 2002, require the Company to make available capacity to customers
over the terms of the agreements.
(e) CAPITAL EXPENDITURE
The Company had the following capital commitments as of December 31, 1997
and 1998 and June 30, 1998 and 1999:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- --------------------
1997 1998 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Contracts for capital expenditure............... $399,954 $362,761 $649,165 $407,078
</TABLE>
(f) FORWARD FOREIGN EXCHANGE CONTRACTS
The Company had the following notional amounts of forward foreign exchange
contracts as of December 31, 1997 and 1998 and June 30, 1998 and 1999:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- -------------------
1997 1998 1998 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Forward foreign exchange contracts................ $42,550 $522,087 $21,329 $511,113
</TABLE>
In conjunction with the change in the functional currency effective July 1,
1998, the Company entered into forward foreign exchange contracts to hedge the
principal and interest obligations associated with its Singapore dollar
denominated loans with the effect of redenominating them to US dollars.
F-27
<PAGE> 126
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
identified foreign currency risks (prior to July 1, 1998, principally Japanese
yen and US dollars; subsequent to June 30, 1998, principally Japanese yen and
Singapore dollars). See Note 2(e). Foreign currency forward contracts are
generally used to reduce the potential impact of increases in foreign currency
exchange rates on existing long-term debt, and to a lesser extent are used to
hedge foreign currency purchase commitments. The term of forward contracts
rarely exceeds five years. Foreign currency forward contracts used to hedge firm
commitments are carried at market value and are recorded as other assets or
other liabilities in the accompanying consolidated balance sheet. Changes in
market values of these agreements are deferred, and included in the basis of the
hedged asset upon purchase.
The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its foreign currency exchange contracts. The Company
anticipates, however, that counterparties will be able to fully satisfy their
obligations under the contracts. The Company does not obtain collateral or other
security to support financial instruments subject to credit risk but monitors
the credit standing of counterparties. See also Note 2(v).
(g) CONTINGENCIES
As is typical in the semiconductor industry, the Company has from time to
time received communications from third parties asserting patents that cover
certain of the Company's technologies and alleging infringement of certain
intellectual property rights of others. The Company has acquired certain
technology licenses for use in its business and may seek to obtain other
licenses in the future. There can be no assurance that the Company will be able
to obtain such future licenses on commercially reasonable terms, or at all.
The Company has accrued a liability for, and charged to its results of
operations in the periods presented, the estimated costs of obtaining such
licenses for third party technology. During 1996, the Company changed its
estimate of costs to obtain certain licenses and recorded a reduction in accrued
liabilities for technology licences of $23,244. The amounts so accrued were
$5,847 and $7,853 as of December 31, 1997 and 1998, respectively and $6,920 and
$9,819 as of June 30, 1998 and 1999, respectively. No assurance can be given
that such provisions are adequate.
23. SHARE OPTIONS AND INCENTIVE PLANS
The Company determines the fair market values of the ordinary shares
underlying each option grant by averaging (i) discounted cashflow valuation;
(ii) last twelve months' revenue multiplied by a composite industry comparable
revenue to market capitalization factor and (iii) book value at each grant date
multiplied by a composite industry comparable book value to market
capitalization factor.
(a) 1995 OWNERSHIP PLAN
Effective September 28, 1995, the Company adopted the Chartered
Semiconductor Manufacturing Employees' Share Ownership Plan (the "1995 Ownership
Plan"). The plan is administered by a committee nominated by the directors and
provides for the grant of options to employees and directors of the Company and
certain of its affiliates. The exercise period of the options was 30 days and
the subscription price for each share which may be purchased upon exercise of
the options was determined by the committee but could not be less than Singapore
dollars S$0.80. The subscription price was payable in installments, the first
installment of 5% of the subscription price being payable upon exercise of the
option, the second installment of 95% of the subscription price being payable
over a period between the second
F-28
<PAGE> 127
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
and fifth years following the date the option is granted, however, such
cumulative second installment due may be deferred and payable at each successive
anniversary date. Interest was payable on outstanding installments at 8% per
annum, but in 1997, the plan was revised to allow ST to bear all interest on
behalf of the employees.
Where employees failed to pay the second installment within seven years of
the date of grant of the option, the employees were required to sell their
shares to an ST affiliate at the greater of 5% of the market value of the
shares, as determined by the committee, or 5% of the net asset value of the
shares. Employees leaving the employment of the Company were entitled to retain
those shares which had been fully paid for, while shares not fully paid for were
either required to be sold to the ST affiliate or, in certain circumstances,
were allowed to be fully paid. Shares which were not fully paid for could not be
sold. Shares which were fully paid for were required to be offered to the ST
affiliate at the greater of the market value of the shares, as determined by the
committee, or net asset value of the shares before they could be sold to any
other party.
The 1995 Ownership Plan was accounted for in accordance with variable plan
accounting.
Total compensation expense (income) recognized for stock-based compensation
under the plan for the years ended December 31, 1996, 1997 and 1998 were $332,
$1,853 and $(2,609) respectively and for the six months ended June 30, 1998 and
1999 were $(1,362) and $2,765 respectively.
Information for December 31, 1996, 1997 and 1998 and June 30, 1998 and 1999
is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Shares outstanding at beginning of period (in
thousands)..................................... 7,898 13,451 12,859 12,859 11,436
Shares granted during period (in thousands)...... 5,553 1,103 -- -- --
Shares outstanding at period end (in
thousands)..................................... 13,451 12,859 11,436 12,658 11,009
Subscription price for shares issued in 1995
at............................................. $ 0.77 $ 0.77 $ 0.77 $ 0.77 $ 0.77
Subscription price for shares issued in 1996
from........................................... $ 0.92 $ 0.92 $ 0.92 $ 0.92 $ 0.92
to............................................. $ 0.98 $ 0.98 $ 0.98 $ 0.98 $ 0.98
Subscription price for shares issued in 1997
at............................................. $ -- $ 0.83 $ 0.83 $ 0.83 $ 0.83
Weighted average grant date fair value of
options........................................ $ 1.36 $ 1.31 $ -- $ -- $ 1--
Subscription receivable at period end............ $10,943 $10,565 $ 9,247 $10,307 $ 8,866
</TABLE>
The fair value of option grants is estimated using the Black-Scholes option
pricing model with the following assumptions used: dividend yield of 0% and
expected lives of 10 years. The weighted average expected volatility used for
option grants was 60.0% and 57.0% in 1996 and 1997, respectively. The weighted
average risk free interest rate used was 6.59% and 6.84% in 1996 and 1997,
respectively.
(b) 1997 OWNERSHIP PLAN
Effective November 27, 1997, the Company adopted the Chartered
Semiconductor Manufacturing Employees' Share Ownership Plan 1997 (the "1997
Ownership Plan"). The terms of the 1997 Ownership Plan are substantially similar
to the 1995 Ownership Plan except that (i) interest was not charged on
outstanding and unpaid installments and (ii) the cumulative unpaid second
installments due could be deferred and paid at each successive anniversary date
but were not due until ten years after the date of grant of the option.
The 1997 Ownership Plan was accounted for in accordance with variable plan
accounting.
F-29
<PAGE> 128
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
Total compensation expense (income) recognized for stock-based compensation
under the plan for the years ended December 31, 1997 and 1998 were $171 and
$(171) respectively and for the six months ended June 30, 1998 and 1999 were $29
and $485 respectively.
Information for December 31, 1997 and 1998 and June 30, 1998 and 1999 is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------- ---------------
1997 1998 1998 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares outstanding at beginning of period (in thousands).... -- -- -- 4,021
Shares granted during period (in thousands)................. 2,792 2,549 1,231 1,207
Shares outstanding at period end (in thousands)............. -- 4,021 2,790 5,339
Subscription price for shares issued in 1997 at............. $ 0.74 $ 0.74 $ 0.74 $ 0.74
Subscription price for shares issued in 1998 from........... -- $ 0.59 $ 0.84 $ 0.59
to........................................................ -- $ 0.84 $ 0.84 $ 0.84
Subscription price for shares issued in 1999 at............. -- -- -- $ 0.55
Weighted average grant date fair value of options........... $ 1.50 $ 1.13 $ 1.30 $ 1.05
Subscription receivable at period end....................... -- $3,094 $2,055 $3,865
</TABLE>
The fair value of option grants is estimated using the Black-Scholes option
pricing model with the following assumptions used: dividend yield of 0% and
expected lives of 10 years. The weighted average expected volatility used for
option grants was 55.0% and 70.0% in 1997 and 1998, respectively, and 67.0% and
71.0% in the six months ended June 30, 1998 and 1999, respectively. The weighted
average risk free interest rate used was 5.96% and 5.29% in 1997 and 1998,
respectively and 5.84% and 5.52% in the six months ended June 30, 1998 and 1999,
respectively.
(c) 1999 OWNERSHIP PLAN
Effective March 30, 1999, the Company adopted the Chartered Semiconductor
Manufacturing Ltd Share Ownership Plan 1999 (the "1999 Ownership Plan") which
provides for a maximum of 107 million shares (subject to adjustment under the
plan) to be reserved for option grants. Options granted under the plan may
include nonstatutory options as well as incentive stock options intended to
qualify under Section 422 of the United States Internal Revenue Code.
The plan is administered by a committee appointed by the directors.
Employees, outside directors and consultants are eligible for the grant of
options except for (i) employees of affiliates, and outside directors and
consultants, who are not eligible for the grant of incentive stock options; and
(ii) employees, outside directors and consultants of affiliates resident in the
United States, who are not be eligible for the grant of options.
The exercise price of an incentive stock option is the fair market value of
the shares at the date of the grant. The exercise price of nonstatutory options
cannot be less than 85% of the fair market value of the shares at the date of
the grant. In certain circumstances, the exercise price may be higher than the
fair market value but in no event will the exercise price be below the par value
of the share.
Option periods do not exceed 10 years from the date of grant. Upon leaving
the employment of the Company, outstanding options remain exercisable for a
specified period.
During the six months ended June 30, 1999, the Company granted options to
subscribe for 6,074,017 shares at an exercise price of Singapore dollars $0.93
(U.S. $0.54). The grant date fair value of the shares was estimated to be U.S.
$0.68. The options vest over five years and expire on dates ranging from April
2004 to April 2009. All the options were outstanding as of June 30, 1999. The
1999 Ownership Plan is
F-30
<PAGE> 129
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
accounted for in accordance with fixed-plan accounting under APB 25. Total
compensation cost with respect to this option grant was $770, which will be
recognized over the vesting period. Total compensation expense recognized for
the six months ended June 30, 1999 totalled $39.
The fair value of the 1999 option grant is estimated using the
Black-Scholes option pricing model with the following assumptions used: dividend
yield of 0% risk free interest rate of 5.52%, expected volatility of 72% and
expected lives of 10 years. The weighted average fair value of options granted
estimated on the date of grant using the Black-Scholes option pricing model was
$0.77.
Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS 123, the Company's net income would
have been reduced or increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1996 1997 1998 1998 1999
------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net income (loss)
As reported.............................. $47,476 $(119,621) $(190,006) $(60,266) $(48,520)
Pro forma................................ 46,250 (119,790) (195,464) (62,864) (46,809)
Basic net income (loss) per share
As reported.............................. 0.10 (0.24) (0.24) (0.09) (0.05)
Pro forma................................ 0.09 (0.24) (0.25) (0.09) (0.05)
Diluted net income (loss) per share
As reported.............................. 0.10 (0.24) (0.24) (0.09) (0.05)
Pro forma................................ 0.09 (0.24) (0.25) (0.09) (0.05)
</TABLE>
24. FAIR VALUES OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1997 1998
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.......................... $ 23,785 $ 23,785 $ 99,619 $ 99,619
Accounts receivable................................ 131,352 131,352 83,988 83,988
Amounts due from ST and affiliates................. 3,509 3,509 9,254 9,254
Liabilities:
Accounts payable................................... 112,017 112,017 31,359 31,359
Bank overdrafts...................................... 1,378 1,378 3,082 3,082
Amounts due to ST and affiliates................... 336,254 336,254 10,607 10,607
Long-term debt..................................... 282,221 247,687 468,591 458,031
Technology obligations payable..................... 7,200 5,920 7,200 6,879
Derivatives:
Forward foreign exchange........................... -- (4,026) 4,199 42,620
</TABLE>
F-31
<PAGE> 130
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------------
1998 1999
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.......................... $ 14,450 $ 14,450 $ 47,548 $ 47,548
Accounts receivable................................ 86,890 86,890 93,347 93,347
Amounts due from ST and affiliates................. 5,349 5,349 12,578 12,578
Liabilities:
Accounts payable................................... 48,958 48,958 38,114 38,114
Bank overdrafts.................................... 5,043 5,043 1,210 1,210
Amounts due to ST and affiliates................... 138,563 138,563 8,574 8,574
Long-term debt..................................... 376,171 340,212 451,294 444,408
Technology obligations payable..................... 7,200 6,118 5,100 4,921
Derivatives:
Forward foreign exchange........................... -- 7,200 4,154 35,303
</TABLE>
Cash and cash equivalents, bank overdrafts, amounts owing by ST and
affiliates, accounts receivable and accounts payable. The carrying amounts
approximate fair value in view of the short term nature of these balances.
Long-term debt. The fair value is based on current interest rates
available to the Company for issuance of debts of similar terms and remaining
maturities.
Technology obligations payable. The fair value is based on the discounted
present value of future payment obligations.
Forward foreign exchange contracts. The fair value is estimated by
reference to market quotations for forward contracts with similar terms adjusted
where necessary for maturity differences, and was a net asset (liability) of
approximately $(4,026) and $42,620, respectively, at December 31, 1997 and 1998
and $7,200 and $35,303, respectively, at June 30, 1998 and 1999.
Limitations. Fair value estimates are made at a specific point in time,
and are based on relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgement and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
25. RECENT CHANGES IN U.S. GAAP
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133, as recently amended, is effective for
fiscal years beginning after June 15, 2000. Management believes the adoption of
SFAS No. 133 will not have a material effect on the Company's financial position
or results of operations.
F-32
<PAGE> 131
CHARTERED SEMICONDUCTOR MANUFACTURING LTD AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996, 1997 AND 1998 AND JUNE 30, 1998 AND 1999
IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
26. SUBSEQUENT EVENT
At an extraordinary general meeting of shareholders held on September 13,
1999, the first stage of a restructuring of the Company's capital was approved.
The first stage of the restructuring involves the issuance of one additional
fully paid A ordinary share and the cancellation of 20 partly-paid A ordinary
shares for every 20 partly paid A ordinary shares. The first stage of the
restructuring was approved by the High Court of Singapore on September 30, 1999.
Subsequently, as part of the second stage of the capital restructuring, the
shareholders of the Company on October 14, 1999 approved the following:
- cancellation of unissued A ordinary shares and B ordinary shares as one
class of ordinary shares;
- a share split which results in each ordinary share with a par value of
S$0.4888 being sub-divided into 1.88 ordinary shares with a par value of
S$0.26 each;
- new Articles of Association.
All share and per share amounts have been presented herein to reflect the
impact of this capital restructuring.
F-33
<PAGE> 132
ANNEX A
THE REPUBLIC OF SINGAPORE
The information in this section has been extracted from published sources
and has not been independently verified by Chartered.
THE COUNTRY
The Republic of Singapore is situated on the southern tip of the Malay
Peninsula and has a total land area of approximately 648.1 sq. km. Singapore has
a population of about 3,865,600 of which approximately 77% are Chinese, 14% are
Malays, 7.6% are Indians and 1.4% are of other ethnicities. The official
languages of Singapore are Malay, Mandarin, Tamil and English. The national
language is Malay. English is the language of administration and the predominant
language of commerce. The population has a literacy rate of approximately 93%.
Singapore was established as a trading station by Sir Thomas Stamford
Raffles of the East India Company in 1819. In 1826, Singapore, along with Penang
and Malacca, became a British Crown Colony under the name of "Straits
Settlements." Following World War II, Singapore became a separate Crown Colony
while Penang and Malacca were incorporated into the Federation of Malaya. In
June 1959, Singapore became a self-governing democracy within the British
Commonwealth and in June 1963, joined the Federation of Malaya, Sarawak and
North Borneo to form Malaysia. Singapore became a sovereign, independent nation
on August 9, 1965 after separating from Malaysia.
Singapore is a republic with a parliamentary system of government.
Singapore maintains friendly ties with many nations. It maintains close ties
with other Southeast Asian countries, through bilateral relationships and
through its membership in the economic and political association known as the
Association of Southeast Asian Nations or Asean. Singapore enjoys good relations
with the United States, China, Japan and Western European nations. Closer
relations between Singapore and Russia and other Eastern European countries are
also being developed. Singapore is a member of the United Nations as well as
such international organizations as the International Monetary Fund, the
International Bank for Reconstruction and Development, the Asian Development
Bank, the Asia-Pacific Economic Cooperation and the British Commonwealth.
Singapore is a signatory to the General Agreement on Tariffs and Trade and a
member of the World Trade Organization.
THE ECONOMY
Singapore has an urban economy whose largest sectors are manufacturing,
finance and trade. Given the small size of its economy, Singapore produces goods
and services for external markets. Exports in value terms amount to some 130% of
gross domestic product, or GDP. Singapore does not have any significant natural
resources, other than a deep water harbor. However, a strategic geographical
location, together with a well developed infrastructure and political stability,
have made it an international business and financial center.
Singapore has enjoyed strong economic growth for more than a decade. Real
GDP grew at an average annual rate of 9.3% between 1987 and 1997. The economy
was in mild recession in 1998, with output contracting about 1.5% in each of the
last two quarters of the year. But for the year, was up 0.3%. The economy's
recovery this year has been stronger and earlier than expected. GDP grew 0.8%
year-over-year in the first quarter of this year; private economists have
projected stronger growth of 4 to 5% for the second quarter.
Singapore has achieved a high level of economic development. Per capita
income, in Singapore dollar terms has risen from S$2,800 in 1970 to S$37,800 in
1997 before falling to $36,538 last year; representing annual gains of about 10%
compounded. In US dollars, the increase in per capita income has been even
greater, 12% per annum, due to the steady appreciation of the Singapore dollar
over the period.
A-1
<PAGE> 133
In 1975, it took S$2.50 to buy one US$1 and S$5.00 to buy L1 sterling.
Today, it takes about S$1.68 to buy US$1 and S$2.69 to buy L1 (i.e., Singapore's
purchasing power has gained tremendously, giving its residents greater command
over goods and services abroad).
The following table sets forth key economic indicators of the Singapore
economy for 1994 to 1998.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999(1)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
GDP at 1990 market prices (S$m)........... 95,209 102,982 110,734 120,713 121,130 32,053
% change from prior year................ 11.4% 8.2% 7.5% 9.0% 0.3% 6.7%
GDP at current prices (S$m)............... 106,577 118,424 128,892 142,361 141,242 N/A
% change from prior year................ 14.6% 11.1% 8.8% 10.4% -0.8% N/A
Per capita GDP (S$)....................... 31,686 34,153 35,685 38,098 36,538 N/A
Consumer Price Index (% change)........... 3.1% 1.7% 1.4% 2.0% -0.3% 0.1%
Unemployment (%).......................... 2.0% 2.0% 2.0% 1.8% 3.2% 4.6%
Total demand (%).......................... 15.3% 12.6% 8.8% 7.9% -5.0% 6.6%
Domestic demand (%)....................... 4.0% 9.0% 12.1% 10.2% -5.1% 5.8%
External demand (%)....................... 20.5% 14.0% 7.6% 7.0% -4.9% 6.9%
</TABLE>
- ---------------
(1) Through second quarter ended, June 30, 1999.
Source: Department of Statistics; Monetary Authority of Singapore, 1999.
A-2
<PAGE> 134
ANNEX B
THE SECURITIES MARKET OF SINGAPORE
SINGAPORE STOCK EXCHANGE LIMITED
The SES was incorporated on May 24, 1973. The SES is the only securities
exchange in Singapore and is the leading organized market for debt and equity
securities of Singapore companies. The SES operates two trading facilities: the
Main Board and the Singapore Stock Exchange Dealing and Automated Quotation
System or SESDAQ. The securities of certain non-Singapore companies listed on
foreign stock exchanges are traded through the SES on an over-the-counter market
known as "CLOB International." Trading on the SES is effected on a computerized
quotation system known as the Central Limit Order Book, or CLOB, Trading System.
Most trades on the Main Board and SESDAQ are executed on a "ready" basis, which
generally requires delivery to be made seven calendar days after the transaction
date and payment to be made within 24 hours of the due date of delivery.
As of June 30, 1999, the SES had a membership of 30 stockbroking firms, 24
of which are domestic member firms and seven are international members. It also
has a governing committee composed of four elected stockbroking members and five
members who are appointed by the elected members, with the approval of the
Monetary Authority of Singapore, or MAS, to represent interests outside the
stockbroking community. The SES's rules have been instituted with the approval
of the Minister for Finance, and its policies and operations are subject to MAS
supervision.
The following table sets forth, for the periods indicated, certain
information with respect to the SES.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total capitalization(1) (S$million).......... 256,124 282,551 255,862 329,268 263,168
Annual trading value(2) (S$million).......... 123,520 83,866 86,722 110,462 96,982
Annual trading volume(2) (million shares).... 45,540 33,919 30,512 47,362 69,648
Number of listed companies (SES Main
Board)..................................... 229 248 266 294 307
</TABLE>
- ---------------
(1) SES Mainboard.
(2) Includes CLOB International, excludes SESDAQ. 1997 and 1998 figures include
non-Singapore dollar trades.
Source: SES Fact Book, 1998, 1999.
REPORTING REQUIREMENTS
An SES-listed company is required under the SES Listing Manual to make
immediate announcements on certain matters to the SES for immediate release.
These matters include: any proposed alteration in the Memorandum and Articles of
Association; any appointments or resignations of its directors, chief executive
officer, general manager (or other executive officers of equivalent rank),
registrar or auditors; the date, time and place of any general meeting and
resolutions put to the general meeting, whether or not the resolutions were
passed; certain acquisitions or disposals by the SES-listed company (for
example, acquisition of shares resulting in a company becoming a subsidiary of
the SES-listed company or acquisition or disposal of shares or assets where, for
instance, the value of the assets acquired or disposed exceeds 5% of the assets
of the SES-listed company and its subsidiaries); and any recommendation or
declaration of a dividend, the rate amount per share and date of payment. In
particular, the SES-listed company is obligated to release to the SES half
yearly consolidated financial statements and annual financial statements as soon
as available and in any event not later than three months after the expiry of
the relevant half year or financial year. The financial statements are to be
prepared in the form set out in the SES Listing Manual and, in respect of the
half year financial statements, must include a review of the performance of the
SES-listed company, setting out any material factors affecting the earnings or
turnover of the SES-listed company and the group and a commentary on
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<PAGE> 135
current year prospects and, in respect of the full year financial statements,
must include a breakdown of the group turnover and profit by product or business
activity and by geographical location for the financial year reported on and the
previous year and a commentary on current year's prospects, including factors
likely to influence the future prospects of the SES-listed company.
An SES-listed company is further required to issue an annual report to its
members and the SES within six months from the end of its financial year. The
annual report must contain the information set out in the Listing Manual
including: (i) a review of the operating and financial performance of the SES-
listed company and its principal subsidiaries in the last financial year and
since the end of the last financial year; (ii) a statement of the interests of
directors in the shares of the SES-listed company and material contracts
involving directors' interests; and (iii) its annual audited accounts.
An SES-listed company is required to disclose to the SES for public release
any material information of a factual nature relating to the group which is
necessary to avoid the establishment of a false market in its shares or which
would be likely materially to affect the price of its securities (for example,
the entry into a joint venture, the borrowing of a significant amount of funds,
significant litigation).
REGULATION
The Singapore securities industry is overseen primarily by the MAS. The
Securities Industry Act, or the Act, provides that the SES must obtain the
approval of the MAS for all changes in the rules governing the SES and its
member companies and the listing rules, and that dealers, investment advisors
and their representatives may only operate under a license granted by the MAS.
The Act prohibits a variety of fraudulent trading practices.
The MAS is empowered by the Act to conduct investigations whenever it has
reason to suspect that a person has committed an offense under the Act or has
been guilty of fraud or dishonesty in relation to a dealing in securities. The
MAS has wide powers to compel, under conditions of secrecy, the production of
books and disclosure of other information.
The Securities Industry Council, or SIC, is an advisory body established in
1973 under the Act The Minister for Finance appoints representatives from both
the private and public sectors to be members of the SIC. The SIC advises the
Minister for Finance on all matters relating to the securities industry.
MARKET INDICES
There are many published indices which track the performance of securities
listed on the Main Board. The most commonly used index is the Straits Times
Industrial Index, or STII. The STII tracks 30 industrial and commercial
concerns, all of which are Singapore incorporated companies. The STII is not
weighted. Another index used to measure the performance of the SES Main Board is
the SES All Share Index. The SES All Share Index is a capitalization-weighted
index of all stocks traded on the Main Board, and is designed to provide a
measure of the overall price movement in the stock market. The Index was
developed with a base value of 100 as of January 2, 1975.
The following table sets forth the high close, low close and year-end
levels of the STII and the SES All Share Index for each of the periods
indicated.
<TABLE>
<CAPTION>
STII SES ALL SHARE INDEX
------------------------------------- -------------------------------------
PERIOD END PERIOD END
HIGH CLOSE LOW CLOSE CLOSE HIGH CLOSE LOW CLOSE CLOSE
---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994.................. 2,471.90 2,036.30 2,239.56 641.61 506.84 533.57
1995.................. 2,287.42 1,916.94 2,266.54 558.94 472.90 555.39
1996.................. 2,218.45 2,176.52 2,216.79 540.77 525.39 513.49
1997.................. 1,753.63 1,514.83 1.529.84 455.71 414.48 425.94
1998.................. 1,553.75 805.04 1,392.73 437.98 253.20 382.51
</TABLE>
- ---------------
Source: SES Fact Book.
B-2
<PAGE> 136
[Description of inside back cover artwork: The back cover will contain a
description of our electronic design automation ("EDA") and intellectual
property qualification process. It will also contain graphics showing our EDA
program and customer teams.]
<PAGE> 137
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
225,000,000 ORDINARY SHARES
DIRECTLY OR IN THE FORM OF AMERICAN DEPOSITARY SHARES
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
CHARTERED LOGO
------------
PROSPECTUS
, 1999
------------
SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON
HAMBRECHT & QUIST
SG COWEN
SOUNDVIEW TECHNOLOGY GROUP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 138
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by us in connection with the sale of the
ordinary shares (including ordinary shares represented by ADSs) being
registered. All amounts are estimates except the SEC registration fee and the
NASD filing fees.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee........................................ $ 143,865
NASD filing fee............................................. 30,500
Legal fees and expenses..................................... 1,000,000
Accounting fees and expenses................................ 250,000
Printing and engraving...................................... 250,000
Blue sky fees and expenses (including legal fees)........... 25,000
Transfer agent fees......................................... 25,000
Miscellaneous............................................... 75,635
----------
Total............................................. $1,800,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Association provide that all of our directors, secretaries
and other officers shall be indemnified by our company against all costs,
charges, losses, expenses and liabilities incurred by them in the execution and
discharge of their duties or in relation thereto, including any liabilities in
defending any proceedings, civil or criminal, which relate to anything done or
omitted or alleged to have been done or omitted by them as a director, secretary
or other officer of our company. Our Articles of Association further provide
that none of our directors, secretaries or other officers shall be liable:
- for the acts, receipts, neglects or defaults of any other director or
officer,
- for joining in any receipt or other act for conformity,
- for any loss or expense happening to our company through the
insufficiency or deficiency of title to any property acquired by order of
the directors for or on behalf of our company,
- for the insufficiency or deficiency of any security in or upon which any
of the moneys of our company shall be invested,
- for any loss or damage arising from the bankruptcy, insolvency or
tortious act of any person with whom any moneys, securities or effects
shall be deposited or left, or
- for any other loss, damage or misfortune whatever which shall happen in
the execution of the duties of their office or in relation thereto,
unless the same shall happen through their own negligence, willful default,
breach of duty or breach of trust.
The indemnification provisions in our Articles of Association provide for
indemnification of our officers and directors to the maximum extent permitted
under the Companies Act (Chapter 50) of Singapore.
The form of underwriting agreements to be filed as Exhibits 1.1, 1.2 and
1.3 to this Registration Statement will also provide for indemnification by the
underwriters of our company and our officers and directors with respect to
certain matters.
II-1
<PAGE> 139
We intend to obtain directors and officers insurance providing
indemnification for certain of our directors, officers, affiliates or employees
for certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, we have issued the following securities. With
respect to the benefit plan participants, the dates provided reflect the dates
the ordinary shares were issued, and not the dates the offer to subscribe for
such shares were made, and the consideration column lists the total
consideration due with respect to the partly paid shares being issued. The
number of ordinary shares column does not give effect to the capital
restructuring which we intend to complete prior to closing the global offering.
<TABLE>
<CAPTION>
NUMBER OF
ORDINARY CONSIDERATION
PURCHASER DATE OF ISSUANCE SHARES (S$)
--------- ----------------- ---------- -------------
<S> <C> <C> <C>
1995 Benefit Plan Participants................ January 29, 1996 31,280 32,697(1)
EDB Investments Pte Ltd....................... February 9, 1996 1,850,837 11,845,357(2)
Actel Corporation............................. February 9, 1996 109,119 698,362(3)
Actel Corporation............................. February 9, 1996 789,600 4,762,500(3)
Conexant Systems, Inc. (as successor in
interest to Rockwell International
Corporation)................................ February 9, 1996 218,239 1,396,730(3)
Conexant Systems, Inc. (as successor in
interest to Rockwell International
Corporation)................................ February 9, 1996 1,579,200 9,525,000(3)
Brooktree Corporation......................... February 9, 1996 789,600 4,762,500(3)
Alliance Semiconductor Corporation............ February 9, 1996 3,637,959 23,282,937(3)
Analog Devices B.V............................ February 9, 1996 1,504,553 9,629,139(3)
Standard Microsystems Corporation............. February 9, 1996 1,321,875 8,460,000(3)
LSI Logic Hong Kong Ltd....................... February 9, 1996 1,359,375 8,700,000(3)
1995 Benefit Plan Participants................ May 30, 1996 402,000 972,438(1)
1995 Benefit Plan Participants................ May 30, 1996 473,700 1,145,880(2)
1995 Benefit Plan Participants................ May 30, 1996 200,000 483,800(2)
1995 Benefit Plan Participants................ August 7, 1996 60,000 145,140(2)
1995 Benefit Plan Participants................ December 10, 1996 1,817,880 4,708,309(1)
1995 Benefit Plan Participants................ June 10, 1997 586,800 1,326,168(1)
1997 Benefit Plan Participants................ January 27, 1998 1,484,850 3,266,670(1)
Singapore Technologies Pte Ltd................ March 23, 1998 84,523,153 278,926,405(2)
Singapore Technologies Semiconductors Pte
Ltd......................................... March 23, 1998 63,529,648 209,647,838(2)
EDB Investments Pte Ltd....................... March 23, 1998 2,307,415 7,614,470(2)
Tritech Microelectronics Ltd.................. March 23, 1998 3,469,321 11,448,759(2)
Other Shareholders............................ March 23, 1998 563,298 1,858,883(1)
1997 Benefit Plan Participants................ June 25, 1998 654,820 1,702,532(1)
Singapore Technologies Pte Ltd................ October 22, 1998 59,712,121 167,193,939(2)
Singapore Technologies Semiconductors Pte
Ltd......................................... October 22, 1998 47,430,736 132,806,061(2)
EDB Investments Pte Ltd....................... October 22, 1998 428,926 1,200,993(2)
Other Shareholders............................ October 22, 1998 79,620 222,936(1)
1997 Benefit Plan Participants................ February 5, 1999 701,290 1,318,425(1)
1997 Benefit Plan Participants................ July 1, 1999 642,140 1,123,745(4)
Employees..................................... August 2, 1999 520,000 910,000(4)
</TABLE>
II-2
<PAGE> 140
<TABLE>
<CAPTION>
NUMBER OF
ORDINARY SHARES AGGREGATE
GRANTEE DATE OF GRANT UNDERLYING GRANT EXERCISE PRICE (S$)
------- -------------- ---------------- -------------------
<S> <C> <C> <C>
1999 Benefit Plan Participants.............. April 30, 1999 3,230,860(5) 5,654,005(4)
</TABLE>
- ---------------
(1) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act or
pursuant to Section 4(2) of the Securities Act regarding transactions not
involving a public offering.
(2) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act.
(3) We believe that the subject issuance was exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act regarding
transactions not involving a public offering.
(4) We believe that the subject issuance was exempt from registration under the
Securities Act in reliance on Regulation S under the Securities Act, on Rule
701 under the Securities Act or pursuant to Section 4(2) of the Securities
Act regarding transactions not involving a public offering.
(5) Represents issued but unexercised share options.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
*1.1 Form of U.S. Underwriting Agreement
*1.2 Form of International Underwriting Agreement
*1.3 Form of Management and Underwriting Agreement for the
Singapore offering
3 Form of Memorandum and New Articles of Association of the
Registrant
*4.1 Form of deposit agreement by and among the Registrant,
Citibank, N.A. and the holders and beneficial owners of
American Depositary Shares evidenced by American Depositary
Receipts issued thereunder (including as an exhibit, the
form of American Depositary Receipt)
4.2 Form of specimen certificate for ordinary shares
5 Form of Opinion of Allen & Gledhill regarding the validity
of the ordinary shares offered hereby
8.1 Form of Opinion of Latham & Watkins regarding certain U.S.
tax matters
8.2 Form of Opinion of Allen & Gledhill regarding certain
Singapore tax matters (included in Exhibit 5)
+*10.1 Joint Venture Agreement dated March 13, 1997 by and among
the Registrant, Hewlett-Packard Europe B.V. and EDB
Investments Pte Ltd
*10.2 Amendment Agreement No. 1 to Joint Venture Agreement dated
July 4, 1997 by and among the Registrant, Hewlett-Packard
Europe B.V. and EDB Investments Pte Ltd
+*10.3 Amendment No. 2 to Joint Venture Agreement dated October 1,
1999 by and among the Registrant, Hewlett-Packard Europe
B.V. and EDB Investments Pte Ltd
+*10.4 Option Agreement dated July 4, 1997 by and among the
Registrant, Hewlett-Packard Europe B.V. and EDB Investments
Pte Ltd
+*10.5 Assured Supply and Demand Agreement dated July 4, 1997 by
and among the Registrant, Chartered Silicon Partners Pte Ltd
and Hewlett-Packard Company
+*10.6 Amendment Agreement No. 1 to Assured Supply and Demand
Agreement dated November 5, 1998 by and among the
Registrant, Chartered Silicon Partners Pte Ltd and
Hewlett-Packard Company
+*10.7 Joint Venture Agreement dated December 19, 1997 by and
between the Registrant and Lucent Technologies
Microelectronics Pte Ltd
</TABLE>
II-3
<PAGE> 141
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
+*10.8 Assured Supply and Demand Agreement dated February 17, 1998
by and among the Registrant, Silicon Manufacturing Partners
Pte Ltd and Lucent Technologies Microelectronics Pte Ltd
+*10.9 Supplemental Assured Supply and Demand Agreement dated
September 3, 1999 by and among the Registrant, Silicon
Manufacturing Partners Pte Ltd and Lucent Technologies
Microelectronics Pte Ltd
+*10.10 License and Technology Transfer Agreement dated July 4, 1997
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Hewlett-Packard Company
+*10.11 License and Technology Transfer Agreement dated February 17,
1998 by and among the Registrant, Lucent Technologies
Microelectronics Pte Ltd and Silicon Manufacturing Partners
Pte Ltd
+*10.12 Technology Transfer Agreement dated February 17, 1998 by and
between the Registrant and Lucent Technologies Inc.
+*10.13 Technology Transfer and License Agreement dated May 20, 1999
by and among the Registrant, Chartered Silicon Partners Pte
Ltd and Motorola, Inc.
+*10.14 Patent License Agreement dated January 1, 1998 by and
between the Registrant and Lucent Technologies Inc.
+*10.15 Patent License Agreement dated January 1, 1995 by and
between the Registrant and International Business Machines
Corporation
+*10.16 Patent Cross License Agreement dated August 12, 1999 by and
between the Registrant and Toshiba Corporation
+*10.17 Joint Development Agreement for Process Technologies dated
February 18, 1999 by and between the Registrant and Lucent
Technologies Inc.
+*10.18 ST Group Management and Support Services Agreement dated
March 3, 1997 by and between the Registrant and Singapore
Technologies Pte Ltd
10.19 Loan Agreement dated August 1, 1995 by and between the
Registrant and the Economic Development Board of Singapore
10.20 Loan Agreement dated April 14, 1997 by and between the
Registrant and the Economic Development Board of Singapore,
as supplemented on May 29, 1997
10.21 Loan Agreement dated July 21, 1997 by and between the
Registrant and the Economic Development Board of Singapore
10.22 Loan Agreement dated February 11, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
10.23 Loan Agreement dated June 10, 1997 by and between the
Registrant and Post Office Savings Bank of Singapore
10.24 Credit Agreement dated March 12, 1998 by and among Chartered
Silicon Partners Pte Ltd, the banks named on the signature
pages thereto, as lenders, and ABN Amro Bank N.V. (Singapore
Branch), as Agent, as supplemented on December 14, 1998
10.25 Shareholders Undertaking dated July 1, 1998 by and among the
Registrant, Chartered Silicon Partners Pte Ltd, EDB
Investments Pte Ltd, Hewlett-Packard Europe B.V. and ABN
Amro Bank N.V. (Singapore Branch), as Agent, as supplemented
on December 16, 1998
10.26 Syndicated Credit Facilities Agreement dated September 3,
1999 by and among Silicon Manufacturing Partners Pte Ltd,
ABN Amro Bank N.V. (Singapore Branch), Citibank, N.A.
(Singapore Branch) and Overseas Union Bank Limited, as Lead
Arrangers, the banks and financial institutions named on the
signature pages thereto, as lenders, Citicorp Investment
Bank (Singapore) Limited, as Facility Agent, and Citicorp
Investment Bank (Singapore) Limited, as Security Agent
</TABLE>
II-4
<PAGE> 142
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
10.27 Shareholders Undertaking dated September 3, 1999 by and
among the Registrant, Lucent Technologies Microelectronics
Pte Ltd, Silicon Manufacturing Partners Pte Ltd and Citicorp
Investment Bank (Singapore) Limited
10.28 Lease of Lot 2164 Mukim 3-2 Science Park Drive dated January
18, 1995 by and between Technology Parks Private Limited and
the Registrant
10.29 Building Agreement relating to Private Lot A12787 Mukim No.
13 Sembawang dated April 11, 1995 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
10.30 Agreement for Sub-License and Sub-Lease dated September 30,
1997 by and between Singapore Technologies Pte Ltd and the
Registrant relating to Private Lot A12787 Mukim No. 13
Sembawang
10.31 Building Agreement relating to Private Lot A12787(a)
Woodlands Industrial Park D, Mukim No. 13 Sembawang dated
February 17, 1998 by and between Jurong Town Corporation and
Singapore Technologies Pte Ltd
10.32 First Supplementary Agreement to Building Agreement relating
to Private Lot A 12787(a) Woodlands Industrial Park D, Mukim
No. 13 dated October 7, 1998 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
10.33 Building Agreement relating to Private Lot A12787(b)
Woodlands Industrial Park D, Mukim No. 13 Sembawang dated
February 17, 1998 by and between Jurong Town Corporation and
Singapore Technologies Pte Ltd
10.34 First Supplementary Agreement to Building Agreement relating
to Private Lot A12787(b) Woodlands Industrial Park D, Mukim
No. 13 dated October 7, 1998 by and between Jurong Town
Corporation and Singapore Technologies Pte Ltd
10.35 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(a)) dated February 17, 1998 by and between Singapore
Technologies Pte Ltd and the Registrant
10.36 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(b)) dated February 17, 1998 by and between Singapore
Technologies Pte Ltd and the Registrant
10.37 Sub-Lease dated February 17, 1998 by and between the
Registrant and Silicon Manufacturing Partners Pte Ltd
10.38 Building Agreement relating to Private Lot A12787(d)
Woodlands Industrial Park D, Mokim No. 13 Sembawang dated
September 24, 1999 by and between Jurong Town Corporation
and Singapore Technologies Pte Ltd
10.39 Agreement for Sub-License and Sub-Lease (Private Lot
A12787(d)) dated September 24, 1999 by and between Singapore
Technologies Pte Ltd and Chartered Silicon Partners Pte Ltd
21 Subsidiaries of Chartered Semiconductor Manufacturing Ltd
23.1 Consent of Latham & Watkins (included in Exhibit 8.1)
23.2 Consent of Allen & Gledhill (included in Exhibit 5)
23.3 Consent of KPMG
24 Power of Attorney (included on Page S-1)
*27 Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential treatment has been requested.
(b) Financial Statement Schedules.
None.
II-5
<PAGE> 143
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4),
or 497(h) under the Securities Act of 1933, shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-6
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the Republic of
Singapore, on this 4th day of October, 1999.
CHARTERED SEMICONDUCTOR MANUFACTURING
LTD
By: /s/ CHIA SONG HWEE
------------------------------------
Name: Chia Song Hwee
Title: Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Barry
Waite, Chia Song Hwee, Sum Soon Lim and Lim Ming Seong as attorneys-in-fact with
the power of substitution, for him or her in any and all capacities, to sign any
amendment to this Registration Statement (including post-effective amendments
and registration statements filed pursuant to Rule 462 and otherwise), and to
file the same, with exhibits thereto and other documents in connection
therewith, with the SEC, granting to said attorneys-in-fact, and each of the
individually, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as her or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-facts or each of them
individually, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HO CHING Chairman of the Board October 4, 1999
- -----------------------------------------------------
Ho Ching
/s/ LIM MING SEONG Deputy Chairman of the Board October 4, 1999
- -----------------------------------------------------
Lim Ming Seong
/s/ BARRY WAITE President and Chief October 4, 1999
- ----------------------------------------------------- Executive Officer (principal
Barry Waite executive officer)
/s/ CHIA SONG HWEE Chief Financial Officer October 4, 1999
- ----------------------------------------------------- (principal financial and
Chia Song Hwee accounting officer)
/s/ SUM SOON LIM Director October 4, 1999
- -----------------------------------------------------
Sum Soon Lim
/s/ JAMES H. VAN TASSEL Director October 4, 1999
- -----------------------------------------------------
James H. Van Tassel
/s/ AUBREY C. TOBEY Director October 4, 1999
- -----------------------------------------------------
Aubrey C. Tobey
</TABLE>
II-7
<PAGE> 145
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT EDMUND LA BLANC Director October 4, 1999
- -----------------------------------------------------
Robert Edmund La Blanc
/s/ ANDRE BORREL Director October 4, 1999
- -----------------------------------------------------
Andre Borrel
/s/ CHARLES E. THOMPSON Director October 4, 1999
- -----------------------------------------------------
Charles E. Thompson
/s/ KOH BENG SENG Director October 4, 1999
- -----------------------------------------------------
Koh Beng Seng
/s/ TSUGIO MAKIMOTO Director October 4, 1999
- -----------------------------------------------------
Tsugio Makimoto
/s/ THOMAS H.R. GURNEE Authorized Representative in October 4, 1999
- ----------------------------------------------------- the United States
Thomas H.R. Gurnee
</TABLE>
II-8
<PAGE> 1
EXHIBIT 3
----------------------------------------------------
FORM OF
NEW ARTICLES OF ASSOCIATION
OF
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(ADOPTED BY SPECIAL RESOLUTION PASSED ON
____ OCTOBER, 1999)
----------------------------------------------------
ALLEN & GLEDHILL,
36, ROBINSON ROAD, #18-01,
CITY HOUSE,
SINGAPORE 068877.
<PAGE> 2
C O N T E N T S
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLES OF ASSOCIATION:-
Preliminary
Share Capital
Issue of Shares
Variation of Rights
Alteration of Share Capital
Shares
Share Certificates
Calls on Shares
Forfeiture and Lien
Transfer of Shares
Transmission of Shares
Stock
General Meetings
Notice of General Meetings
Proceedings at General Meetings
Votes of Members
Corporations Acting by Representatives
Directors
Managing Director or Chief Executive Officer or President
</TABLE>
<PAGE> 3
C O N T E N T S
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Appointment and Retirement of Directors
Alternate Directors
Meetings and Proceedings of Directors
Borrowing Powers
General Powers of Directors
Secretary
The Seal
Authentication of Documents
Reserves
Dividends
Capitalisation of Profits and Reserves
Accounts
Auditors
Notices
Winding Up
Indemnity
Secrecy
</TABLE>
ii
<PAGE> 4
THE COMPANIES ACT, CHAPTER 50
--------------------------------
PUBLIC COMPANY LIMITED BY SHARES
--------------------------------
ARTICLES OF ASSOCIATION
of
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(Adopted by Special Resolution passed on 14th October, 1999)
----------------------------------------------------------------------
PRELIMINARY
1. The regulations in Table A in the Fourth Schedule to the Companies Act,
Chapter 50 (as amended) shall not apply to the Company.
2. In these presents (if not inconsistent with the subject or context) the words
and expressions set out in the first column below shall bear the meanings set
opposite to them respectively.
"The Act" The Companies Act, Chapter 50.
"The Company" Chartered Semiconductor Manufacturing Ltd
"In writing" Written or produced by any substitute for writing
or partly one and partly another.
"Month" Calendar month.
"Office" The registered office of the Company for the time
being.
"Ordinary Shares" The ordinary shares of $0.26 each in the capital
of the Company.
"Paid" Paid or credited as paid.
<PAGE> 5
"Seal" The Common Seal of the Company.
"The Statutes" The Act and every other
Act for the time being in force
concerning companies and affecting
the Company.
"These presents" These Articles of Association as from time to
time altered.
"Year" Calendar year.
The expressions "Depositor", "Depository", "Depository Agent" and
"Depository Register" shall have the meanings ascribed to them respectively in
the Act.
References in these presents to "holders" of shares or a class of
shares shall:-
(a) exclude the Depository except where otherwise expressly
provided in these presents or where the term "registered holders" or "registered
holder" is used in these presents; and
(b) where the context so requires, be deemed to include
references to Depositors whose names are entered in the Depository Register in
respect of those shares,
and "holding" and "held" shall be construed accordingly.
The expression "Director" shall have the meaning ascribed to it
in the Act and shall, where the context so requires, be deemed to include a
reference to an Alternate Director.
The expression "Secretary" shall include any person appointed by
the Directors to perform any of the duties of the Secretary and where two or
more persons are appointed to act as Joint Secretaries shall include any one of
those persons.
All such of the provisions of these presents as are applicable to
paid-up shares shall apply to stock, and the words "share" and "shareholder"
shall be construed accordingly.
Words denoting the singular shall include the plural and vice
versa. Words denoting the masculine shall include the feminine. Words denoting
persons shall include corporations.
Subject as aforesaid any words or expression defined in the Act
shall (if not inconsistent with the subject or context) bear the same meanings
in these presents.
A Special Resolution shall be effective for any purpose for which
an Ordinary Resolution is expressed to be required under any provision of these
presents.
SHARE CAPITAL
2
<PAGE> 6
3. The authorised share capital of the Company is $800,000,000.540 divided into
3,076,923,079 ordinary shares of $0.26 each.
ISSUE OF SHARES
4. Subject to the Statutes and to these presents, no shares may be issued by the
Directors without the prior approval of the Company in General Meeting but
subject thereto and to Article 8, and to any special rights attached to any
shares for the time being issued, the Directors may allot or grant options over
or otherwise dispose of the same to such persons on such terms and conditions
and for such consideration and at such time and subject or not to the payment of
any part of the amount thereof in cash as the Directors may think fit, and any
shares may be issued with such preferential, deferred, qualified or special
rights, privileges or conditions as the Directors may think fit, and preference
shares may be issued which are or at the option of the Company are liable to be
redeemed, the terms and manner of redemption being determined by the Directors,
Provided always that:-
(a) no shares shall be issued to transfer a controlling
interest in the Company without the prior approval of the
members in a General Meeting; and
(b) no shares shall be issued at a discount except in
accordance with the Statutes.
5. (A) In the event of preference shares being issued the total nominal value of
issued preference shares shall not at any time exceed the total nominal value of
the issued ordinary shares and preference shareholders shall have the same
rights as ordinary shareholders as regards receiving of notices, reports and
balance sheets and attending General Meetings of the Company, and preference
shareholders shall also have the right to vote at any meeting convened for the
purpose of reducing the capital or winding-up or sanctioning a sale of the
undertaking or where the proposal to be submitted to the meeting directly
affects their rights and privileges or when the dividend on the preference
shares is more than six months in arrear.
(B) The Company has power to issue further preference capital ranking
equally with, or in priority to, preference shares already issued.
VARIATION OF RIGHTS
6. (A) Whenever the share capital of the Company is divided into different
classes of shares, the special rights attached to any class may, subject to the
provisions of the Statutes, be varied or abrogated either with the consent in
writing of the holders of three-quarters in nominal value of the issued shares
of the class or with the sanction of a Special Resolution passed at a separate
General Meeting of the holders of the shares of the class (but not otherwise)
and may be so varied or abrogated either whilst the Company is a going concern
or during or in contemplation of a winding-up. To every such separate General
Meeting all the provisions of these presents relating to General Meetings of the
Company and to the proceedings thereat shall mutatis mutandis apply, except that
the necessary quorum shall be two persons at least holding or representing by
proxy at least one-third in nominal value of the
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issued shares of the class and that any holder of shares of the class present in
person or by proxy may demand a poll and that every such holder shall on a poll
have one vote for every share of the class held by him, Provided always that
where the necessary majority for such a Special Resolution is not obtained at
such General Meeting, consent in writing if obtained from the holders of
three-quarters in nominal value of the issued shares of the class concerned
within two months of such General Meeting shall be as valid and effectual as a
Special Resolution carried at such General Meeting. The foregoing provisions of
this Article shall apply to the variation or abrogation of the special rights
attached to some only of the shares of any class as if each group of shares of
the class differently treated formed a separate class the special rights whereof
are to be varied.
(B) The special rights attached to any class of shares having
preferential rights shall not unless otherwise expressly provided by the terms
of issue thereof be deemed to be varied by the creation or issue of further
shares ranking as regards participation in the profits or assets of the Company
in some or all respects pari passu therewith but in no respect in priority
thereto.
ALTERATION OF SHARE CAPITAL
7. The Company may from time to time by Ordinary Resolution increase its share
capital by such sum to be divided into shares of such amounts as the resolution
shall prescribe.
8. (A) The Company may by Ordinary Resolution in General Meeting give to the
Directors a general authority, either unconditionally or subject to such
conditions as may be specified in the Ordinary Resolution, to issue shares
(whether by way of rights, bonus or otherwise) where, unless previously revoked
or varied by the Company in General Meeting, such authority to issue shares does
not continue beyond the conclusion of the Annual General Meeting of the Company
next following the passing of the Ordinary Resolution or the date by which such
Annual General Meeting is required to be held, or the expiration of such other
period as may be prescribed by the Statutes (whichever is the earliest).
(B) Except so far as otherwise provided by the conditions of issue or by
these presents, all new shares shall be subject to the provisions of the
Statutes and of these presents with reference to allotment, payment of calls,
lien, transfer, transmission, forfeiture and otherwise.
9. The Company may by Ordinary Resolution:-
(a) consolidate and divide all or any of its share capital
into shares of larger amount than its existing shares;
(b) cancel any shares which, at the date of the passing of the
resolution, have not been taken, or agreed to be taken, by
any person and diminish the amount of its capital by the
amount of the shares so cancelled;
(c) sub-divide its shares, or any of them, into shares of
smaller amount than is fixed by the Memorandum of
Association (subject, nevertheless, to the provisions of
the Statutes), and so that the resolution whereby any
share is sub-divided may
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<PAGE> 8
determine that, as between the holders of the shares
resulting from such sub-division, one or more of the
shares may, as compared with the others, have any such
preferred, deferred or other special rights, or be subject
to any such restrictions, as the Company has power to
attach to unissued or new shares;
(d) subject to the provisions of the Statutes, convert any
class of shares into any other class of shares.
10. (A) The Company may reduce its share capital or any capital redemption
reserve fund, share premium account or other undistributable reserve in any
manner and with and subject to any incident authorised and consent required by
law. Without prejudice to the generality of the foregoing, upon cancellation of
any share purchased or otherwise acquired by the Company pursuant to these
presents, the nominal amount of the issued share capital of the Company shall be
diminished by the nominal amount of the share so cancelled.
(B) The Company may, subject to and in accordance with the Statutes,
purchase or otherwise acquire shares in the issued share capital of the Company
on such terms and in such manner as the Company may from time to time think fit.
If required by the Statutes, any share which is so purchased or acquired by the
Company shall be deemed to be cancelled immediately on purchase or acquisition
by the Company. On the cancellation of any share as aforesaid, the rights and
privileges attached to that share shall expire. In any other instance, the
Company may deal with any such share which is so purchased or acquired by it in
such manner as may be permitted by, and in accordance with, the Statutes.
SHARES
11. Except as required by law, no person shall be recognised by the Company as
holding any share upon any trust, and the Company shall not be bound by or
compelled in any way to recognise any equitable, contingent, future or partial
interest in any share, or any interest in any fractional part of a share, or
(except only as by these presents or by law otherwise provided) any other right
in respect of any share, except an absolute right to the entirety thereof in the
person (other than the Depository) entered in the Register of Members as the
registered holder thereof or (as the case may be) person whose name is entered
in the Depository Register in respect of that share.
12. Without prejudice to any special rights previously conferred on the holders
of any shares or class of shares for the time being issued, any share in the
Company may be issued with such preferred, deferred or other special rights, or
subject to such restrictions, whether as regards dividend, return of capital,
voting or otherwise, as the Company may from time to time by Ordinary Resolution
determine (or, in the absence of any such determination, as the Directors may
determine) and subject to the provisions of the Statutes the Company may issue
preference shares which are, or at the option of the Company are, liable to be
redeemed.
13. Subject to the provisions of these presents and of the Statutes relating to
authority and of any resolution of the Company in General Meeting passed
pursuant thereto, all unissued shares shall be at the disposal of the Directors
and they may allot (with or without conferring a right of renunciation),
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<PAGE> 9
grant options over or otherwise dispose of them to such persons, at such times
and on such terms as they think proper.
14. The Company may exercise the powers of paying commissions conferred by the
Statutes to the full extent thereby permitted provided that the rate or amount
of the commissions paid or agreed to be paid shall be disclosed in the manner
required by the Statutes. Such commissions may be satisfied by the payment of
cash or the allotment of fully or partly paid shares or partly in one way and
partly in the other. The Company may also on any issue of shares pay such
brokerage as may be lawful.
15. Subject to the terms and conditions of any application for shares, the
Directors shall allot shares applied for within thirty days of the closing date
of any such application. The Directors may, at any time after the allotment of
any share but before any person has been entered in the Register of Members as
the holder or (as the case may be) before that share is entered against the name
of a Depositor in the Depository Register, recognise a renunciation thereof by
the allottee in favour of some other person and may accord to any allottee of a
share a right to effect such renunciation upon and subject to such terms and
conditions as the Directors may think fit to impose.
SHARE CERTIFICATES
16. Every share certificate shall be issued under the Seal and shall specify the
number and class of shares to which it relates and the amount paid up thereon
and shall bear the autographic or facsimile signatures of one Director and the
Secretary or a second Director or some other person appointed by the Directors.
The facsimile signatures may be reproduced by mechanical, electronic or other
method approved by the Directors. No certificate shall be issued representing
shares of more than one class.
17. (A) The Company shall not be bound to register more than three persons as
the registered holder of a share except in the case of executors or
administrators of the estate of a deceased member.
(B) In the case of a share registered jointly in the names of several
persons the Company shall not be bound to issue more than one certificate
therefor and delivery of a certificate to any one of the registered joint
holders shall be sufficient delivery to all.
18. Subject to the payment of all or any part of the stamp duty payable (if any)
on each share certificate prior to the delivery thereof which the Directors in
their absolute discretion may require, every person whose name is entered as a
member in the Register of Members shall be entitled to receive within thirty
days of the closing date of any application for shares or after the date of
lodgement of a registrable transfer one certificate for all his shares of any
one class or several certificates in reasonable denominations each for a part of
the shares so allotted or transferred. Where such a member transfers part only
of the shares comprised in a certificate or where such a member requires the
Company to cancel any certificate or certificates and issue new certificates for
the purpose of subdividing his holding in a different manner the old certificate
or certificates shall be cancelled and a new certificate or certificates for the
balance of such shares issued in lieu thereof and such member shall pay all or
any part of the stamp duty payable (if any) on each share certificate prior to
the delivery thereof which the Directors in
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<PAGE> 10
their absolute discretion may require and a maximum fee of $2 for each new
certificate or such other fee as the Directors may from time to time determine.
19. Where some only of the shares comprised in a share certificate are
transferred the old certificate shall be cancelled and a new certificate for the
balance of such shares issued in lieu without charge.
20. (A) Any two or more certificates representing shares of any one class held
by any person whose name is entered in the Register of Members may at his
request be cancelled and a single new certificate for such shares issued in lieu
without charge.
(B) If any person whose name is entered in the Register of Members shall
surrender for cancellation a share certificate representing shares held by him
and request the Company to issue in lieu two or more share certificates
representing such shares in such proportions as he may specify, the Directors
may, if they think fit, comply with such request. Such person shall (unless such
fee is waived by the Directors) pay a maximum fee of $2 for each share
certificate issued in lieu of a share certificate surrendered for cancellation
or such other fee as the Directors may from time to time determine.
(C) Subject to the provisions of the Statutes, if any share certificate
shall be defaced, worn out, destroyed, lost or stolen, it may be renewed on such
evidence being produced and a letter of indemnity (if required) being given by
the shareholder, transferee, person entitled, purchaser, member firm or member
company of any Stock Exchange upon which the shares in the Company may be listed
or on behalf of its or their client or clients as the Directors of the Company
shall require, and (in case of defacement or wearing out) on delivery up of the
old certificate and in any case on payment of such sum not exceeding $2 as the
Directors may from time to time require together with the amount of the proper
duty with which such share certificate is chargeable under any law for the time
being in force relating to stamps. In the case of destruction, loss or theft, a
shareholder or person entitled to whom such renewed certificate is given shall
also bear the loss and pay to the Company all expenses incidental to the
investigations by the Company of the evidence of such destruction or loss.
(D) In the case of shares registered jointly in the names of several
persons any such request may be made by any one of the registered joint holders.
CALLS ON SHARES
21. The Directors may from time to time make calls upon the members in respect
of any moneys unpaid on their shares (whether on account of the nominal value of
the shares or, when permitted, by way of premium) but subject always to the
terms of issue of such shares. A call shall be deemed to have been made at the
time when the resolution of the Directors authorising the call was passed and
may be made payable by instalments.
22. Each member shall (subject to receiving at least fourteen days' notice
specifying the time or times and place of payment) pay to the Company at the
time or times and place so specified the amount called on his shares. The joint
holders of a share shall be jointly and severally liable to pay all calls in
respect thereof. A call may be revoked or postponed as the Directors may
determine.
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23. If a sum called in respect of a share is not paid before or on the day
appointed for payment thereof, the person from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate (not exceeding ten per cent. per annum) as the
Directors determine but the Directors shall be at liberty in any case or cases
to waive payment of such interest wholly or in part.
24. Any sum (whether on account of the nominal value of the share or by way of
premium) which by the terms of issue of a share becomes payable upon allotment
or at any fixed date shall for all the purposes of these presents be deemed to
be a call duly made and payable on the date on which by the terms of issue the
same becomes payable. In case of non-payment all the relevant provisions of
these presents as to payment of interest and expenses, forfeiture or otherwise
shall apply as if such sum had become payable by virtue of a call duly made and
notified.
25. No member shall be entitled to receive any dividend or vote at any meeting
or upon a poll, until he shall have paid all calls for the time being due and
payable on every share held by him, whether alone or jointly with any other
person, together with interest and expenses (if any).
26. The Directors may on the issue of shares differentiate between the holders
as to the amount of calls to be paid and the times of payment.
27. The Directors may if they think fit receive from any member willing to
advance the same all or any part of the moneys (whether on account of the
nominal value of the shares or by way of premium) uncalled and unpaid upon the
shares held by him and such payment in advance of calls shall extinguish pro
tanto the liability upon the shares in respect of which it is made and upon the
money so received (until and to the extent that the same would but for such
advance become payable) the Company may pay interest at such rate (not exceeding
eight per cent. per annum) as the member paying such sum and the Directors may
agree. Capital paid on shares in advance of calls shall not while carrying
interest confer a right to participate in profits.
FORFEITURE AND LIEN
28. If a member fails to pay in full any call or instalment of a call on the due
date for payment thereof, the Directors may at any time thereafter serve a
notice on him requiring payment of so much of the call or instalment as is
unpaid together with any interest which may have accrued thereon and any
expenses incurred by the Company by reason of such non-payment.
29. The notice shall name a further day (not being less than fourteen days from
the date of service of the notice) on or before which and the place where the
payment required by the notice is to be made, and shall state that in the event
of non-payment in accordance therewith the shares on which the call has been
made will be liable to be forfeited.
30. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may at any time
thereafter, before payment of all calls and interest and expenses due in respect
thereof has been made, be forfeited by a resolution of the Directors
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<PAGE> 12
to that effect. Such forfeiture shall include all dividends declared in respect
of the forfeited share and not actually paid before forfeiture. The Directors
may accept a surrender of any share liable to be forfeited hereunder.
31. A share so forfeited or surrendered shall become the property of the Company
and may be sold, re-allotted or otherwise disposed of either to the person who
was before such forfeiture or surrender the holder thereof or entitled thereto
or to any other person upon such terms and in such manner as the Directors shall
think fit and at any time before a sale, re-allotment or disposition the
forfeiture or surrender may be cancelled on such terms as the Directors think
fit. The Directors may, if necessary, authorise some person to transfer or
effect the transfer of a forfeited or surrendered share to any such other person
as aforesaid.
32. A member whose shares have been forfeited or surrendered shall cease to be a
member in respect of the shares but shall notwithstanding the forfeiture or
surrender remain liable to pay to the Company all moneys which at the date of
forfeiture or surrender were presently payable by him to the Company in respect
of the shares with interest thereon at eight per cent. per annum (or such lower
rate as the Directors may determine) from the date of forfeiture or surrender
until payment and the Directors may at their absolute discretion enforce payment
without any allowance for the value of the shares at that time of forfeiture or
surrender or waive payment in whole or in part.
33. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys (whether presently payable or not) called or
payable at a fixed time in respect of such share and for all moneys as the
Company may be called upon by law to pay in respect of the shares of the member
or deceased member. The Directors may waive any lien which has arisen and may
resolve that any share shall for some limited period be exempt wholly or
partially from the provisions of this Article.
34. The Company may sell in such manner as the Directors think fit any share on
which the Company has a lien, but no sale shall be made unless some sum in
respect of which the lien exists is presently payable nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of the
sum presently payable and giving notice of intention to sell in default shall
have been given to the holder for the time being of the share or the person
entitled thereto by reason of his death or bankruptcy.
35. The net proceeds of such sale after payment of the costs of such sale shall
be applied in or towards payment or satisfaction of the debts or liabilities and
any residue shall be paid to the person entitled to the shares at the time of
the sale or to his executors, administrators or assigns, as he may direct. For
the purpose of giving effect to any such sale the Directors may authorise some
person to transfer or effect the transfer of the shares sold to the purchaser.
36. A statutory declaration in writing that the declarant is a Director or the
Secretary of the Company and that a share has been duly forfeited or surrendered
or sold to satisfy a lien of the Company on a date stated in the declaration
shall be conclusive evidence of the facts therein stated as against all persons
claiming to be entitled to the share. Such declaration and the receipt of the
Company for the consideration (if any) given for the share on the sale,
re-allotment or disposal thereof together (where the
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same be required) with the share certificate delivered to a purchaser (or where
the purchaser is a Depositor, to the Depository) or allottee thereof shall
(subject to the execution of a transfer if the same be required) constitute a
good title to the share and the share shall be registered in the name of the
person to whom the share is sold, re-allotted or disposed of or, where such
person is a Depositor, the Company shall procure that his name be entered in the
Depository Register in respect of the share so sold, re-allotted or disposed of.
Such person shall not be bound to see to the application of the purchase money
(if any) nor shall his title to the share be affected by any irregularity or
invalidity in the proceedings relating to the forfeiture, surrender, sale,
re-allotment or disposal of the share.
TRANSFER OF SHARES
37. All transfers of the legal title in shares may be effected by the registered
holders thereof by transfer in writing in any form acceptable to the Directors.
The instrument of transfer of any share shall be signed by or on behalf of both
the transferor and the transferee and be witnessed, provided that an instrument
of transfer in respect of which the transferee is the Depository shall be
effective although not signed or witnessed by or on behalf of the Depository.
The transferor shall remain the holder of the shares concerned until the name of
the transferee is entered in the Register of Members in respect thereof.
38. The Register of Members may be closed at such times and for such period as
the Directors may from time to time determine, provided always that such
Register shall not be closed for more than thirty days in any year.
39. There shall be no restriction on the transfer of fully paid up shares
(except where required by law) but the Directors may, in their sole discretion,
decline to register any transfer of shares upon which the Company has a lien and
in the case of shares not fully paid up may refuse to register a transfer to a
transferee of whom they do not approve, Provided always that in the event of the
Directors refusing to register a transfer of shares, they shall within thirty
days beginning with the date on which the application for a transfer of shares
was made, serve a notice in writing to the applicant stating the facts which are
considered to justify the refusal as required by the Statutes.
40. The Directors may in their sole discretion refuse to register any instrument
of transfer of shares unless:-
(a) all or any part of the stamp duty (if any) payable on each
share certificate and such fee not exceeding $2 as the
Directors may from time to time require, is paid to the
Company in respect thereof;
(b) the instrument of transfer is deposited at the Office or
at such other place (if any) as the Directors may appoint
accompanied by the certificates of the shares to which it
relates, and such other evidence as the Directors may
reasonably require to show the right of the transferor to
make the transfer and, if the instrument of transfer is
executed by some other person on his behalf, the authority
of the person so to do;
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(c) the instrument of transfer is in respect of only one class
of shares; and
(d) the amount of the proper duty with which each share
certificate to be issued in consequence of the
registration of such transfer is chargeable under any law
for the time being in force relating to stamps is
tendered.
41. If the Directors refuse to register a transfer of any shares, they shall
within thirty days after the date on which the application for transfer was
lodged with the Company send to the transferor and the transferee a notice in
writing stating the reasons justifying the refusal to transfer and a notice of
refusal as required by the Statutes.
42. All instruments of transfer which are registered may be retained by the
Company.
43. There shall be paid to the Company in respect of the registration of any
instrument of transfer or probate or letters of administration or certificate of
marriage or death or stop notice or power of attorney or other document relating
to or affecting the title to any shares or otherwise for making any entry in the
Register of Members affecting the title to any shares such fee not exceeding $2
as the Directors may from time to time require or prescribe.
44. The Company shall be entitled to destroy all instruments of transfer which
have been registered at any time after the expiration of six years from the date
of registration thereof and all dividend mandates and notifications of change of
address at any time after the expiration of six years from the date of recording
thereof and all share certificates which have been cancelled at any time after
the expiration of six years from the date of the cancellation thereof and it
shall conclusively be presumed in favour of the Company that every entry in the
Register of Members purporting to have been made on the basis of an instrument
of transfer or other document so destroyed was duly and properly made and every
instrument of transfer so destroyed was a valid and effective instrument duly
and properly registered and every share certificate so destroyed was a valid and
effective certificate duly and properly cancelled and every other document
hereinbefore mentioned so destroyed was a valid and effective document in
accordance with the recorded particulars thereof in the books or records of the
Company; Provided always that:-
(a) the provisions aforesaid shall apply only to the
destruction of a document in good faith and without notice
of any claim (regardless of the parties thereto) to which
the document might be relevant;
(b) nothing herein contained shall be construed as imposing
upon the Company any liability in respect of the
destruction of any such document earlier than as aforesaid
or in any other circumstances which would not attach to
the Company in the absence of this Article; and
(c) references herein to the destruction of any document
include references to the disposal thereof in any manner.
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TRANSMISSION OF SHARES
45. (A) In the case of the death of a member whose name is entered in the
Register of Members, the survivors or survivor where the deceased was a joint
holder, and the executors or administrators of the deceased where he was a sole
or only surviving holder, shall be the only person(s) recognised by the Company
as having any title to his interest in the shares.
(B) In the case of the death of a member who is a Depositor, the
survivors or survivor where the deceased is a joint holder, and the executors or
administrators of the deceased where he was a sole or only surviving holder and
where such executors or administrators are entered in the Depository Register in
respect of any shares of the deceased member, shall be the only person(s)
recognised by the Company as having any title to his interest in the shares.
(C) Nothing in this Article shall release the estate of a deceased
holder (whether sole or joint) from any liability in respect of any share held
by him.
46. Any person becoming entitled to the legal title in a share in consequence of
the death or bankruptcy of a person whose name is entered in the Register of
Members may (subject as hereinafter provided) upon supplying to the Company such
evidence as the Directors may reasonably require to show his legal title to the
share either be registered himself as holder of the share upon giving to the
Company notice in writing of such his desire or transfer such share to some
other person. All the limitations, restrictions and provisions of these presents
relating to the right to transfer and the registration of transfers of shares
shall be applicable to any such notice or transfer as aforesaid as if the death
or bankruptcy of the person whose name is entered in the Register of Members had
not occurred and the notice or transfer were a transfer executed by such person.
47. Save as otherwise provided by or in accordance with these presents, a person
becoming entitled to a share pursuant to Article 45(A) or (B) or Article 46
(upon supplying to the Company such evidence as the Directors may reasonably
require to show his title to the share) shall be entitled to the same dividends
and other advantages as those to which he would be entitled if he were the
member in respect of the share except that he shall not be entitled in respect
thereof (except with the authority of the Directors) to exercise any right
conferred by membership in relation to meetings of the Company until he shall
have been registered as a member in the Register of Members or his name shall
have been entered in the Depository Register in respect of the share.
STOCK
48. The Company may from time to time by Ordinary Resolution convert any paid-up
shares into stock and may from time to time by like resolution reconvert any
stock into paid-up shares of any denomination.
49. The holders of stock may transfer the same or any part thereof in the same
manner and subject to the same Articles as and subject to which the shares from
which the stock arose might previously to conversion have been transferred (or
as near thereto as circumstances admit) but no stock
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<PAGE> 16
shall be transferable except in such units (not being greater than the nominal
amount of the shares from which the stock arose) as the Directors may from time
to time determine.
50. The holders of stock shall, according to the amount of stock held by them,
have the same rights, privileges and advantages as regards dividend, return of
capital, voting and other matters, as if they held the shares from which the
stock arose; but no such privilege or advantage (except as regards participation
in the profits or assets of the Company) shall be conferred by an amount of
stock which would not, if existing in shares, have conferred such privilege or
advantage; and no such conversion shall affect or prejudice any preference or
other special privileges attached to the shares so converted.
GENERAL MEETINGS
51. An Annual General Meeting shall be held once in every year, at such time
(within a period of not more than fifteen months after the holding of the last
preceding Annual General Meeting) and place as may be determined by the
Directors. All other General Meetings shall be called Extraordinary General
Meetings.
52. The Directors may whenever they think fit, and shall on requisition in
accordance with the Statutes, proceed with proper expedition to convene an
Extraordinary General Meeting.
NOTICE OF GENERAL MEETINGS
53. Any General Meeting at which it is proposed to pass a Special Resolution or
(save as provided by the Statutes) a resolution of which special notice has been
given to the Company, shall be called by twenty-one days' notice in writing at
the least and an Annual General Meeting and any other Extraordinary General
Meeting by fourteen days' notice in writing at the least. The period of notice
shall in each case be exclusive of the day on which it is served or deemed to be
served and of the day on which the meeting is to be held and shall be given in
the manner hereinafter mentioned to all members other than such as are not under
the provisions of these presents entitled to receive such notices from the
Company; Provided that a General Meeting notwithstanding that it has been called
by a shorter notice than that specified above shall be deemed to have been duly
called if it is so agreed:-
(a) in the case of an Annual General Meeting, by all the
members entitled to attend and vote thereat; and
(b) in the case of an Extraordinary General Meeting, by a
majority in number of the members having a right to attend
and vote thereat, being a majority together holding not
less than 95 per cent. in nominal value of the shares
giving that right;
Provided also that the accidental omission to give notice to or the non-receipt
of notice by any person entitled thereto shall not invalidate the proceedings at
any General Meeting. At least 14 days' notice of any General Meeting shall be
given by advertisement in the daily press.
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54. (A) Every notice calling a General Meeting shall specify the place and the
day and hour of the meeting, and there shall appear with reasonable prominence
in every such notice a statement that a member entitled to attend and vote is
entitled to appoint a proxy to attend and vote instead of him and that a proxy
need not be a member of the Company.
(B) In the case of an Annual General Meeting, the notice shall also
specify the meeting as such.
(C) In the case of any General Meeting at which business other than
routine business is to be transacted, the notice shall specify the general
nature of such business; and if any resolution is to be proposed as a Special
Resolution, the notice shall contain a statement to that effect.
55. Routine business shall mean and include only business transacted at an
Annual General Meeting of the following classes, that is to say:-
(a) declaring dividends;
(b) receiving and adopting the accounts, the reports of the
Directors and Auditors and other documents required to be
attached or annexed to the accounts;
(c) appointing or re-appointing Directors to fill vacancies
arising at the meeting on retirement whether by rotation
or otherwise;
(d) re-appointing the retiring Auditors (unless they were last
appointed otherwise than by the Company in General
Meeting);
(e) fixing the remuneration of the Auditors or determining the
manner in which such remuneration is to be fixed; and
(f) fixing the remuneration of the Directors proposed to be
paid under Article 81.
56. Any notice of a General Meeting to consider special business shall be
accompanied by a statement regarding the effect of any proposed resolution on
the Company in respect of such special business.
PROCEEDINGS AT GENERAL MEETINGS
57. The Chairman of the Board of Directors, failing whom the Deputy Chairman,
shall preside as chairman at a General Meeting. If there be no such Chairman or
Deputy Chairman, or if at any meeting neither be present within 15 minutes after
the time appointed for holding the meeting and willing to act, the Directors
present shall choose one of their number (or, if no Director be present or if
all the Directors present decline to take the chair, the members present shall
choose one of their number) to be chairman of the meeting.
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58. No business other than the appointment of a chairman shall be transacted at
any General Meeting unless a quorum is present at the time when the meeting
proceeds to business. Save as herein otherwise provided, the quorum at any
General Meeting shall be two or more members holding or representing in
aggregate not less than 33 1/3 per cent. of the total issued and fully paid up
shares in the capital of the Company, present in person or by proxy.
59. If within 30 minutes from the time appointed for a General Meeting (or such
longer interval as the chairman of the meeting may think fit to allow) a quorum
is not present, the meeting, if convened on the requisition of members, shall be
dissolved. In any other case it shall stand adjourned to the same day in the
next week (or if that day is a public holiday then to the next business day
following that public holiday) at the same time and place or such other day,
time or place as the directors may by not less than ten days' notice appoint. At
the adjourned meeting any one or more members present in person or by proxy
shall be a quorum.
60. The chairman of any General Meeting at which a quorum is present may with
the consent of the meeting (and shall if so directed by the meeting) adjourn the
meeting from time to time (or sine die) and from place to place, but no business
shall be transacted at any adjourned meeting except business which might
lawfully have been transacted at the meeting from which the adjournment took
place. Where a meeting is adjourned sine die, the time and place for the
adjourned meeting shall be fixed by the Directors. When a meeting is adjourned
for 30 days or more or sine die, not less than seven days' notice of the
adjourned meeting shall be given in like manner as in the case of the original
meeting.
61. Save as hereinbefore expressly provided, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting.
62. If an amendment shall be proposed to any resolution under consideration but
shall in good faith be ruled out of order by the chairman of the meeting, the
proceedings on the substantive resolution shall not be invalidated by any error
in such ruling. In the case of a resolution duly proposed as a Special
Resolution, no amendment thereto (other than a mere clerical amendment to
correct a patent error) may in any event be considered or voted upon.
63. At any General Meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is (before or on the declaration of the
result of the show of hands) demanded by:-
(a) the chairman of the meeting; or
(b) any member present in person or by proxy and entitled to
vote; or
(c) a member present in person or by proxy and representing
not less than one-tenth of the total voting rights of all
the members having the right to vote at the meeting; or
(d) a member present in person or by proxy and holding
shares in the Company conferring a right to vote at the
meeting being shares on which an aggregate sum
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has been paid up equal to not less than one-tenth of the
total sum paid on all the shares conferring that right;
Provided always that no poll shall be demanded on the choice of a chairman or on
a question of adjournment.
64. A demand for a poll may be withdrawn only with the approval of the meeting.
Unless a poll is required a declaration by the chairman of the meeting that a
resolution has been carried, or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the minute book, shall be
conclusive evidence of that fact without proof of the number or proportion of
the votes recorded for or against such resolution. If a poll is required, it
shall be taken in such manner (including the use of ballot or voting papers or
tickets) as the chairman of the meeting may direct, and the result of the poll
shall be deemed to be the resolution of the meeting at which the poll was
demanded. The chairman of the meeting may (and if so directed by the meeting
shall) appoint scrutineers and may adjourn the meeting to some place and time
fixed by him for the purpose of declaring the result of the poll.
65. In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman of the meeting at which the show of hands takes place or at
which the poll is demanded shall be entitled to a casting vote.
66. A poll demanded on any question shall be taken either immediately or at such
subsequent time (not being more than 30 days from the date of the meeting) and
place as the chairman may direct. No notice need be given of a poll not taken
immediately. The demand for a poll shall not prevent the continuance of the
meeting for the transaction of any business other than the question on which the
poll has been demanded.
VOTES OF MEMBERS
67. Subject and without prejudice to any special privileges or restrictions as
to voting for the time being attached to any special class of shares for the
time being forming part of the capital of the Company each member entitled to
vote may vote in person or by proxy. On a show of hands every member who is
present in person and each proxy shall have one vote and on a poll, every member
who is present in person or by proxy shall have one vote for every share which
he holds or represents. For the purpose of determining the number of votes which
a member, being a Depositor, or his proxy may cast at any General Meeting on a
poll, the reference to shares held or represented shall, in relation to shares
of that Depositor, be the number of shares entered against his name in the
Depository Register as at 48 hours before the time of the relevant General
Meeting as certified by the Depository to the Company.
68. In the case of joint holders of a share the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders and for this purpose seniority shall be
determined by the order in which the names stand in the Register of Members or
(as the case may be) the Depository Register in respect of the share.
69. Where in Singapore or elsewhere a receiver or other person (by whatever name
called) has been appointed by any court claiming jurisdiction in that behalf to
exercise powers with respect to
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the property or affairs of any member on the ground (however formulated) of
mental disorder, the Directors may in their absolute discretion, upon or subject
to production of such evidence of the appointment as the Directors may require,
permit such receiver or other person on behalf of such member to vote in person
or by proxy at any General Meeting or to exercise any other right conferred by
membership in relation to meetings of the Company.
70. No member shall, unless the Directors otherwise determine, be entitled in
respect of shares held by him to vote at a General Meeting either personally or
by proxy or to exercise any other right conferred by membership in relation to
meetings of the Company if any call or other sum presently payable by him to the
Company in respect of such shares remains unpaid.
71. No objection shall be raised as to the admissibility of any vote except at
the meeting or adjourned meeting at which the vote objected to is or may be
given or tendered and every vote not disallowed at such meeting shall be valid
for all purposes. Any such objection shall be referred to the chairman of the
meeting whose decision shall be final and conclusive.
72. On a poll, votes may be given either personally or by proxy and a person
entitled to more than one vote need not use all his votes or cast all the votes
he uses in the same way.
73. (A) A member may appoint not more than two proxies to attend and vote at the
same General Meeting provided that if the member is a Depositor, the Company
shall be entitled and bound:-
(a) to reject any instrument of proxy lodged if the Depositor
is not shown to have any shares entered against his name
in the Depository Register as at 48 hours before the time
of the relevant General Meeting as certified by the
Depository to the Company; and
(b) to accept as the maximum number of votes which in
aggregate the proxy or proxies appointed by the Depositor
is or are able to cast on a poll a number which is the
number of shares entered against the name of that
Depositor in the Depository Register as at 48 hours before
the time of the relevant General Meeting as certified by
the Depository to the Company, whether that number is
greater or smaller than the number specified in any
instrument of proxy executed by or on behalf of that
Depositor.
(B) The Company shall be entitled and bound, in determining rights to
vote and other matters in respect of a completed instrument of proxy submitted
to it, to have regard to the instructions (if any) given by and the notes (if
any) set out in the instrument of proxy.
(C) In any case where a form of proxy appoints more than one proxy, the
proportion of the shareholding concerned to be represented by each proxy shall
be specified in the form of proxy.
(D) A proxy need not be a member of the Company.
74. (A) An instrument appointing a proxy shall be in writing in any usual or
common form or in any other form which the Directors may approve and:-
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(a) in the case of an individual, shall be signed by the
appointor or his attorney; and
(b) in the case of a corporation, shall be either given under
its common seal or signed on its behalf by an attorney or
a duly authorised officer of the corporation.
(B) The signature on such instrument need not be witnessed. Where an
instrument appointing a proxy is signed on behalf of the appointor by an
attorney, the letter or power of attorney or a duly certified copy thereof must
(failing previous registration with the Company) be lodged with the instrument
of proxy pursuant to the next following Article, failing which the instrument
may be treated as invalid.
75. An instrument appointing a proxy must be left at such place or one of such
places (if any) as may be specified for that purpose in or by way of note to or
in any document accompanying the notice convening the meeting (or, if no place
is so specified, at the Office) not less than 48 hours before the time appointed
for the holding of the meeting or adjourned meeting or (in the case of a poll
taken otherwise than at or on the same day as the meeting or adjourned meeting)
for the taking of the poll at which it is to be used, and in default shall not
be treated as valid. The instrument shall, unless the contrary is stated
thereon, be valid as well for any adjournment of the meeting as for the meeting
to which it relates; Provided that an instrument of proxy relating to more than
one meeting (including any adjournment thereof) having once been so delivered
for the purposes of any meeting shall not be required again to be delivered for
the purposes of any subsequent meeting to which it relates.
76. An instrument appointing a proxy shall be deemed to include the right to
demand or join in demanding a poll, to move any resolution or amendment thereto
and to speak at the meeting.
77. A vote cast by proxy shall not be invalidated by the previous death or
insanity of the principal or by the revocation of the appointment of the proxy
or of the authority under which the appointment was made provided that no
intimation in writing of such death, insanity or revocation shall have been
received by the Company at the Office at least one hour before the commencement
of the meeting or adjourned meeting or (in the case of a poll taken otherwise
than at or on the same day as the meeting or adjourned meeting) the time
appointed for the taking of the poll at which the vote is cast.
CORPORATIONS ACTING BY REPRESENTATIVES
78. Any corporation which is a member of the Company may by resolution of its
directors or other governing body authorise such person as it thinks fit to act
as its representative at any meeting of the Company or of any class of members
of the Company. The person so authorised shall be entitled to exercise the same
powers on behalf of such corporation as the corporation could exercise if it
were an individual member of the Company and such corporation shall for the
purposes of these presents be deemed to be present in person at any such meeting
if a person so authorised is present thereat.
DIRECTORS
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79. The number of Directors shall not be less than two. All Directors of the
Company shall be natural persons.
80. A Director shall not be required to hold any shares of the Company by way of
qualification. A Director who is not a member of the Company shall nevertheless
be entitled to attend and speak at General Meetings.
81. The ordinary remuneration of the Directors shall from time to time be
determined by an Ordinary Resolution of the Company, shall not be increased
except pursuant to an Ordinary Resolution passed at a General Meeting where
notice of the proposed increase shall have been given in the notice convening
the General Meeting and shall (unless such resolution otherwise provides) be
divisible among the Directors as they may agree, or failing agreement, equally,
except that any Director who shall hold office for part only of the period in
respect of which such remuneration is payable shall be entitled only to rank in
such division for a proportion of remuneration related to the period during
which he has held office.
82. Any Director who holds any executive office, or who serves on any committee
of the Directors, or who otherwise performs services which in the opinion of the
Directors are outside the scope of the ordinary duties of a Director, may be
paid such extra remuneration by way of salary, commission or otherwise as the
Directors may determine.
83. The Directors may repay to any Director all such reasonable expenses as he
may incur in attending and returning from meetings of the Directors or of any
committee of the Directors or General Meetings or otherwise in or about the
business of the Company.
84. The Directors shall have power to pay and agree to pay pensions or other
retirement, superannuation, death or disability benefits to (or to any person in
respect of) any Director for the time being holding any executive office and for
the purpose of providing any such pensions or other benefits, to contribute to
any scheme or fund or to pay premiums.
85. A Director may be party to or in any way interested in any contract or
arrangement or transaction to which the Company is a party or in which the
Company is in any way interested and he may hold and be remunerated in respect
of any office or place of profit (other than the office of Auditor of the
Company or any subsidiary thereof) under the Company or any other company in
which the Company is in any way interested and he (or any firm of which he is a
member) may act in a professional capacity for the Company or any such other
company and be remunerated therefor and in any such case as aforesaid (save as
otherwise agreed) he may retain for his own absolute use and benefit all profits
and advantages accruing to him thereunder or in consequence thereof.
86. A Director who holds any office or possesses any property whereby whether
directly or indirectly duties or interests might be created in conflict with his
duties or interests as Director shall declare the fact and the nature, character
and extent of the conflict at a meeting of the Directors of the Company in
accordance with the Statutes.
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87. (A) The Directors may from time to time appoint one or more of their body to
be the holder of any executive office (including, where considered appropriate,
the office of Chairman or Deputy Chairman) on such terms and for such period as
they may (subject to the provisions of the Statutes) determine and, without
prejudice to the terms of any contract entered into in any particular case, may
at any time revoke any such appointment.
(B) The appointment of any Director to the office of Chairman or Deputy
Chairman or Managing or Joint Managing or Deputy or Assistant Managing Director
or Chief Executive Officer or President shall automatically determine if he
ceases to be a Director but without prejudice to any claim for damages for
breach of any contract of service between him and the Company.
(C) The appointment of any Director to any other executive office shall
not automatically determine if he ceases from any cause to be a Director, unless
the contract or resolution under which he holds office shall expressly state
otherwise, in which event such determination shall be without prejudice to any
claim for damages for breach of any contract of service between him and the
Company.
88. The Directors may entrust to and confer upon any Directors holding any
executive office any of the powers exercisable by them as Directors upon such
terms and conditions and with such restrictions as they think fit, and either
collaterally with or to the exclusion of their own powers, and may from time to
time revoke, withdraw, alter or vary all or any of such powers.
MANAGING DIRECTOR OR CHIEF EXECUTIVE OFFICER OR PRESIDENT
89. The Directors may from time to time appoint one or more of their body to be
Managing Director or Chief Executive Officer or President of the Company and may
from time to time (subject to the provisions of any contract between him or them
and the Company) remove or dismiss him or them from office and appoint another
or others in his or their place or places.
90. A Managing Director or Chief Executive Officer or President shall not while
he continues to hold that office be subject to retirement by rotation and he
shall not be taken into account in determining the rotation of retirement of
Directors but he shall, subject to the provisions of any contract between him
and the Company, be subject to the same provisions as to resignation and removal
as the other Directors of the Company and if he ceases to hold the office of
Director from any cause he shall ipso facto and immediately cease to be a
Managing Director or Chief Executive Officer or President.
91. The remuneration of a Managing Director or Chief Executive Officer or
President shall from time to time be fixed by the Directors and may subject to
these presents be by way of salary or commission or participation in profits or
by any or all these modes.
92. A Managing Director or Chief Executive Officer or President shall at all
times be subject to the control of the Directors but subject thereto the
Directors may from time to time entrust to and confer upon a Managing Director
or Chief Executive Officer or President for the time being such of the powers
exercisable under these presents by the Directors as they may think fit and may
confer such powers for such time and to be exercised on such terms and
conditions and with such restrictions as they think expedient and they may
confer such powers either collaterally with or to the exclusion of and in
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substitution for all or any of the powers of the Directors in that behalf and
may from time to time revoke, withdraw, alter or vary all or any of such powers.
APPOINTMENT AND RETIREMENT OF DIRECTORS
93. The office of a Director shall be vacated in any of the following events,
namely:-
(a) if he shall become prohibited by law from acting as a
Director; or
(b) if (not being a Director holding any executive office for
a fixed term) he shall resign by writing under his hand
left at the Office or if he shall in writing offer to
resign and the Directors shall resolve to accept such
offer; or
(c) if he shall have a receiving order made against him or
shall compound with his creditors generally; or
(d) if he becomes of unsound mind or if in Singapore or
elsewhere an order shall be made by any court claiming
jurisdiction in that behalf on the ground (however
formulated) of mental disorder for his detention or for
the appointment of a guardian or for the appointment of a
receiver or other person (by whatever name called) to
exercise powers with respect to his property or affairs;
or
(e) if he is removed by the Company in General Meeting
pursuant to Article 98.
94. At each Annual General Meeting one-third of the Directors for the time being
(or, if their number is not a multiple of three, the number nearest to but not
less than one-third) shall retire from office by rotation. Provided that no
Director holding office as Managing Director or Chief Executive Officer or
President shall be subject to retirement by rotation or be taken into account in
determining the number of Directors to retire.
95. The Directors to retire in every year shall be those subject to retirement
by rotation who have been longest in office since their last re-election or
appointment and so that as between persons who became or were last re-elected
Directors on the same day those to retire shall (unless they otherwise agree
among themselves) be determined by lot. A retiring Director shall be eligible
for re-election.
96. The Company at the meeting at which a Director retires under any provision
of these presents may by Ordinary Resolution fill the office being vacated by
electing thereto the retiring Director or some other person eligible for
appointment. In default the retiring Director shall be deemed to have been
re-elected except in any of the following cases:-
(a) where at such meeting it is expressly resolved not to fill
such office or a resolution for the re-election of such
Director is put to the meeting and lost;
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(b) where such Director has given notice in writing to the
Company that he is unwilling to be re-elected;
(c) where the default is due to the moving of a resolution in
contravention of the next following Article; or
(d) where such Director has attained any retiring age
applicable to him as Director.
The retirement shall not have effect until the conclusion of the meeting except
where a resolution is passed to elect some other person in the place of the
retiring Director or a resolution for his re-election is put to the meeting and
lost and accordingly a retiring Director who is re-elected or deemed to have
been re-elected will continue in office without a break.
97. A resolution for the appointment of two or more persons as Directors by a
single resolution shall not be moved at any General Meeting unless a resolution
that it shall be so moved has first been agreed to by the meeting without any
vote being given against it; and any resolution moved in contravention of this
provision shall be void.
98. The Company may in accordance with and subject to the provisions of the
Statutes by Ordinary Resolution of which special notice has been given remove
any Director from office (notwithstanding any provision of these presents or of
any agreement between the Company and such Director, but without prejudice to
any claim he may have for damages for breach of any such agreement) and appoint
another person in place of a Director so removed from office and any person so
appointed shall be treated for the purpose of determining the time at which he
or any other Director is to retire by rotation as if he had become a Director on
the day on which the Director in whose place he is appointed was last elected a
Director. In default of such appointment the vacancy arising upon the removal of
a Director from office may be filled as a casual vacancy.
99. The Company may by Ordinary Resolution appoint any person to be a Director
either to fill a casual vacancy or as an additional Director. Without prejudice
thereto the Directors shall have power at any time so to do, but any person so
appointed by the Directors shall hold office only until the next Annual General
Meeting. He shall then be eligible for re-election, but shall not be taken into
account in determining the number of Directors who are to retire by rotation at
such meeting.
ALTERNATE DIRECTORS
100. (A) Any Director may at any time by writing under his hand and deposited at
the Office, or delivered at a meeting of the Directors, appoint any person
(other than another Director) to be his alternate Director and may in like
manner at any time terminate such appointment. Such appointment, unless
previously approved by the Directors, shall have effect only upon and subject to
being so approved.
(B) The appointment of an alternate Director shall determine on the
happening of any event which if he were a Director would cause him to vacate
such office or if the Director concerned (below called "his principal") ceases
to be a Director.
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(C) An Alternate Director shall (except when absent from Singapore) be
entitled to receive notices of meetings of the Directors and shall be entitled
to attend and vote as a Director at any such meeting at which his principal is
not personally present and generally at such meeting to perform all functions of
his principal as a Director and for the purposes of the proceedings at such
meeting the provisions of these presents shall apply as if he (instead of his
principal) were a Director. If his principal is for the time being absent from
Singapore or temporarily unable to act through ill health or disability, his
signature to any resolution in writing of the Directors shall be as effective as
the signature of his principal. To such extent as the Directors may from time to
time determine in relation to any committees of the Directors, the foregoing
provisions of this paragraph shall also apply mutatis mutandis to any meeting of
any such committee of which his principal is a member. An Alternate Director
shall not (save as aforesaid) have power to act as a Director nor shall he be
deemed to be a Director for the purposes of these presents.
(D) An Alternate Director shall be entitled to contract and be
interested in and benefit from contracts or arrangements or transactions and to
be repaid expenses and to be indemnified to the same extent mutatis mutandis as
if he were a Director but he shall not be entitled to receive from the Company
in respect of his appointment as Alternate Director any remuneration except only
such part (if any) of the remuneration otherwise payable to his principal as
such principal may by notice in writing to the Company from time to time direct.
MEETINGS AND PROCEEDINGS OF DIRECTORS
101. (A) Subject to the provisions of these presents the Directors may meet
together for the despatch of business, adjourn and otherwise regulate their
meetings as they think fit. At any time any Director may, and the Secretary on
the requisition of a Director shall, summon a meeting of the Directors. It shall
not be necessary to give notice of a meeting of Directors to any Director for
the time being absent from Singapore. Any Director may waive notice of any
meeting and any such waiver may be retroactive.
(B) Directors may participate in a meeting of the Directors by means of
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, without a Director
being in the physical presence of another Director or Directors, and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting.
102. The quorum necessary for the transaction of the business of the Directors
may be fixed from time to time by the Directors and unless so fixed at any other
number shall be two. A meeting of the Directors at which a quorum is present
shall be competent to exercise all powers and discretions for the time being
exercisable by the Directors.
103. Questions arising at any meeting of the Directors shall be determined by a
majority of votes. In case of an equality of votes (except where only two
Directors are present and form the quorum or when only two Directors are
competent to vote on the question in issue) the chairman of the meeting shall
have a second or casting vote.
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104. Director shall not vote in respect of any contract or arrangement or any
other proposal whatsoever in which he has any interest, directly or indirectly.
A Director shall not be counted in the quorum at a meeting in relation to any
resolution on which he is debarred from voting.
105. The continuing Directors may act notwithstanding any vacancies, but if and
so long as the number of Directors is reduced below the minimum number fixed by
or in accordance with these presents the continuing Directors or Director may
act for the purpose of filling up such vacancies or of summoning General
Meetings, but not for any other purpose. If there be no Directors or Director
able or willing to act, then any two members may summon a General Meeting for
the purpose of appointing Directors.
106. (A) The Directors may elect from their number a Chairman and a Deputy
Chairman (or two or more Deputy Chairmen) and determine the period for which
each is to hold office. If no Chairman or Deputy Chairman shall have been
appointed or if at any meeting of the Directors no Chairman or Deputy Chairman
shall be present within five minutes after the time appointed for holding the
meeting, the Directors present may choose one of their number to be chairman of
the meeting.
(B) If at any time there is more than one Deputy Chairman the right in
the absence of the Chairman to preside at a meeting of the Directors or of the
Company shall be determined as between the Deputy Chairmen present (if more than
one) by seniority in length of appointment or otherwise as resolved by the
Directors.
107. A resolution in writing signed by a majority in number of the Directors for
the time being shall be as effective as a resolution duly passed at a meeting of
the Directors and may consist of several documents in the like form, each signed
by one or more Directors. The expressions "in writing" and "signed" include
approval by telefax, telex, cable or telegram by any such Director.
108. The Directors may delegate any of their powers or discretion to committees
consisting of one or more members of their body and (if thought fit) one or more
other persons co-opted as hereinafter provided. Any committee so formed shall in
the exercise of the powers so delegated conform to any regulations which may
from time to time be imposed by the Directors. Any such regulations may provide
for or authorise the co-option to the committee of persons other than Directors
and for such co-opted members to have voting rights as members of the committee.
109. The meetings and proceedings of any such committee consisting of two or
more members shall be governed mutatis mutandis by the provisions of these
presents regulating the meetings and proceedings of the Directors, so far as the
same are not superseded by any regulations made by the Directors under the last
preceding Article.
110. All acts done by any meeting of Directors, or of any such committee, or by
any person acting as a Director or as a member of any such committee, shall as
regards all persons dealing in good faith with the Company, notwithstanding that
there was defect in the appointment of any of the persons acting as aforesaid,
or that any such persons were disqualified or had vacated office, or were not
entitled to vote, be as valid as if every such person had been duly appointed
and was qualified and had continued to be a Director or member of the committee
and had been entitled to vote.
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BORROWING POWERS
111. Subject as hereinafter provided and to the provisions of the Statutes, the
Directors may exercise all the powers of the Company to borrow money, to
mortgage or charge its undertaking, property and uncalled capital and to issue
debentures and other securities, whether outright or as collateral security for
any debt, liability or obligation of the Company or of any third party.
GENERAL POWERS OF DIRECTORS
112. The business and affairs of the Company shall be managed by the Directors,
who may exercise all such powers of the Company as are not by the Statutes or by
these presents required to be exercised by the Company in General Meeting,
subject nevertheless to any regulations of these presents, to the provisions of
the Statutes and to such regulations, being not inconsistent with the aforesaid
regulations or provisions, as may be prescribed by Special Resolution of the
Company, but no regulation so made by the Company shall invalidate any prior act
of the Directors which would have been valid if such regulation had not been
made; Provided that the Directors shall not carry into effect any proposals for
selling or disposing of the whole or substantially the whole of the Company's
undertaking unless such proposals have been approved by the Company in General
Meeting. The general powers given by this Article shall not be limited or
restricted by any special authority or power given to the Directors by any other
Article.
113. The Directors may establish any local boards or agencies for managing any
of the affairs of the Company, either in Singapore or elsewhere, and may appoint
any persons to be members of such local boards, or any managers or agents, and
may fix their remuneration, and may delegate to any local board, manager or
agent any of the powers, authorities and discretions vested in the Directors,
with power to sub-delegate, and may authorise the members of any local boards,
or any of them, to fill any vacancies therein, and to act notwithstanding
vacancies, and any such appointment or delegation may be made upon such terms
and subject to such conditions as the Directors may think fit, and the Directors
may remove any person so appointed, and may annul or vary any such delegation,
but no person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
114. The Directors may from time to time and at any time by power of attorney or
otherwise appoint any company, firm or person or any fluctuating body of
persons, whether nominated directly or indirectly by the Directors, to be the
attorney or attorneys of the Company for such purposes and with such powers,
authorities and discretions (not exceeding those vested in or exercisable by the
Directors under these presents) and for such period and subject to such
conditions as they may think fit, and any such power of attorney may contain
such provisions for the protection and convenience of persons dealing with any
such attorney as the Directors may think fit, and may also authorise any such
attorney to sub-delegate all or any of the powers, authorities and discretions
vested in him.
115. The Company or the Directors on behalf of the Company may in exercise of
the powers in that behalf conferred by the Statutes cause to be kept a Branch
Register or Register of Members and the Directors may (subject to the provisions
of the Statutes) make and vary such regulations as they may think fit in respect
of the keeping of any such Register.
25
<PAGE> 29
116. All cheques, promissory notes, drafts, bills of exchange, and other
negotiable or transferable instruments, and all receipts for moneys paid to the
Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as
the case may be, in such manner as the Directors shall from time to time by
resolution determine.
SECRETARY
117. The Secretary shall be appointed by the Directors on such terms and for
such period as they may think fit. Any Secretary so appointed may at any time be
removed from office by the Directors, but without prejudice to any claim for
damages for breach of any contract of service between him and the Company. If
thought fit two or more persons may be appointed as Joint Secretaries. The
Directors may also appoint from time to time on such terms as they may think fit
one or more Assistant Secretaries. The appointment and duties of the Secretary
or Joint Secretaries shall not conflict with the Statutes and in particular
Section 171 of the Act.
THE SEAL
118. The Directors shall provide for the safe custody of the Seal which shall
not be used without the authority of the Directors or of a committee authorised
by the Directors in that behalf.
119. Every instrument to which the Seal shall be affixed shall be signed
autographically by one Director and the Secretary or by a second Director or
some another person appointed by the Directors save that as regards any
certificates for shares or debentures or other securities of the Company the
Directors may by resolution determine that such signatures or either of them
shall be dispensed with or affixed by some method or system of mechanical
signature or other method approved by the Directors.
120. (A) The Company may exercise the powers conferred by the Statutes with
regard to having an official seal for use abroad and such powers shall be vested
in the Directors.
(B) The Company may exercise the powers conferred by the Statutes with
regard to having a duplicate Seal as referred to in Section 124 of the Act which
shall be a facsimile of the Seal with the addition on its face of the words
"Share Seal".
AUTHENTICATION OF DOCUMENTS
121. Any Director or the Secretary or any person appointed by the Directors for
the purpose shall have power to authenticate any documents affecting the
constitution of the Company and any resolutions passed by the Company or the
Directors or any committee, and any books, records, documents and accounts
relating to the business of the Company, and to certify copies thereof or
extracts therefrom as true copies or extracts; and where any books, records,
documents or accounts are elsewhere than at the Office the local manager or
other officer of the Company having the custody thereof shall be deemed to be a
person appointed by the Directors as aforesaid. A document purporting to be a
copy of a resolution, or an extract from the minutes of a meeting, of the
Company or of the Directors or any committee which is certified as aforesaid
shall be conclusive evidence in favour of all persons dealing
26
<PAGE> 30
with the Company upon the faith thereof that such resolution has been duly
passed, or as the case may be, that any minute so extracted is a true and
accurate record of proceedings at a duly constituted meeting.
RESERVES
122. The Directors may from time to time set aside out of the profits of the
Company and carry to reserve such sums as they think proper which, at the
discretion of the Directors, shall be applicable for any purpose to which the
profits of the Company may properly be applied and pending such application may
either be employed in the business of the Company or be invested. The Directors
may divide the reserve into such special funds as they think fit and may
consolidate into one fund any special funds or any parts of any special funds
into which the reserve may have been divided. The Directors may also, without
placing the same to reserve, carry forward any profits. In carrying sums to
reserve and in applying the same the Directors shall comply with the provisions
of the Statutes.
DIVIDENDS
123. The Company may by Ordinary Resolution declare dividends but no such
dividend shall exceed the amount recommended by the Directors.
124. If and so far as in the opinion of the Directors the profits of the Company
justify such payments, the Directors may declare and pay the fixed dividends on
any class of shares carrying a fixed dividend expressed to be payable on fixed
dates on the half-yearly or other dates prescribed for the payment thereof and
may also from time to time declare and pay interim dividends on shares of any
class of such amounts and on such dates and in respect of such periods as they
think fit.
125. Unless and to the extent that the rights attached to any shares or the
terms of issue thereof otherwise provide, all dividends shall (as regards any
shares not fully paid throughout the period in respect of which the dividend is
paid) be apportioned and paid pro rata according to the amounts paid on the
shares during any portion or portions of the period in respect of which the
dividend is paid. For the purposes of this Article no amount paid on a share in
advance of calls shall be treated as paid on the share.
126. No dividend shall be paid otherwise than out of profits available for
distribution under the provisions of the Statutes.
127. No dividend or other moneys payable on or in respect of a share shall bear
interest as against the Company.
128. (A) The Directors may retain any dividend or other moneys payable on or in
respect of a share on which the Company has a lien and may apply the same in or
towards satisfaction of the debts, liabilities or engagements in respect of
which the lien exists.
(B) The Directors may retain the dividends payable upon shares in
respect of which any person is under the provisions as to the transmission of
shares hereinbefore contained entitled to become
27
<PAGE> 31
a member, or which any person is under those provisions entitled to transfer,
until such person shall become a member in respect of such shares or shall
transfer the same.
129. The waiver in whole or in part of any dividend on any share by any document
(whether or not under seal) shall be effective only if such document is signed
by the shareholder (or the person entitled to the share in consequence of the
death or bankruptcy of the holder) and delivered to the Company and if or to the
extent that the same is accepted as such or acted upon by the Company.
130. The Company may upon the recommendation of the Directors by Ordinary
Resolution direct payment of a dividend in whole or in part by the distribution
of specific assets (and in particular of paid-up shares or debentures of any
other company) and the Directors shall give effect to such resolution. Where any
difficulty arises in regard to such distribution, the Directors may settle the
same as they think expedient and in particular may issue fractional
certificates, may fix the value for distribution of such specific assets or any
part thereof, may determine that cash payments shall be made to any members upon
the footing of the value so fixed in order to adjust the rights of all parties
and may vest any such specific assets in trustees as may seem expedient to the
Directors.
131. Any dividend or other moneys payable in cash on or in respect of a share
may be paid by cheque or warrant sent through the post to the registered address
appearing in the Register of Members or (as the case may be) the Depository
Register of a member or person entitled thereto (or, if two or more persons are
registered in the Register of Members or (as the case may be) entered in the
Depository Register as joint holders of the share or are entitled thereto in
consequence of the death or bankruptcy of the holder, to any one of such
persons) or to such person at such address as such member or person or persons
may by writing direct. Every such cheque or warrant shall be made payable to the
order of the person to whom it is sent or to such person as the holder or joint
holders or person or persons entitled to the share in consequence of the death
or bankruptcy of the holder may direct and payment of the cheque or warrant by
the banker upon whom it is drawn shall be a good discharge to the Company. Every
such cheque or warrant shall be sent at the risk of the person entitled to the
money represented thereby. Notwithstanding the foregoing provisions of this
Article and the provisions of Article 133, the payment by the Company to the
Depository of any dividend payable to a Depositor shall, to the extent of the
payment made to the Depository, discharge the Company from any liability to the
Depositor in respect of that payment.
132. If two or more persons are registered in the Register of Members or (as the
case may be) the Depository Register as joint holders of any share, or are
entitled jointly to a share in consequence of the death or bankruptcy of the
holder, any one of them may give effectual receipts for any dividend or other
moneys payable or property distributable on or in respect of the share.
133. Any resolution declaring a dividend on shares of any class, whether a
resolution of the Company in General Meeting or a resolution of the Directors,
may specify that the same shall be payable to the persons registered as the
holders of such shares in the Register of Members or (as the case may be) the
Depository Register at the close of business on a particular date and thereupon
the dividend shall be payable to them in accordance with their respective
holdings so registered, but without prejudice to the rights inter se in respect
of such dividend of transferors and transferees of any such shares.
28
<PAGE> 32
CAPITALISATION OF PROFITS AND RESERVES
134. The Directors may, with the sanction of an Ordinary Resolution of the
Company, capitalise any sum standing to the credit of any of the Company's
reserve accounts (including Share Premium Account, Capital Redemption Reserve
Fund or other undistributable reserve) or any sum standing to the credit of
profit and loss account by appropriating such sum to the persons registered as
holders of shares in the Register of Members or (as the case may be) in the
Depository Register at the close of business on the date of the Resolution (or
such other date as may be specified therein or determined as therein provided)
or such other date as may be determined by the Directors in proportion to their
then holdings of shares and applying such sum on their behalf in paying up in
full unissued shares (or, subject to any special rights previously conferred on
any shares or class of shares for the time being issued, unissued shares of any
other class not being redeemable shares) for allotment and distribution credited
as fully paid up to and amongst them as bonus shares in the proportion
aforesaid. The Directors may do all acts and things considered necessary or
expedient to give effect to any such capitalisation, with full power to the
Directors to make such provisions as they think fit for any fractional
entitlements which would arise on the basis aforesaid (including provisions
whereby fractional entitlements are disregarded or the benefit thereof accrues
to the Company rather than to the members concerned). The Directors may
authorise any person to enter on behalf of all the members interested into an
agreement with the Company providing for any such capitalisation and matters
incidental thereto and any agreement made under such authority shall be
effective and binding on all concerned.
135. In addition and without prejudice to the power to capitalise profits and
other moneys provided for by Article 134, the Directors shall have power to
capitalise any undivided profits or other moneys of the Company not required for
the payment or provision of the fixed dividend on any shares entitled to fixed
cumulative or non-cumulative preferential dividends (including profits or moneys
carried and standing to any reserve or reserves) and to apply such profits or
moneys in paying up in full at par unissued shares on terms that such shares
shall, upon issue, be held by or for the benefit of participants of any share
incentive or option scheme or plan implemented by the Company and approved by
shareholders in General Meeting in such manner and on such terms as the
Directors shall think fit.
ACCOUNTS
136. Accounting records sufficient to show and explain the Company's
transactions and otherwise complying with the Statutes shall be kept at the
Office, or at such other place as the Directors think fit. No member of the
Company or other person shall have any right of inspecting any account or book
or document of the Company except as conferred by statute or ordered by a court
of competent jurisdiction or authorised by the Directors.
137. In accordance with the Statutes, the Directors shall cause to be prepared
and to be laid before the Company in General Meeting such profit and loss
accounts, balance sheets, group accounts (if any) and reports as may be
necessary. The interval between the close of a financial year of the Company and
the issue of accounts relating thereto shall not exceed six months.
29
<PAGE> 33
138. A copy of every balance sheet and profit and loss account which is to be
laid before a General Meeting of the Company (including every document required
by law to be comprised therein or attached or annexed thereto) shall not less
than 14 days before the date of the meeting be sent to every member of, and
every holder of debentures of, the Company and to every other person who is
entitled to receive notices of meetings from the Company under the provisions of
the Statutes or of these presents; Provided that this Article shall not require
a copy of these documents to be sent to more than one or any joint holders or to
any person of whose address the Company is not aware, but any member or holder
of debentures to whom a copy of these documents has not been sent shall be
entitled to receive a copy free of charge on application at the Office.
AUDITORS
139. Subject to the provisions of the Statutes, all acts done by any person
acting as an Auditor shall, as regards all persons dealing in good faith with
the Company, be valid, notwithstanding that there was some defect in his
appointment or that he was at the time of his appointment not qualified for
appointment or subsequently became disqualified.
140. An Auditor shall be entitled to attend any General Meeting and to receive
all notices of and other communications relating to any General Meeting which
any member is entitled to receive and to be heard at any General Meeting on any
part of the business of the meeting which concerns him as Auditor.
NOTICES
141. Any notice or document (including a share certificate) may be served on or
delivered to any member by the Company either personally or by sending it
through the post in a prepaid cover addressed to such member at his registered
address appearing in the Register of Members or (as the case may be) the
Depository Register, or (if he has no registered address within Singapore) to
the address, if any, within Singapore supplied by him to the Company or (as the
case may be) supplied by him to the Depository as his address for the service of
notices, or by delivering it to such address as aforesaid. Where a notice or
other document is served or sent by post, service or delivery shall be deemed to
be effected at the time when the cover containing the same is posted and in
proving such service or delivery it shall be sufficient to prove that such cover
was properly addressed, stamped and posted.
142. Any notice given to that one of the joint holders of a share whose name
stands first in the Register of Members or (as the case may be) the Depository
Register in respect of the share shall be sufficient notice to all the joint
holders in their capacity as such. For such purpose a joint holder having no
registered address in Singapore and not having supplied an address within
Singapore for the service of notices shall be disregarded.
143. A person entitled to a share in consequence of the death or bankruptcy of a
member upon supplying to the Company such evidence as the Directors may
reasonably require to show his title to the share, and upon supplying also to
the Company or (as the case may be) the Depository an address within Singapore
for the service of notices, shall be entitled to have served upon or delivered
to him at such address any notice or document to which the member but for his
death or bankruptcy would have been
30
<PAGE> 34
entitled, and such service or delivery shall for all purposes be deemed a
sufficient service or delivery of such notice or document on all persons
interested (whether jointly with or as claiming through or under him) in the
share. Save as aforesaid any notice or document delivered or sent by post to or
left at the address of any member in pursuance of these presents shall,
notwithstanding that such member be then dead or bankrupt or in liquidation, and
whether or not the Company shall have notice of his death or bankruptcy or
liquidation, be deemed to have been duly served or delivered in respect of any
share registered in the name of such member in the Register of Members or, where
such member is a Depositor, entered against his name in the Depository Register
as sole or first-named joint holder.
144. A member who (having no registered address within Singapore) has not
supplied to the Company or (as the case may be) the Depository an address within
Singapore for the service of notices shall not be entitled to receive notices
from the Company.
WINDING UP
145. The Directors shall have power in the name and on behalf of the Company to
present a petition to the court for the Company to be wound up.
146. If the Company shall be wound up (whether the liquidation is voluntary,
under supervision, or by the court) the Liquidator may, with the authority of a
Special Resolution, divide among the members in specie or kind the whole or any
part of the assets of the Company and whether or not the assets shall consist of
property of one kind or shall consist of properties of different kinds, and may
for such purpose set such value as he deems fair upon any one or more class or
classes of property and may determine how such division shall be carried out as
between the members of different classes of members. The Liquidator may, with
the like authority, vest any part of the assets in trustees upon such trusts for
the benefit of members as the Liquidator with the like authority shall think
fit, and the liquidation of the Company may be closed and the Company dissolved,
but so that no contributory shall be compelled to accept any shares or other
property in respect of which there is a liability.
147. On a voluntary winding up of the Company, no commission or fee shall be
paid to a Liquidator without the prior approval of the members in General
Meeting. The amount of such commission or fee shall be notified to all members
not less than seven days prior to the General Meeting at which it is to be
considered.
148. In the event of a winding up of the Company every member of the Company who
is not for the time being in the Republic of Singapore shall be bound, within
fourteen days after the passing of an effective resolution to wind up the
Company voluntarily, or within the like period after the making of an order for
the winding up of the Company, to serve notice in writing on the Company
appointing some householder in the Republic of Singapore upon whom all
summonses, notices, processes, orders and judgments in relation to or under the
winding up of the Company may be served, and in default of such nomination the
liquidator of the Company shall be at liberty on behalf of such member to
appoint some such person, and service upon any such appointee shall be deemed to
be a good personal service on such member for all purposes, and where the
liquidator makes any such appointment he shall, with all convenient speed, give
notice thereof to such member by advertisement in any leading daily newspaper in
the English language in circulation in Singapore or by a registered letter sent
through the post and
31
<PAGE> 35
addressed to such member at his address as appearing in the Register of Members
or (as the case may be) the Depository Register, and such notice shall be deemed
to be served on the day following that on which the advertisement appears or the
letter is posted.
INDEMNITY
149. Subject to the provisions of and so far as may be permitted by the
Statutes, every Director, Auditor, Secretary or other officer of the Company
shall be entitled to be indemnified by the Company against all costs, charges,
losses, expenses and liabilities incurred by him in the execution and discharge
of his duties or in relation thereto including any liability incurred by him in
defending any proceedings, civil or criminal, which relate to anything done or
omitted or alleged to have been done or omitted by him as an officer or employee
of the Company. Without prejudice to the generality of the foregoing, no
Director, Manager, Secretary or other officer of the Company shall be liable for
the acts, receipts, neglects or defaults of any other Director or officer or for
joining in any receipt or other act for conformity or for any loss or expense
happening to the Company through the insufficiency or deficiency of title to any
property acquired by order of the Directors for or on behalf of the Company or
for the insufficiency or deficiency of any security in or upon which any of the
moneys of the Company shall be invested or for any loss or damage arising from
the bankruptcy, insolvency or tortious act of any person with whom any moneys,
securities or effects shall be deposited or left or for any other loss, damage
or misfortune whatever which shall happen in the execution of the duties of his
office or in relation thereto unless the same shall happen through his own
negligence, wilful default, breach of duty or breach of trust.
SECRECY
150. No member shall be entitled to require discovery of or any information
respecting any detail of the Company's trade or any matter which may be in the
nature of a trade secret, mystery of trade or secret process which may relate to
the conduct of the business of the Company and which in the opinion of the
Directors it will be inexpedient in the interest of the members of the Company
to communicate to the public save as may be authorised by law.
32
<PAGE> 1
EXHIBIT 4.2
[LOGO] Chartered
semiconductor manufacturing
(Incorporated in the Republic of Singapore under the Companies Act, Chapter 50)
Registered Office: 60 Woodlands, Industrial Park D Street 2, Singapore 738406.
No. of Shares
Certificate No.
Account No.
This is to certify that
is/are the Registered Shareholder(s) of
Ordinary Shares of S$0.26 each, fully paid, in CHARTERED SEMICONDUCTOR
MANUFACTURING LTD subject to the provisions of the Memorandum and Articles of
Association of the Company.
Given under the Share Seal of the Company on
No transfer of any portion of shares comprised in this certificate will be
registered unless this Certificate is delivered to the Registrar, M & C
Services Private Limited, 16 Raffles Quay, #23-01, Hong Leong Building,
Singapore 048581.
<PAGE> 2
CERTIFICATE NO.
Shares
- -------------------------------------------------------------------------
Registered Shareholder
---------------------------------------------------------
- --------------------------------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Share Register Folio
-----------------------------------------------------------
- --------------------------------------------------------------------------------
Date of Certificate 19
-------------------------------------------------- -------
-------------------------
Director
-------------------------
Director/Secretary
RECEIPT FOR SHARE
CERTIFICATE
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
No.
----------------------------------------------------------------------------
RECEIVED this
------------------------------------------------------------------
day of
-------------------------------------------------------------------------
Certificate of
-----------------------------------------------------------------
in this Company numbered as on the face thereof.
--------------------------
Registered Shareholder
<PAGE> 1
EXHIBIT 5
[On the letterhead of Allen & Gledhill]
Chartered Semiconductor Manufacturing Ltd,
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406. , 1999
Dear Sirs,
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
REGISTRATION STATEMENT ON FORM F-1
1. We have acted as Singapore legal advisers to Chartered Semiconductor
Manufacturing Ltd (the "Company"), a company organised under the laws of
Singapore, in connection with a draft registration statement on Form F-1
confidentially submitted by the Company with the Securities and Exchange
Commission ("SEC") in the United States on 13th August, 1999, as amended by the
draft Amendment No. 1 (as amended, the "Registration Statement"), for the
registration under the United States Securities Act of 1933, as amended, of
ordinary shares of the Company (the "Shares") directly or in the form of
American Depository Shares representing Ordinary Shares.
2. We have examined the Memorandum of Association and Articles of Association of
the Company, such records of the corporate proceedings of the Company as we have
deemed relevant, the Registration Statement, the proposed form of the U.S.
Underwriting Agreement (the "U.S. Underwriting Agreement") to be entered into
between (1) the Company and (2) Salomon Smith Barney Inc. (for itself and the
other several U.S. Representatives and U.S. Underwriters), the proposed form of
the International Underwriting Agreement (the "International Underwriting
Agreement") to be entered into between (1) the Company and (2) Salomon Brothers
International Limited (for itself and the other International Representatives
and International Underwriters) and such other certificates, records and
documents as we deemed necessary for the purposes of this opinion.
3. We have assumed:-
(i) the genuineness of all signatures on all documents and the
completeness, and the conformity to original documents, of all
copies submitted to us; and
(ii) that copies of the Memorandum and Articles of Association and
the Certificate of Incorporation of the Company submitted to us
for examination are true, complete and up-to-date copies.
4. Based upon and subject to the foregoing, and subject to any matters not
disclosed to us, we are of the opinion that the Shares will be duly authorised
and, upon the issue of share certificates representing the Shares in accordance
with the Articles of Association of the Company against payment for the Shares,
the Shares will be
<PAGE> 2
2
validly issued, fully paid and non-assessable. For the purposes of this opinion
we have assumed that the term "non-assessable" in relation to the Shares to be
offered means under Singapore law that holders of such Shares, having fully paid
up all amounts due on such Shares as to nominal amount and premium thereon, are
under no further personal liability to contribute to the assets or liabilities
of the Company in their capacities purely as holders of such Shares.
5. The statements in the Registration Statement under the caption "Taxation -
Singapore Taxation" insofar as such statements relate to Singapore tax matters
currently applicable to holders of Shares who are non-residents of Singapore
fairly summarises the material Singapore tax matters and consequences of owning
the shares of such holders.
6. We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the use of our name under the captions "Risk
Factors - It may be difficult for you to enforce any judgment obtained in the
United States against us or our affiliates", "Taxation - Singapore Taxation" and
"Legal Matters" in the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the United States Securities Act of 1933, as amended or the
rules and regulations of the SEC thereunder.
Yours faithfully,
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF LATHAM & WATKINS]
________ __, 1999
Chartered Semiconductor Manufacturing Ltd
60 Woodlands Industrial Park D
Street 2, Singapore 738406
Re: Registration Statement on Form F-1
Ladies and Gentlemen:
We have acted as tax counsel to Chartered Semiconductor Manufacturing
Ltd, a Singapore limited liability company (the "Company"), in connection with
its issuance of up to [225,000,000 ordinary shares, par value S$0.26 per share
(including ordinary shares represented by American Depositary Shares) of the
Company pursuant to the registration statement filed with the Securities and
Exchange Commission (the "Commission") on Form F-1 on ________ __, 1999, (file
No. 333-[ ]) (as amended and together with all exhibits thereto, the
"Registration Statement"). You have requested our opinion concerning the
material federal income tax consequences to certain persons acquiring the
securities described above in connection with the Registration Statement.
In formulating our opinion, we have examined such documents, corporate
records, or other instruments as we deemed necessary or appropriate for purposes
of this opinion, including, without limitation, the Registration Statement. In
addition, we have obtained such additional information as we deemed relevant and
necessary for purposes of this opinion through consultation with various
officers and representatives of the Company. We have made such further legal and
factual examinations and inquiries as we deemed necessary or appropriate for
purposes of this opinion. We have not made an independent investigation or audit
of the facts contained in the above referenced documents or otherwise discovered
through our consultation with officers and representatives of the Company.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures thereon, the
legal capacity of natural persons executing such documents and the conformity to
authentic original documents of all documents submitted to us as copies. Our
opinion set forth below further assumes the accuracy of (a) the statements and
facts set forth in the Registration Statement and in the other documents
examined by us, and (b) the statements made to us by the officers and
representatives of the Company, in connection with formulating our opinion.
<PAGE> 2
Chartered Semiconductor Manufacturing Ltd
_______ ___, 1999
Page 2
We are opining herein as to the effect on the subject transaction only
of the federal income tax laws of the United States and we express no opinion
with respect to the applicability thereto, or the effect thereon, of other
federal laws, the laws of any state or other jurisdiction or as to any matters
of municipal law or the laws of any other local agencies within any state.
Based on such facts, assumptions and representations, the information
set forth in the Registration Statement under the caption "Taxation - United
States Federal Taxation" sets forth, subject to the limitations set forth
therein, our opinion regarding the material federal income tax considerations
with respect to the acquisition, ownership and disposition of ordinary shares or
American Depositary Shares pursuant to the Registration Statement.
No opinion is expressed as to any matter not discussed herein.
This opinion is based on various statutory provisions of the Internal
Revenue Code of 1986, as amended, regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service and the courts having
jurisdiction over such matters, all of which are subject to change either
prospectively or retroactively. Also, any variation or difference in the facts
from those set forth in the Registration Statement may affect the conclusions
stated herein. This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion after the effectiveness of
the Registration Statement.
Except as provided below, this opinion is for your use in connection
with the Company's issuance of ordinary shares, including ordinary shares
represented by American Depositary Shares, pursuant to the Registration
Statement. This opinion may not be relied upon by you for any other purpose, or
furnished to, quoted to, or relied upon by any other person, firm or
corporation, for any purpose, without our prior written consent, except that
this opinion may be relied upon by the investors who acquire ordinary shares,
including ordinary shares represented by American Depositary Shares, of the
Company pursuant to the Registration Statement. We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement and to the use of
our name under the caption "Taxation - United States Federal Taxation" in the
Registration Statement. In giving this consent, we do not hereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules or regulations of the Commission
promulgated thereunder.
Very truly yours,
<PAGE> 1
EXHIBIT 10.19
Dated the 1st day of August 1995
EDB LOAN AGREEMENT
BETWEEN
CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD
AND
ECONOMIC DEVELOPMENT BOARD
<PAGE> 2
EDB LOAN AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CLAUSE CONTENTS PAGE
- ------ -------- ----
<S> <C> <C>
1. DEFINITIONS 3
2. TERM LOAN 5
3. CONDITIONS PRECEDENT AND AVAILABILITY 5
4. PURPOSE OF THE TERM LOAN 6
5. DRAWINGS OF TERM LOAN 7
6. AVAILABILITY OF TERM LOAN 7
7. INTEREST 8
8. REPAYMENT OF THE TERM LOAN 8
9. PAYMENT PROVISIONS 8
10. PREPAYMENT 9
11. SECURITY 9
12. WARRANTIES AND REPRESENTATION 9
13. AFFIRMATIVE UNDERTAKING 10
14. NEGATIVE UNDERTAKINGS 10
15. EVENTS OF DEFAULT 10
16. NOTICES 13
17. WAIVER NOT TO PREJUDICE RIGHT OF BOARD 13
18. INDULGENCE OF THE BOARD 14
19. SEVERABILITY 14
20. GOVERNING LAW 14
21. MISCELLANEOUS 14
</TABLE>
i
<PAGE> 3
THIS AGREEMENT is made the _______________ day of __________One Thousand
Nine Hundred and Ninety Five (1995) Between CHARTERED SEMICONDUCTOR
MANUFACTURING PTE LTD, a company incorporated in Singapore and having its
registered office at 2 Science Park Drive, Science Park, Singapore 0511
(hereinafter called "the Company") of the one part And the ECONOMIC DEVELOPMENT
BOARD, a Corporate Body established in the Republic of Singapore by The Economic
Development Board Act (Cap. 85) of 250, North Bridge Road, #24-00 Raffles City
Tower Singapore 0617 (hereinafter called "the Board") of the other part.
WHEREAS:
(1) The Company has applied to the Board for term loans up to an
aggregate principal amount of Singapore Dollars One Hundred Million
($100,000,000.00) under the Capital Assistance Scheme of the Board.
(2) The Board is willing to grant the term loans to the Company, upon
the terms and subject to the conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:-
1. DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the following
words or expressions shall have the following meanings respectively:-
(a) "Business Day" means a day on which banks in Singapore are open for
business excluding Saturday and Sunday.
(b) "Day" means a calendar day.
(c) "Dollars" and the sign "$" respectively mean the lawful currency of the
Republic of Singapore.
(d) "Drawing" means any, each or all (as the context may require) of the
drawings made by the Company under the Term Loan and includes the First
Drawing as defined hereof.
(e) "Event of Default" and "Events of Default" mean any, each or all (as the
context may require) of the Events of Default described in Clause 15
hereof.
(f) "First Drawing" means the first of the drawings made by the Company under
the Term Loan.
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<PAGE> 4
(g) "Fixed Productive Assets" includes buildings, facilities and equipment, for
the wafer fabrication of semiconductor devices at a facility to be
established in Woodlands in Singapore (the "FAB 2 Project").
(h) "Guarantee" means a corporate guarantee to be issued by Singapore
Technologies Pte Ltd ("STPL") and duly executed under seal and signed by
STPL's authorised signatories, in favour of the Board and in the form and
containing terms acceptable to the Board.
(i) "Interest Rate" means the rate of interest determined in accordance with
Clause 7.2 hereof.
(j) "Interest Payment Dates" means the day first Business Day of March or the
first Business Day of September as the case may be and the first Interest
Payment Date shall be the Interest Payment Date immediately following the
date of the First Drawing of the Term Loan.
(k) "Interest Period" means the period or periods determined as follows:-
(i) the Interest Period in relation to the First Drawing shall begin
on the date on which that Drawing is made hereunder and shall end
on the Interest Payment Date;
(ii) the Interest Period in respect of any subsequent Drawing shall
begin on the date on which the relevant subsequent Drawing is
made and shall end on the Interest Payment Date falling
immediately thereafter;
(iii) each successive Interest Period shall begin on the last Interest
Payment Date and shall end on the Interest Payment Date falling
six (6) months immediately following;
(iv) if any Interest Period would otherwise end on a day which is not
a Business Day that Interest Period shall be extended to the next
succeeding day which is a Business Day;
(v) if any Interest Period is extended by the application of (iv)
above, the following Interest Period shall (without prejudice to
the application of (iv) above) end on the day on which it would
have ended if the preceding Interest Period had not been so
extended; and
(vi) any amount to be repaid under Clause 8 shall have a final
Interest Period expiring on the relevant Repayment Date.
(l) "Month" means a calendar month.
(m) "person" shall include a company, body of persons, association or body
corporate or unincorporated.
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<PAGE> 5
(n) "Repayment Dates" means the first day of March and the first day of
September of each year.
(o) "Term Loan" means the loan facility in the aggregate amount of Dollars One
Hundred Million ($100,000,000.00) to be made available to the Company by
the Board in accordance with the terms and conditions set out in this
Agreement and shall also be deemed to include the whole or any part
thereof.
(p) "Year" means a calendar year.
1.2 Unless the context otherwise requires, words importing the singular number
include the plural number and vice versa.
1.3 The words "hereof", "herein", "hereon" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement.
1.4 The headings to the Clauses hereof shall not be deemed to be a part thereof
or be taken in consideration in the interpretation or construction thereof or of
this Agreement.
1.5 Reference herein to Clauses are references to Clauses of this Agreement.
2. TERM LOAN
Subject to the provisions of this Agreement and in particular those of
Clause 3 hereof, the Board will make available to the Company the Term Loan at
the times and in the manner as hereinafter provided. The Term Loan shall be for
a period of 8 years, inclusive of a two (year) grace period for repayment of the
Term Loan as provided in Clause 8 herein.
3. CONDITIONS PRECEDENT AND AVAILABILITY
The right of the Company to make any Drawing or Drawings under the Term
Loan, and the obligations of the Board to make available the same shall be
subject to the following conditions precedent, that is to say:-
(a) There shall not exist at or prior to any Drawing, any Event of Default
or any condition, event or act which, with the giving of notice or
lapse of time, or both, would constitute such an Event of Default.
(b) All representations, warranties and statements contained herein, or
otherwise made in writing in connection herewith or in any certificate
or statement furnished pursuant to any provision of this Agreement or
in any document referred to herein made by the Company shall be true
and correct with the same effect as though made on the date on which
the Drawing is to be made.
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<PAGE> 6
(c) The Board shall have received, in form and substance satisfactory to
the Board, the following:-
(i) copy of the Memorandum and Articles of Association of the
Company duly certified by a Director and the Secretary of
the Company to be a true copy thereof;
(ii) a copy, certified by a Director and Secretary of the
Company, of the resolution of the Board of Directors of the
Company, which is in full force and effect, approving the
terms and conditions contained in this Agreement and
authorising a person or persons to sign this Agreement and
any other document to be given to the Board from time to
time by the Company;
(iii) specimen signatures of the persons authorised to sign this
Agreement on behalf of the Company, and to sign the notices
of Drawing and any other document to be given from time to
time by the Company, such specimens to be certified by a
Director or the Secretary of the Company to be the true
signatures of such persons respectively; and
(iv) the Guarantee relating to each Drawing to be made, duly
executed.
(d) all acts, conditions and things required to be done and performed and
to have happened precedent to the execution and delivery of this
Agreement and the Guarantee and to constitute this Agreement and the
Guarantee legal, valid and binding obligations enforceable in
accordance with their respective terms, shall have been done and
performed and have happened in compliance with all applicable laws;
(e) there is no breach by the Company of any of the terms, conditions and
undertakings herein contained.
4. PURPOSE OF THE TERM LOAN
4.1 Subject to the terms and conditions herein contained and in particular to
those of Clause 3, the Term Loan will be made available by the Board to the
Company for financing the Fixed Productive Assets for the wafer fabrication of
semiconductor devices at a facility to be established in Woodlands in Singapore
(the "FAB 2 Project").
4.2 Upon advance of a Drawing under Clause 5, the Company shall apply all the
proceeds thereof for the purposes described in Clause 4.1 above and for no other
purpose whatsoever.
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<PAGE> 7
5. DRAWINGS OF TERM LOAN
5.1 Subject to the terms and conditions of this Agreement and in particular to
all the conditions of Clause 3 being complied with the Board will make available
drawings under the Term Loan in accordance with a disbursement schedule
submitted by the Company and approved by the Board at least 45 days before the
First Drawing of the Term Loan.
5.2 The Company shall give notice of Drawing to the Board not later than thirty
(30) Business Days prior to the intended date of Drawing and each notice of
Drawing shall be substantially in the form set out in the Appendix I hereto and
shall:-
(i) state the date (which must be a Business Day) and the amount of
the proposed Drawing;
(ii) be irrevocable;
(iii) commit the Company to borrow the amount and on the date stated;
and
(iv) constitute a representation and warranty that at the date thereof
the warranties and representations set out in Clause 12 are true
and no Event of Default and no event or act which with the giving
of notice or lapse of time or both would constitute such an Event
of Default has occurred.
5.3 The First Drawing shall be made not later than 1 March 1996 or such other
later date as may be approved by Chairman EDB or his lawful representative.
5.4 All Drawings shall be made on the first day of March or the first day of
September of the respective years.
6. AVAILABILITY OF TERM LOAN
The Term Loan shall be available for Drawing for a period of two (2) Years
from the date of the First Drawing after which date any part of the Term Loan
not drawn shall be cancelled.
7. INTEREST
7.1 The Company shall pay to the Board on each Interest Payment Date interest
in arrears on the amounts drawn and outstanding under the Term Loan from time to
time in respect of each Interest Period of each Interest Period relating thereto
determined in accordance with clause 1.1(k) and at the Interest Rate determined
in accordance with sub-clause 7.2 hereof.
7.2 Interest will be charged by the Board at the rate of four per cent (4%) per
annum (the "Interest Rate") and shall be payable in arrears at six-monthly
intervals, the first payment to be made on the Interest Payment Date as defined
in Clause 1.1(j) hereof.
5
<PAGE> 8
7.3 The amount of interest payable on the drawings under the Term Loan from
time, to time owing and outstanding shall be calculated at the Interest Rate on
the basis of a year of three hundred and sixty five (365) Days for the actual
number of Days elapsed.
7.4 The certificate of the Board in writing as to the determination of the
amount of interest payable on each Interest Payment Date shall be conclusive and
binding upon the parties hereto, save for manifest error.
7.5 The Company recognises and accepts that it is commercial practice for
interest on amounts in default to be charged and that the rate of interest to be
applied by the Board on the amounts in default shall be three per cent (3%) per
annum above the average prevailing prime interest rate as reported by the
Monetary Authority of Singapore compounded on a monthly basis, which will
represent a genuine estimate of the damage the Board would suffer in the event
of a failure by the Company in the payment on the due date of any principal
and/or interest on the amounts due and payable to the Board.
8. REPAYMENT OF THE TERM LOAN
The Company shall repay the principal of the amounts drawn under the Term
Loan in thirteen (13) equal consecutive six-monthly instalments on the Repayment
Dates. The first of such instalments shall be paid on the first Repayment Date
following two (2) Years from the date of the First Drawing of the Term Loan or
such other later date as the Board may determine in its absolute discretion.
9. PAYMENT PROVISIONS
9.1 All payments to be made by the Company under this Agreement shall be made
not later than 11 a.m. (Singapore time) on the relevant day to the Board at its
address described above or at such other address as the Board may from time to
time designate by notice in writing to the Company not less than ten (10)
Business Days prior to the date of any such payment hereunder.
9.2 If any sum becomes due for payment under this Agreement on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and all calculation of interest shall be adjusted accordingly.
10. PREPAYMENT
10.1 The Company may prepay in the inverse order of maturity any part of the
Term Loan or the entire Term Loan before maturity on paying a fee amounting to a
quarter of one percent (1/4 of 1%) of the amount prepaid for every period of six
(6) months or any lesser period before maturity or one percent (1%) of the
amount prepaid, whichever is the lesser amount.
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<PAGE> 9
10.2 The Company shall give the Board seven (7) Days' prior written notice of
the intention to prepay any amount described in Clause 10.1.
10.3 In the event the Company is required to prepay the principal sum owing
under the Term Loan pursuant to Clause 15.2(a) hereof the Company shall pay to
the Board the fee at the rate described in Clause 10.1 above on the principal
sum owing.
11. SECURITY
Prior to each Drawing of the Term Loan, the Company shall procure the
requisite Guarantee to be given in favour of the Board.
12. WARRANTIES AND REPRESENTATION
12.1 The Company hereby warrants and represents to the Board as follows:-
(a) that it is lawfully incorporated, validly existing and in good
standing under the laws of the Republic of Singapore;
(b) that it has the corporate power and authority to carry on the business
as now being conducted;
(c) that it has the corporate power to execute and perform this Agreement
and to borrow hereunder;
(d) that the execution, delivery and performance of this Agreement and the
borrowings hereunder have been duly authorised by all requisite
corporate action and will not violate any provision of any agreement
or other instrument to which the Company is a party;
(e) that its latest balance sheet and financial statements submitted to
the Board are correct and complete and accurately represent the
financial condition of the Company on the date thereof and the results
of its operation for the period then ended and each such balance sheet
shows all known present and future liabilities, direct or contingent,
of the Company as of the date thereof and each financial statement
referred to herein was prepared in accordance with generally accepted
accounting principles;
(f) that there has been no material adverse change in the business
activities, operations or financial condition of the Company since the
date of the latest financial statements referred to in sub-paragraph
(e) above;
(g) save as otherwise disclosed to the Board, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened
against the Company or its parent or any of its subsidiaries, at law
or in equity (whether or not purportedly
7
<PAGE> 10
on behalf of the Company, its parent or any of its subsidiaries)
before any court or competent body adjudicating such matters, which
involve the possibility of any judgement or liability which may result
in any material adverse change in the business, operations, properties
or assets, or in the condition, financial or otherwise of the Company
or its parent or any of its subsidiaries and adversely affect the
Company's ability to make repayment of the Term Loan;
(h) that to the best of the knowledge of the Company no steps have been
taken or are being taken to appoint a receiver and/or manager or
judicial manager or liquidator or any other person over it or any of
its assets or in any winding up action.
12.2 Each of the warranties and representations contained in the preceding
subclause shall survive and continue to have full force and effect after the
execution of this Agreement and that they will be true and correct and fully
observed as though made on the date of Drawing or each Interest Payment Date
with reference to the facts and circumstances then subsisting.
13. AFFIRMATIVE UNDERTAKING
The Company hereby undertakes and agrees with the Board as follows:-
(a) that the Term Loan granted by the Board under the provisions of this
Agreement and every part thereof shall be used solely for the purpose
and in the manner hereinbefore stipulated and not for any other
purpose or manner save with the prior written consent of the Board.
(b) that it will carry on and conduct its business and affairs with due
diligence and efficiency in accordance with sound technical financial
industrial and managerial standards and practices including the
maintenance of adequate records with qualified personnel and in
accordance with its Memorandum and Articles of Association.
(c) that it will furnish and provide the Board with and permit the Board
to obtain all such statements information explanation and data, except
information of a confidential nature, as the Board may reasonably
require, by prior written notice, regarding the affairs operations
administration financial or other whatsoever state or condition of the
Company or any of the matters in this Clause mentioned.
(d) that it will furnish to the Board particulars of any kind of immovable
property hereafter acquired by the Company.
(e) that the Board shall have the right as it may reasonably request, by
prior written notice to inspect any land or premises where the Company
carries on its business and inspect the same and all property and
assets whatsoever therein or thereon and all accounts records and
statements wherever the same may be situate and to make inventories
and record thereof.
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<PAGE> 11
(f) that it will supply to the Board certified copies of all resolutions
passed which materially affect the financial state and condition of
the Company at general and/or special meetings of the Company within
seven (7) Days from the date of the passing of such resolutions.
(g) that it will deliver to the Board every year immediately after the
issue of the same, a copy of the Company's audited balance sheet and
profit and loss accounts audited by a firm of auditors of
international repute together with Auditors' and Directors' Reports
and will also deliver to the Board a copy of the annual return which
the Company is required by law to file with the Registrar of
Companies.
(h) that it shall punctually pay all rents rates assessments taxes and all
outgoings payable in respect of any land/or premises belonging to the
Company or at which it carries on business and obtain all necessary
licences and comply with all laws regulations rules and orders
relating to the carrying on of its business on such premises.
(i) that it will keep all its plant machinery equipment buildings
constructions fixtures fittings implements and other effects in good
and substantial repair and proper working condition to the
satisfaction of the Board.
(j) that it shall not dismantle pull down or remove any part of the
buildings fixtures plant machinery and equipment, except in cases
where such dismantling pulling down or removal shall in the opinion of
the Company be rendered necessary by reason of the same being obsolete
worn out or damaged, in which case the Company shall give sufficient
written notice to the Board and will replace such property by property
of similar nature and value after giving intimation to the Board.
(k) that it shall give to the Board such written authorities or other
directions and provide such facilities and access as the Board may
require for the aforesaid inspection and shall pay all costs fees
travelling and other out-of-pocket expenses whether legal or otherwise
in respect of such inspection.
(l) that it shall continue with its best efforts to bring strategic equity
shareholders into the Company with the prior approval of the Board.
(m) that insofar as may be necessary the Company shall amend its
Memorandum and Articles of Association so as to enable it to observe
and perform all the covenants undertakings terms stipulations
conditions and other provisions of this Agreement.
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<PAGE> 12
14. NEGATIVE UNDERTAKINGS
The Company hereby undertakes and agrees with the Board that it shall not
without the written consent of the Board, which consent shall not be
unreasonably withheld:-
(a) embark on any new project or substantial expansion or diversification
of its present business and operations, which are not related to its
present business activities;
(b) invest its funds by way of deposits (other than deposits with banks
licensed by the Monetary Authority of Singapore), loans, share capital
or otherwise in any other concern or issue or give guarantees for the
account or on behalf of any person or otherwise become contingently
liable for or in connection with any obligations or indebtedness of
any person;
(c) effect any form of reconstruction including amalgamation with another
company which will result in STPL holding less than 51% of the share
capital of the Company;
(d) create or permit to arise or subsist, any mortgage, charge (whether
fixed or floating), pledge, lien or other encumbrances whatsoever
(except those which have been specifically disclosed to and approved
by the Board respectively) on any of its properties or assets, both
present and future whatsoever and wheresoever situate;
(e) declare or pay any dividend or make any income or capital
distribution, whether in cash or in specie, to its shareholder or any
of them; or
(f) raise, borrow, take, make, issue or give, as the case may be, any
loans, debentures, bonds or credits from or to any persons.
15. EVENTS OF DEFAULT
15.1 If any one or more of the following Events of Default shall occur, that is
to say:
(a) if the Company shall fail to pay or otherwise discharge when due any
sums of money, whether principal, interest, fees or otherwise, payable
under this Agreement;
(b) if the Company shall default in the payment of any, principal or
interest or any other obligation for borrowed money (whether or not to
the Board) beyond any period of grace provided in respect thereof;
(c) if any representation or warranty made in or in pursuance of this
Agreement or in any certificate, statement or other document delivered
in connection with the execution and delivery hereof or in pursuance
of this Agreement shall be or become incorrect in any material
respect;
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<PAGE> 13
(d) if the Company defaults in the due performance of any undertaking,
condition or obligation on its part to be performed and observed
hereunder (other than the payment of any sum due hereunder) and such
default (if capable of being rectified) shall not be rectified for a
period of thirty (30) Days after the date of receipt by the Company of
written notice of such default from the Board;
(e) if a petition is presented in any court of competent jurisdiction or a
resolution is passed for the winding-up of the Company or its parent
or for the filing or any application for placing the Company or its
parent under judicial management or any similar or analogous
proceedings are taken against any of them and are not withdrawn within
thirty (30) Days after being presented;
(f) if any encumbrancer or lessor shall take possession or a receiver
and/or manager, judicial manager, liquidator or other similar officer
is appointed of the whole of the undertaking, property or assets, or
any part thereof, of the Company or its parent;
(g) if a distress or execution is levied or enforced upon or sued out
against any part of the property or assets of the Company and is not
discharged within thirty (30) Days of being levied and the Board is of
the reasonable opinion that such an event will be materially
prejudicial to the interests of the Board;
(h) if a judgement or order is made against the Company and is not
discharged within sixty (60) Days or if legal proceedings suits or
actions of any kind whatsoever (whether criminal or civil) shall be
instituted against the parent of the Company and the Board is in that
case of the reasonable opinion that the said legal proceedings suits
or actions will materially affect the Company's ability to perform and
observe its obligations under this Agreement;
(i) if the Company becomes insolvent or is unable or deemed unable to pay
its debts or admits in writing its inability to pay its debts, as they
mature, or enters into composition, compromise or arrangement with its
creditors or makes a general assignment for the benefit of its
creditors and the Board is of the opinion that any such event will be
materially prejudicial to the interests of the Board;
(j) a winding-up petition is presented by or against the guarantor of any
Guarantee or analogous proceedings shall be taken by or against it and
is not discharged within thirty (30) Days after being presented;
(k) if the Company ceases or threatens to cease to carry on its business
and the Board is of the opinion that it will materially affect the
ability of the Company to perform and observe its obligations under
this Agreement;
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<PAGE> 14
(l) if any licence, consent or approval of any authority at any time
necessary to enable the Company to comply with and perform its
obligations under this Agreement to a material extent shall be
revoked, withheld or materially modified or shall otherwise not be
granted or fail to remain in full force and effect;
(m) if any of the consents, authorities, approvals, waivers or resolutions
referred to in Clause 3 shall be modified in a manner unacceptable to
the Board or shall be wholly or partly revoked, withdrawn, suspended
or terminated or shall expire and not be renewed or shall otherwise
fail to remain in full force and its effect and such circumstances are
considered by the Board to be material;
(n) if without the prior written consent of the Board there is any change
in the shareholding of the Company which will result in STPL holding
less than 51% of the share capital of the Company or if there is any
change in the shareholding of its parent;
(o) if a situation shall have arisen, which shall make it improbable that
the Company will be able to perform its obligations under this
Agreement;
(p) if the Board determines in its absolute discretion that its interests
under the Guarantee is or are in jeopardy or that a situation shall
have arisen which shall make it improbable that STPL will be able to
perform its obligation under the Guarantee;
then and in any of such event, the Board may, by notice in writing to the
Company declare that an Event of Default has occurred and such declaration shall
be deemed to take effect from the date of such an Event of Default.
15.2 Upon the declaration by the Board that an Event of Default has occurred:-
(a) the whole of the principal sum drawndown and owing under the Term
Loan, interest thereon and all other sums agreed to be paid under this
Agreement shall immediately become due and payable without any demand
or notice of any kind by the Board to the Company; and
(b) it shall be lawful for the Board to exercise all or any rights, powers
or remedies under this Agreement, the Guarantee given to the Board or
any one or more of them.
15.3 In the event of an occurrence of an Event of Default before the Term Loan
shall have been fully drawn or utilised hereunder, the Board's obligations
hereunder shall automatically and forthwith cease.
15.4 After the declaration by the Board that an Event of Default has occurred,
all moneys received or recovered by the Board (whether such moneys shall have
been received or recovered as a result of or arising from its exercise of all or
any rights, powers or remedies under this
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<PAGE> 15
Agreement, the Guarantee or any one or more of them or by way of a set-off or
otherwise) shall be held by it and shall be applied as follows:-
(a) Firstly, in or towards payment of all costs charges and expenses, if
any, incurred in enforcing this Agreement, the Guarantee or any one or
more of them;
(b) Secondly, in or towards payment to the Board of all moneys and
liabilities for the time being due, owing or outstanding under this
Agreement and where such moneys and liabilities are of a contingent
nature, in or towards making full and adequate provisions for payment
of such moneys and liabilities as and when they become due and
payable; and
(c) Thirdly, any surplus shall be paid to the Company.
16. NOTICES
16.1 Except as otherwise expressly provided herein, any notice, request, demand
or other communication to be given or served hereunder by one of the parties
hereto to or on the other or others may be delivered at or sent by prepaid
registered post or by facsimile to the address or addresses herein specified of
the other party or parties and shall be deemed to be duly served:
(a) if it is delivered, at the time of delivery,
(b) if it is sent by prepaid registered post, one (1) Day after posting
thereof, or
(c) if it is sent by facsimile, immediately after transmission thereof, if
the date of transmission is a Business Day, and if such a date is not
a Business Day, then the notice by facsimile shall be deemed to be
served on the immediately next Business Day.
Except as otherwise expressly provided herein, all notices, requests, demands or
other communications which are required by this Agreement to be in writing may
be made by facsimile.
16.2 For the purpose of this Clause 16 each of the parties hereto shall from
time to time notify the other party in writing of an address in Singapore where
such notice, request, demand or other communication as aforesaid can be given or
served and such notification shall be effective only when it is actually
received. In the absence of such notification, the notice, request, demand or
other communication aforesaid may be given or served at the addresses of the
respective parties as stated above.
17. WAIVER NOT TO PREJUDICE RIGHT OF BOARD
The Board may from time to time and at any time waive either
unconditionally or on such terms and conditions as it may deem fit any breach by
the Company of any of the
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undertakings stipulations terms and conditions herein contained and any
modification thereof but without prejudice to its powers rights and remedies for
enforcement thereof, provided always that:-
(a) no neglect or forbearance of the Board to require and enforce payment
of any moneys hereunder or the performance and observance of any
undertaking stipulation term or condition herein contained, nor any
time which may be given to the Company shall in any way prejudice or
affect any of the rights powers or remedies of the Board at any time
afterwards to act strictly in accordance with the provisions hereof;
(b) no such waiver of any such breach as aforesaid shall prejudice the
rights of the Board in respect of any other or subsequent breach of
any of the undertakings stipulations terms or conditions aforesaid.
18. INDULGENCE OF THE BOARD
The liability of the Company hereunder shall not be impaired or discharged
by reason of any time or other indulgence being granted by or with the consent
of the Board to any person who or which may be in any way liable to pay any of
the moneys secured hereby by any other security in favour of the Board or by
reason of any arrangement being entered into or composition accepted by the
Board which has the affect of modifying the operation of law or otherwise its
rights and remedies under the provisions of this Agreement did not form or is
part of this Agreement.
19. SEVERABILITY
In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law, such
invalidity, illegality or unenforceability shall not in any way affect or impair
the other provisions of this Agreement but this Agreement shall be construed as
if such invalid or illegal or unenforceable provision contained herein or
therein did not form a part of this Agreement.
20. GOVERNING LAW
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the Republic of Singapore.
21. MISCELLANEOUS
21.1 All legal and other professional fees, out-of-pocket expenses, charges and
expenses of and in connection with this Agreement shall be paid by the Company.
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<PAGE> 17
21.2 The Company shall further pay all legal fees as between solicitor and
client and other costs and disbursements incurred in connection with or
demanding and enforcing payment of moneys due under this Agreement and each
Guarantee and otherwise howsoever in enforcing the performance of any other
undertakings stipulations terms conditions or provisions of hereof and thereof.
21.3 A certificate signed by a duly authorised officer for the time being of the
Board as to the amount of moneys and liabilities for the time being due to the
Board or incurred by the Board under this Agreement and Guarantee shall be
conclusive and binding on the Company, save for any computation or clerical
error.
21.4 This Agreement shall be binding upon the successor of the Company and shall
entire to the benefit of the Board and its successors and assigns.
15
<PAGE> 18
IN WITNESS WHEREOF the parties hereto have hereunto affixed their
respective common seals.
The Common Seal of CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD was hereunto
affixed in the presence of:-
/s/ HO CHING
------------------------
Chairman
/s/ LIM MING SEONG
------------------------ [SEAL]
Director
The Common Seal of the ECONOMIC DEVELOPMENT BOARD was hereunto affixed in the
presence of:-
[Signature Illegible]
------------------------
Chairman
[Signature Illegible]
------------------------ [SEAL]
Secretary
16
<PAGE> 19
APPENDIX I
ECONOMIC DEVELOPMENT BOARD
250 North Bridge Road
#24-00 Raffles City Tower
Singapore 0617
Dear Sirs,
NOTICE OF DRAWING
TERM LOAN OF S$100 MILLION
Pursuant to Clause 5 of the EDB Loan Agreement dated _____________________ 1995
in respect of the above Term Loan we hereby give you notice for a Drawing of
Singapore Dollars (S$ ___________ ) on ___________________ 19 .
We confirm--
(i) that the conditions precedent under Clause 3 of the EDB Loan
Agreement have been complied with in every respect;
(ii) that save as otherwise disclosed to the Board, each of the
representations and warranties contained in Clause 12 of the
EDB Loan Agreement are true and accurate in all respects as
though made on the date of this Notice with reference to
facts and circumstances presently subsisting and will be
true and accurate in all respects on the date of the
intended Drawing as though made on the date of the intended
Drawing with reference to facts and circumstances then
subsisting; and
(iii) that as at the date hereof no Event of Default has occurred
and no event has occurred which, with the giving of notice
and/or the lapse of time and/or upon you making any
necessary determination under Clause 15 of the EDB Loan
Agreement, might constitute an Event of Default, and we
undertake that no Event of Default and none of the events
aforesaid will exist at the date of the intended Drawing.
In addition to the above documents kindly let us know if you require copies of
any opinion approval or other documents.
Dated this ____________ day of __________________ 19
Yours faithfully
CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD
Director/Authorised Signatory
<PAGE> 1
EXHIBIT 10.20
Dated the 14th day of April 1997
EDB LOAN AGREEMENT
BETWEEN
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND
ECONOMIC DEVELOPMENT BOARD
<PAGE> 2
THIS AGREEMENT is made the 14th day of April, One Thousand Nine Hundred
and Ninety Seven (1997) Between:
CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in the
Republic of Singapore and having its registered office at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406 (hereinafter called "the Company")
of the one part; And
ECONOMIC DEVELOPMENT BOARD, a Corporate Body established in the Republic of
Singapore by The Economic Development Board Act (Cap. 85) of 250, North Bridge
Road, #24-00 Raffles City Tower Singapore 179101 (hereinafter called "the
Board") of the other part.
WHEREAS:
(1) The Company has applied to the Board for a term loan up to a maximum
aggregate principal amount of Singapore Dollars Six Hundred Million
(S$600,000,000.00) under the Capital Assistance Scheme of the Board.
(2) The Board is willing to grant the term loan to the Company, upon the
terms and subject to the conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:-
1. DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the
following words or expressions shall have the following meanings respectively:
(a) "Business Day" means a day on which banks in Singapore
are open for business excluding Saturday and Sunday.
(b) "Day" means a calendar day.
(c) "Dollars" and the sign "$" respectively mean the lawful
currency of the Republic of Singapore.
(d) "Drawing" means any, each or all (as the context may
require) of the drawings made by the Company under the Term Loan and includes
the First Drawing as defined hereof.
(e) "Event of Default" and "Events of Default" mean any,
each or all (as the context may require) of the Events of Default described in
Clause 15 hereof.
(f) "First Drawing" means the first of the drawings made by
the Company under the Term Loan.
<PAGE> 3
(g) "Fixed Productive Assets" means the buildings,
facilities and equipment, for the wafer fabrication of semiconductor devices at
a facility to be established in Woodlands in Singapore (the "FAB 3 Project").
(h) "Guarantee" means a corporate guarantee to be issued by
Singapore Technologies Pte Ltd ("STPL") and duly executed under seal and signed
by STPL's authorised signatories, in favour of the Board and in the form and
containing terms acceptable to the Board.
(i) "Interest Rate" means the rates of interest determined
in accordance with Clause 7.2 hereof.
(j) "Interest Payment Dates" means the day falling on the
first Business Day of March or the first Business Day of September as the case
may be and the first Interest Payment Date shall be the Interest Payment Date
immediately following the date of the First Drawing of the Term Loan.
(k) "Interest Period" means the period or periods determined
as follows:
(i) the Interest Period in relation to the First
Drawing shall begin on the date on which that Drawing is made hereunder and
shall end on the first Interest Payment Date;
(ii) the Interest Period in respect of any subsequent
Drawing shall begin on the date on which the relevant subsequent Drawing is made
and shall end on the Interest Payment Date falling immediately thereafter;
(iii) each successive Interest Period shall begin on
the last Interest Payment Date and shall end on the Interest Payment Date
falling six (6) months immediately following;
(iv) if any Interest Period would otherwise end on a
day which is not a Business Day that Interest Period shall be extended to the
next succeeding day which is a Business Day;
(v) if any Interest Period is extended by the
application of (iv) above, the following Interest Period shall (without
prejudice to the application of (iv) above) end on the day on which it would
have ended if the preceding Interest Period had not been so extended; and
(vi) any amount to be repaid under clause 8 shall
have a final Interest Period expiring on the relevant Repayment Date.
(l) "Month" means a calendar month.
(m) "person" shall include a company, body of persons,
association or body corporate or unincorporated.
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<PAGE> 4
(n) "Repayment Dates" means the first Day of March and the
first Day of September of each year.
(o) "Term Loan" means the loan facility in the aggregate
amount of Singapore Dollars Six Hundred Million (S$600,000,000.00) to be made
available to the Company by the Board in accordance with the terms and
conditions set out in this Agreement and shall also be deemed to include the
whole or any part thereof.
(p) "Year" means a calendar year.
1.2 Unless the context otherwise requires, words importing the
singular number include the plural number and vice versa.
1.3 The words "hereof", "herein", "hereon" and "hereunder" and words
of similar import, when used in this Agreement, refer to this Agreement as a
whole and not to any particular provision of this Agreement.
1.4 The headings to the Clauses hereof shall not be deemed to be a
part thereof or be taken in consideration in the interpretation or construction
thereof or of this Agreement.
1.5 Reference herein to Clauses are references to Clauses of this
Agreement.
2. TERM LOAN
Subject to the provisions of this Agreement and in particular those of
Clause 3 hereof, the Board will make available to the Company the Term Loan at
the times and in the manner as hereinafter provided. The Term Loan shall be for
a period of eight (8) years, inclusive of a two (2) year grace period for
repayment of the Term Loan as provided in Clause 8 herein.
3. CONDITIONS PRECEDENT AND AVAILABILITY
The right of the Company to make any Drawing or Drawings under the Term
Loan, and the obligations of the Board to make available the same shall be
subject to the following conditions precedent, that is to say:
(a) There shall not exist at or prior to any Drawing, any Event of
Default or any condition, event or act which, with the giving of notice or lapse
of time, or both, would constitute such an Event of Default.
(b) All representations, warranties and statements contained herein,
or otherwise made in writing in connection herewith or in any certificate or
statement furnished pursuant to any provision of this Agreement or in any
document referred to herein made by the Company shall be true and correct with
the same effect as though made on the date on which the Drawing is to be made.
3
<PAGE> 5
(c) The Board shall have received, in form and substance
satisfactory to the Board, the following:-
(i) A copy of the Memorandum and Articles of Association of
the Company duly certified by a Director and the Secretary of the Company to be
a true copy thereof;
(ii) A copy, certified by a Director and Secretary of the
Company, of the resolution of the Board of Directors of the Company, which is in
full force and effect, approving the terms and conditions contained in this
Agreement and authorising a person or persons to sign this Agreement and any
other document to be given to the Board from time to time by the Company;
(iii) Specimen signatures of the persons authorised to sign
this Agreement on behalf of the Company, and to sign the notices of Drawing and
any other document to be given from time to time by the Company, such specimens
to be certified by a Director or the Secretary of the Company to be the true
signatures of such persons respectively; and
(iv) The Guarantee relating to the Term Loan to be made and
duly executed.
(d) All acts, conditions and things required to be done and
performed and to have happened precedent to the execution and delivery of this
Agreement and the Guarantee and to constitute this Agreement and the Guarantee
legal, valid and binding obligations enforceable in accordance with their
respective terms, shall have been done and performed and have happened in
compliance with all applicable laws.
(e) There is no breach by the Company of any of the terms,
conditions and undertakings herein contained.
4. PURPOSE OF THE TERM LOAN
4.1 Subject to the terms and conditions herein contained and in
particular to those of Clause 3, the Term Loan will be made available by the
Board to the Company for financing the purchase of Fixed Productive Assets of
the Company's plant only for the Fab 3 Project. Under this Agreement, the
Company shall be required to invest a minimum amount of Singapore Dollars One
Billion Eight Hundred Million (S$1,800,000,000.00) in Fixed Productive Assets
(excluding land) by 31 December 2000.
4.2 Upon advance of a Drawing under Clause 5, the Company shall
apply all the proceeds thereof for the purposes described in Clause 4.1 above
and for no other purpose whatsoever.
4
<PAGE> 6
5. DRAWINGS OF TERM LOAN
5.1 Subject to the terms and conditions of this Agreement and in
particular to all the conditions of Clause 3 being complied with the Board will
make available drawings under the Term Loan in accordance with a disbursement
schedule submitted by the Company and approved by the Board at least 45 days
before the First Drawing of the Term Loan.
5.2 The Company shall give notice of Drawing to the Board not later
than thirty (30) Business Days prior to the intended date of Drawing and each
notice of Drawing shall be substantially in the form set out in the Appendix I
hereto and shall:-
(i) state the date (which must be a Business Day)
and the amount of the proposed Drawing;
(ii) be irrevocable;
(iii) commit the Company to borrow the amount and on
the date stated; and
(iv) constitute a representation and warranty that at
the date thereof the warranties and representations set out in Clause 12 are
true and no Event of Default and no event or act which with, the giving of
notice or lapse of time or both would constitute such an Event of Default has
occurred.
5.3 The First Drawing shall be made not later than 1 May 1997 or
such other later date as maybe approved by the Chairman of the Board or his
lawful representative.
5.4 All Drawings shall be made on the first Day of March or the
first Day of September of the respective years or such other date(s) as may be
approved by the Chairman of the Board or his lawful representative.
5.5 The Company shall have the option to request the Board to
advance the amount of a Drawing in the following manner:
(i) either after the Board has verified that the
aggregate amount payable by the Company for Fixed Productive Assets as at the
intended date of Drawing is equivalent to the amount of that Drawing; or
(ii) before such verification has been made by the
Board, provided that:
(a) the Company shall give notice of Drawing to the Board
not later than fourteen (14) Business Days prior to the
intended date of Drawing;
5
<PAGE> 7
(b) the Company shall together with the notice of Drawing
provide the Board with the aggregate amount payable by
the Company for Fixed Productive Assets as at the
intended date of Drawing;
(c) the Board shall have the right to verify such amount
within sixty (60) Days after advance of such Drawing;
and
(d) any amount advanced under a Drawing that is in excess of
the aggregate amount payable by the Company for Fixed
Productive Assets as at the intended date of the
relevant Drawing (the "Excess Amount") shall be subject
to interest to be applied on the Excess Amount at a rate
of three per cent (3%) per annum above the average
prevailing prime rate as reported by the Monetary
Authority of Singapore from the date of the relevant
Drawing to the date of payment by the Company of the
Excess Amount.
6. AVAILABILITY OF TERM LOAN
The Term Loan shall be available for Drawing for a period of two (2)
Years from the date of the First Drawing after which date any part of the Term
Loan not drawn shall be cancelled.
7. INTEREST
7.1 The Company shall pay to the Board on each Interest Payment Date
interest in arrears on the amounts drawn and outstanding under the Term Loan
from time to time in respect of each Interest Period relating thereto determined
in accordance with clause 1.1(k) and at the Interest Rate determined in
accordance with sub-clause 7.2 hereof.
7.2 Interest will be charged by the Board at the rate of four per
cent (4%) per annum (the "Interest Rate") and shall be payable in arrears at
six-monthly intervals, the first payment to be made on the Interest Payment Date
as defined in Clause 1.1(j) hereof.
7.3 The amount of interest payable on the drawings under the Term
Loan from time to time owing and outstanding shall be calculated at the Interest
Rate on the basis of a year of three hundred and sixty five (365) Days for the
actual number of Days elapsed.
7.4 The certificate of the Board in writing as to the determination
of the amount of interest payable on each Interest Payment Date shall be
conclusive and binding upon the parties hereto, save for manifest error.
7.5 The Company recognises and accepts that it is commercial
practice for interest on amounts in default to be charged and that the rate of
interest to be applied by the Board on the amounts in default shall be three per
cent (3%) per annum above the average prevailing prime interest rate as reported
by the Monetary Authority of Singapore compounded on a monthly basis, which will
represent a genuine estimate of the damage the Board would suffer in the event
6
<PAGE> 8
of a failure by the Company in the payment on the due date of any principal
and/or interest on the amounts due and payable to the Board.
8. REPAYMENT OF THE TERM LOAN
The Company shall repay the principal of the amounts drawn under the
Term Loan in thirteen (13) equal consecutive six-monthly instalments on the
Repayment Dates. The first of such instalments shall be paid on the first
Repayment Date following two (2) Years from the date of the First Drawing of the
Term Loan or such other later date as the Board may determine in its absolute
discretion.
9. PAYMENT PROVISIONS
9.1 All payments to be made by the Company under this Agreement
shall be made not later than 11 a.m. (Singapore time) on the relevant day to the
Board at its address described above or at such other address as the Board may
from time to time designate by notice in writing to the Company not less than
ten (10) Business Days prior to the date of any such payment hereunder.
9.2 If any sum becomes due for payment under this Agreement on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and all calculation of interest shall be adjusted accordingly.
10. PREPAYMENT
10.1 The Company may prepay in the inverse order of maturity any part
of the Term Loan or the entire Term Loan before maturity on paying a fee
amounting to a quarter of one percent (1/4 of 1%) of the amount prepaid for
every period of six (6) months or any lesser period before maturity or one
percent (1%) of the amount prepaid, whichever is the lesser amount.
10.2 The Company shall give the Board thirty (30) Days' prior written
notice of the intention to prepay any amount described in Clause 10.1.
10.3 In the event the Company is required to prepay the principal sum
owing under the Term Loan pursuant to Clause 15.2(a) hereof the Company shall
pay to the Board the fee at the rate described in Clause 10.1 above on the
principal sum owing.
11. SECURITY
Prior to each Drawing of the Term Loan, the Company shall procure the
requisite Guarantee to be given in favour of the Board.
7
<PAGE> 9
12. WARRANTIES AND REPRESENTATIONS
12.1 The Company hereby warrants and represents to the Board as
follows:
(a) that it is lawfully incorporated, validly existing and
in good standing under the laws of the Republic of Singapore;
(b) that it has the corporate power and authority to carry
on the business as now being conducted;
(c) that it has the corporate power to execute and perform
this Agreement and to borrow hereunder;
(d) that the execution, delivery and performance of this
Agreement and the borrowings hereunder have been duly authorised by all
requisite corporate action and will not violate any provision of any agreement
or other instrument to which the Company is a party;
(e) that its latest balance sheet and financial statements
submitted to the Board are correct and complete and accurately represent the
financial condition of the Company on the date thereof and the results of its
operation for the period then ended and each such balance sheet shows all known
present and future liabilities, direct or contingent, of the Company as of the
date thereof and each financial statement referred to herein was prepared in
accordance with generally accepted accounting principles;
(f) save as disclosed in writing to the Board that there has
been no material adverse change in the business activities, operations or
financial condition of the Company since the date of the latest financial
statements referred to in sub-paragraph (e) above;
(g) save as otherwise disclosed to the Board, there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against the Company or its parent or any of its subsidiaries, at law
or in equity (whether or not purportedly on behalf of the Company, its parent or
any of its subsidiaries) before any court or competent body adjudicating such
matters, which involve the possibility of any judgement or liability which may
result in any material adverse change in the business, operations, properties or
assets, or in the condition, financial or otherwise of the Company or its parent
or any of its subsidiaries and adversely affect the Company's ability to make
repayment of the Term Loan;
(h) that to the best of the knowledge of the Company no
steps have been taken or are being taken to appoint a receiver and/or manager or
judicial manager or liquidator or any other person over it or any of its assets
or in any winding up action.
12.2 Each of the warranties and representations contained in the
preceding subclause shall survive and continue to have full force and effect
after the execution of this Agreement and that they will be true and correct and
fully observed as though made on the date of Drawing or each Interest Payment
Date with reference to the facts and circumstances then subsisting.
8
<PAGE> 10
13. AFFIRMATIVE UNDERTAKINGS
The Company hereby undertakes and agrees with the Board as follows:-
(a) that the Term Loan granted by the Board under the
provisions of this Agreement and every part thereof shall be used solely for the
purpose and in the manner hereinbefore stipulated and not for any other purpose
or manner save with the prior written consent of the Board.
(b) that it will carry on and conduct its business and
affairs with due diligence and efficiency in accordance with sound technical
financial industrial and managerial standards and practices including the
maintenance of adequate records with qualified personnel and in accordance with
its Memorandum and Articles of Association.
(c) that it will furnish and provide the Board with and
permit the Board to obtain all such statements information explanation and data,
except information of a confidential nature, as the Board may reasonably
require, by prior written notice, regarding the affairs operations
administration financial or other whatsoever state or condition of the Company
or any of the matters in this Clause mentioned.
(d) that it will furnish to the Board particulars of any
kind of immovable property hereafter acquired by the Company.
(e) that the Board shall have the right as it may reasonably
request, by prior written notice, to inspect any land or premises where the
Company carries on its business and inspect the same and all property and assets
whatsoever therein or thereon and all accounts records and statements wherever
the same may be situate and to make inventories and record thereof.
(f) that it will supply to the Board certified copies of all
resolutions passed which materially affect the financial state and condition of
the Company at general and/or special meetings of the Company within seven (7)
Days from the date of the passing of such resolutions.
(g) that it will deliver to the Board every year immediately
after the issue of the a copy of the Company's audited balance sheet and profit
and loss accounts audited by a firm of auditors of international repute together
with Auditors' and Directors' Reports and will also deliver to the Board a copy
of the annual return which the Company is required by law to file with the
Registrar of Companies.
(h) that it shall punctually pay all rents rates assessments
taxes and all outgoings payable in respect of any land/or premises belonging to
the Company or at which it carries on business and obtain all necessary licences
and comply with all laws regulations rules and orders relating to the carrying
on of its business on such premises.
9
<PAGE> 11
(i) that it will keep all its plant machinery equipment
buildings constructions fixtures fittings implements and other effects in good
and substantial repair and proper working condition to the satisfaction of the
Board.
(j) that it shall not dismantle pull down or remove any part
of the buildings fixtures plant machinery and equipment, except in cases where
such dismantling pulling down or removal shall in the opinion of the Company be
rendered necessary by reason of the same being obsolete worn out or damaged, in
which case the Company shall give sufficient written notice to the Board and
will replace such property by property of similar nature and value after giving
intimation to the Board.
(k) that it shall give to the Board such written
authorities or other directions and provide such facilities and access as the
Board may require for the aforesaid inspection and shall pay all costs fees
travelling and other out-of-pocket expenses whether legal or otherwise in
respect of such inspection.
(l) that it shall continue with its best efforts to bring
strategic equity shareholders into the Company with the prior approval of the
Board.
(m) that insofar as may be necessary the Company shall
amend its Memorandum and Articles of Association so as to enable it to observe
and perform all the covenants undertakings terms stipulations conditions and
other provisions of this Agreement.
14. NEGATIVE UNDERTAKINGS
The Company hereby undertakes and agrees with the Board that it shall
not without the written consent of the Board, which consent shall not be
unreasonably withheld:-
(a) embark on any new project or substantial expansion or
diversification of its present business and operations, which are not related to
its present business activities;
(b) invest its funds by way of deposits (other than deposits
with banks licensed by the Monetary Authority of Singapore), loans, share
capital or otherwise in any other concern or issue or give guarantees for the
account or on behalf of any person or otherwise become contingently liable for
or in connection with any obligations or indebtedness of any person;
(c) effect any form of reconstruction including amalgamation
with another company which will result in STPL holding less than 51% of the
share capital of the Company;
(d) create or permit to arise or subsist, any mortgage,
charge (whether fixed or floating), pledge, lien or other encumbrances
whatsoever (except those which have been specifically disclosed to and approved
by the Board respectively) on any of its properties or assets, both present and
future whatsoever and wheresoever situate;
10
<PAGE> 12
(e) declare or pay any dividend or make any income or
capital distribution, whether in cash or in specie, to its shareholders or any
of them; or
(f) raise, borrow, take, make, issue or give, as the case
may be, any loans, debentures, bonds or credits from or to any persons.
15. EVENTS OF DEFAULT
15.1 If any one or more of the following Events of Default shall
occur, that is to say:
(a) if the Company shall fail to pay or otherwise discharge
when due any sums of money, whether principal, interest, fees or otherwise,
payable under this Agreement;
(b) if the Company shall default in the payment of any
principal or interest or any other obligation for borrowed money (whether or not
to the Board) beyond any period of grace provided in respect thereof;
(c) if any representation or warranty made in or in
pursuance of this Agreement or in any certificate, statement or other document
delivered in connection with the execution and delivery hereof or in pursuance
of this Agreement shall be or become incorrect in any material respect;
(d) if the Company defaults in the due performance of any
undertaking, condition or obligation on its part to be performed and observed
hereunder (other than the payment of any sum due hereunder) and such default (if
capable of being rectified) shall not be rectified for a period of thirty (30)
Days after the date of receipt by the Company of written notice of such default
from the Board;
(e) if a petition is presented in any court of competent
jurisdiction or a resolution is passed for the winding-up of the Company or its
parent or for the filing or any application for placing the Company or its
parent under judicial management or any similar or analogous proceedings are
taken against any of them and are not withdrawn within thirty (30) Days after
being presented;
(f) if any encumbrancer or lessor shall take possession or a
receiver and/or manager, judicial manager, liquidator or other similar officer
is appointed of the whole of the undertaking, property or assets, or any part
thereof, of the Company or its parent;
(g) if a distress or execution is levied or enforced upon or
sued out against any part of the property or assets of the Company and is not
discharged within thirty (30) Days of being levied and the Board is of the
reasonable opinion that such an event will be materially prejudicial to the
interests of the Board;
(h) if a judgement or order is made against the Company and
is not discharged within sixty (60) Days or if legal proceedings suits or
actions of any kind whatsoever (whether criminal or civil) shall be instituted
against the parent of the Company and the Board is in that
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<PAGE> 13
case of the reasonable opinion that the said legal proceedings suits or actions
will materially affect the Company's ability to perform and observe its
obligations under this Agreement;
(i) if the Company becomes insolvent or is unable or deemed
unable to pay its debts or admits in writing its inability to pay its debts, as
they mature, or enters into composition, compromise or arrangement with its
creditors or makes a general assignment for the benefit of its creditors and the
Board is of the opinion that any such event will be materially prejudicial to
the interests of the Board;
(j) if a winding-up petition is presented by or against the
guarantor of the Guarantee or analogous proceedings shall be taken by or against
it and is not discharged within thirty (30) Days after being presented;
(k) if the Company ceases or threatens to cease to carry on
its business and the Board is of the opinion that it will materially affect the
ability of the Company to perform and observe its obligations under this
Agreement;
(l) if any licence, consent or approval of any authority at
any time necessary to enable the Company to comply with and perform its
obligations under this Agreement to a material extent shall be revoked, withheld
or materially modified or shall otherwise not be granted or fail to remain in
full force and effect;
(m) if any of the consents, authorities, approvals, waivers
or resolutions referred to in Clause 3 shall be modified in a manner
unacceptable to the Board or shall be wholly or partly revoked, withdrawn,
suspended or terminated or shall expire and not be renewed or shall otherwise
fail to remain in full force and its effect and such circumstances are
considered by the Board to be material;
(n) if without the prior written consent of the Board there
is any change in the shareholding of the Company which will result in STPL
holding less than 51% of the share capital of the Company or if there is any
change in the shareholding of its parent;
(o) if a situation shall have arisen, which shall make it
improbable that the Company will be able to perform its obligations under this
Agreement;
(p) if the Board determines in its absolute discretion that
its interests under the Guarantee is or are in jeopardy or that a situation
shall have arisen which shall make it improbable that STPL will be able to
perform its obligations under the Guarantee;
then and in any of such event, the Board may, by notice in writing to the
Company declare that an Event of Default has occurred and such declaration shall
be deemed to take effect from the date of such an Event of Default.
15.2 Upon the declaration by the Board that an Event of Default has
occurred:
12
<PAGE> 14
(a) the whole of the principal sum drawndown and owing under
the Term Loan, interest thereon and all other sums agreed to be paid under this
Agreement shall immediately become due and payable without any demand or notice
of any kind by the Board to the Company; and
(b) it shall be lawful for the Board to exercise all or any
rights, powers or remedies under this Agreement, the Guarantee given to the
Board or any one or more of them.
15.3 In the event of an occurrence of an Event of Default before the
Term Loan shall have been fully drawn or utilised hereunder, the Board's
obligations hereunder shall automatically and forthwith cease.
15.4 After the declaration by the Board that an Event of Default has
occurred, all moneys received or recovered by the Board (whether such moneys
shall have been received or recovered as a result of or arising from its
exercise of all or any rights, powers or remedies under this Agreement, the
Guarantee or any one or more of them or by way of a set-off or otherwise) shall
be held by it and shall be applied as follows:-
(a) Firstly, in or towards payment of all costs charges and
expenses, if any, incurred in enforcing this Agreement, the Guarantee or any one
or more of them;
(b) Secondly, in or towards payment to the Board of all
moneys and liabilities for the time being due, owing or outstanding under this
Agreement and where such moneys and liabilities are of a contingent nature, in
or towards making full and adequate provisions for payment of such moneys and
liabilities as and when they become due and payable; and
(c) Thirdly, any surplus shall be paid to the Company.
16. NOTICES
16.1 Except as otherwise expressly provided herein, any notice,
request, demand or other communication to be given or served hereunder by one of
the parties hereto to or on the other or others may be delivered at or sent by
prepaid registered post or by facsimile to the address or addresses herein
specified of the other party or parties and shall be deemed to be duly served:
(a) if it is delivered, at the time of delivery,
(b) if it is sent by prepaid registered post, one (1) Day
after posting thereof, or
(c) if it is sent by facsimile, immediately after
transmission thereof, if the date of transmission is a Business Day, and if such
a date is not a Business Day, then the notice by facsimile shall be deemed to be
served on the next succeeding day which is a Business Day.
13
<PAGE> 15
Except as otherwise expressly provided herein, all notices, requests, demands or
other communications which are required by this Agreement to be in writing may
be made by facsimile.
16.2 For the purpose of this Clause 16 each of the parties hereto
shall from time to time notify the other party in writing of an address in
Singapore where such notice, request, demand or other communication as aforesaid
can be given or served and such notification shall be effective only when it is
actually received. In the absence of such notification, the notice, request,
demand or other communication aforesaid may be given or served at the addresses
of the respective parties as stated above.
17. WAIVER NOT TO PREJUDICE RIGHT OF BOARD
The Board may from time to time and at any time waive either
unconditionally or on such terms and conditions as it may deem fit any breach by
the Company of any of the undertakings stipulations terms and conditions herein
contained and any modification thereof but without prejudice to its powers,
rights and remedies for enforcement thereof, provided always that:-
(a) no neglect or forbearance of the Board to require and
enforce payment of any moneys hereunder or the performance and observance of any
undertaking stipulation term or condition herein contained, nor any time which
may be given to the Company shall in any way prejudice or affect any of the
rights, powers or remedies of the Board at any time afterwards to act strictly
in accordance with the provisions hereof;
(b) no such waiver of any such breach as aforesaid shall
prejudice the rights of the Board in respect of any other or subsequent breach
of any of the undertakings stipulations terms or conditions aforesaid.
18. INDULGENCE OF THE BOARD
The liability of the Company hereunder shall not be impaired or
discharged by reason of any time or other indulgence being granted by or with
the consent of the Board to any person who or which may be in any way liable to
pay any of the moneys secured hereby by any other security in favour of the
Board or by reason of any arrangement being entered into or composition accepted
by the Board which has the effect of modifying the operation of law or otherwise
its rights and remedies under the provisions of this Agreement.
19. SEVERABILITY
In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law, such
invalidity, illegality or unenforceability shall not in any way affect or impair
the other provisions of this Agreement but this Agreement shall be construed as
if such invalid or illegal or unenforceable provision contained herein or
therein did not form a part of this Agreement.
14
<PAGE> 16
20. GOVERNING LAW
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the Republic of Singapore.
21. MISCELLANEOUS
21.1 All legal and other professional fees, out-of-pocket expenses,
charges and expenses of and in connection with this Agreement shall be paid by
the Company.
21.2 The Company shall further pay all legal fees as between
solicitor and client and other costs and disbursements incurred in connection
with or demanding and enforcing payment of moneys due under this Agreement and
Guarantee and otherwise howsoever in enforcing the performance of any other
undertakings stipulations terms conditions or provisions hereof and thereof.
21.3 A certificate signed by a duly authorised officer for the time
being of the Board as to the amount of moneys and liabilities for the time being
due to the Board or incurred by the Board under this Agreement and Guarantee
shall be conclusive and binding on the Company, save for any computation or
clerical error.
21.4 This Agreement shall be binding upon the successors of the
Company and shall enure to the benefit of the Board and its successors and
assigns.
15
<PAGE> 17
IN WITNESS WHEREOF the parties hereto have hereunto affixed their
respective common seals.
The Common Seal of CHARTERED SEMICONDUCTOR MANUFACTURING LTD was hereunto
affixed in the presence of:
/s/ HO CHING
-------------------- [SEAL]
Chairman
/s/ TAN BOCK SENG
--------------------
Director
The Common Seal of the ECONOMIC DEVELOPMENT BOARD was hereunto affixed in the
presence of:-
[SIGNATURE ILLEGIBLE]
--------------------- [SEAL]
Chairman
[SIGNATURE ILLEGIBLE]
---------------------
Director
16
<PAGE> 18
APPENDIX I
ECONOMIC DEVELOPMENT BOARD
250 North Bridge Road
#24-00 Raffles City Tower
Singapore 179101
Dear Sirs,
NOTICE OF DRAWING
TERM LOAN OF S$[ ]
Pursuant to Clause 5 of the EDB Loan Agreement dated ________ 1997 in respect of
the above Term Loan we hereby give you notice for a Drawing of Dollars [_______]
($______) on ________ 19__.
We confirm--
(i) that the conditions precedent under Clause 3 of the EDB Loan
Agreement have been complied with in every respect;
(ii) that each of the representations and warranties contained in
Clause 12 of the EDB Loan Agreement are true and accurate in all respects as
though made on the date of this Notice with reference to facts and circumstances
presently subsisting and will be true and accurate in all respects on the date
of the intended Drawing as though made on the date of the intended Drawing with
reference to facts and circumstances then subsisting; and
(iii) that as at the date hereof no Event of Default has occurred and
no event has occurred which, with the giving of notice and/or the lapse of time
and/or upon you making any necessary determination under Clause 15 of the EDB
Loan Agreement, might constitute an Event of Default, and we undertake that no
Event of Default and none of the events aforesaid will exist at the date of the
intended Drawing.
In addition to the above documents kindly let us know if you require copies of
any opinion approval or other documents.
Dated this day of 19
Yours faithfully
Director/Authorised Signatory
<PAGE> 19
Dated the 29th day of May 1997
EDB LOAN SUPPLEMENTAL AGREEMENT
BETWEEN
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND
ECONOMIC DEVELOPMENT BOARD
<PAGE> 20
THIS AGREEMENT is made the 29th day of May, One Thousand Nine Hundred
and Ninety Seven (1997) Between
CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in the
Republic of Singapore and having its registered office at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406 (hereinafter called "the Company")
of the one part; And
ECONOMIC DEVELOPMENT BOARD, a Corporate Body established in the Republic of
Singapore by The Economic Development Board Act (Cap. 85) of 250, North Bridge
Road, #24-00 Raffles City Tower Singapore 179101 (hereinafter called "the
Board") of the other part.
WHEREAS:
(1) The parties have on the fourteenth day of April, One Thousand Nine
Hundred and Ninety Seven (1997) entered into an agreement where in the Board has
agreed, subject to terms and conditions agreed on to grant term loans to the
Company under the Capital Assistance Scheme of the Board (the "Agreement").
(2) The parties have agreed to amend parts of the Agreement.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
1. The parties agree that clause 5.5 of the Agreement be deleted and replaced
with the following:
5.5
(a) The Company shall have the option to request the Board to advance the
amount of a Drawing provided that written notice is given by the Company to the
Board indicating the amount to be advanced, not later than fourteen (14)
Business Days prior to the intended date of Drawing;
(b) In respect of any monies advanced under this clause, the Company shall,
without demand, produce to the Board, within sixty-five (65) Days of the date of
the Drawing, all documentary proof showing that the Company has fully utilise
the said Drawing for the payment of approved Fixed Productive Assets, and that
such payment was made within 60 Days after advance of the said Drawing.
(c) Any amount advanced under a Drawing that is in excess of the aggregate
amount actually paid by the Company in respect of approved Fixed Productive
Assets at the expiry of 60 days after Drawing (the "Excess Amount") shall be
subject to interest. Interest to be applied on the Excess Amount shall be at the
rate of three per cent (3%) per annum above the average prevailing prime lending
rate as reported by the Monetary Authority of Singapore from the date of the
relevant Drawing to the date that the Excess Amount is eventually paid by the
Company for approved Fixed Productive Assets.
<PAGE> 21
IN WITNESS WHEREOF the parties hereto have hereunto affixed their
respective common seals.
The Common Seal of CHARTERED SEMICONDUCTOR MANUFACTURING LTD was hereunto
affixed in the presence of:-
/s/ Ho Ching
-------------------------
Chairman
/s/ Tan Bock Seng [SEAL]
-------------------------
Director
The Common Seal of the ECONOMIC DEVELOPMENT BOARD was hereunto affixed in the
presence of:-
[Signature Illegible]
-------------------------
Chairman
[Signature Illegible] [SEAL]
-------------------------
Secretary
2
<PAGE> 1
EXHIBIT 10.21
Dated this 21st day of July, 1997
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
as Company
and
ECONOMIC DEVELOPMENT BOARD
as Board
------------------------------------------
EDB LOAN AGREEMENT
-------------------------------------------
ECONOMIC DEVELOPMENT BOARD
250 NORTH BRIDGE ROAD #24-00
RAFFLES CITY TOWER
SINGAPORE 179101
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
1. Definitions..................................................... 1
2. Term Loan....................................................... 3
3. Conditions Precedent and Availability........................... 3
4. Purpose of The Term Loan........................................ 4
5. Drawings of Term Loan........................................... 5
6. Availability of Term Loan....................................... 6
7. Interest........................................................ 6
8. Repayment of The Term Loan...................................... 6
9. Payment Provisions.............................................. 7
10. Prepayment...................................................... 7
11. Security........................................................ 7
12. Warranties and Representations.................................. 7
13. Affirmative Undertaking......................................... 8
14. Negative Undertakings........................................... 10
15. Events of Default............................................... 11
16. Notices......................................................... 13
17. Waiver Not To Prejudice Right of Board.......................... 14
18. Indulgence of the Board......................................... 14
19. Severability.................................................... 14
20. Governing Law................................................... 14
21. Miscellaneous................................................... 15
22. Appendix I...................................................... 17
</TABLE>
<PAGE> 3
THIS AGREEMENT is made the 21st day of July, One Thousand Nine Hundred
and Ninety Seven (1997) Between
CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
the Republic of Singapore and having its registered office at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406 (hereinafter called "the Company")
of the one part; And
ECONOMIC DEVELOPMENT BOARD, a Corporate Body established in the
Republic of Singapore by The Economic Development Board Act (Cap. 85) of 250,
North Bridge Road, #24-00 Raffles City Tower Singapore 179101 (hereinafter
called "the Board") of the other part.
WHEREAS:
(1) The Company has applied to the Board for a term loan up to a maximum
aggregate principal amount of Singapore Dollars Three Hundred Million
(S$300,000,000.00) under the Capital Assistance Scheme of the Board,
hereinafter known as the Principal Amount.
(2) The Board is willing to grant the term loan to the Company, upon the
terms and subject to the conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
1. DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the following
words or expressions shall have the following meanings respectively:
(a) "Business Day" means a day on which banks in Singapore are
open for business excluding Saturday and Sunday.
(b) "Day" means a calendar day.
(c) "Dollars" and the sign "$" respectively mean the lawful
currency of the Republic of Singapore.
(d) "Drawing" means any, each or all (as the context may require)
of the drawings made by the Company under the Term Loan and
includes the First Drawing as defined hereof.
(e) "Event of Default" and "Events of Default" mean any, each or
all (as the context may require) of the Events of Default
described in Clause 15 hereof.
(f) "First Drawing" means the first of the drawings made by the
Company under the Term Loan.
<PAGE> 4
(g) "Productive Fixed Assets" means the equipment for the wafer
fabrication of semiconductor devices at a facility established
in Woodlands in Singapore (the "FAB 2 Project").
(h) "Guarantee" means each of the bank Guarantees issued or to be
issued severally by banks acceptable to the Board at the
request of the Company and duly executed under seal or signed
by the said banks' authorized signatories, in favor of the
Board and in the form and substance acceptable to the Board.
(i) "Interest Rate" means the rates of interest determined in
accordance with Clause 7.2 hereof.
(j) "Interest Payment Dates" means the day falling on the first
Business Day of March or the first Business Day of September
as the case may be and the first Interest Payment Date shall
be the payment date (either 1st March or 1st September)
falling more than 90 days from the date of the first drawdown.
(k) "Interest Period" means the period or periods determined as
follows:-
(i) the Interest Period in relation to the First Drawing
shall begin on the date on which that Drawing is made
hereunder and shall end on the first Interest Payment
Date;
(ii) the Interest Period in respect of any subsequent
Drawing shall begin on the date on which the relevant
subsequent Drawing is made and shall end on the
Interest Payment Date falling immediately thereafter;
(iii) each successive Interest Period shall begin on the
last Interest Payment Date and shall end on the
Interest Payment Date falling six (6) months
immediately following;
(iv) if any Interest Period would otherwise end on a day
which is not a Business Day that Interest Period
shall be extended to the next succeeding day which is
a Business Day;
(v) if any Interest Period is extended by the application
of (iv) above, the following Interest Period shall
(without prejudice to the application of (iv) above)
end on the day on which it would have ended if the
preceding Interest Period had not been so extended;
and
(vi) any amount to be repaid under clause 8 shall have a
final Interest Period expiring on the relevant
Repayment Date.
(l) "Minimum Prepayment" means (a) in relation to a Drawing having
a principal amount equal to S$100,000,000.00 or higher,
S$5,000,000.00 (b) in relation to a Drawing having a principal
amount of not less than S$10,000,000.00 but not more than
S$100,000,000.00, S$2,000,000.00; and (c) in relation to a
Drawing having a principal amount of less than
S$10,000,000.00, S$500,000.00.
-2-
<PAGE> 5
(m) "Month" means a calendar month.
(n) "person" shall include a company, body of persons, association
or body corporate or unincorporated.
(o) "Repayment Dates" means the first Day of March and the first
Day of September of each year.
(p) "Term Loan" means the loan facility in the aggregate amount of
Singapore Dollars Three Hundred Million (S$300,000,000.00) to
be made available to the Company by the Board in accordance
with the terms and conditions set out in this Agreement and
shall also be deemed to include the whole or any part thereof.
(q) "Year" means a calendar year.
1.2 Unless the context otherwise requires, words importing the singular
number include the plural number and vice versa.
1.3 The words "hereof", "herein", "hereon" and "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as
a whole and not to any particular provision of this Agreement.
1.4 The headings to the Clauses hereof shall not be deemed to be a part
thereof or be taken in consideration in the interpretation or
construction thereof or of this Agreement.
1.5 Reference herein to Clauses are references to Clauses of this
Agreement.
2. TERM LOAN
Subject to the provisions of this Agreement and in particular those of
Clause 3 hereof, the Board will make available to the Company the Term
Loan at the times and in the manner as hereinafter provided. The Term
Loan shall be for a period of five (5) years, inclusive of a two (2)
year grace period for repayment of the Term Loan as provided in Clause
8 herein.
3. CONDITIONS PRECEDENT AND AVAILABILITY
The right of the Company to make any Drawing or Drawings under the Term
Loan, and the obligations of the Board to make available the same shall
be subject to the following conditions precedent, that is to say:
(a) There shall not exist at or prior to any Drawing, any Event of
Default or any condition, event or act which, with the giving
of notice or lapse of time, or both, would constitute such an
Event of Default.
(b) All representations, warranties and statements contained
herein, or otherwise made in writing in connection herewith or
in any certificate or statement furnished pursuant to any
provision of this Agreement or in any document referred to
herein
-3-
<PAGE> 6
made by the Company shall be true and correct with the same
effect as though made on the date on which the Drawing is to
be made.
(c) The Board shall have received, in form and substance
satisfactory to the Board, the following:
(i) A copy of the Memorandum and Articles of Association
of the Company duly certified by a Director and the
Secretary of the Company to be a true copy thereof;
(ii) A copy, certified by a Director and Secretary of the
Company, of the resolution of the Board of Directors
of the Company, which is in full force and effect,
approving the terms and conditions contained in this
Agreement and authorizing a person or persons to sign
this Agreement and any other document to be given to
the Board from time to time by the Company;
(iii) Specimen signatures of the persons authorized to sign
this Agreement on behalf of the Company, and to sign
the notices of Drawing and any other document to be
given from time to time by the Company, such
specimens to be certified by a Director or the
Secretary of the Company to be the true signatures of
such persons respectively, and
(iv) The Guarantee(s) relating to the particular Drawing
to be made and duly executed.
(d) All acts, conditions and things required to be done and
performed and to have happened precedent to the execution and
delivery of this Agreement and the Guarantee(s) and to
constitute this Agreement and the Guarantee(s) legal, valid
and binding obligations enforceable in accordance with their
respective terms, shall have been done and performed and have
happened in compliance with all applicable laws.
(e) There is no breach by the Company of any of the terms,
conditions and undertakings herein contained.
4. PURPOSE OF THE TERM LOAN
4.1 Subject to the terms and conditions herein contained and in particular
to those of Clause 3, the Term Loan will be made available by the Board
to the Company for financing the purchase of Productive Fixed Assets of
the Company's plant for the FAB 2 Project only, provided always that
such financing shall only be in respect of payments already made by the
Company after 1 September 1996 in respect of the said Project. Under
this Agreement, the Company shall be required to invest a minimum of
Singapore Dollars One Billion Five Hundred Million (S$1,500,000,000.00)
cumulatively in Productive Fixed Assets (excluding land) by 31 December
1999.
-4-
<PAGE> 7
4.2 Upon advance of a Drawing under Clause 5, the Company shall apply all
the proceeds thereof for the purposes described in Clause 4.1 above and
for no other purpose whatsoever.
5. DRAWINGS OF TERM LOAN
5.1 Subject to the terms and conditions of this Agreement and in particular
to all the conditions of Clause 3 being complied with the Board will
make available drawings under the Term Loan in accordance with a
disbursement schedule submitted by the Company and approved by the
Board at least 45 days before the First Drawing of the Term Loan.
5.2 The Company shall give notice of Drawing to the Board not later than
thirty (30) Business Days prior to the intended date of Drawing and
each notice of Drawing shall be substantially in the form set out in
the Appendix I hereto and shall:
(i) state the date (which must be a Business Day) and the amount
of the proposed Drawing;
(ii) be irrevocable;
(iii) commit the Company to borrow the amount and on the date
stated; and
(iv) constitute a representation and warranty that at the date
thereof the warranties and representations set out in Clause
12 are true and no Event of Default and no event or act which
with the giving of notice or lapse of time or both would
constitute such an Event of Default has occurred.
5.3 The First Drawing shall be made not later than 31 July 1997 or such
other later date as may be approved by the Chairman of the Board or his
lawful representative.
5.4 (a) The Company shall have the option to request the Board to
advance the amount of a Drawing provided that written notice
is given by the Company to the Board indicating the amount to
be advanced, not later than fourteen (14) Business Days prior
to the intended date of Drawing;
(b) In respect of any monies advanced under this clause, the
Company shall, without demand, produce to the Board, within
sixty-five (65) Days of the date of the Drawing, all
documentary proof showing that the Company has fully utilize
the said Drawing for the payment of approved Productive Fixed
Assets, and that such payment was made within 60 Days after
advance of the said Drawing.
(c) Any amount advanced under a Drawing that is in excess of the
aggregate amount actually paid by the Company in respect of
approved Productive Fixed Assets at the expiry of 60 days
after Drawing (the "Excess Amount") shall be subject to
interest. Interest to be applied on the Excess Amount shall be
at the rate of three per cent (3%) per annum above the average
prevailing prime lending rate as reported by the Monetary
Authority of Singapore from the date of the relevant
-5-
<PAGE> 8
Drawing to the date that the Excess Amount is eventually paid
by the Company for approved Productive Fixed Assets.
5.5 The amount of each Drawing shall not exceed S$200,000,000.00 at any one
time.
6. AVAILABILITY OF TERM LOAN
The Term Loan shall be available for Drawing for a period of two (2)
Years from the date of the First Drawing after which date any part of
the Term Loan not drawn shall be cancelled.
7. INTEREST
7.1 The Company shall pay to the Board on each Interest Payment Date
interest in arrears on the amounts drawn and outstanding under the Term
Loan from time to time in respect of each Interest Period relating
thereto determined in accordance with clause 1.1(k) and at the Interest
Rate determined in accordance with sub-clause 7.2 hereof
7.2 Interest will be charged by the Board at the rate of four and one
quarter per cent (4_%) per annum (the "Interest Rate") and shall be
payable in arrears at six monthly intervals, the first payment to bc
made on the Interest Payment Date as defined in Clause 1.1(j) hereof.
7.3 The amount of interest payable on the drawings under the Term Loan from
time to time owing and outstanding shall be calculated at the Interest
Rate on the basis of a year of three hundred and sixty five (365) Days
for the actual number of Days elapsed.
7.4 The certificate of the Board in writing as to the determination of the
amount of interest payable on each Interest Payment Date shall be
conclusive and binding upon the parties hereto, save for manifest
error.
7.5 The Company recognizes and accepts that it is commercial practice for
interest on amounts in default to be charged and that the rate of
interest to be applied by the Board on the amounts in default shall be
three per cent (3%) per annum above the average prevailing prime
interest rate as reported by the Monetary Authority of Singapore
compounded on a monthly basis, which will represent a genuine estimate
of the damage the Board would suffer in the event of a failure by the
Company in the payment on the due date of any principal and/or interest
on the amounts due and payable to the Board.
8. REPAYMENT OF THE TERM LOAN
8.1 The Company shall repay the principal of the amounts drawn under the
Term Loan in seven (7) equal consecutive six-monthly installments on
the Repayment Dates. The first of such installments shall be paid on
the first Repayment Date following two (2) Years from the date of the
First Drawing of the Term Loan or such other later date as the Board
may determine in its absolute discretion.
-6-
<PAGE> 9
8.2 The Board shall only on request by the Banks or the Company, confirm
the receipt of any repayment and that such confirmation shall not be
unreasonably withheld.
9. PAYMENT PROVISIONS
9.1 All payments to be made by the Company under this Agreement shall be
made not later than 11 a.m. (Singapore time) on the relevant day to the
Board at its address described above or at such other address as the
Board may from time to time designate by notice in writing to the
Company not less than ten (10) Business Days prior to the date of any
such payment hereunder.
9.2 If any sum becomes due for payment under this Agreement on a day which
is not a Business Day, such payment shall be made on the next
succeeding Business Day and all calculation of interest shall be
adjusted accordingly.
10. PREPAYMENT
10.1 The Company may prepay the entire Term Loan or any part of the Term
Loan which is the Minimum Prepayment amount, before maturity on paying
accrued interest on the amount prepaid and a prepayment fee amounting
to 0.125 per cent of the amount prepaid and any other sum due under
this Agreement.
10.2 The Company shall give the Board seven (7) Days' prior written
notice of the intention to prepay any amount described in Clause 10.1.
10.3 In the event the Company is required to prepay the principal sum owing
under the Term Loan pursuant to Clause 15.2 (a) hereof the Company
shall pay to the Board the fee at the rate described in Clause 10.1
above on the principal sum owing.
11. SECURITY
Prior to each Drawing of the Term Loan, the Company shall procure the
requisite Guarantee(s) to be given in favor of the Board.
12. WARRANTIES AND REPRESENTATIONS
12.1 The Company hereby warrants and represents to the Board as follows:
(a) that it is lawfully incorporated, validly existing and in good
standing under the laws of the Republic of Singapore;
(b) that it has the corporate power and authority to carry on the
business as now being conducted;
(c) that it has the corporate power to execute and perform this
Agreement and to borrow hereunder;
-7-
<PAGE> 10
(d) that the execution, delivery and performance of this Agreement
and the borrowings hereunder have been duly authorized by all
requisite corporate action and will not violate any provision
of any agreement or other instrument to which the Company is a
party;
(e) that its latest balance sheet and financial statements
submitted to the Board are correct and complete and accurately
represent the financial condition of the Company on the date
thereof and the results of its operation for the period then
ended and each such balance sheet shows all known present and
future liabilities, direct or contingent, of the Company as of
the date thereof and each financial statement referred to
herein was prepared in accordance with generally accepted
accounting principles;
(f) save as disclosed in writing to the Board there has been no
material adverse change in the business activities, operations
or financial condition of the company since the date of the
latest financial statements referred to in sub-paragraph (e)
above;
(g) save as otherwise disclosed to the Board, there are no
actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against the Company or its parent or
any of its subsidiaries, at law or in equity (whether or not
purportedly on behalf of the Company, its parent or any of its
subsidiaries) before any court or competent body adjudicating
such matters, which involve the possibility of any judgement
or liability which may result in any material adverse change
in the business, operations, properties or assets, or in the
condition, financial or otherwise of the Company or its parent
or any of its subsidiaries and adversely affect the Company's
ability to make repayment of the Term Loan;
(h) that to the best of the knowledge of the Company no steps have
been taken or are being taken to appoint a receiver and/or
manager or judicial manager or liquidator or any other person
over it or any of its assets or in any winding up action.
12.2 Each of the warranties and representations contained in the preceding
subclause shall survive and continue to have full force and effect
after the execution of this Agreement and that they will be true and
correct and fully observed as though made on the date of Drawing or
each Interest Payment Date with reference to the facts and
circumstances then subsisting.
13. AFFIRMATIVE UNDERTAKING
The Company hereby undertakes and agrees with the Board as follows:-
(a) that the Term Loan granted by the Board under the provisions
of this Agreement and every part thereof shall be used solely
for the purpose and in the manner hereinbefore stipulated and
not for any other purpose or manner save with the prior
written consent of the Board.
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<PAGE> 11
(b) that it will carry on and conduct its business and affairs
with due diligence and efficiency in accordance with sound
technical financial industrial and managerial standards and
practices including the maintenance of adequate records with
qualified personnel and in accordance with its Memorandum and
Articles of Association.
(c) that it will furnish and provide the Board with and permit the
Board to obtain all such statements information explanation
and data, except information of a confidential nature, as the
Board may reasonably require, by prior written notice,
regarding the affairs operations administration financial or
other whatsoever state or condition of the Company or any of
the matters in this Clause mentioned.
(d) that it will furnish to the Board particulars of any kind of
immovable property hereafter acquired by the Company.
(e) that the Board shall have the right as it may reasonably
request, by prior written notice, to inspect any land or
premises where the Company carries on its business and inspect
the same and all property and assets whatsoever therein or
thereon and all accounts records and statements wherever the
same may be situate and to make inventories and record
thereof.
(f) that it will supply to the Board certified copies of all
resolutions passed which materially affect the financial state
and condition of the Company at general and/or special
meetings of the Company within seven (7) Days from the date of
the passing of such resolutions.
(g) that it will deliver to the Board every year immediately after
the issue of the audited accounts a copy of the Company's
audited balance sheet and profit and loss accounts audited by
a firm of auditors of international repute together with
Auditors' and Directors' Reports and will also deliver to the
Board copy of the annual return which the Company is required
by law to file with the Registrar of Companies.
(h) that it shall punctually pay all rents rates assessments taxes
and all outgoings payable in respect of any land/or premises
belonging to the Company or at which it carries on business
and obtain all necessary licenses and comply with all laws
regulations rules and orders relating to the carrying on of
its business on such premises.
(i) that it will keep all its plant machinery equipment buildings
constructions fixtures fittings implements and other effects
in good and substantial repair and proper working condition to
the satisfaction of the Board.
(j) that it shall not dismantle pull down or remove any part of
the buildings fixtures plant machinery and equipment, except
in cases where such dismantling pulling down or removal shall
in the opinion of the Company be rendered necessary by reason
of the same being obsolete worn out or damaged, in which case
the
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<PAGE> 12
Company shall give sufficient written notice to the Board and
will replace such property by property of similar nature and
value after giving intimation to the Board.
(k) that it shall give to the Board such written authorities or
other directions and provide such facilities and access as the
Board may require for the aforesaid inspection and shall pay
all costs fees travelling and other out-of-pocket expenses
whether legal or otherwise in respect of such inspection.
(l) that it shall continue with its best efforts to bring
strategic equity shareholders into the Company with the prior
approval of the Board.
(m) that insofar as may be necessary the Company shall amend its
Memorandum and Articles of Association so as to enable it to
observe and perform all the covenants undertakings terms
stipulations conditions and other provisions of this
Agreement.
14. NEGATIVE UNDERTAKINGS
The Company hereby undertakes and agrees with the Board that it shall
not without the written consent of the Board, which consent shall not
be unreasonably withheld:-
(a) embark on any new project or substantial expansion or
diversification of its present business and operations, which
are not related to its present business activities;
(b) invest its funds by way of deposits (other than deposits with
banks licensed by the Monetary Authority of Singapore), loans,
share capital or otherwise in any other concern or issue or
give guarantee(s) for the account or on behalf of any person
or otherwise become contingently liable for or in connection
with any obligations or indebtedness of any person;
(c) effect any form of reconstruction including amalgamation with
another company which will result in STPL holding less than
51% of the share capital of the Company;
(d) create or permit to arise or subsist, any mortgage, charge
(whether fixed or floating), pledge, lien or other
encumbrances whatsoever (except those which have been
specifically disclosed to and approved by the Board
respectively) on any of its properties or assets, both present
and future whatsoever and wheresoever situate;
(e) declare or pay any dividend or make any income or capital
distribution, whether in cash or in specie, to its
shareholders or any of them; or
(f) raise, borrow, take, make, issue or give, as the case may be,
any loans, debentures, bonds or credits from or to any
persons.
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<PAGE> 13
15. EVENTS OF DEFAULT
15.1 If any one or more of the following Events of Default shall occur, that
is to say:
(a) if the Company shall fail to pay or otherwise discharge when
due any sums of money, whether principal, interest, fees or
otherwise, payable under this Agreement;
(b) if the Company shall default in the payment of any principal
or interest or any other obligation for borrowed money
(whether or not to the Board) beyond any period of grace
provided in respect thereof;
(c) if any representation or warranty made in or in pursuance of
this Agreement or in any certificate, statement or other
document delivered in connection with the execution and
delivery hereof or in pursuance of this Agreement shall be or
become incorrect in any material respect;
(d) if the Company defaults in the due performance of any
undertaking, condition or obligation on its part to be
performed and observed hereunder (other than the payment of
any sum due hereunder) and such default (if capable of being
rectified) shall not be rectified for a period of thirty (30)
Days after the date of receipt by the Company of written
notice of such default from the Board;
(e) if a petition is presented in any court of competent
jurisdiction or a resolution is passed for the winding-up of
the Company or its parent or for the filing or any application
for placing the Company or its parent under judicial
management or any similar or analogous proceedings are taken
against any of them and are not withdrawn within thirty (30)
Days after being presented;
(f) if any encumbrancer or lessor shall take possession or a
receiver and/or manager, judicial manager, liquidator or other
similar officer is appointed of the whole of the under-taking,
property or assets, or any part thereof, of the Company or its
parent;
(g) if a distress or execution is levied or enforced upon or sued
out against any part of the property or assets of the Company
and is not discharged within thirty (30) Days of being levied
and the Board is of the reasonable opinion that such an event
will be materially prejudicial to the interests of the Board;
(h) if a judgement or order is made against the Company and is not
discharged within sixty (60) Days or if legal proceedings
suits or actions of any kind whatsoever (whether criminal or
civil) shall be instituted against the parent of the Company
and the Board is in that case of the reasonable opinion that
the said legal proceedings suits or actions will materially
affect the Company's ability to perform and observe, its
obligations under this Agreement;
(i) if the Company becomes insolvent or is unable or deemed unable
to pay its debts or admits in writing its inability to pay its
debts, as they mature, or enters into
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<PAGE> 14
composition, compromise or arrangement with its creditors or
makes a general assignment for the benefit of its creditors
and the Board is of the opinion that any such event will be
materially prejudicial to the interests of the Board;
(j) If a winding-up petition is presented by or against the
guarantor(s) of any Guarantee(s) or analogous proceedings
shall be taken by or against it and is not discharged within
thirty (30) Days after being presented;
(k) if the Company ceases or threatens to cease to carry on its
business and the Board is of the opinion that it will
materially affect the ability of the Company to perform and
observe its obligations under this Agreement;
(l) if any license, consent or approval of any authority at any
time necessary to enable the Company to comply with and
perform its obligations under this Agreement to a material
extent shall be revoked, withheld or materially modified or
shall otherwise not be granted or fail to remain in full force
and effect;
(m) if any of the consents, authorities, approvals, waivers or
resolutions referred to in Clause 3 shall be modified in a
manner unacceptable to the Board or shall be wholly or partly
revoked, withdrawn, suspended or terminated or shall expire
and not be renewed or shall otherwise fail to remain in full
force and its effect and such circumstances are considered by
the Board to be material;
(n) if without the prior written consent of the Board there is any
change in the shareholding of the Company which will result in
STPL holding less than 51% of the share capital of the Company
or if there is any change in the shareholding of its parent;
(o) if a situation shall have arisen, which shall make it
improbable that the Company will be able to perform its
obligations under this Agreement;
(p) if the Board determines in its absolute discretion that its
interests under the Guarantee(s) is or are in jeopardy;
then and in any of such event, the Board may, by notice in writing to the
Company declare that an Event of Default has occurred and such declaration shall
be deemed to take effect from the date of such an Event of Default.
15.2 Upon the declaration by the Board that an Event of Default has
occurred:
(a) the whole of the principal sum drawndown and owing under the
Term Loan, interest thereon and all other sums agreed to be
paid under this Agreement shall immediately become due and
payable without any demand or notice of any kind by the Board
to the Company; and
(b) it shall be lawful for the Board to exercise all or any
rights, powers or remedies under this Agreement, the
Guarantee(s) given to the Board or any one or more of them.
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<PAGE> 15
15.3 In the event of an occurrence of an Event of Default before the Term
Loan shall have been fully drawn or utilized hereunder, the Board's
obligations hereunder shall automatically and forthwith cease.
15.4 After the declaration by the Board that an Event of Default has
occurred, all moneys received or recovered by the Board (whether such
moneys shall have been received or recovered as a result of or arising
from its exercise of all or any rights, powers or remedies under this
Agreement, the Guarantee(s) or any one or more of them or by way of a
set-off or otherwise) shall be held by it and shall be applied as
follows:-
(a) Firstly, in or towards payment of all costs charges and
expenses. if any, incurred in enforcing this Agreement, the
Guarantee(s) or any one or more of them.
(b) Secondly, in or towards payment to the Board of all moneys and
liabilities for the time being due, owing or outstanding under
this Agreement and where such moneys and liabilities are of a
contingent nature, in or towards making full and adequate
provisions for payment of such moneys and liabilities as and
when they become due and payable; and
(c) Thirdly, any surplus shall be paid to the Company.
16. NOTICES
16.1 Except as otherwise expressly provided herein, any notice, request,
demand or other communication to be given or served hereunder by one of
the parties hereto to or on the other or others may be delivered at or
sent by prepaid registered post or by facsimile to the address or
addresses herein specified of the other party or parties and shall be
deemed to be duly served:
(a) if it is delivered, at the time of delivery,
(b) if it is sent by prepaid registered post, one (1) Day after
posting thereof, or
(c) if it is sent by facsimile, immediately after transmission
thereof, if the date of transmission is a Business Day, and if
such a date is not a Business Day, then the notice by
facsimile shall be deemed to be served on the next succeeding
day which is a Business Day.
Except as otherwise expressly provided herein, all notices, requests, demands or
other communications which are required by this Agreement to be in writing may
be made by facsimile.
16.2 For the purpose of this Clause 16 each of the parties hereto shall from
time to time notify the other party in writing of an address in
Singapore where such notice, request, demand or other communication as
aforesaid can be given or served and such notification shall be
effective only when it is actually received.
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<PAGE> 16
In the absence of such notification, the notice, request, demand or
other communication aforesaid may be given or served at the addresses
of the respective parties as stated above.
17. WAIVER NOT TO PREJUDICE RIGHT OF BOARD
The Board may from time to time and at any time waive either
unconditionally or on such terms and conditions as it may deem fit any
breach by the Company of any of the undertakings stipulations terms and
conditions herein contained and any modification thereof but without
prejudice to its powers rights and remedies for enforcement thereof,
provided always that:-
(a) no neglect or forbearance of the Board to require and enforce
payment of any moneys hereunder or the performance and
observance of any undertaking stipulation term or condition
herein contained, nor any time which may be given to the
Company shall in any way prejudice or affect any of the rights
powers or remedies of the Board at any time afterwards to act
strictly in accordance with the provisions hereof,
(b) no such waiver of any such breach as aforesaid shall prejudice
the rights of the Board in respect of any other or subsequent
breach of any of the undertakings stipulations terms or
conditions aforesaid.
18. INDULGENCE OF THE BOARD
The liability of the Company hereunder shall not be impaired or
discharged by reason of any time or other indulgence being granted by
or with the consent of the Board to any person who or which may be in
any way liable to pay any of the moneys secured hereby by any other
security in favor of the Board or by reason of any arrangement being
entered into or composition accepted by the Board which has the effect
of modifying the operation of law or otherwise its rights and remedies
under the provisions of this Agreement.
19. SEVERABILITY
In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law,
such invalidity, illegality or unenforceability shall not in any way
affect or impair the other provisions of this Agreement but this
Agreement shall be construed as if such invalid or illegal or
unenforceable provision contained herein or therein did not form a part
of this Agreement.
20. GOVERNING LAW
This Agreement shall be governed by and construed in all respects in
accordance with the laws of the Republic of Singapore.
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<PAGE> 17
21. MISCELLANEOUS
21.1 All legal and other professional fees, out-of-pocket expenses, charges
and expenses of and in connection with this Agreement shall be paid by
the Company.
21.2 The Company shall further pay all legal fees as between solicitor and
client and other costs and disbursements incurred in connection with or
demanding and enforcing payment of moneys due under this Agreement and
Guarantee(s) and otherwise howsoever in enforcing the performance of
any other undertakings stipulations terms conditions or provisions of
hereof and thereof.
21.3 A certificate signed by a duly authorized officer for the time being of
the Board as to the amount of moneys and liabilities for the time being
due to the Board or incurred by the Board under this Agreement and
Guarantee(s) shall be conclusive and binding on the Company, save for
any computation or clerical error.
21.4 This Agreement shall be binding upon the successors of the Company
and shall enure to the benefit of the Board and its successors and
assigns.
21.5 Any provision of this Agreement may be amended or supplemented only if
the Board and the Company so agree in writing prior to such amendment
and supplement.
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<PAGE> 18
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
common seals.
The Common Seal of
CHARTERED SEMICONDUCTOR
MANUFACTURING LTD was
hereunto affixed in
the presence of:-
/s/ Tan Bock Seng
------------------------------
Director
[SEAL]
/s/ Chua Su Li
------------------------------
Secretary
The Common Seal of the ECONOMIC DEVELOPMENT
BOARD was hereunto affixed in the presence
of:-
[Signature Illegible]
------------------------------
Chairman
[SEAL]
[Signature Illegible]
------------------------------
Secretary
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<PAGE> 19
APPENDIX I
ECONOMIC DEVELOPMENT BOARD
250 North Bridge Road
#24-00 Raffles City Tower
Singapore 179101
Dear Sirs,
NOTICE OF DRAWING
TERM LOAN OF S$[ ]
Pursuant to Clause 5 of the EDB Loan Agreement dated in respect of the above
Term Loan we hereby give you notice for a Drawing of Dollars [ ]
($ ) on 19 .
We confirm--
(i) that the conditions precedent under Clause 3 of the EDB Loan
Agreement have been complied with in every respect;
(ii) that each of the representations and warranties contained in
Clause 12 of the EDB Loan Agreement are true and accurate in
all respects as though made on the date of this Notice with
reference to facts and circumstances presently subsisting and
will be true and accurate in all respects on the date of the
intended Drawing as though made on the date of the intended
Drawing with reference to facts and circumstances then
subsisting; and
(iii) that as at the date hereof no Event of Default has occurred
and no event has occurred which, with the giving of notice
and/or the lapse of time and/or upon you making any necessary
determination under Clause 15 of the EDB Loan Agreement, might
constitute an Event of Default, and we undertake that no Event
of Default and none of the events aforesaid will exist at the
date of the intended Drawing.
In addition to the above documents kindly let us know if you require copies of
any opinion approval or other documents.
Dated this day of 19
Yours faithfully
Director/Authorised Signatory
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<PAGE> 1
EXHIBIT 10.22
DATED THIS 11TH DAY OF FEBRUARY 1997
BETWEEN
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(THE BORROWER)
AND
POST OFFICE SAVINGS BANK OF SINGAPORE
(THE LENDER)
---------------------
LOAN AGREEMENT
---------------------
(SEMCON.FA2)
KHATTAR WONG & PARTNERS
SINGAPORE
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
1 DEFINITIONS ........................................................... 1
2 FACILITY .............................................................. 4
3 PURPOSES OF THE FACILITY .............................................. 4
4 CONDITIONS PRECEDENT TO DISBURSEMENT
OF THE FACILITY ....................................................... 4
5 DRAWING UNDER THE FACILITY ............................................ 4
6 CANCELLATION .......................................................... 5
7 INTEREST .............................................................. 5
8 REPAYMENT ............................................................. 6
9 PREPAYMENT ............................................................ 6
10 PAYMENTS .............................................................. 6
11 TAXES ................................................................. 7
12 CHANGE IN CIRCUMSTANCES ............................................... 8
13 SET-OFF ............................................................... 8
14 REPRESENTATIONS AND WARRANTIES ........................................ 9
15 AFFIRMATIVE UNDERTAKINGS .............................................. 10
16 NEGATIVE UNDERTAKINGS ................................................. 11
17 EVENTS OF DEFAULT ..................................................... 12
18 INDEMNITY ............................................................. 14
19 CURRENCY INDEMNITY .................................................... 14
20 WAIVER NOT TO PREJUDICE RIGHT OF THE LENDER ........................... 15
21 INDULGENCE OF THE LENDER NOT TO
DISCHARGE THE BORROWER ................................................ 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
22 FEES AND EXPENSES ..................................................... 16
23 DEFAULT IN PAYMENT OF EXPENSES ........................................ 16
24 NOTICES ............................................................... 16
25 SUCCESSORS AND ASSIGNS ................................................ 17
26 SEVERABILITY .......................................................... 17
27 DISCLOSURE ............................................................ 17
28 CALCULATION AND EVIDENCE .............................................. 17
29 GOVERNING LAW AND SUBMISSION TO
JURISDICTION .......................................................... 17
SCHEDULE 1................................................................... 18
SCHEDULE 2................................................................... 19
</TABLE>
<PAGE> 4
THIS AGREEMENT is made the 11th day of February, One thousand nine
hundred and ninety-seven (1997) Between:-
1. CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED (Company
Registration No. 198703584), a company incorporated in Singapore and having its
registered office at 60 Woodlands Industrial Park D Street 2 Singapore 738406
(hereinafter called the "Borrower") of the one part; and
2. POST OFFICE SAVINGS BANK OF SINGAPORE, a body corporate
incorporated in Singapore under the Post Office Savings Bank of Singapore Act
and having its registered office at 73 Bras Basah Road POSB Centre, Singapore
189556 (hereinafter called the "Lender") of the other part.
WHEREAS at the request of the Borrower, the Lender has agreed to make
available to the Borrower a term loan facility of not exceeding the aggregate
principal amount of DOLLARS FIFTY MILLION ($50,000,000.00) subject to the terms
and conditions hereinafter appearing.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:-
1. DEFINITIONS
1.1 In this Agreement and the Schedules, except to the extent that the
context requires otherwise:-
"AGREEMENT" or "THIS AGREEMENT" means this Agreement and all amendments
and variations thereof from time to time;
"AVAILABILITY PERIOD" means, subject to the discretion of the Lender to
extend the period at the request of the Borrower, the period commencing
on the date of this Agreement and ending on 15 February 1997;
"BORROWER" includes its successors;
"BUSINESS DAY" means any day (excluding Saturdays, Sundays and public
holidays) on which banks in Singapore are open for business;
"DEFAULT INTEREST RATE" means the rate of 4% per annum over the
Lender's posted board rate for deposits placed with the Lender for
amounts up to Dollars One Hundred Thousand ($100,000.00) or such other
amount as the Lender may from time to time determine;
"DOLLAR", "DOLLARS" and the symbol "$" mean the lawful currency for the
time being of Singapore;
"DRAWING" means the Drawing made or to be made under the Facility in
terms of Clause 5;
1
<PAGE> 5
"EVENTS OF DEFAULT" means the events mentioned in Clause 17.1; and
"EVENT OF DEFAULT" means any one of them;
"FACILITY" means the term loan facility granted by the Lender to the
Borrower under this Agreement;
"INTEREST PAYMENT DATE" means the last day of each Interest Period;
"INTEREST PERIOD" means each successive period of six (6) months
determined as follows:-
(i) the first Interest Period shall commence on the date on which
the Drawing is made from the Facility and end on the date
falling six (6) months immediately following;
(ii) each subsequent Interest Period shall commence forthwith upon
the expiry of the previous Interest Period and end on the date
falling six (6) months immediately following;
(iii) an Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next day which is
a Business Day; and
(iv) an Interest Period which would otherwise end after the
Repayment Date shall be abridged to end on the Repayment Date;
"INTEREST RATE" has the meaning ascribed to it in Clause 7.1;
"LENDER" includes its successors and assigns;
"MARGIN" means one percent (1%);
"POTENTIAL EVENT OF DEFAULT" means any condition act omission or event
which with the giving of notice, lapse of time and/or determination of
materiality or other condition would become an Event of Default;
"REFERENCE BANKS" mean The Development Bank of Singapore Limited,
United Overseas Bank Limited, Overseas Union Bank Limited and
Oversea-Chinese Banking Corporation Limited;
"RELATED CORPORATIONS" means Singapore Technologies Pte Ltd (including
its successors and assigns) and the Borrower's subsidiaries and for the
purposes of this Agreement, shall not mean a related corporation as
defined under Section 4 of the Companies Act (Cap. 50); and "RELATED
CORPORATION" means any or each (as the context way require) of them;
2
<PAGE> 6
"REPAYMENT DATE" means the date immediately following five (5) years
from the date of first disbursement of the Facility or such later date
permitted by the Lender;
"SIBOR" means, in respect of each Interest Period the arithmetic mean
(rounded if necessary to the nearest 1/16 of 1%) of the respective
rates quoted by the Reference Banks to the Lender at its request as the
rates offered to banks in the Singapore inter-bank market for deposits
in Singapore Dollars for the required amount for such Interest Period
at or about 11:00 am on the second Business Day before the commencement
of such Interest Period, but if any of the Reference Banks cannot quote
a rate as aforesaid, SIBOR shall be treated as not capable of being
determined;
"SUBSTITUTED BASIS" means the alternative basis for charging interest
as mentioned in Clause 7.2;
"TOTAL INDEBTEDNESS" means at any time, all amounts (whether of
principal, interest, fees or otherwise) at that time owing or payable
(whether contingently or otherwise) from the Borrower to the Lender
under the provisions of this Agreement;
1.2 Any reference in this Agreement to:-
1.2.1 "borrowed moneys" means (a) moneys borrowed or raised
(including hire under financial leases) and interest thereon,
(b) any liability under any bond, note, guarantee, indemnity
or other security or under acceptance credit facilities, (c)
any liability in respect of the acquisition cost of assets or
services to the extent payable after the time of acquisition
or possession thereof which upon default in payment thereof
would materially or adversely affect the financial condition
of the Borrower or its Related Corporations, and (d) any
guarantee or other assurance against financial loss in respect
of such moneys borrowed or raised, interest or liability;
1.2.2 "certified copy" means a copy certified by an authorised
signatory as being a true, complete and up to date copy of an
original then currently in full force and effect;
1.2.3 a "Clause", "Recital" or "Schedule" is to be construed as a
reference to a clause, recital or schedule of this Agreement
unless the context requires otherwise;
1.2.4 an "encumbrance" includes any mortgage, charge (whether fixed
or floating), pledge, lien, hypothec, hypothecation,
assignment, fiduciary assignment, fiduciary transfer, power of
attorney to establish hypothec, power of attorney to sell,
security interest or any other type of
3
<PAGE> 7
preferential agreement or arrangement having substantially the
same economic effect (including sale and repurchase
agreements, title retention or flawed asset arrangements);
1.2.5 "indebtedness" shall be construed so as to include any
obligation (whether incurred as principal or as surety) for
the payment or repayment of money, whether present or future,
actual or contingent;
1.2.6 a "person" shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not having
separate legal personality) of two or more of the foregoing;
1.2.7 a "subsidiary" shall mean a subsidiary as defined in the
Companies Act (Chapter 50, Singapore Statutes);
1.2.8 "tax" shall be construed so as to include any present or
future tax, levy, impost, duty or other charge of a similar
nature (including, without limitation, any penalty or interest
payable in connection with any failure to pay or any delay in
paying any of the same) imposed, levied, collected, withheld
or assessed by any agency of any state;
1.2.9 the "winding-up", "dissolution" or "judicial management" of a
company, the "bankruptcy" of an individual, the appointment of
a receiver and/or manager, liquidator, administrator, judicial
manager or trustee shall be construed so as to include any
equivalent or analogous proceedings or appointment under the
law of the jurisdiction in which such company is incorporated
or such individual is domiciled or any jurisdiction in which
such company or such individual carries on business or has
assets;
1.2.10 a "year", "month" or "day" shall be construed as a reference
to a calendar year, a calendar month or a calendar day;
1.2.11 any statute or other legislation, subsidiary legislation or
rules shall be read as referring to such statute or other
legislation, subsidiary legislation or rules as amended or
re-enacted from time to time; and
1.2.12 a time of day is a reference to Singapore time unless provided
otherwise.
1.3 The headings in this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement.
4
<PAGE> 8
1.4 Words denoting the singular number shall also include the plural and
vice versa and words denoting the masculine gender shall also include
the feminine gender and neuter gender and references to any gender
shall include any other gender.
2. FACILITY
Subject to the terms and conditions herein contained, the Lender shall
make available to the Borrower a term loan facility ("THE FACILITY") of DOLLARS
FIFTY MILLION ($50,000,000.00) Provided that if any portion of the Facility is
cancelled by the Borrower or the Lender pursuant to the provisions of this
Agreement or by mutual agreement, the limit of the Facility shall be reduced
accordingly.
3. PURPOSES OF THE FACILITY
Subject to the term and conditions of this Agreement, the Borrower
shall utilise the Facility for the purpose of the Borrower's working capital
requirements or any other business purposes.
4. CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FACILITY
4.1 Subject to the Lender's discretion otherwise, the Facility will become
available to the Borrower only after the Lender has received from the
Borrower all the documents, payments and evidence listed in Schedule 1
and each is in form and substance satisfactory to the Lender.
4.2 Subject to Clause 4.1, the following conditions shall also have to be
satisfied before the Facility is made available to the Borrower:-
4.2.1 that all acts, conditions and things required to be done and
performed under Schedule 1 shall have been done and performed
and have happened in due and strict compliance with all
applicable laws; and
4.2.2 that there is no material adverse change in the financial
condition, operating environment, management of the Borrower
or any other conditions which in the reasonable opinion of the
Lender will materially affect the ability of the Borrower to
perform its obligations under this Agreement.
5. DRAWING UNDER THE FACILITY
5.1 Subject to the Lender's discretion to permit otherwise, the Borrower
may on any Business Day during the Availability Period applicable to
the Facility request for one Drawing for the full amount granted under
the Facility by giving to the Lender written notice in substantially
the form provided in Schedule 2 not later than three (3) Business Days
prior to the intended date of drawdown, Provided
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Always that on both the date of such notice and on the date of the
proposed drawdown:-
5.1.1 no Event of Default has occurred which remains unwaived and no
Potential Event of Default has occurred;
5.1.2 the representations and warranties contained in Clause 14 of
this Agreement are correct and accurate in all material
respects.
5.2 Once having been given by the Borrower, the notice shall be irrevocable
and the Borrower shall be bound to borrow and draw in accordance with
the notice. In addition to the other remedies of the Lender hereunder,
the Borrower shall have full liability and accountability for any costs
incurred by the Lender resulting from the failure of the Borrower to
effect the Drawing in full for any reason whatsoever or a failure to
satisfy the conditions of the Drawing, including but not limited to
losses from re-employment of funds obtained for the Drawing at rates
lower than the cost of such funds or any expense incurred by the Lender
in liquidating such funds as such Lender may certify.
5.3 Any part of the Facility left undrawn shall be deemed to be cancelled
by the Borrower on that date and shall not subsequently be available to
the Borrower.
6. CANCELLATION
6.1 The Borrower may, at any time during the Availability Period and upon
payment of the cancellation fee stipulated in Clause 6.5, cancel the
whole or any part of the Facility.
6.2 In the event any part of the Facility is deemed cancelled in terms of
Clause 5.3, the Borrower shall forthwith pay the cancellation fee
stipulated in Clause 6.5.
6.3 Upon such cancellation becoming effective the Facility shall be reduced
by the amount of such cancellation.
6.4 No part of the Facility which has been cancelled may be redrawn or
reborrowed, unless the Lender permits otherwise.
6.5 A cancellation fee equivalent to zero point five per cent (0.5%) flat
shall be payable by the Borrower to the Lender on any amount of the
Facility cancelled or deemed to be cancelled by the Borrower.
7. INTEREST AND DEFAULT INTEREST
7.1 The Borrower shall pay to the Lender on each Interest Payment Date
interest on the Facility at the rate of the aggregate of the Margin and
the SIBOR ("the Interest Rate") for each Interest Period, such interest
shall accrue from day to day and
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shall be calculated on the principal amount of the Facility for the
time being owing and unpaid and compounded semi-annually.
7.2 If, in relation to any Interest Period, the Lender reasonably
determines that (a) SIBOR is not capable of being determined or (b) by
reason of circumstances affecting the Singapore inter-bank market
generally, adequate and fair means do not exist for ascertaining SIBOR
for that relevant Interest Period, the Lender shall notify the Borrower
of the same. The Borrower and the Lender shall then negotiate in good
faith with a view to agreeing to an alternative basis (the "Substitute
Basis", which expression shall mean such alternative basis agreed by
the Borrower and the Lender) for calculating the interest payable on
the Facility for that Interest Period.
7.3 In the event of failure by the Borrower to make payment on the due date
of any sum due under this Agreement (whether by way of a repayment of
the Facility or payment of any principal, interest or fee or otherwise
howsoever) then subject always to and without prejudice to the other
rights and remedies of the Lender contained in this Agreement, the
Borrower shall (to the fullest extent permitted by applicable law) pay
to the Lender interest at the Default Interest Rate on that overdue sum
from the date of default up to the date of actual payment (as well
after as before judgment), such interest to be calculated with monthly
rests and shall be payable on the last day of each month.
7.4 Interest payable under this Agreement shall be computed on the basis of
a three hundred and sixty-five (365)-day year and on actual days
elapsed.
7.5 No part of any payment made by the Company shall be treated as a
repayment of principal until after interest due or deemed to be due or
accrued has been paid.
7.6 The Borrower hereby covenants to pay to the Lender all interest payable
by the Borrower to the Lender as provided in any provisions of this
Agreement.
8. REPAYMENT
The Borrower hereby covenants to repay to the Lender the Facility in
one lump sum without demand on the Repayment Date.
9. PREPAYMENT
9.1 The Borrower may upon giving not less than thirty-one (31) days prior
notice in writing to the Lender and upon paying any prepayment fee
payable in accordance with Clause 9.2 together with all interest and
other moneys accrued in respect of the amount to be prepaid up to the
date of prepayment prepay in advance on an Interest Payment Date the
whole or any part of the Drawing made under the Facility in accordance
with the provisions of this Clause Provided that any partial prepayment
shall be in an amount of not less than Dollars Five Million
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($5,000,000.00) and equal to integral multiples of Dollars One Million
($1,000,000.00).
9.2 A prepayment premium computed at the rate of zero point five per cent
(0.5%) flat of each amount prepaid shall be payable by the Borrower to
the Lender.
9.3 Notice of intended prepayment once having been given by the Borrower
shall be irrevocable and it shall be obligatory on the Borrower to make
the prepayment in accordance with the notice, failing which interest at
the Default Interest Rate shall be payable thereon.
9.4 No partial prepayment of any sums under the Facility shall relieve the
Borrower of its obligations under this Agreement except to the extent
of the amount prepaid.
9.5 The Borrower shall not repay or prepay to the Leader the Drawing
otherwise than in accordance with the provisions of this Agreement and
each amount prepaid shall be cancelled and may not be redrawn or
reborrowed.
10. PAYMENTS
10.1 All payments by the Borrower to the Lender of principal, interest and
all other sums due and payable by the Borrower to the Lender hereunder
shall be made in Dollars, not later than 11:00 a.m. on due day in
immediately available and free transferable funds to such account of
the Lender in Singapore as the Lender may from time to time designate
or in such other manner as the Lender may reasonably direct.
10.2 If any sum shall become due for payment hereunder on a day which is not
a Business Day, such payment must be made on the next succeeding
Business Day, unless that succeeding Business Day falls within the next
calendar month, in which case such payment must be made on the previous
Business Day, and interest shall be adjusted accordingly.
10.3 All payments made to the Lender shall be applied first against fees and
expenses payable hereunder, then against interest due on amounts in
default, if any, then against interest due on principal moneys
outstanding under the Facility, and thereafter against the principal
moneys and all other moneys outstanding under this Agreement.
11. TAXES
11.1 All sums payable by the Borrower under this Agreement shall be paid (i)
free of any restriction or condition, (ii) free and clear of and
(except to the extent required by law) without any deduction or
withholding on account of any tax and (iii) without deduction or
withholding (except to the extent required by law) on
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<PAGE> 12
account of any other amount, whether by way of set-off counterclaim or
otherwise.
11.2 If (i) the Borrower or any other person making payment on behalf
of the Borrower is required by law to make any deduction or withholding
on account of any such tax or other amount from any sum paid or payable
by the Borrower to the Lender under this Agreement or (ii) the Lender
(or any person on its behalf) is required by law to make any deduction
or withholding from, or (except on account of tax on the overall net
income of the Lender) any payment on or calculated by reference to the
amount of, any sum received or receivable by the Lender under this
Agreement:-
11.2.1 the Borrower shall notify the Lender of any such requirement
or any change in any such requirement as soon as the Borrower
becomes aware of it;
11.2.2 the Borrower shall pay any such tax or other amount before the
date on which the penalties attach thereto, such payment to be
made, if the liability to pay is imposed on the Borrower, for
its account, or otherwise on behalf of and in the name of the
Lender;
11.2.3 the sums payable by the Borrower shall (except, in the case of
any such payment, to the extent that its amount is not
ascertainable when that sum is paid) be increased to the
extent necessary to ensure that, after the making of that
deduction, withholding or payment, the Lender receives on the
due date and retains (free from the liability in respect of
any such deduction, withholding or payment) a not sum equal to
what it would have received and so retained had no such
deduction, withholding or payment been required or made;
11.2.4 within thirty (30) days after paying any sum from which it is
required by law to make any deduction or withholding, and
within thirty (30) days after the due date of payment of any
tax or the amount which it is required by Clause 11.2.2 above
to pay, the Borrower shall deliver to the Lender evidence
reasonably satisfactory to the Lender of such deduction,
withholding or payment and of the remittance thereof to the
relevant taxing or other authority.
Provided that in any such event the Borrower shall be entitled to
prepay the Drawing in accordance with this Agreement, but without any premium,
together with accrued interest thereon and any other sum then due to the Lender
under this Agreement.
11.3 If directly as a consequence of any such deduction or withholding by
the Borrower (as referred to in the first paragraph of Clause 11.2) and
payment by the Borrower to the relevant taxing or other authority, the
Lender shall receive or be granted a credit against any taxes payable
by it in relation solely to the sum from
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<PAGE> 13
which such deduction or withholding was made, the Lender shall (to the
extent to which the Lender may do so without prejudicing the retention
of the amount of such credit and without prejudice to the rights of the
Lender to obtain any other relief or allowance available to it and
generally to organise its tax affairs in such manner as it sees fit),
reimburse the Borrower with such amount as the Lender shall certify to
be the proportion of such credit as will leave the Lender (after such
reimbursement) in no worse position than that in which it would have
been had there been no such deduction or withholding from the payment
by the Borrower as aforesaid and such reimbursement shall be made as
soon as practicable after the Lender has received the benefit of such
credit. Nothing in Clause 11.3 shall entitle the Borrower to access to
the Lender's tax records or to its book of account.
11.4 Without prejudice to the generality of the foregoing, in the event that
any goods and services tax or any other taxes levies or charges
whatsoever now or hereafter required by law to be paid on or in respect
of any sums payable to the Lender or any other matters under or
relating to this Agreement, the same shall (except to the extent
prohibited by law) be borne and paid by the Borrower and the Borrower
shall pay to the Lender on demand a sum equivalent to the amount of
such goods and services tax or other taxes, levies or charges (or such
part thereof which the law does not prohibit the Lender from collecting
from the Borrower) less any such part thereof as has been paid by the
Borrower under the preceding subclause, in addition to all other sums
payable to the Lender under this Agreement.
12. CHANGE IN CIRCUMSTANCES
12.1 If at any time the Lender reasonably determines that it is or will
become unlawful or contrary to any directive of any agency of any state
for it to allow all or part of the Facility to remain outstanding, to
make, fund or allow to remain outstanding all or part of the Drawing,
to carry out all or any of its other obligations under this Agreement
and/or to charge or receive interest at the rate or rates applicable
upon the Lender notifying the Borrower and setting out reasonable
details of such circumstances, the Facility or such part thereof to
comply with such directive as the Lender shall think fit shall be
cancelled and the Borrower shall prepay the Drawing without premium
together with accrued interest thereon and any other sum then due to
the Lender under this Agreement or such part thereof to comply with
such directive as the Lender shall require within the period allowed;
The expression "PERIOD ALLOWED" used in this Clause 12.1 shall mean the
period of time beyond which it will become unlawful or contrary to any
directive of any agency of any state for the Lender to allow all or
part of the Facility to remain outstanding, to make, fund or allow to
remain outstanding all or part of the Drawing, to carry out all or any
of its other obligations under this Agreement and/or to charge or
receive interest at the rate or rates applicable or which will be
applicable as aforesaid under this Agreement.
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12.2 If the Lender reasonably determines that, as a result of (a) the
introduction of or any change in, or in the interpretation or
application of any law or (b) compliance by it with any directive of
any agency of any state:-
12.2.1 the cost to the Lender of maintaining all or any part of the
Facility is increased; and/or
12.2.2 any sum received or receivable by the Lender under this
Agreement or the effective return to it under this Agreement
is reduced (except on account of tax on its overall net
income); and/or
12.2.3 the Lender makes any payment (except on account of tax on its
overall net income) or foregoes any interest or other return
on or calculated by reference to the amount of any sum
received or receivable by it under this Agreement,
the Borrower shall indemnify the Lender against that increased cost, reduction,
payment or foregone interest or other return and, accordingly, shall from time
to time on demand (whenever made) pay to the Lender the amount certified by it
to be necessary so to indemnify it (such certification to set out the basis of
such amount payable) Provided that in such event the Borrower shall be entitled
to prepay the Drawing in accordance with this Agreement but without any premium,
together with accrued interest thereon and any other sum then due to the Lender
under this Agreement.
13. SET-OFF
13.1 Upon the occurrence of an Event of Default, in addition to any banker's
lien right of set-off or other right which the Lender may have the
Lender shall be entitled at any time and without notice to the Borrower
to combine or consolidate all or any of the accounts of the Borrower
including accounts of the Borrower either alone or jointly with others
(whether current, deposit, savings or of any other nature whatsoever,
and whether in Dollars or other currency) wheresoever situate (in
Singapore or elsewhere) and set-off or transfer any sum standing to the
credit of any one or more such accounts in or towards satisfaction of
any moneys, obligations and liabilities of the Borrower to the Lender
on any other account whether in Singapore or elsewhere and whether such
liabilities be actual contingent primary collateral several or joint.
Upon the Lender exercising its rights under this Clause, it shall
promptly thereafter give written notice thereof to the Borrower.
13.2 The Lender shall be entitled at its absolute discretion at any time and
from time to time whether or not an Event of Default has occurred after
prior notice to the Borrower to debit any account of the Borrower with
the Lender (whether in Singapore or elsewhere) for the Total
Indebtedness or any part thereof Provided Always that any such debit
shall not constitute nor be deemed to be a payment of any moneys to
which it relates (except to the extent of any amount in credit in the
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said account of the Borrower with the Lender) nor shall it be deemed a
waiver of a Potential Event of Default or an Event of Default or any
other event of default under this Agreement.
14. REPRESENTATIONS AND WARRANTIES
14.1 The Borrower hereby represents and warrants to the Lender as follows: -
14.1.1 that the Borrower is a company with limited liability duly
registered and validly existing under the laws of Singapore
and has the power and authority to own assets and to conduct
the business which it conducts and/or proposes to conduct;
14.1.2 that the Borrower has full power and authority to consummate
the transactions contemplated by this Agreement and to borrow
the Facility;
14.1.3 that this Agreement constitute legal, valid and binding
obligations of the Borrower and is enforceable in accordance
with its terms;
14.1.4 that there are no proceedings pending before any court or to
the knowledge of the Borrower threatened against or affecting
the Borrower and no proceedings are before any government
agency or administrative body pending or to the knowledge of
the Borrower threatened against the Borrower which if
adversely determined would materially or adversely affect its
financial condition or operations or impair its rights to
carry on its business substantially as now conducted or the
ability of the Borrower to pay, when due, the principal of and
interest on the Facility and any other sums that may become
due and owing hereunder and to the best of the knowledge and
belief of the Borrower, the Borrower has complied with all
applicable statutes and regulations and with the requirements
of all governmental authorities having jurisdiction over the
Borrower;
14.1.5 that the certified true copies of the Memorandum and Articles
of Association and the Board of Directors' resolutions of the
Borrower delivered to the Lender are true and accurate copies
of the corporate records of the Borrower;
14.1.6 that the Borrower is not in default in the payment or
performance of any of its obligations for borrowed moneys;
14.1.7 that there is no provision of any existing mortgage, trust,
deed, contract, licence, franchise, concession or agreement
binding on the Borrower which is being contravened or breached
by the acceptance by the Borrower of the Facility or the
execution of this Agreement or
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by the performance or observance of any of its obligations
under this Agreement;
14.1.8 that no Event of Default or Potential Event of Default has
occurred or is continuing;
14.1.9 that save as otherwise disclosed to the Lender in writing or
otherwise permitted under Clause 16.2, no security or
encumbrance exists on or over the assets of the Borrower;
14.1.10 that no steps have been taken or are being taken to appoint a
receiver and/or manager or a judicial manager to take over the
assets of the Borrower and/or any of its Related Corporations
or a liquidator to wind up the Borrower or any of its Related
Corporations;
14.1.11 that the Borrower has paid and discharged all taxes rates
rents and governmental charges upon the Borrower or its
properties or adequate reserves have been established for the
payment thereof;
14.1.12 that save as disclosed in writing to the Lender, there is no
material adverse change in the financial condition, operating
environment or management of the Borrower since the date of
the last audited accounts of the Borrower;
14.1.13 that all audited financial statements of the Borrower which
have previously been submitted to the Lender are complete and
correct and fairly represent the financial condition of the
Borrower and the results of its operations for the period
stated in accordance with generally accepted accounting
principles applied on a consistent basis;
14.1.14 that all statements documents and information submitted by the
Borrower to the Lender relating to the business, assets and
financial condition or management of the Borrower are true
complete and correct in all material respects as at the date
when such statements, documents and information is given and
the Borrower is not aware of any facts or circumstances which
have not been disclosed to the Lender and which might have a
material effect or the business, assets, financial condition
or management of the Borrower.
14.2 Each of the representations and warranties contained in the preceding
sub-clauses shall survive and continue to have full force and effect
after the execution of this Agreement and the Borrower hereby warrants
to the Lender that the above representations and warranties will be
true and correct and fully observed as if repeated then by reference to
the then existing circumstances until all moneys payable or agreed to
be paid to the Lender under this Agreement are fully repaid.
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15. AFFIRMATIVE UNDERTAKINGS
The Borrower hereby undertakes and agrees with the Lender as follows:-
15.1 that the Borrower shall, upon receipt of a written request, duly
furnish to the Lender annually as soon as possible and in any event not
later than one hundred and eighty (180) days after the close of its
financial year the audited financial statements of the Borrower
consisting of a balance sheet as of the close of such respective
financial years and a statement of its respective profits and loss for
the period then ended in accordance with generally accepted accounting
practices and principles consistently applied and signed by its
respective auditors, such auditors to be acceptable to the Lender;
15.2 that the Borrower shall carry on and conduct its affairs and business
in a proper and efficient manner and will keep or cause to be kept all
its properties and assets in a good state of repair and condition in
accordance with good commercial practice and shall procure that each of
its subsidiaries shall also do so;
15.3 that the Borrower shall observe, perform and comply with all the
covenants undertakings stipulations terms and conditions of this
Agreement;
15.4 that the Borrower shall duly pay and discharge all rents, rates, taxes,
assessments and governmental charges from time to time levied upon it
or against its properties, business and operations prior to the date on
which penalties become attached thereto unless and to the extent only
that the same shall be contested in good faith and by appropriate
proceedings;
15.5 that the Borrower shall furnish and provide the Lender with and permit
the Lender to obtain all such statements information explanation and
data as the Lender may reasonably require regarding the financial state
or condition of the Borrower (other than confidential information of a
price sensitive nature);
15.6 that unless the Lender permits otherwise the Borrower shall use the
Facility only for the purposes specified;
15.7 that the Borrower shall obtain all necessary licences and comply with
all laws regulations rules and orders relating to the carrying on of
its business;
15.8 that the Borrower shall at its own expense, execute, sign, perfect, do
and if required register every document, act or thing as in the
reasonable opinion of the Lender may be necessary or desirable for the
purpose of implementing the terms and provisions of this Agreement;
15.9 that the Borrower shall deliver to the Lender upon demand any documents
or evidence under any provisions hereof the production of which has
been waived
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and to comply with all the terms and conditions of any provisions
hereof which have been waived;
15.10 that the Borrower shall promptly notify the Lender of any material
event or adverse change in the condition (financial or otherwise) or
management of the Borrower and of any circumstances which will
adversely affect the Borrower's ability to perform its obligations
hereunder.
16. NEGATIVE UNDERTAKINGS
Except with the prior written consent of the Lender, such consent not
to be unreasonably withheld, the Borrower shall not:-
16.1 effect any form of reconstruction or amalgamation by way of a scheme of
arrangement or otherwise nor approve, permit or suffer any change of
ownership or transfer of any part of its issued share capital or any
change in its shareholding Provided that the Lender's consent shall not
be required where any such reconstruction, amalgamation or change in
ownership or shareholding is the result of a restructuring exercise
within the Singapore Technologies Group of Companies;
16.2 create or permit to arise or subsist any mortgage, charge (whether
fixed or floating), pledge, hypothecation, lien or any other
encumbrance whatsoever on its properties and assets without the consent
of the Lender such consent not to be unreasonably withheld other than
liens arising solely by operation of law and not by way of contract and
are discharged within fourteen (14) days from the date of such liens
arising;
16.3 assign or enter into any arrangements to assign its account receivables
Provided that the Lender's consent shall not be required where such
assignment is to a company within the Singapore Technologies Group of
Companies;
16.4 terminate any of its businesses as now conducted which will
substantially and adversely affect the financial condition of the
Borrower; and
16.5 amend or alter any of the provisions in its Memorandum or Articles of
Association which will result in any change in the nature of business
or the borrowing powers of the Borrower.
17. EVENTS OF DEFAULT
17.1 Upon the happening of any of the following events:-
17.1.1 if a demand is made for payment of all or any moneys payable
by the Borrower to the Lender on demand and the Borrower fails
to make
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payment as demanded or if the Borrower fails to pay any sum
due or payable under this Agreement on the due date therefor;
17.1.2 if the Borrower fails to perform any of the terms and
conditions stipulated in this Agreement and if the failure is
in the reasonable opinion of the Lender capable of remedy, the
same is not remedied to the satisfaction of the Lender within
fourteen (14) days of such failure;
17.1.3 if any representation or warranty made by the Borrower in this
Agreement or any certificate or statement delivered or made
hereunder shall be or become incorrect or untrue in any
material respect and if the default is in the reasonable
opinion of the Lender capable of remedy, the same is not
remedied to the satisfaction of the Lender within fourteen
(14) days of such failure;
17.1.4 if the accounts of the Borrower delivered to the Lender under
Clause 15.1 are qualified in a manner or to an extent which,
in the reasonable opinion of the Lender, will adversely or
materially affect the financial condition of the Borrower;
17.1.5 if any other indebtedness (unless such indebtedness is
disputed by the Borrower or its Related Corporation (as the
case may be) in good faith) of the Borrower or any of its
Related Corporations (to whomsoever owing) or part thereof is
not paid at its stated maturity or on its due date or within
any applicable grace period or by reason of any default or the
occurrence of any event becomes due or is declared due prior
to its stated maturity or original due date or if the Borrower
or any of its Related Corporations fail to discharge any
guarantee or indemnity given by it with respect to any
indebtedness Provided that no Event of Default win occur under
this paragraph 17.1.5 unless and until the aggregate amount of
the indebtedness in respect of which one or more of the events
mentioned in this paragraph 17.1.5 has/have occurred equals or
exceeds Dollars Seven Million ($7,000,000.00);
17.1.6 if an event has occurred which constitutes a default under or
in respect of any other agreement or document to which the
Borrower is a party or by which the Borrower may be bound or
an event has occurred which, with the giving of notice, lapse
of time, determination of materiality or other condition might
constitute a default under or in respect of any such agreement
or document and which event might in the reasonable opinion of
the Lender adversely affect the financial condition of the
Borrower;
17.1.7 if the Borrower or any of its Related Corporations become
insolvent, is unable to pay its debts as they fall due, stops,
suspends, or threatens to stop or suspend payment of all or a
material part of its debts, begins
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negotiations or takes any proceedings or other step with a
view to readjustment, rescheduling or deferral of all its
indebtedness (or of any part of its indebtedness which it will
or might otherwise be unable to pay when due) or proposes or
makes a general assignment or an arrangement or composition
with or for the benefit of its creditors or a moratorium is
agreed or declared in respect of or affecting all or a
material part of any indebtedness on the part of the Borrower
or any of its Related Corporations for any moneys whatsoever;
17.1.8 if any application is made or petition presented pursuant to
the Companies Act (Cap. 50) for an order that the Borrower or
any of its Related Corporations be placed under the judicial
management of a judicial manager;
17.1.9 if the Borrower or any of its Related Corporations shall cease
or threaten to cease to carry on its respective business;
17.1.10 if a distress or execution is levied or enforced upon or
issued against any part of the properties or assets of the
Borrower or any of its Related Corporations;
17.1.11 if any legal proceedings suits or actions of any kind
whatsoever (whether criminal or civil) shall be instituted
against the Borrower or any of its Related Corporations which
in the reasonable opinion of the Lender will materially and
adversely affect the Borrower's ability to repay the amounts
payable to the Lender under this Agreement;
17.1.12 if any present or future security or encumbrance on or over
the assets of the Borrower or any of its Related Corporations
is or becomes enforceable;
17.1.13 if any step or petition is taken by any person for the
dissolution or winding up of the Borrower or any of its
Related Corporations or a receiver is appointed over the
assets and undertakings of the Borrower or any of its Related
Corporations other than any step or petition that is, in the
reasonable opinion of the Lender, frivolous or vexatious and
is withdrawn within fourteen (14) days after such step is
taken or petition is presented;
17.1.14 if the Borrower or any of its Related Corporations shall
transfer or otherwise dispose of all or substantially all its
assets to any person, firm or corporation except in the case
of a reconstruction, whether by way of any scheme of
arrangement or otherwise, which the Lender has approved;
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<PAGE> 21
17.1.15 if any agency of any state seizes, compulsorily acquires,
expropriates or nationalises all or a material part of the
assets properties or shares of the Borrower or any of its
Related Corporations;
17.1.16 if it is or will become unlawful for the Borrower to perform
or comply with any one or more of its obligations under this
Agreement;
17.1.17 if the Borrower or any of the Related Corporations is declared
by the Minister to be a declared company under the provisions
of Part IX of the Companies Act (Cap. 50);
17.1.18 if there shall occur a material adverse change in the
business, assets or financial position of the Borrower or any
of its Related Corporations or if any situation shall have
arisen which in the reasonable opinion of the Lender shall
make it improbable that the Borrower will be able to perform
its obligations under this Agreement;
17.1.19 if at any time as determined by the Lender in its absolute
discretion, the Government of Singapore holds less than twenty
per cent (20%) of the issued and paid-up share capital of the
Borrower, whether legally or beneficially;
17.1.20 if at any time the issued and paid-up share capital of the
Borrower is less than the Facility then outstanding and owing
by the Borrower to the Lender,
and while such event is continuing, the Lender may by notice in writing to the
Borrower declare the Total Indebtedness to be immediately due and payable
whereupon they shall become so due and payable.
17.2 Upon the Total Indebtedness becoming due and payable pursuant to Clause
17.1:-
17.2.1 the Lender shall be entitled to apply any credit balance
standing to any account of the Borrower with the Lender and in
whatever currency towards satisfaction of any sum due to the
Lender from the Borrower on any account whatsoever (without
prejudice to the generality of Clause 13); and
17.2.2 all the Facility which have not been drawn or cancelled shall
automatically be cancelled and forthwith cease to be
available.
18. INDEMNITY
18.1 Without prejudice to the foregoing terms and provisions the Borrower
shall indemnify the Lender and hold the Lender harmless from and
against all losses,
18
<PAGE> 22
damages, expenses, penalties, costs, claims or liabilities whatsoever,
legal or otherwise, which the Lender may sustain suffer or incur as a
consequence of:-
18.1.1 any prepayment of the Drawing or any part thereof otherwise
than on an Interest Payment Date or in accordance with this
Agreement;
18.1.2 any default in the payment of any principal moneys when due or
any interest accrued thereon, or any other amounts payable
hereunder; and/or
18.1.3 the occurrence of any Event of Default or Potential Event of
Default,
and such losses, damages, expenses, penalties, costs, claims or liabilities
shall include but not be limited to such amount as the Lender shall certify
(such certification being conclusive and binding upon the Borrower save for any
manifest error or fraud and such certification to set out the basis of such
amount payable) as being necessary to compensate the Lender for:-
(a) any actual loss of interest, commission or fee incurred on
account of such default; and
(b) any interest, commissions or fees paid or payable on account
of any funds borrowed in order to carry or maintain any unpaid amount except to
the extent that such interest, commission or fees are recovered under the
provisions of this Agreement.
For the avoidance of doubt, the indemnity herein shall not extend to loss of
profit, earning or income suffered by the Lender as a result of any prepayment
of the Drawing made by the Borrower in accordance with this Agreement.
19. CURRENCY INDEMNITY
19.1 Dollars is the sole currency of account and payment for all sums
payable by the Borrower under or in connection with this Agreement,
including damages.
19.2 Any amount received or recovered in a currency other than Dollars
(including but not limited to any amount received or recovered as a
result of, or the enforcement of, a judgment or order of a court of any
jurisdiction, in the dissolution of the Borrower or otherwise) by the
Lender in respect of any sum expressed to be due to it from the
Borrower under this Agreement shall only constitute a discharge to the
Borrower to the extent of the Dollar amount which the Lender is able,
in accordance with its usual practice and at The Development Bank of
Singapore Limited's own rate of exchange then prevailing, to purchase
with the amount so received or recovered in that other currency on the
date of that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is
practicable to do so).
19
<PAGE> 23
19.3 If that Dollar amount is less than the Dollar amount expressed to be
due to the Lender under this Agreement, the Borrower shall indemnify
the Lender against any loss sustained by it as a result thereof. In any
event, the Borrower shall indemnify that Lender against the reasonable
cost of making any such purchase.
19.4 These indemnities constitute a separate and independent obligation from
the other obligations in this Agreement, shall give rise to a separate
and independent cause of action, shall apply irrespective of any
indulgence granted by any parties hereto and shall continue in full
force and effect despite any judgment, order, claim or proof for a
liquidated amount in respect of any sum due under this Agreement or any
judgment or order.
20. WAIVER NOT TO PREJUDICE RIGHT OF THE LENDER
20.1 The Lender may from time to time waive either unconditionally or on
such terms and conditions as it may deem fit any breach by the Borrower
of any of the undertakings, stipulations, terms and conditions herein
contained and any modification thereof but without prejudice to its
powers, rights and remedies for enforcement thereof, Provided Always
that:-
20.1.1 no neglect or forbearance of the Lender to require and enforce
payment of any monies hereunder or the performance and
observance of any undertakings stipulations terms and
conditions contained in this Agreement, nor any time which may
be given to the Borrower shall in any way prejudice or affect
any of the rights, powers or remedies of the Lender at any
time afterwards to act strictly in accordance with the
provisions hereof; and
20.1.2 no such waiver of any such breach as aforesaid shall prejudice
the rights of the Lender in respect of any other or subsequent
breach of any of the undertakings, stipulations, terms or
conditions aforesaid.
20.2 Any such waiver and any consent by the Lender under any provision of
this Agreement must be in writing and may be given subject to any
conditions thought fit by the Lender. Any waiver or consent shall be
effective only in the instance and for the purpose for which it is
given.
20.3 The rights and remedies provided in this Agreement are cumulative and
not exclusive of any rights or remedies provided by law.
21. INDULGENCE OF THE LENDER NOT TO DISCHARGE THE BORROWER
The liability of the Borrower hereunder shall not be impaired or
discharged by reason of the fact that any person is or has become in any way,
whether with or without the Lender's acceptance, liable to pay any of the moneys
owing by the Borrower hereunder or by reason of any time or other indulgence
being granted by or with the
20
<PAGE> 24
consent of the Lender to any such person or by reason of any arrangement being
entered into or composition accepted by the Lender modifying the operation of
law or otherwise the rights and remedies of the Lender under the provisions of
this Agreement.
22. FEES AND EXPENSES
The Borrower shall pay forthwith on demand:-
22.1 all reasonable expenses including stamp duty (whether as penalty or
otherwise), legal, administrative, registration, execution, valuation
fees and any other costs or charges (including abortive costs) incurred
or expended by the Lender in connection with the Facility and/or this
Agreement whether the Facility is accepted or otherwise together with
all goods and services tax in connection therewith; and
22.2 all legal fees as between solicitors and clients on a full indemnity
basis and other costs and disbursements whatsoever including but not
limited to stamp or other duties incurred by the Lender in connection
with demanding and enforcing payment of monies due hereunder or
otherwise howsoever in enforcing this Agreement, or any other document
called for by the terms of this Agreement or any of the covenants,
undertakings, stipulations, terms, conditions or provisions of this
Agreement, or any other document called for by the terms of this
Agreement or incurred in connection with any delay or Omission on the
part of the Borrower to pay any stamp or other duties in connection
with this Agreement, or any other document called for by the terms of
this Agreement together with all goods and services tax in connection
therewith.
23. DEFAULT IN PAYMENT OF EXPENSES
In addition to and not in derogation of the other provisions of this
Agreement, if the Borrower shall fail or refuse to pay any legal fees tax stamp
duty and other costs charges and expenses which the Borrower is liable to pay
under any provisions of this Agreement, the Lender may at its discretion pay the
same (but shall not be under any obligations to do so) and if such payment is
made by the Lender the Borrower shall forthwith on demand repay the same to the
Lender together with interest thereon at the Default Interest Rate, such
interest to be calculated from day to day with monthly rests from the date of
payment by the Lender up to the date of repayment by the Borrower.
24. NOTICES
24.1 Except as otherwise expressly provided herein, any notice, request,
demand or other communication to be given or served under this
Agreement to or on any party may be delivered at or sent by prepaid
registered post or by telex or facsimile transmission to the address,
telex number or facsimile number and marked for the attention of the
person or department (if any) from time to time
21
<PAGE> 25
designated by that party for the purpose of this Agreement and shall be
deemed to be duly served:-
24.1.1 if it is delivered, at the time of delivery;
24.1.2 if it is sent by prepaid registered post, two (2) Business
Days after posting thereof; and
24.1.3 if it is sent by telex or facsimile transmission, immediately
after transmission thereof if the date of transmission is a
Business Day, and if the date of transmission is not a
Business Day, then the notice by telex or facsimile
transmission shall be deemed to be served on the next Business
Day.
24.2 Any communication from the Borrower shall be irrevocable. Except for
the drawdown notice, all other notices, requests, demands or other
communications which are required by this Agreement to be in writing
may be made by telex or facsimile transmission.
24.3 For the purpose of this Clause, notice, request, demand or other
communication to any party shall be given or served at its address,
telex number or facsimile number set out below its name in the
execution clause or at such other address, telex number or facsimile
number from time to time notified to the other parties in writing.
25. SUCCESSORS AND ASSIGNS
25.1 This Agreement shall be binding upon and inure to the benefit of the
Borrower and the Lender and their successors in title and the assigns
of the Lender and any reference in this Agreement to any party shall be
construed accordingly. All undertakings, agreements, representations
and warranties given, made or entered into by the Borrower under this
Agreement shall survive the making of any assignments hereunder.
25.2 The Borrower shall have no right to assign or transfer any of its
rights or obligations hereunder and it shall remain fully liable for
all of its undertakings, agreements, duties, liabilities and
obligations hereunder, and for the due and punctual observance and
performance thereof.
25.3 The Lender may assign all or part of its rights or transfer all or part
of its obligations under this Agreement without the consent of the
Borrower. Any such assignee or transferee shall be and be treated as a
party of this Agreement for all purposes of this Agreement and shall be
entitled to the full benefit of this Agreement to the same extent as if
it were an original party in respect of the rights or obligations
assigned or transferred to it.
22
<PAGE> 26
26. SEVERABILITY
If any one or more of the provisions contained in this Agreement shall
be deemed invalid, unlawful or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained therein shall not in any way be affected or impaired but this
Agreement shall be construed as if such invalid, unlawful or unenforceable
provision had never been included in this Agreement.
27. DISCLOSURE
The Lender shall be entitled, subject to the prior written consent of
the Borrower, such consent not to be unreasonably withheld, to disclose to any
potential assignee or transferee or guarantor or any other person who has
entered into or is proposing to enter into contractual arrangements with the
Lender or the Borrower in relation to this Agreement or any moneys or
liabilities under or relating to the Facility any information about the Borrower
and the Facility or information regarding the moneys or other relevant
particulars of any of the Borrower's accounts with the Lender.
28. CALCULATION AND EVIDENCE
28.1 The entries in the accounts maintained by the Lender in accordance with
its usual practice shall be prima facie evidence of the existence and
amounts of the obligations of the Borrower recorded therein.
28.2 A statement or certificate in writing signed by the Assistant Manager
or Investment Administration Officer or other duly authorised officer
for the time being of the Lender and certifying (a) the amount due at
any time in respect of any moneys owing or payable by the Borrower to
the Lender and/or any liabilities incurred by the Lender and payable by
the Borrower to the Lender under or by virtue of any terms, conditions
or stipulations of this Agreement, or (b) any interest rate applicable;
or any other certificate determination, notification or opinion of the
Lender provided for in this Agreement shall (in the absence of any
manifest error or fraud) be final and conclusive of the matters so
certified and be binding upon the Borrower.
29. GOVERNING LAW AND SUBMISSION TO JURISDICTION
This Agreement shall be governed by and construed in all aspects in
accordance with the laws of Singapore.
SCHEDULE 1
Conditions Precedent
1. A certified copy of the Certificate of Incorporation and the Memorandum
and Articles of Association of the Borrower.
23
<PAGE> 27
2. A certified copy of resolutions of the Board of Directors of the
Borrower in form and substance satisfactory to the Lender authorising,
in accordance with the Memorandum and Articles of Association of the
Borrower:-
(a) the acceptance of the Facility upon the terms and conditions
enumerated in this Agreement;
(b) the execution of this Agreement;
(c) a person or persons to sign the drawdown notice and any other
notices and any other documents to be executed under hand and
to be given pursuant to or ancillary to this Agreement by or
on behalf of the Borrower;
(d) the execution of all other documents called for by this
Agreement.
3. A verification certificate by a director of the Borrower together with
list of the names and specimen signatures of each of the authorised
signatories referred to in paragraph 2(c) authenticated by such
director.
4. A certificate from the Borrower's Company Secretary, certified by its
Chairman, that the Borrower's issued and paid-up capital is no less
than Dollars Fifty million ($50,000,000.00).
5. This Agreement duly executed and all stamp fees (if any) payable
thereon under the laws of Singapore.
6. Such other documents as the Lender may reasonably request not later
than one (1) Business Day before the date of the Drawing.
24
<PAGE> 28
SCHEDULE 2
NOTICE OF DRAWING
Three (3) Business Days before date of Drawing
POST OFFICE SAVINGS BANK OF SINGAPORE
73 Bras Basah Road
5th Storey POSB Centre
Singapore 189556
("the Lender")
Attention: Ms Eu Chin Fen
$50 MILLION TERM LOAN FACILITY TO CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED
Dear Sirs
Pursuant to Clause 5 of the Facility Agreement dated the ____ day of __________,
1997 made between ourselves as Borrower and yourselves Lenders ("the Agreement")
in respect of the Facility (as defined in the Agreement), we hereby give you
notice for the following Drawing:-
Amount : Dollars
($_____________)
Date of Drawing:
Payee: [name(s) and address(es)]
We confirm:-
(1) that the Conditions Precedent mentioned in Schedule 1 of the Agreement
have been complied with in every respect;
(2) that each of the Representations and Warranties contained in Clause 14
of the Agreement are true and accurate in all respects as though made
on the date of this Notice with reference to facts and circumstances
presently subsisting and will be true and accurate in all respects on
the date of the intended Drawing as though made on the date of the
intended Drawing with reference to facts and circumstances then
subsisting;
25
<PAGE> 29
(3) that as at the date hereof, no Event of Default has occurred and no
event has occurred which, with the giving of notice and/or the lapse of
time might constitute an Event of Default. We further represent warrant
and undertake that no Event of Default and no such event as aforesaid
will exist at the date of the intended Drawing; and
Yours faithfully
CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED
.................................
Name:
Title:
26
<PAGE> 30
IN WITNESS WHEREOF the parties hereto have executed this Agreement
under hand the day and year first above written.
Signed by Tan Bock Seng ) /s/ TAN BOCK SENG
) ------------------------------
for and on behalf of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LIMITED )
Address: 60 Woodlands Industrial )
Park D Street 2 )
Singapore 738406 )
Facsimile Number: 362 2909 )
Attn: Mr. Chia Song Hwee )
)
in the presence of: Chia Song Hwee ) /s/ CHIA SONG HWEE
------------------------------
Signed by Chua Bee Choo (Miss) ) /s/ CHUA BEE CHOO
Director (Investment) ) ------------------------------
POS Bank )
for and on behalf of )
POST OFFICE BANK OF )
SINGAPORE )
Address: 73 Bras Basah Road )
POSB Centre )
Singapore 189556 )
Telex Number: RS 25450 )
Facsimile Number: 339 1479 )
Attn: Ms. Eu Chin Fen )
in the presence of: Eu Chin Fen ) /s/ EU CHIN FEN
) ------------------------------
27
<PAGE> 1
EXHIBIT 10.23
DATED THIS 10TH DAY OF JUNE 1997
BETWEEN
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
(THE BORROWER)
AND
POST OFFICE SAVINGS BANK OF SINGAPORE
(THE LENDER)
----------------------------------------------------
LOAN AGREEMENT
----------------------------------------------------
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- -------------------------------------------------------------------------------------
<S> <C>
1. DEFINITIONS...............................................................
2. FACILITY..................................................................
3. PURPOSES OF THE FACILITY..................................................
4. CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FACILITY......................
5. DRAWING UNDER THE FACILITY................................................
6. CANCELLATION..............................................................
7. INTEREST..................................................................
8. REPAYMENT.................................................................
9. PREPAYMENT................................................................
10. PAYMENTS..................................................................
11. TAXES.....................................................................
12. CHANGE IN CIRCUMSTANCES...................................................
13. SET-OFF...................................................................
14. REPRESENTATIONS AND WARRANTIES............................................
15. AFFIRMATIVE UNDERTAKINGS..................................................
16. NEGATIVE UNDERTAKINGS.....................................................
17. EVENTS OF DEFAULT.........................................................
18. INDEMNITY.................................................................
19. CURRENCY INDEMNITY........................................................
20. WAIVER NOT TO PREJUDICE RIGHT OF THE LENDER...............................
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
21. INDULGENCE OF THE LENDER NOT TO DISCHARGE THE BORROWER....................
22. FEES AND EXPENSES ........................................................
23. DEFAULT IN PAYMENT OF EXPENSES ...........................................
24. NOTICES ..................................................................
25. SUCCESSORS AND ASSIGNS ...................................................
26. SEVERABILITY..............................................................
27. DISCLOSURE................................................................
28. CALCULATION AND EVIDENCE..................................................
29. GOVERNING LAW AND SUBMISSION TO JURISDICTION..............................
SCHEDULE 1......................................................................
SCHEDULE 2......................................................................
</TABLE>
<PAGE> 4
THIS AGREEMENT is made the 10th day of June One thousand nine hundred
and ninety-seven (1997) Between:-
1. CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED (Company Registration No.
198703584), a company incorporated in Singapore and having its
registered office at 60 Woodlands Industrial Park D Street 2 Singapore
738406 (hereinafter called the "Borrower") of the one part; and
2. POST OFFICE SAVINGS BANK OF SINGAPORE, a body corporate incorporated in
Singapore under the Post Office Savings Bank of Singapore Act and having
its registered office at 73 Bras Basah Road POSB Centre, Singapore
189556 (hereinafter called the "Lender") of the other part.
WHEREAS at the request of the Borrower, the Lender has agreed to make
available to the Borrower a term loan facility of not exceeding the aggregate
principal amount of DOLLARS FIFTY MILLION ($50,000,000.00) subject to the terms
and conditions hereinafter appearing.
NOW THIS AGREEMENT WITNESSETH as follows:-
1. DEFINITIONS
1.1 In this Agreement and the Schedules, except to the extent that the
context requires otherwise:-
"AGREEMENT" or "THIS AGREEMENT" means this Agreement and all amendments
and variations thereof from time to time;
"AVAILABILITY PERIOD" means, subject to the discretion of the Lender to
extend the period at the request of the Borrower, the period commencing
on the date of this Agreement and ending on 30 June 1997;
"BORROWER" includes its successors;
"BUSINESS DAY" means any day (excluding Saturdays, Sundays and public
holidays) on which banks in Singapore are open for business;
"DEFAULT INTEREST RATE" means the rate of 4% per annum over the Lender's
posted board rate for deposits placed with the Lender for amounts up to
Dollars One Hundred Thousand ($100,000.00) or such other amount as the
Lender may from time to time determine;
<PAGE> 5
-3-
"DOLLAR", "DOLLARS" and the symbol "$" mean the lawful currency for the
time being in Singapore;
"DRAWING" means the Drawing made or to be made under the Facility in
terms of, Clause 5;
"EVENTS OF DEFAULT" means the events mentioned in Clause 17.1; and
"EVENT OF DEFAULT" means any one of them;
"FACULTY" means the term loan facility granted by the Lender to the
Borrower under this Agreement;
"INTEREST PAYMENT DATE" means the last day of each Interest Period;
"INTEREST PERIOD" means each successive period of six (6) months
determined as follows:-
(i) the first Interest Period shall commence on the date on which
the Drawing is made from the Facility and end on the date
falling six (6) months immediately following;
(ii) each subsequent Interest Period shall commence forthwith upon
the expiry of the previous Interest Period and end on the date
falling six (6) months immediately following;
(iii) an Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next day which is a
Business Day; and
(iv) an Interest Period which would otherwise end after the Repayment
Date shall be abridged to end on the Repayment Date;
"INTEREST RATE" has the meaning ascribed to it in Clause 7.1;
"LENDER" includes its successors and assigns;
"POTENTIAL EVENT OF DEFAULT" means any condition act omission or event
which with the giving of notice, lapse of time and/or determination of
materiality or other condition would become an Event of Default;
"RELATED CORPORATIONS" means Singapore Technologies Pte Ltd (including
its successors and assigns) and the Borrower's subsidiaries and for the
purposes of this Agreement, shall not mean a related corporation as
defined under Section 4 of
<PAGE> 6
-4-
the Companies Act (Cap. 50); and "RELATED CORPORATION" means any or each
(as the context may require) of them; "REPAYMENT DATE" means the date
immediately following five (5) years from the date of first disbursement
of the Facility or such later date permitted by the Lender;
"TOTAL INDEBTEDNESS" means at any time, all amounts (whether of
principal, interest, fees or otherwise) at that time owing or payable
(whether contingently or otherwise) from the Borrower to the Lender
under the provisions of this Agreement;
1.2 Any reference in this Agreement to:
1.2.1 "borrowed moneys" means (a) moneys borrowed or raised (including
hire under financial leases) and interest thereon, (b) any
liability under any bond, note, guarantee, indemnity or other
security or under acceptance credit facilities, (c) any
liability in respect of the acquisition cost of assets or
services to the extent payable after the time of acquisition or
possession thereof which upon default in payment thereof would
materially or adversely affect the financial condition of the
Borrower or its Related Corporations, and (d) any guarantee or
other assurance against financial loss in respect of such moneys
borrowed or raised, interest or liability;
1.2.2 a "certified copy" means a copy certified by an authorized
signatory as being a true, complete and up to date copy of an
original then currently in full force and effect;
1.2.3 a "Clause", "Recital" or "Schedule" is to be construed as a
reference to a clause, recital or schedule of this Agreement
unless the context requires otherwise;
1.2.4 an "encumbrance" includes any mortgage, charge (whether fixed or
floating), pledge, lien, hypothec, hypothecation, assignment,
fiduciary assignment, fiduciary transfer, power of attorney to
establish hypothec, power of attorney to sell, security interest
or any other type of preferential agreement or arrangement
having substantially the same economic effect (including sale
and repurchase agreements, title retention or flawed asset
arrangements);
1.2.5 "indebtedness" shall be construed so as to include any
obligation (whether incurred as principal or as surety) for the
payment or repayment of money, whether present or future, actual
or contingent;
<PAGE> 7
-5-
1.2.6 a "person" shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not having
separate legal personality) of two or more of the foregoing;
1.2.7 a "subsidiary" shall mean a subsidiary as defined in the
Companies Act (Chapter 50, Singapore Statutes);
1.2.8 "tax" shall be construed so as to include any present or future
tax, levy, impost, duty or other charge of a similar nature
(including, without limitation, any penalty or interest payable
in connection with any failure to pay or any delay in paying any
of the same) imposed, levied, collected, withhold or assessed by
any agency of any state;
1.2.9 the "winding-up", "dissolution" or "judicial management" of a
company, the "bankruptcy" of an individual, the appointment of a
receiver and/or manager, liquidator, administrator, judicial
manager or trustee shall be construed so as to include any
equivalent or analogous proceedings or appointment under the law
of the jurisdiction in which such company is incorporated or
such individual is domiciled or any jurisdiction in which such
company or such individual carries on business or has assets;
1.2.10 a "year", "month" or "day" shall be construed as a reference to
a calendar year, a calendar month or a calendar day;
1.2.11 any statute or other legislation, subsidiary legislation or
rules shall be read as referring to such statute or other
legislation, subsidiary legislation or rules as amended or
re-enacted from time to time; and
1.2.12 a time of day is a reference to Singapore time unless provided
otherwise.
1.3 The headings in this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement.
1.4 Words denoting the singular number shall also include the plural and
vice versa and words denoting the masculine gender shall also include the
feminine gender and neuter gender and references to any gender shall include any
other gender.
2. FACILITY
Subject to the terms and conditions herein contained, the Lender shall
make available to the Borrower a term loan facility ("THE FACILITY") OF DOLLARS
FIFTY MILLION ($50,000,000.00) Provided that if any portion of the Facility is
cancelled by
<PAGE> 8
-6-
the Borrower or the Lender pursuant to the provisions of this Agreement or by
mutual agreement, the limit of the Facility shall be reduced accordingly.
3. PURPOSES OF THE FACILITY
Subject to the terms and conditions of this Agreement, the Borrower
shall utilize the Facility for the purpose of the Borrower's working capital
requirements or any other business purposes.
4. CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FACILITY
4.1 Subject to the Lender's discretion otherwise, the Facility will become
available to the Borrower only after the Lender has received from the Borrower
all the documents, payments and evidence listed in Schedule 1 and each is in
form and substance satisfactory to the Lender.
4.2 Subject Clause 4.1, the following conditions shall also have to be
satisfied before the Facility is made available to the Borrower:-
4.2.1 that all acts, conditions and things required to be done and
performed under Schedule 1 shall have been done and performed
and have happened in due and strict compliance with all
applicable laws; and
4.2.2 that there is no material adverse change in the financial
condition, operating environment, management of the Borrower or
any other conditions which in the reasonable opinion of the
Lender will materially affect the ability of the Borrower to
perform its obligations under this Agreement.
5. DRAWING UNDER THE FACILITY
5.1 Subject to the Lender's discretion to permit otherwise, the Borrower may
on any Business Day during the Availability Period applicable to the Facility
request for one Drawing for the full amount granted under the Facility by giving
to the Lender written notice in substantially the form provided in Schedule 2
not later than three (3) Business Days prior to the intended date of drawdown,
Provided Always that on both the date of such notice and on the date of the
proposed drawdown:-
5.1.1 no Event of Default has occurred which remain unwaived and no
Potential Event of Default has occurred;
5.1.2 the representations and warranties contained in Clause 14 of
this Agreement are correct and accurate in all material
respects.
<PAGE> 9
-7-
5.2 Once having been given by the Borrower, the notice shall be irrevocable
and the Borrower shall be bound to borrow and draw in accordance with the
notice. In addition to the other remedies of the Lender hereunder, the Borrower
shall have full liability and accountability for any costs incurred by the
Lender resulting from the failure of the Borrower to effect the Drawing in full
for any reason whatsoever or a failure to satisfy the conditions of the Drawing,
including but not limited to losses from re-employment of funds obtained for the
Drawing at rates lower than the cost of such funds or any expense incurred by
the Lender in liquidating such funds as such Lender may certify.
5.3 Any part of the Facility left undrawn shall be deemed to be cancelled by
the Borrower on that date and shall not subsequently be available to the
Borrower.
6. CANCELLATION
6.1 The Borrower may, at any time during the Availability Period and upon
payment of the cancellation fee stipulated in Clause 6.5, cancel the whole or
any part of the Facility.
6.2 In the event any part of the Facility is deemed cancelled in terms of
Clause 5.3, the Borrower shall forthwith pay the cancellation fee stipulated in
Clause 6.5.
6.3 Upon such cancellation becoming effective the Facility shall be reduced
by the amount of such cancellation.
6.4 No part of the Facility which has been cancelled may be redrawn or
reborrowed, unless the Lender permits otherwise.
6.5 A cancellation fee equivalent to zero point five per cent (0.5%) flat
shall be payable by the Borrower to the Lender on any amount of the Facility
cancelled or deemed to be cancelled by the Borrower.
7. INTEREST AND DEFAULT INTEREST
7.1 The Borrower shall pay to the Lender on each Interest Payment Date
interest on the Facility at the rate of two percent (2%) per annum over the
Lender's board rate for deposits placed with the Lender for amounts up to
Dollars One Hundred Thousand ($100,000.00) or such other amounts as the Lender
may from time to time determine ("the Interest Rate") for each Interest Period,
such interest shall accrue from day to day and shall be calculated on the
principal amount of the Facility for the time being owing and unpaid and
compounded semi-annually.
7.2 In the event of failure by the Borrower to make payment on the due date
of any sum due under this Agreement (whether by way of a repayment of the
Facility or payment of any principal, interest or fee or otherwise howsoever)
then subject always to and without prejudice to the other rights and remedies of
the Lender contained in this
<PAGE> 10
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Agreement, the Borrower shall (to the fullest extent permitted by applicable
law) pay to the Lender interest at the Default Interest Rate on that overdue sum
from the date of default up to the date of actual payment (as well after as
before judgment), such interest to be calculated with monthly rests and shall be
payable on the last day of each month.
7.3 Interest payable under this Agreement shall be computed on the basis of
a three hundred and sixty-five (365)-day year and on actual days
elapsed.
7.4 No part of any payment made by the Company shall be treated as a
repayment of principal until all interest due or deemed to be due or
accrued has been paid.
7.5 The Borrower hereby covenants to pay to the Lender all interest payable
by the Borrower to the Lender as provided in any provisions of this
Agreement.
8. REPAYMENT
The Borrower hereby covenants to repay to the Lender the Facility in one
lump sum without demand on the Repayment Date.
9. PREPAYMENT
9.1 The Borrower may upon giving not less than thirty-one (31) days prior
notice in writing to the Lender and upon paying any prepayment fee payable in
accordance with Clause 9.2 together with all interest and other moneys accrued
in respect of the amount to be prepaid up to the date of prepayment prepay in
advance on an Interest Payment Date the whole or any part of the Drawing made
under the Facility in accordance with the provisions of this Clause Provided
that any partial prepayment shall be in an amount of not less than Dollars Five
Million ($5,000,000.00) and equal to integral multiples of Dollars One Million
($1,000,000.00).
9.2 A prepayment premium computed at the rate of zero point five per cent
(0.5%) flat of each amount prepaid shall be payable by the Borrower to the
Lender.
9.3 Notice of intended prepayment once having been given by the Borrower
shall be irrevocable and it shall be obligatory on the Borrower to make the
prepayment in accordance with the notice, failing which interest at the Default
Interest Rate shall be payable thereon.
9.4 No partial prepayment of any sums under the Facility shall relieve the
Borrower of its obligations under this Agreement except to the extent of the
amount prepaid.
9.5 The Borrower shall not repay or prepay to the Lender the Drawing
otherwise than in accordance with the provisions of this Agreement and each
amount prepaid shall be cancelled and may not be redrawn or reborrowed.
<PAGE> 11
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10. PAYMENTS
10.1 All payments by the Borrower to the Lender of principal, interest and
all other sum due and payable by the Borrower to the Lender hereunder shall be
made in Dollars, not later than 11:00 a.m. on due day in immediately available
and free transferable funds to such account of the Lender in Singapore as the
Lender may from time to time designate or in such other manner as the Lender may
reasonably direct.
10.2 If any sum shall become due for payment hereunder on a day which is not
a Business Day, such payment must be made on the next succeeding Business Day,
unless that succeeding Business Day falls within the next calendar month, in
which case such payment must be made on the previous Business Day, and interest
shall be adjusted accordingly.
10.3 All payments made to the Lender shall be applied first against fees and
expenses payable hereunder, then against interest due on amounts in default, if
any, then against interest due on principal moneys outstanding under the
Facility, and thereafter against the principal moneys and all other moneys
outstanding under this Agreement.
11. TAXES
11.1 All sums payable by the Borrower under this Agreement shall be paid (i)
free of any restriction or condition, (ii) free and clear of and (except to the
extent required by law) without any deduction or withholding on account of any
tax and (iii) without deduction or withholding (except to the extent required by
law) on account of any other amount, whether by way of set-off counterclaim or
otherwise.
11.2 If (i) the Borrower or any other person making payment on behalf of the
Borrower is required by law to make any deduction or withholding on account of
any such tax or other amount from any sum paid or payable by the Borrower to the
Lender under this Agreement or (ii) the Lender (or any person on its behalf) is
required by law to make any deduction or withholding from, or (except on account
of tax on the overall net income of the Lender) any payment on or calculated by
reference to the amount of, any sum received or receivable by the Lender under
this Agreement: -
11.2.1 the Borrower shall notify the Lender of any such requirement or
any change in any such requirement as soon as the Borrower
becomes aware of it;
11.2.2 the Borrower shall pay any such tax or other amount before the
date on which the penalties attach thereto, such payment to be
made, if the liability to pay is imposed on the Borrower, for
its account, or otherwise on behalf of and in the name of the
Lender;
<PAGE> 12
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11.2.3 the sums payable by the Borrower shall (except, in the case of
any such payment, to the extent that its amount is not
ascertainable when that sum is paid) be increased to the extent
necessary to ensure that, after the making of that deduction,
withholding or payment, the Lender receives on the due date and
retains (free from the liability in respect of any such
deduction, withholding or payment) a net sum equal to what it
would have received and so retained had no such deduction,
withholding or payment been required or made;
11.2.4 within thirty (30) days after paying any sum from which it is
required by law to make any deduction or withholding, and within
thirty (30) days after the due date of payment of any tax or the
amount which it is required by Clause 11.2.2 above to pay, the
Borrower shall deliver to the Lender evidence reasonably
satisfactory to the Lender of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or
other authority.
Provided that in any such event the Borrower shall be entitled to prepay
the Drawing in accordance with this Agreement, but without any premium, together
with accrued interest thereon and any other sum then due to the Lender under
this Agreement.
11.3 If directly as a consequence of any such deduction or withholding by the
Borrower (as referred to in the first paragraph of Clause 11.2) and payment by
the Borrower to the relevant taxing or other authority, the Lender shall receive
or be granted a credit against any taxes payable by it in relation solely to the
sum from which such deduction or withholding was made, the Lender shall (to the
extent to which the Lender may do so without prejudicing the retention of the
amount of such credit and without prejudice to the rights of the Lender to
obtain any other relief or allowance available to it and generally to organize
its tax affairs in such manner as it sees fit), reimburse the Borrower with such
amount as the Lender shall certify to be the proportion of such credit as will
leave the Lender (after such reimbursement) in no worse position than that in
which it would have been had there been no such deduction or withholding from
the payment by the Borrower as aforesaid and such reimbursement shall be made as
soon as practicable after the Lender has received the benefit of such credit.
Nothing in Clause 11.3 shall entitle the Borrower to access to the Lender's tax
records or to its book of account.
11.4 Without prejudice to the generality of the foregoing, in the event that
any goods and services tax or any other taxes levies or charges whatsoever now
or hereafter required by law to be paid on or in respect of any sums payable to
the Lender or any other matters under or relating to this Agreement, the same
shall (except to the extent prohibited by law) be borne and paid by the Borrower
and the Borrower shall pay to the Lender on demand a sum equivalent to the
amount of such goods and services tax or other taxes, levies or charges (or such
part thereof which the law does not prohibit the Lender from
<PAGE> 13
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collecting from the Borrower) less any such part thereof as has been paid by the
Borrower under the preceding sub-clause, in addition to all other sums payable
to the Lender under this Agreement.
12. CHANGE IN CIRCUMSTANCES
12.1 If at any time the Lender reasonably determines that it is or will
become unlawful or contrary to any directive of any agency of any state for it
to allow all or part of the Facility to remain outstanding, to make, fund or
allow to remain outstanding all or part of the Drawing, to carry out all or any
of its other obligations under this Agreement and/or to charge or receive
interest at the rate or rates applicable upon the Lender notifying the Borrower
and setting out reasonable details of such circumstances, the Facility or such
part thereof to comply with such directive as the Lender shall think fit shall
be cancelled and the Borrower shall prepay the Drawing without premium together
with accrued interest thereon and any other sum then due to the Lender under
this Agreement or such part thereof to comply with such directive as the Lender
shall require within the period allowed; The expression "PERIOD ALLOWED" used in
this Clause 12.1 shall mean the period of time beyond which it will become
unlawful or contrary to any directive of any agency of any state for the Lender
to allow all or part of the Facility to remain outstanding, to make, fund or
allow to remain outstanding all or part of the Drawing, to carry out all or any
of its other obligations under this Agreement and/or to charge or receive
interest at the rate or rates applicable or which will be applicable as
aforesaid under this Agreement.
12.2 If the Lender reasonably determines that, as a result of (a) the
introduction of or any change in, or in the interpretation or application of any
law or (b) compliance by it with any directive of any agency of any state:-
12.2.1 the cost to the Lender of maintaining all or any part of the
Facility is increased; and/or
12.2.2 any sum received or receivable by the Lender under this
Agreement or the effective return to it under this Agreement is
reduced (except on account of tax on its overall net income);
and/or
12.2.3 the Lender makes any payment (except on account of tax on its
overall net income) or foregoes any interest or other return on
or calculated by reference to the amount of any sum received or
receivable by it under this Agreement,
the Borrower shall indemnify the Lender against that increased cost, reduction,
payment or foregone interest or other return and, accordingly, shall from time
to time on demand (whenever made) pay to the Lender the amount certified by it
to be necessary so to indemnify it (such certification to set out the basis of
such amount payable) Provided that in such event the Borrower shall be entitled
to prepay the Drawing in accordance with
<PAGE> 14
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this Agreement but without any premium, together with accrued interest thereon
and any other sum then due to the Lender under this Agreement.
13. SET-OFF
13.1 Upon the occurrence of an Event of Default, in addition: to any banker's
lien right of set-off or other right which the Lender may have the Lender shall
be entitled at any time and without notice to the Borrower to combine or
consolidate all or any of the accounts of the Borrower including accounts of the
Borrower either alone or jointly with others (whether current, deposit, savings
or of any other nature whatsoever, and whether in Dollars or other currency)
wheresoever situate (in Singapore or elsewhere) and set-off or transfer any sum
standing to the credit of any one or more such accounts in or towards
satisfaction of any moneys, obligations and liabilities of the Borrower to the
Lender on any other account whether in Singapore or elsewhere and whether such
liabilities be actual contingent primary collateral several or joint. Upon the
Lender exercising its rights under this Clause, it shall promptly thereafter
give written notice thereof to the Borrower.
13.2 The Lender shall be entitled at its absolute discretion at any time and
from time to time whether or not an Event of Default has occurred after prior
notice to the Borrower to debit any account of the Borrower with the Lender
(whether in Singapore or elsewhere) for the Total Indebtedness or any part
thereof Provided Always that any such debit shall not constitute nor be deemed
to be a payment of any moneys to which it relates (except to the extent of any
amount in credit in the said account of the Borrower with the Lender) nor shall
it be deemed a waiver of a Potential Event of Default or an Event of Default or
any other event of default under this Agreement.
14. REPRESENTATIONS AND WARRANTIES
14.1 The Borrower hereby represents and warrants to the Lender as follows:-
14.1.1 that the Borrower is a company with limited liability duly
registered and validly existing under the laws of Singapore and
has the power and authority to own assets and to conduct the
business which it conducts and/or proposes to conduct;
14.1.2 that the Borrower has full power and authority to consummate the
transactions contemplated by this Agreement and to borrow the
Facility;
14.1.3 that this Agreement constitute legal, valid and binding
obligations of the Borrower and is enforceable in accordance
with its terms;
14.1.4 that there are no proceedings pending before any court or to the
knowledge of the Borrower threatened against or affecting the
Borrower and no proceedings are before any government agency or
<PAGE> 15
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administrative body pending or to the knowledge of the Borrower
threatened against the Borrower which if adversely determined
would materially or adversely affect its financial condition or
operations or impair its rights to carry on its business
substantially as now conducted or the ability of the Borrower to
pay, when due, the principal of and interest on the Facility and
any other sums that may become due and owing hereunder and to
the best of the knowledge and belief of the Borrower, the
Borrower has complied with all applicable statutes and
regulations and with the requirements of all governmental
authorities having jurisdiction over the Borrower;
14.1.5 that the certified true copies of the Memorandum and Articles of
Association and the Board of Directors' resolutions of the
Borrower delivered to the Lender are true and accurate copies of
the corporate records of the Borrower;
14.1.6 that the Borrower is not in default in the payment or
performance of any of its obligations for borrowed moneys;
14.1.7 that there is no provision of any existing mortgage, trust,
deed, contract, license, franchise, concession or agreement
binding on the Borrower which is being contravened or breached
by the acceptance by the Borrower of the Facility or the
execution of this Agreement or by the performance or observance
of any of its obligations under this Agreement;
14.1.8 that no Event of Default or Potential Event of Default has
occurred or is continuing;
14.1.9 that save as otherwise disclosed to the Lender in writing or
otherwise permitted under Clause 16.2, no security or
encumbrance exists on or over the assets of the Borrower;
14.1.10 that no steps have been taken or are being taken to appoint a
receiver and/or manager or a judicial manager to take over the
assets of the Borrower and/or any of its Related Corporations or
a liquidator to wind up the Borrower or any of its Related
Corporations;
14.1.11 that the Borrower has paid and discharged all taxes rates rents
and governmental charges upon the Borrower or its properties or
adequate reserves have been established for the payment thereof;
14.1.12 that save as disclosed in writing to the Lender, there is no
material adverse change in the financial condition, operating
environment or
<PAGE> 16
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management of the Borrower since the date of the last audited
accounts of the Borrower;
14.1.13 that all audited financial statements of the Borrower which have
previously been submitted to the Lender are complete and correct
and fairly represent the financial condition of the Borrower and
the results of its operations for the period stated in
accordance with generally accepted accounting principles applied
on a consistent basis;
14.1.14 that all statements documents and information submitted by the
Borrower to the Lender relating to the business, assets and
financial condition or management of the Borrower are true
complete and correct in all material respects as at the date
when such statements, documents and information is given and the
Borrower is not aware of any facts or circumstances which have
not been disclosed to the Lender and which might have a material
effect or the business, assets, financial condition or
management of the Borrower.
14.2 Each of the representations and warranties contained in the preceding
sub-clauses shall survive and continue to have full force and effect after the
execution of this Agreement and the Borrower hereby warrants to the Lender that
the above representations and warranties will be true and correct and fully
observed as if repeated then by reference to the then existing circumstances
until all moneys payable or agreed to be paid to the Lender under this Agreement
are fully repaid.
15. AFFIRMATIVE UNDERTAKNGS
The Borrower hereby undertakes and agrees with the Lender as follows:-
15.1 that the Borrower shall, upon receipt of a written request, duly furnish
to the Lender annually as soon as possible and in any event not later than one
hundred and eighty (180) days after the close of its financial year the audited
financial statements of the Borrower consisting of a balance sheet as of the
close of such respective financial years and a statement of its respective
profits and loss for the period then ended in accordance with generally accepted
accounting practices and principles consistently applied and signed by its
respective auditors, such auditors to be acceptable to the Lender;
15.2 that the Borrower shall carry on and conduct its affairs and business in
a proper and efficient manner and will keep or cause to be kept all its
properties and assets in a good state of repair and condition in accordance with
good commercial practice and shall procure that each of its subsidiaries shall
also do so;
15.3 that the Borrower shall observe, perform and comply with all the
covenants undertakings stipulations terms and conditions of this Agreement;
<PAGE> 17
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15.4 that the Borrower shall duly pay and discharge all rents, rates, taxes,
assessments and governmental charges from time to time levied upon it or against
its properties, business and operations prior to the date on which penalties
become attached thereto unless and to the extent only that the same shall be
contested in good faith and by appropriate proceedings;
15.5 that the Borrower shall furnish and provide the Lender with and permit
the Lender to obtain all such statements information explanation and data as the
Lender may reasonably require regarding the financial state or condition of the
Borrower (other than confidential information of a price sensitive nature);
15.6 that unless the Lender permits otherwise the Borrower shall use the
Facility only for the purposes specified;
15.7 that the Borrower shall obtain all necessary licences and comply with
all laws regulations rules and orders relating to the carrying on of its
business;
15.8 that the Borrower shall at its own expense, execute, sign, perfect, do
and if required register every document, act or thing as in the reasonable
opinion of the Lender may be necessary or desirable for the purpose of
implementing the terms and provisions of this Agreement;
15.9 that the Borrower shall deliver to the Lender upon demand any documents
or evidence under any provisions hereof the production of which has been waived
and to comply with all the terms and conditions of any provisions hereof which
have been waived;
15.10 that the Borrower shall promptly notify the Lender of any material event
or adverse change in the condition (financial or otherwise) or management of the
Borrower and of any circumstances which will adversely affect the Borrower's
ability to perform its obligations hereunder;
16. NEGATIVE UNDERTAKINGS
Except with the prior written consent of the Lender, such consent not to
be unreasonably withheld, the Borrower shall not:-
16.1 effect any form of reconstruction or amalgamation by way of a scheme of
arrangement or otherwise nor approve, permit or suffer any change of ownership
or transfer of any part of its issued share capital or any change in its
shareholding Provided that the Lender's consent shall not be required where any
such reconstruction, amalgamation or change in ownership or shareholding is the
result of a restructuring exercise within the Singapore Technologies Group of
Companies;
<PAGE> 18
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16.2 create or permit to arise or subsist any mortgage, charge (whether fixed
or floating), pledge, hypothecation, lien or any other encumbrance whatsoever on
its properties and assets without the consent of the Lender such consent not to
be unreasonably withheld other than Liens arising solely by operation of law and
not by way of contract and are discharged within fourteen (14) days from the
date of such liens arising;
16.3 assign or enter into any arrangements to assign its account receivables
Provided that the Lender's consent shall not be required where such assignment
is to a company within the Singapore Technologies Group of Companies;
16.4 terminate any of its businesses as now conducted which will
substantially and adversely affect the financial condition of the Borrower; and
16.5 amend or alter any of the provisions in its Memorandum or Articles of
Association which will result in any change in the nature of business or the
borrowing powers of the Borrower.
17. EVENTS OF DEFAULT
17.1 Upon the happening of any of the following events:-
17.1.1 if a demand is made for payment of all or any moneys payable by
the Borrower to the Lender on demand and the Borrower fails to
make payment as demanded or if the Borrower fails to pay any sum
due or payable under this Agreement on the due date therefor;
17.1.2 if the Borrower fails to perform any of the terms and conditions
stipulated in this Agreement and if the failure is in the
reasonable opinion of the Lender capable of remedy, the same is
not remedied to the satisfaction of the Lender within fourteen
(14) days of such failure;
17.1.3 if any representation or warranty made by the Borrower in this
Agreement or any certificate or statement delivered or made
hereunder shall be or become incorrect or untrue in any material
respect and if the default is in the reasonable opinion of the
Lender capable of remedy, the same is not remedied to the
satisfaction of the Leader within fourteen (14) days of such
failure;
17.1.4 if the accounts of the Borrower delivered to the Lender under
Clause 15.1 are qualified in a manner or to an extent which, in
the reasonable opinion of the Lender, will adversely or
materially affect the financial condition of the Borrower;
<PAGE> 19
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17.1.5 if any other indebtedness (unless such indebtedness is disputed
by the Borrower or its Related Corporation (as the case may be)
in good faith) of the Borrower or any of its Related
Corporations (to whomsoever owing) or part thereof is not paid
at its stated maturity or on its due date or within any
applicable grace period or by reason of any default or the
occurrence of any event becomes due or is declared due prior to
its stated maturity or original due date or if the Borrower or
any of its Related Corporations fail to discharge any guarantee
or indemnity given by it with respect to any indebtedness
Provided that no Event of Default will occur under this
paragraph 17.1.5 unless and until the aggregate amount of the
indebtedness in respect of which one or more of the events
mentioned in this paragraph 17.1.5 has/have occurred equals or
exceeds Dollars Seven Million ($7,000,000.00);
17.1.6 if an event has occurred which constitutes a default under or in
respect of any other agreement or document to which the Borrower
is a party or by which the Borrower may be bound or an event has
occurred which, with the giving of notice, lapse of time,
determination of materiality or other condition might constitute
a default under or in respect of any such agreement or document
and which event might in the reasonable opinion of the Lender
adversely affect the financial condition of the Borrower;
17.1.7 if the Borrower or any of its Related Corporations become
insolvent, is unable to pay its debts as they fall due, stops,
suspends, or threatens to stop or suspend payment of all or a
material part of its debts, begins negotiations or takes any
proceedings or other step with a view to readjustment,
rescheduling or deferral of all its indebtedness (or of any part
of its indebtedness which it will or might otherwise be unable
to pay when due) or proposes or makes a general assignment or an
arrangement or composition with or for the benefit of its
creditors or a moratorium is agreed or declared in respect of or
affecting all or a material part of any indebtedness on the part
of the Borrower or any of its Related Corporations for any
moneys whatsoever;
17.1.8 if any application is made or petition presented pursuant to the
Companies Act (Cap. 50) for an order that the Borrower or any of
its Related Corporations be placed under the judicial management
of a judicial manager;
17.1.9 if the Borrower or any of its Related Corporations shall cease
or threaten to cease to carry on its respective business;
<PAGE> 20
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17.1.10 if a distress or execution is levied or enforced upon or issued
against any part of the properties or assets of the Borrower or
any of its Related Corporations;
17.1.11 if any legal proceedings suits or actions of any kind whatsoever
(whether criminal or civil) shall be instituted against the
Borrower or any of its Related Corporations which in the
reasonable opinion of the Lender will materially and adversely
affect the Borrower's ability to repay the amounts payable to
the Lender under this Agreement;
17.1.12 if any present or future security or encumbrance on or over the
assets of the Borrower or any of its Related Corporation is or
becomes enforceable;
17.1.13 if any step or petition is taken by any person for the
dissolution or winding up of the Borrower or any of its Related
Corporations or a receiver is appointed over the assets and
undertakings of the Borrower or any of its Related Corporations
other than any step or petition that is, in the reasonable
opinion of the Lender, frivolous or vexatious and is withdrawn
within fourteen (14) days after such step is taken or petition
is presented;
17.1.14 if the Borrower or any of its Related Corporations shall
transfer or otherwise dispose of all or substantially all its
assets to any person, firm or corporation except in the case of
a reconstruction, whether by way of any scheme of arrangement or
otherwise, which the Lender has approved;
17.1.15 if any agency of any state seizes, compulsorily acquires,
expropriates or nationalises all or a material part of the
assets properties or shares of the Borrower or any of its
Related Corporations;
17.1.16 if it is or will become unlawful for the Borrower to perform or
comply with any one or more of its obligations under this
Agreement;
17.1.17 if the Borrower or any of the Related Corporations is declared
by the Minister to be a declared company under the provisions of
Part IX of the Companies Act (Cap. 50);
17.1.18 if there shall occur a material adverse change in the business,
assets or financial position of the Borrower or any of its
Related Corporations or if any situation shall have arisen which
in the reasonable opinion of the Lender shall make it improbable
that the Borrower will be able to perform its obligations under
this Agreement;
<PAGE> 21
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17.1.19 if at any time as determined by the Lender in its absolute
discretion, the Government of Singapore holds less than twenty
per cent (20%) of the issued and paid-up share capital of the
Borrower, whether legally or beneficially;
17.1.20 if at any time the issued and paid-up share capital of the
Borrower is less than the Facility then outstanding and owing by
the Borrower to the Lender,
and while such event is continuing, the Lender may by notice in writing to the
Borrower declare the Total Indebtedness to be immediately due and payable
whereupon they shall become so due and payable.
17.2 Upon the Total Indebtedness becoming due and payable pursuant to Clause
17.1:-
17.2.1 the Lender shall be entitled to apply any credit balance
standing to any account of the Borrower with the Lender and in
whatever currency towards satisfaction of any sum due to the
Lender from the Borrower on any account whatsoever (without
prejudice to the generality of Clause 13); and
17.2.2 all the Facility which have not been drawn or cancelled shall
automatically be cancelled and forthwith cease to be available.
<PAGE> 22
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18. INDEMNITY
18.1 Without prejudice to the foregoing terms and provisions the Borrower shall
indemnify the Lender and hold the Lender harmless from and against all losses,
damages, expenses, penalties, costs, claims or liabilities whatsoever, legal or
otherwise, which the Lender may sustain suffer or incur as a consequence of: -
18.1.1 any prepayment of the Drawing or any part thereof otherwise than
on an Interest Payment Date or in accordance with this
Agreement;
18.1.2 any default in the payment of any principal moneys when due or
any interest accrued thereon, or any other amounts payable
hereunder; and/or
18.1.3 the occurrence, of any Event of Default or Potential Event of
Default,
and such losses, damages, expenses, penalties, costs, claims or liabilities
shall include but not be limited to such amount as the Lender shall certify
(such certification being conclusive and binding upon the Borrower save for any
manifest error or fraud and such certification to set out the basis of such
amount payable) as being necessary to compensate the Lender for:-
(a) any actual loss of interest, commission or fee incurred on
account of such default; and
(b) any interest, commissions or fees paid or payable on account of
any funds borrowed in order to carry or maintain any unpaid
amount except to the extent that such interest, commission or
fees are recovered under the provisions of this Agreement.
For the avoidance of doubt, the indemnity herein shall not extend to loss of
profit, earning or income suffered by the Lender as a result of any prepayment
of the Drawing made by the Borrower in accordance with this Agreement.
9. CURRENCY INDEMNITY
19.1 Dollars is the sole currency of account and payment for all sums payable
by the Borrower under or in connection with this Agreement, including damages.
19.2 Any amount received or recovered in a currency other than Dollars
(including but not limited to any amount received or recovered as a result of,
or the enforcement of, a judgment or order of a court of any jurisdiction, in
the dissolution of the Borrower or otherwise) by the Lender in respect of any
sum expressed to be due to it from the Borrower under this Agreement shall only
constitute a discharge to the Borrower to the extent of the Dollar amount which
the Lender is able, in accordance with its usual
<PAGE> 23
-21-
practice and at The Development Bank of Singapore Limited's own rate of exchange
then prevailing, to purchase with the amount so received or recovered in that
other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on which it is
practicable to do so).
19.3 If that Dollar amount is less than the Dollar amount expressed to be due
to the Lender under this Agreement, the Borrower shall indemnify the Lender
against any loss sustained by it as a result thereof. In any event, the Borrower
shall indemnify that Lender against the reasonable cost of making any such
purchase.
19.4 These indemnities constitute a separate and independent obligation from
the other obligations in this Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by any parties hereto and shall continue in full force and effect despite any
judgment, order, claim or proof for a liquidated amount in respect of any sum
due under this Agreement or any judgment or order.
20. WAIVER NOT TO PREJUDICE RIGHT OF THE LENDER
20.1 The Lender may from time to time waive either unconditionally or on such
terms and conditions as it may deem fit any breach by the Borrower of any of the
undertakings, stipulations, terms and conditions herein contained and any
modification thereof but without prejudice to its powers, rights and remedies
for enforcement thereof, Provided Always that:-
20.1.1 no neglect or forbearance of the Lender to require and enforce
payment of any monies hereunder or the performance and
observance of any undertakings stipulations terms and conditions
contained in this Agreement, nor any time which may be given to
the Borrower shall in any way prejudice or affect any of the
rights, powers or remedies of the Lender at any time afterwards
to act strictly in accordance with the provisions hereof, and
20.1.2 no such waiver of any such breach as aforesaid shall prejudice
the rights of the Lender in respect of any other or subsequent
breach of any of the undertakings, stipulations, terms or
conditions aforesaid.
20.2 Any such waiver and any consent by the Lender under any provision of
this Agreement must be in writing and may be given subject to any conditions
thought fit by the Lender. Any waiver or consent shall be effective only in the
instance and for the purpose for which it is given.
20.3 The rights and remedies provided in this Agreement are cumulative and
not exclusive of any rights or remedies provided by law.
<PAGE> 24
-22-
21. INDULGENCE OF THE LENDER NOT TO DISCHARGE THE BORROWER
The liability of the Borrower hereunder shall not be impaired or
discharged by reason of the fact that any person is or has become in any way,
whether with or without the Lender's acceptance, liable to pay any of the moneys
owing by the Borrower hereunder or by reason of any time or other indulgence
being granted by or with the consent of the Lender to any such person or by
reason of any arrangement being entered into or composition accepted by the
Lender modifying the operation of law or otherwise the rights and remedies of
the Lender under the provisions of this Agreement.
22. FEES AND EXPENSES
The Borrower shall pay forthwith on demand:-
22.1 all reasonable expenses including stamp duty (whether as penalty or
otherwise), legal, administrative, registration, execution, valuation fees and
any other costs or charges (including abortive costs) incurred or expended by
the Lender in connection with the Facility and/or this Agreement whether the
Facility is accepted or otherwise together with all goods and services tax in
connection therewith; and
22.2 all legal fees as between solicitors and clients on a full indemnity
basis and other costs and disbursements whatsoever including but not limited to
stamp or other duties incurred by the Lender in connection with demanding and
enforcing payment of monies due hereunder or otherwise howsoever in enforcing
this Agreement, or any other document called for by the terms of this Agreement
or any of the covenants, undertakings, stipulations, terms, conditions or
provisions of this Agreement, or any other document called for by the terms of
this Agreement or incurred in connection with any delay or omission on the part
of the Borrower to pay any stamp or other duties in connection with this
Agreement, or any other document called for by the terms of this Agreement
together with all goods and services tax in connection therewith.
23. DEFAULT IN PAYMENT OF EXPENSES
In addition to and not in derogation of the other provisions of this
Agreement, if the Borrower shall fail or refuse to pay any legal fees tax stamp
duty and other costs charges and expenses which the Borrower is liable to pay
under any provisions of this Agreement, the Lender may at its discretion pay the
same (but shall not be under any obligations to do so) and if such payment is
made by the Lender the Borrower shall forthwith on demand repay the same to the
Lender together with interest thereon at the Default Interest Rate, such
interest to be calculated from day to day with monthly rests from the date of
payment by the Lender up to the date of repayment by the Borrower.
<PAGE> 25
-23-
24. NOTICES
24.1 Except as otherwise expressly provided herein, any notice, request,
demand or other communication to be given or served under this Agreement to or
on any party may be delivered at or sent by prepaid registered post or by telex
or facsimile transmission to the address, telex number or facsimile number and
marked for the attention of the person or department (if any) from time to time
designated by that party for the purpose of this Agreement and shall be deemed
to be duly served:-
24.1.1 if it is delivered, at the time of delivery;
24.1.2 if it is sent by prepaid registered post, two (2) Business Days
after posting thereof; and
24.1.3 if it is sent by telex or facsimile transmission, immediately
after transmission thereof if the date of transmission is a
Business Day, and if the date of transmission is not a Business
Day, then the notice by telex or facsimile transmission shall be
deemed to be served on the next Business Day.
24.2 Any communication from the Borrower shall be irrevocable. Except for the
drawdown notice, all other notices, requests, demands or other communications
which are required by this Agreement to be in writing may be made by telex or
facsimile transmission.
24.3 For the purpose of this Clause, notice, request, demand or other
communication to any party shall be given or served at its address, telex number
or facsimile number set out below its name in the execution clause or at such
other address, telex number or facsimile number from time to time notified to
the other parties in writing.
25. SUCCESSORS AND ASSIGNS
25.1 This Agreement shall be binding upon and inure to the benefit of the
Borrower and the Lender and their successors in title and the assigns of the
Lender and any reference in this Agreement to any party shall be construed
accordingly. All undertakings, agreements, representations and warranties given,
made or entered into by the Borrower under this Agreement shall survive the
making of any assignments hereunder.
25.2 The Borrower shall have no right to assign or transfer any of its rights
or obligations hereunder and it shall remain fully liable for all of its
undertakings, agreements, duties, liabilities and obligations hereunder, and for
the due and punctual observance and performance thereof.
<PAGE> 26
-24-
25.3 The Lender may assign all or part of its rights or transfer all or part
of its obligations under this Agreement without the consent of the Borrower. Any
such assignee or transferee shall be and be treated as a party of this Agreement
for all purposes of this Agreement and shall be entitled to the full benefit of
this Agreement to the same extent as if it were an original party in respect of
the rights or obligations assigned or transferred to it.
26. SEVERABILITY
If any one or more of the provisions contained in this Agreement shall
be deemed invalid, unlawful or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained therein shall not in any way be affected of impaired but this
Agreement shall be construed as if such invalid, unlawful or unenforceable
provision had never been included in this Agreement.
27. DISCLOSURE
The Lender shall be entitled, subject to the prior written consent of
the Borrower, such consent not to be unreasonably withheld, to disclose to any
potential assignee or transferee or guarantor or any other person who has
entered into or is proposing to enter into contractual arrangements with the
Lender or the Borrower in relation to this Agreement or any moneys or
liabilities under or relating to the Facility any information about the Borrower
and the Facility or information regarding the moneys or other relevant
particulars of any of the Borrower's accounts with the Lender.
28. CALCULATION AND EVIDENCE
28.1 The entries in the accounts maintained by the Lender in accordance with
its usual practice shall be prima facie evidence of the existence and amounts of
the obligations of the Borrower recorded therein.
28.2 A statement or certificate in writing signed by the Assistant Manager or
Investment Administration Officer or other duly authorized officer for the time
being of the Lender and certifying (a) the amount due at any time in respect of
any moneys owing or payable by the Borrower to the Lender and/or any liabilities
incurred by the Lender and payable by the Borrower to the Lender under or by
virtue of any terms conditions or stipulations of this Agreement, or (b) any
interest rate applicable; or any other certificate determination, notification
or opinion of the Lender provided for in this Agreement shall (in the absence of
any manifest error or fraud) be final and conclusive of the matters so certified
and be binding upon the Borrower.
29. GOVERNING LAW AND SUBMISSION TO JURISDICTION
This Agreement shall be governed by and construed in all aspects in
accordance with the laws of Singapore.
<PAGE> 27
-25-
SCHEDULE 1
CONDITIONS PRECEDENT
1. A certified copy of the Certificate of Incorporation and the Memorandum and
Articles of Association of the Borrower.
2. A certified copy of resolutions of the Board of Directors of the Borrower
in form and substance satisfactory to the Lender authorizing, in accordance
with the Memorandum and Articles of Association of the Borrower:-
(a) the acceptance of the Facility upon the terms and conditions
enumerated in this Agreement;
(b) the execution of this Agreement;
(c) a person or persons to sign the drawdown notice and any other notices
and any other documents to be executed under hand and to be given
pursuant to or ancillary to this Agreement by or on behalf of the
Borrower;
(d) the execution of all other documents called for by this Agreement.
3. A verification certificate by a director of the Borrower together with list
of the names and specimen signatures of each of the authorized signatories
referred to in paragraph 2(c) authenticated by such director.
4. A certificate from the Borrower's Company Secretary, certified by its
Chairman, that the Borrower's issued and paid-up capital is no less than
Dollars One Hundred million ($100,000,000.00).
5. This Agreement duly executed and all stamp fees (if any) payable thereon
under the laws of Singapore.
6. Such other documents as the Lender may reasonably request not later than
one (1) Business Day before the date of the Drawing.
<PAGE> 28
-26-
SCHEDULE 2
NOTICE OF-DRAWING
Three(3) Business Days before date of Drawing
POST OFFICE SAVINGS BANK OF SINGAPORE
73 Bras Basah Road
5th Storey POSB Centre
Singapore 189556
("the Lender")
Attention: Ms Eu Chin Fen
$50 MILLION TERM LOAN FACILITY TO CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED
Dear Sirs
Pursuant to Clause 5 of the Facility Agreement dated the _____ day of
___________ made between ourselves as Borrower and yourselves Lenders ("the
Agreement") in respect of the Facility (as defined in the Agreement), we hereby
give you notice for the following Drawing: -
<TABLE>
<S> <C> <C>
Amount : Dollars
($ )
Date of Drawing:
Payee: [name(s) and address(es)]
</TABLE>
We confirm:
(1) that the Conditions Precedent mentioned in Schedule 1 of the Agreement have
been complied with in every respect;
(2) that each of the Representations and Warranties contained in Clause 14 of
the Agreement are true and accurate in all respects as though made on the
date of this Notice with reference to facts and circumstances presently
subsisting and will be true and accurate in all respects on the date of the
intended Drawing as though made on the date of the intended Drawing with
reference to facts and circumstances then subsisting;
<PAGE> 29
-27-
(3) that as at the date hereof, no Event of Default has occurred and no event
has occurred which, with the giving of notice and/or the lapse of time
might constitute an Event of Default. We further represent warrant and
undertake that no Event of Default and no such event as aforesaid will
exist at the date of the intended Drawing; and
Yours faithfully
CHARTERED SEMICONDUCTOR MANUFACTURING LIMITED
- --------------------------------------
Name:
Title:
<PAGE> 30
-28-
IN WITNESS WHEREOF the parties hereto have executed this Agreement under
hand the day and year first above written.
<TABLE>
<S> <C>
Signed by Chia Song Hwee ) /s/ CHIA SONG HWEE
Finance Director ) ----------------------
for and on behalf of )
CHARTED SEMICONDUCTOR )
MANUFACTURING LIMITED )
Address: 60 Woodlands Industrial )
Park D Street 2 )
Singapore 738406 )
Facsimile Number: 362 29D9 )
Attn: Mr Chia Song Hwee )
)
in the presence of: Francis Chau ) /s/ FRANCIS CHUA
) ----------------------
SIGNED by CHUM BEE CHOO (MISS) ) /s/ CHUM BEE CHOO
DIRECTOR (INVESTMENT) ) ----------------------
POSBANK )
for and on behalf of )
POST OFFICE BANK OF )
SINGAPORE )
Address: 73 Bras Basah Road )
POSB Centre )
Singapore 189556 )
Telex Number: RS 25450 )
Facsimile Number: 339 1479 )
Attn: Ms Eu Chin Fen )
in the presence of: Eu Chin Fen (Miss) ) /s/ EU CHIN FEN
Ag. Assistant Manager (Credit) ) ----------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.24
CONFORMED COPY
DATED 12TH MARCH, 1998
CHARTERED SILICON PARTNERS PTE LTD
AS BORROWER
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
AS ARRANGERS
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS SENIOR LEAD MANAGER
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
AS LEAD MANAGER
THE SANWA BANK, LIMITED, SINGAPORE BRANCH
AS MANAGER
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
THE SANWA BANK, LIMITED, SINGAPORE BRANCH
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS GUARANTOR BANKS
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS LENDING BANKS
- AND -
ABN AMRO BANK N.V., SINGAPORE BRANCH
AS AGENT
------------------------------------------------------
CREDIT AGREEMENT
FOR
(1) A S$236,800,000 GUARANTEE FACILITY
(2) A US$143,200,000 TERM LOAN FACILITY
------------------------------------------------------
ALLEN & GLEDHILL,
36, ROBINSON ROAD, #18-01,
CITY HOUSE,
SINGAPORE 068877.
<PAGE> 2
i
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
1. INTERPRETATION 1
2. THE FACILITIES 12
3. CONDITIONS PRECEDENT 12
4. ISSUE OF EDB GUARANTEE 13
5. INDEMNITY TO GUARANTOR BANKS 14
6. ADVANCES 17
7. REPAYMENT AND PREPAYMENT 18
8. CANCELLATION 19
9. INTEREST 19
10. FEES 20
11. TAXES 22
12. CHANGES IN CIRCUMSTANCES 23
13. PAYMENTS 28
14. REPRESENTATIONS AND WARRANTIES 30
15. INFORMATION 33
16. UNDERTAKINGS 35
17. EVENTS OF DEFAULT 39
18. DEFAULT INTEREST 45
19. INDEMNITIES 46
20. THE AGENT AND ARRANGERS 47
21. SET-OFF AND PRO RATA SHARING 51
22. EXPENSES AND STAMP DUTY 52
23. CALCULATIONS AND EVIDENCE 53
24. BENEFIT OF AGREEMENT 53
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
25. REMEDIES, WAIVERS, AMENDMENTS
AND CONSENTS 55
26. COMMUNICATIONS 55
27. PARTIAL INVALIDITY 56
28. NATURE OF RIGHTS AND OBLIGATIONS 56
29. GOVERNING LAW 56
SCHEDULE 1 - BANKS AND COMMITMENTS 57
SCHEDULE 2 - FORM OF TRANSFER NOTICE 59
SCHEDULE 3 - CONDITIONS PRECEDENT 61
SCHEDULE 4 - FORM OF REQUEST FOR ISSUE
OF EDB GUARANTEE 63
SCHEDULE 5 - FORM OF REQUEST FOR
ADVANCE 64
SCHEDULE 6 - FORM OF DRAWDOWN SCHEDULE 66
APPENDIX A - FORM OF EDB GUARANTEE 67
APPENDIX B - FORM OF SHAREHOLDERS
UNDERTAKING 76
</TABLE>
<PAGE> 4
T H I S A G R E E M E N T is made on 12th March, 1998
B E T W E E N:-
(1) CHARTERED SILICON PARTNERS PTE LTD (the "Borrower");
(2) ABN AMRO BANK N.V., SINGAPORE BRANCH, BAYERISCHE LANDESBANK
GIROZENTRALE, SINGAPORE BRANCH, CITIBANK, N.A., OVERSEAS UNION
BANK LIMITED and THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
(the "Arrangers");
(3) THE SEVERAL BANKS AND FINANCIAL INSTITUTIONS named in Part A
of Schedule 1 (the "Guarantor Banks");
(4) THE SEVERAL BANKS AND FINANCIAL INSTITUTIONS named in Part B
of Schedule 1 (the "Lending Banks"); and
(5) ABN AMRO BANK N.V., SINGAPORE BRANCH, as agent for and on
behalf of the Banks (in such capacity, the "Agent", which
expression shall include any of its successors in such
capacity).
W H E R E A S, as a result of arrangements by the Arrangers
made at the request of the Borrower, (1) the Guarantor Banks are willing to
grant to the Borrower a S$236,800,000 guarantee facility and (2) the Lending
Banks are willing to grant to the Borrower a US$143,200,000 term loan facility,
upon the terms and subject to the conditions of this Agreement.
I T I S A G R E E D as follows:-
1. INTERPRETATION
(A) Definitions: In this Agreement, except to the extent that the
context requires otherwise:-
"Advance" means an advance made or to be made by the Lending
Banks to the Borrower under this Agreement or, as the case may
be, the outstanding principal amount of any such advance;
"Available Commitment" means, in relation to a Lending Bank,
its Term Commitment less its share of the Advances made by the
Lending Banks under this Agreement;
"Available EDB Amount" means, in relation to an Utilisation
Period, and subject as provided in this Agreement, the amount
specified against that Utilisation Period in column (2) of the
Drawdown Schedule;
"Available Facility" means the total amount of the Available
Commitments of all the Lending Banks;
"Available Term Amount" means, in relation to an Utilisation
Period, and subject as provided in this Agreement, the amount
specified against that Utilisation Period in column (3) of the
Drawdown Schedule as the aggregate amount of the Term
Commitments which is available for drawing by the Borrower
under this Agreement;
<PAGE> 5
2
"Banks" means the Guarantor Banks and the Lending Banks (and
includes their respective successors and assigns);
"Borrowings" means, at any particular time, but without double
counting, the aggregate outstanding principal, capital or
nominal amount of the indebtedness of the Borrower in respect
of borrowed money (whether actual, contingent or otherwise)
and, to the extent not otherwise taken into account, shall in
any event include:-
(1) any indebtedness for moneys borrowed or raised by the
Borrower;
(2) any indebtedness of the Borrower to any bank or other
financial institution under any guarantee, indemnity,
security or other commitment designed to assure any
creditor against loss in respect of any indebtedness
of any other person;
(3) any indebtedness under any acceptance credit opened
on behalf of the Borrower;
(4) the principal amount of any factored debts and
discounted receivables for which there is recourse to
the Borrower;
(5) any indebtedness under any debenture, note, bill of
exchange or commercial paper on which the Borrower is
liable as drawer, acceptor, endorser, issuer or
otherwise; and
(6) any amounts payable under any financial lease or
agreement entered into by the Borrower primarily for
the purposes of raising or obtaining finance whether
in respect of land, machinery, equipment or under any
hire purchase agreement or any agreement for the
conditional sale of goods or equipment on deferred
terms (excluding, for the avoidance of doubt, any
operating lease in respect of machinery or equipment
entered into by the Borrower on normal commercial
terms in the ordinary course of business),
but less any indebtedness of the Borrower to the Shareholders
or any related corporation of the Borrower which is
subordinated to the Borrower's obligations under the Financing
Documents (either pursuant to the Shareholders Undertaking or
otherwise in a manner and on terms satisfactory to the
Majority Banks);
"Business Day" means a day (other than Saturday or Sunday) on
which (1) deposits in Singapore Dollars and US Dollars may be
dealt in on the Singapore inter-bank market, (2) commercial
banks are open for business in Singapore, and (3) if on that
day a transfer of funds is to be made under this Agreement in
US Dollars, commercial banks are open for business in
Singapore and New York City;
"Calculation Dates" means each 30th June and 31st December
falling after the date of this Agreement;
<PAGE> 6
3
"Calculation Period" means each period of six months ending on
any date referred to in the definition of the Calculation
Dates;
"Centre" means (1) in relation to Singapore Dollar, Singapore,
and (2) in relation to US Dollar, New York City;
"Commitment Fee Payment Dates" means the last day of each
Utilisation Period;
"Commitment Termination Date" means 31st December, 1999;
"Commitments" means the Guarantee Commitments and the Term
Commitments;
"Completion" means the physical completion of the Plant (which
shall be evidenced by the grant of the temporary occupation
permit for the Plant pursuant to the Building Control Act,
Chapter 29 of Singapore) and the commencement of commercial
production by the Plant (which shall be the date on which the
Plant achieves a production rate of an aggregate of 2,000
wafers start per month);
"CSM" means Chartered Semiconductor Manufacturing Ltd, a
company incorporated in Singapore;
"Current Financial Report" means the then most recent
financial report delivered by the Borrower to the Agent
pursuant to Clause 15;
"Debt Service Coverage Ratio" or "DSCR" means, in relation to
any Calculation Period, the ratio of A:B where:-
"A" = the Net Available Cash for that Calculation Period as
set out in the then Current Financial Report; and
"B" = the sum of all payments of the following:-
(1) principal, interest, commitment or other fees or
commissions; and
(2) grossing-up for indemnities for taxes withheld,
deducted or paid or for indemnities for
increased funding or similar costs,
which are or will be due and payable during the
next succeeding Calculation Period in respect of
any indebtedness of the Borrower in respect of
borrowed money;
"Drawdown Schedule" means the schedule of Utilisation Periods,
Available EDB Amounts and Available Term Amounts (referred to
in paragraph 10 of Schedule 3 and to be substantially in the
form set out in Schedule 6) delivered or to be delivered by
the Borrower to the Agent prior to the date of the making of
the first request for
<PAGE> 7
4
an Advance;
"EDB" means the Economic Development Board, a statutory body
established under the Economic Development Board Act, Chapter
85 of Singapore;
"EDB Commitment" means the commitment of EDB to grant to the
Borrower a loan facility of S$450,000,000, upon the terms and
subject to the conditions of the EDB Loan Agreement;
"EDB Guarantee" means a guarantee from the Guarantor Banks in
favour of EDB, substantially in the form of Appendix A (and
any reference to the EDB Guarantee shall include the EDB
Guarantee as from time to time amended, modified or
supplemented and any document which amends, modifies or
supplements the EDB Guarantee);
"EDB Loan" means the Drawings (as defined in the EDB Loan
Agreement) in the aggregate principal amount not exceeding
S$450,000,000 made or to be made by EDB to the Borrower
pursuant to the EDB Loan Agreement (or, as the case may be,
the outstanding aggregate principal amount of such Drawings
(as defined in the EDB Loan Agreement));
"EDB Loan Agreement" means a loan agreement made or to be made
between (1) the Borrower and (2) EDB relating to a
S$450,000,000 loan facility granted by EDB to the Borrower
(and any reference to the EDB Loan Agreement includes the EDB
Loan Agreement as from time to time amended, modified or
supplemented and any document which amends, modifies or
supplements the EDB Loan Agreement);
"EDBI" means EDB Investments Pte Ltd, a company incorporated
in Singapore;
"Equity" means, at any time, the sum of:-
(1) the Net Worth of the Borrower; and
(2) the aggregate principal amount of any loan advanced
or lent by the Shareholders (or any of them) and is
still outstanding at that time and which is
subordinated to the Borrower's obligations under the
Financing Documents (either pursuant to the
Shareholders Undertaking or otherwise in a manner and
on terms satisfactory to the Majority Banks), in each
case as set out in the then Current Financial Report;
"Event of Default" means one of the events mentioned in Clause
17(A);
"Expiry Date" means the date specified in the EDB Guarantee as
the latest date on which any claim or demand may be made by
EDB for payment by any of the Guarantor Banks under the EDB
Guarantee (which shall not be later than 30th June, 2006);
"Final Maturity Date" means 30th June, 2002;
<PAGE> 8
5
"Financing Documents" means this Agreement and the
Shareholders Undertaking (and any reference to either
Financing Document includes that Financing Document as from
time to time amended, modified or supplemented and any
document which amends, modifies or supplements that Financing
Document);
"Guarantee Commitment" means, in relation to a Guarantor Bank
and subject as provided in this Agreement, the amount set
opposite its name in Part A of Schedule 1;
"Guarantee Fee Payment Dates" means (1) the date of the first
Drawing (as defined in the EDB Loan Agreement) under the EDB
Loan Agreement as certified by EDB to the Banks under the EDB
Guarantee and (2) each 1st March and 1st September thereafter
(provided that no Guarantee Fee Payment Date shall fall later
than the Expiry Date);
"Guarantee Outstanding Amount" means, at any particular time,
the sum of (1) the aggregate amount of the maximum actual
and/or contingent liability of the Guarantor Banks under or in
connection with the EDB Guarantee at that time and (2) the
amounts paid by the Guarantor Banks under or in connection
with the EDB Guarantee and not reimbursed by the Borrower to
the Guarantor Banks under this Agreement at that time;
"HP" means Hewlett Packard Company, a company incorporated in
California;
"HPE" means Hewlett Packard Europe B.V., a company
incorporated in the Netherlands;
"Information Package" means the document containing certain
information concerning the Borrower and the Shareholders dated
15th September, 1997 and the appendum thereto dated 23rd
February, 1998;
"Interest Payment Date" means the last day of an Interest
Period;
"Interest Period" means a period by reference to which
interest is calculated on an Advance or overdue sum;
"Joint Venture Agreement" means the joint venture agreement
dated 13th March, 1997 made between (1) CSM, (2) EDBI, and (3)
HPE (and any reference to the Joint Venture Agreement includes
the Joint Venture Agreement as from time to time amended,
modified or supplemented and any document which amends,
modifies or supplements the Joint Venture Agreement);
"Majority Banks" means Banks whose Outstandings together
exceed 66 2/3 per cent. of the total Outstandings (or, if
there are no Outstandings, Banks whose Commitments together
exceed 66 2/3 per cent. of the total Commitments);
"Margin" means 0.5625 per cent.;
<PAGE> 9
6
"Net Available Cash" means, in relation to any Calculation
Period, but without double counting, an amount equal to the
sum of:-
(1) all earnings (before payment of interest, taxation,
depreciation and amortisation) of the Borrower during
such Calculation Period from carrying out of its
business (including interest and other returns paid
on, and profits made on the disposal of, any
investments) and all other cash amounts which should
be credited to the profit and loss account of the
Borrower and which are received by the Borrower
during such Calculation Period; and
(2) all cash in hand or at bank belonging to the Borrower
which is available to the Borrower on the last day of
such Calculation Period (excluding any double
counting of cash generated from earnings before
payment of interest, taxation, depreciation and
amortisation during such Calculation Period),
all as set out in the then Current Financial Report;
"Net Worth" means, as at any particular time, the sum of:-
(1) the amount paid up or credited as paid up on the
issued share capital of the Borrower (other than any
redeemable share capital);
(2) the amount standing to the credit of the capital and
revenue reserves of the Borrower; and
(3) the aggregate outstanding amount of all indebtedness
of the Borrower to the Shareholders or any related
corporation of the Borrower which are subordinated to
the Borrower's obligations under the Financing
Documents (either pursuant to the Shareholders
Undertaking or otherwise in a manner and on terms
satisfactory to the Majority Banks),
as set out in the then Current Financial Report, but less any
amount included in the above which is attributable to:-
(a) any debit balance on the profit and loss account as
at the date (the "balance sheet date") at which the
then Current Financial Report was prepared;
(b) goodwill or other intangible assets;
(c) amounts set aside for taxation;
(d) minority interests in subsidiaries;
(e) so far as not otherwise excluded as attributable to
minority interests, the amount by which the book
value of any asset has been written up after the date
of this Agreement by way of revaluation. However, no
deduction shall be made to the
<PAGE> 10
7
extent that a revaluation is based on, and the
written-up value does not exceed the value shown by,
a written valuation prepared by a suitable
independent professional valuer; and
(f) any dividend or other distribution declared,
recommended or made by the Borrower out of profits
earned up to and including the balance sheet date but
not provided for in it;
"New Lending Bank" means a bank or financial institution to
which a Lending Bank seeks to transfer all or part of its
rights and/or obligations in accordance with Clause 24(C);
"Outstandings" means, in relation to a Bank at any particular
time, the sum of:-
(1) (where that Bank is a Guarantor Bank) that Bank's
share of the Guarantee Outstanding Amount at that
time; and
(2) (where that Bank is a Lending Bank) that Bank's share
of the Advances outstanding at that time (and, for
the purposes of the determination of the Majority
Banks under this Agreement at any particular time,
there shall be taken into account the Singapore
Dollar Equivalent (as determined by the Agent) of the
Advances);
"Plant" means the wafer fabrication plant constructed or to be
constructed by the Borrower as part of the Project;
"Potential Event of Default" means any event or circumstance
which, if it continued after the giving of any notice, the
expiry of any grace period, and/or (as the case may be) the
making of any determination by the Majority Banks, provided
for in Clause 17(A), would become an Event of Default;
"Project" means the construction and subsequent operation of a
wafer fabrication plant by the Borrower to be located at
Private Lot A12787(d) at Woodlands Industrial Park D,
Singapore;
"Reference Banks" means the respective principal Singapore
offices of ABN AMRO Bank N.V., Bayerische Landesbank
Girozentrale, Citibank, N.A., Overseas Union Bank Limited, The
Bank of Tokyo-Mitsubishi, Ltd. and The Sumitomo Bank, Limited;
"Repayment Dates" means 31st December, 1999, 30th June, 2000,
31st December, 2000, 30th June, 2001, 31st December, 2001 and
the Final Maturity Date;
"Shareholders" means CSM, EDBI and HPE;
"Shareholders Undertaking" means an agreement between (1) the
Borrower, (2) the Shareholders and (3) the Agent,
substantially in the form of Appendix B (or in such other form
as may be approved by the Agent and the Banks);
"Singapore Business Day" means a day (other than Saturday or
<PAGE> 11
8
Sunday) on which commercial banks are open for business in
Singapore;
"Singapore Dollar(s)" and "S$" mean the lawful currency of
Singapore;
"Singapore Dollar Equivalent" means, on any day in relation to
an amount denominated in a currency other than Singapore
Dollars, the amount in Singapore Dollars (as determined by the
Agent) which the Agent is able to purchase with such amount in
that currency on such day at the rate certified by the Agent
to be the spot exchange rate of the Agent for the purchase in
Singapore of Singapore Dollars with that currency at or about
11 a.m. on the second Singapore Business Day before such day;
"Term Commitment" means, in relation to a Lending Bank and
subject as provided in this Agreement, the amount set opposite
its name in Part B of Schedule 1;
"Transfer Notice" means a notice substantially in the form set
out in Schedule 2;
"Unavailable EDB Amount" means, at any particular time during
an Utilisation Period, the difference between (1) the lower of
the EDB Commitment at that time and S$225,695,203 and (2) the
Available EDB Amount for that Utilisation Period;
"Unavailable Term Amount" means, at any particular time during
an Utilisation Period, the difference between the Term
Commitments at that time and the Available Term Amount for
that Utilisation Period;
"US Dollar(s)" and "US$" mean the lawful currency of the
United States of America; and
"Utilisation Periods" means each of the three month periods
(the first such period commencing on 1st July, 1998) specified
as a Utilisation Period in column (1) of the Drawdown
Schedule.
(B) Swap Rate: For the purposes of this Agreement, the "Swap Rate"
means, in relation to an Interest Period relating to an overdue sum denominated
in Singapore Dollars, the arithmetic mean (rounded up, if necessary, to the next
1/16 per cent.) of the respective Swap Rates (as quoted to the Agent) of each
Reference Bank applicable to that Interest Period. The Swap Rate of a Reference
Bank shall be the rate per annum (expressed as a percentage) determined by that
Reference Bank, and quoted by that Reference Bank to the Agent, to be equal to Y
(which shall be calculated to the nearest four decimal places) calculated in
accordance with the following formula:-
(R x 365) + (F x 36500) + (F x R x 365)
--- - ----- - ---
Y = 360 S N S 360
where:-
F = the premium (being a positive number) or
the discount
<PAGE> 12
9
(being a negative number), as the case may
be, which would have been paid or received
(as the case may be) by that Reference Bank
in offering to sell US Dollars forward in
exchange for Singapore Dollars on the last
day of that Interest Period relating to such
overdue sum in the Singapore inter-bank
market at or about 11 a.m. on the second
Business Day before the first day of that
Interest Period relating to such overdue
sum;
S = the exchange rate at which that Reference
Bank sells US Dollars spot in exchange for
Singapore Dollars in the Singapore foreign
exchange market, as quoted by that Reference
Bank at or about 11 a.m. on the second
Business Day before the first day of that
Interest Period relating to such overdue
sum;
R = the rate at which that Reference Bank is
offering US Dollar deposits for that
Interest Period relating to such overdue sum
in an amount comparable to the US Dollar
equivalent of such overdue sum (such US
Dollar equivalent to be determined by that
Reference Bank at such rate or rates as that
Reference Bank determines to be most
appropriate) to prime banks in the Singapore
inter-bank market at or about 11 a.m. on the
second Business Day before the first day of
that Interest Period relating to such
overdue sum; and
N = the actual number of days in that Interest
Period relating to such overdue sum.
(C) Construction of Certain References: Except to the extent that
the context requires otherwise, any reference in this Agreement to:-
an "Act of Parliament" or any Section of, Schedule to or other
provision of an Act of Parliament shall be construed, at any
particular time, as including a reference to any modification,
extension or re-enactment thereof then in force and all
instruments, orders and regulations then in force and made
under or deriving validity from the relevant Act or provision;
an "agency" of a state includes any agency, authority, central
bank, department, government, legislature, minister, ministry,
official or public or statutory person (whether autonomous or
not) of, or of the government of, that state;
the "assets" of any person means all or any part of its
business, undertaking, property, assets, revenues (including
any right to receive revenues) and uncalled capital;
"borrowed money" includes any indebtedness for or in respect
of money borrowed or raised (whether or not for cash), by
whatever means (including acceptances, with recourse
discounting and factoring, finance leases, hire-purchase,
sale-and-leaseback, sale-and-repurchase and any form of
"off-balance sheet" financing
<PAGE> 13
10
but shall, for the avoidance of doubt, exclude operating
leases and credit sales on normal commercial terms in the
ordinary course of trading);
"consent" also includes an approval, authorisation, exemption,
filing, licence, order, permission, recording or registration
(and references to obtaining consents shall be construed
accordingly);
a "directive" includes any present or future directive,
regulation, request, requirement, rule or credit restraint
programme of any agency of any state or of any self-regulating
organisation (but, if not having the force of law, only if
compliance with the directive is in accordance with the
general practice of persons to whom the directive is intended
to apply);
"disposal" includes any sale, assignment, exchange, transfer,
concession, loan, lease, surrender of lease, licence,
reservation, waiver, compromise, release of security, dealing
with or the granting of any option or right or interest
whatsoever or any agreement for any of the same and "dispose"
means to make a disposal, and "acquisition" and "acquire"
shall be construed mutatis mutandis;
a "guarantee" also includes an indemnity, and any other
obligation (whatever called) of any person to pay, purchase,
provide funds (whether by the advance of money, the purchase
of or subscription for shares or other securities, the
purchase of assets or services, or otherwise) for the payment
of, indemnify against the consequences of default in the
payment of, or otherwise be responsible for, any indebtedness
of any other person (and "guaranteed" and "guarantor" shall be
construed accordingly);
"identified form" in relation to any document means a form of
such document initialled by the Borrower and the Agent for the
purposes of identification on the date of this Agreement;
"indebtedness" includes any obligation (whether present or
future, actual or contingent, secured or unsecured, as
principal, surety or otherwise) for the payment or repayment
of money;
a "law" includes common or customary law and any constitution,
decree, judgment, legislation, order, ordinance, regulation,
statute, treaty or other legislative measure, in each case of
any jurisdiction whatsoever (and "lawful" and "unlawful" shall
be construed accordingly);
something having a "material adverse effect" on:-
(1) the Borrower is to it having a material adverse
effect (a) on its financial condition, or (b) on its
ability to perform and comply with its obligations
under any Financing Document; or
(2) any of the Shareholders is to it having a material
adverse
<PAGE> 14
11
effect (a) on its financial condition or (b) on its
ability to perform and comply with its obligations
under the Shareholders Undertaking or any other
Financing Document;
a "month" means a period beginning in one calendar month and
ending in the next calendar month on the day numerically
corresponding to the day of the calendar month on which it
commences or, where there is no date in the next calendar
month numerically corresponding as aforesaid, the last day of
such calendar month, and "months" and "monthly" shall be
construed accordingly;
any "obligation" of any person under this Agreement or any
other agreement or document shall be construed as a reference
to an obligation expressed to be assumed by or imposed on it
under this Agreement or, as the case may be, that other
agreement or document (and "due", "owing", "payable" and
"receivable" shall be similarly construed);
a "person" includes any individual, company, corporation,
firm, partnership, joint venture, association, organisation,
trust, state or agency of a state (in each case, whether or
not having separate legal personality);
"related corporations" has the meaning ascribed to it in
Section 6 of the Companies Act, Chapter 50 of Singapore;
"security" includes any mortgage, pledge, lien, hypothecation,
security interest or other charge or encumbrance and any other
agreement or arrangement having substantially the same
economic effect (including any "hold-back" or "flawed asset"
arrangement) (and "secured" shall be construed accordingly);
"subsidiary" has the meaning ascribed to it in Section 5 of
the Companies Act, Chapter 50 of Singapore;
"tax(es)" includes any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed;
"tax on overall net income" of a person shall be construed as
a reference to tax (other than tax deducted or withheld from
any payment) imposed on that person by the jurisdiction in
which its principal office is located on (1) the net income,
profits or gains of that person worldwide or (2) such of its
net income, profits or gains as arise in or relate to that
jurisdiction;
a "time of the day" is to Singapore time unless otherwise
stated; and
the "winding-up" of a person also includes the amalgamation,
reconstruction, reorganisation, administration, judicial
management, dissolution, liquidation, merger or consolidation
of that person, and any equivalent or analogous procedure
under the law of any jurisdiction in which that person is
incorporated,
<PAGE> 15
12
domiciled or resident or carries on business or has assets.
(C) Miscellaneous: The headings in this Agreement are inserted for
convenience only and shall be ignored in construing this Agreement. Unless the
context otherwise requires, words (including words defined herein) denoting the
singular number only shall include the plural and vice versa. The words
"written" and "in writing" include any means of visible reproduction. References
to "Appendices", "Clauses" and "Schedules" are to be construed as references to
the appendices to, clauses of, and schedules to, this Agreement. Any reference
to a sub-Clause or a paragraph is to a sub-Clause or paragraph of the Clause in
which such reference appears.
2. THE FACILITIES
(A) Guarantee Facility: (1) The Guarantor Banks grant to the
Borrower a S$236,800,000 guarantee facility upon the terms and subject to the
conditions of this Agreement.
(2) The Guarantor Banks will participate in the EDB Guarantee to
be issued under that facility in the manner specified in Clause 4.
(B) Term Loan Facility: (1) The Lending Banks grant to the
Borrower a US$143,200,000 term loan facility upon the terms and subject to the
conditions of this Agreement.
(2) The Lending Banks will participate in the Advances to be made
under that facility in the manner specified in Clause 6.
(C) Purpose: The Borrower shall use the entire proceeds of each
Advance and the EDB Loan to finance the construction and operation of the Plant
and/or the purchase of equipment for wafer fabrication of semiconductor devices
in relation to the Plant, but none of the Arrangers, the Agent nor any Bank need
check that it does so.
3. CONDITIONS PRECEDENT
The Borrower may not make its request for the issue of the EDB
Guarantee and may not make its first request for an Advance until the Agent has
confirmed to it and the Banks that the Agent has received documents appearing to
the Agent to comply with the requirements of Schedule 3 and to be satisfactory,
which confirmation shall be given as soon as practicable following receipt of
all such documents.
4. ISSUE OF EDB GUARANTEE
(A) Issue Conditions: Subject to the provisions of this Agreement, the EDB
Guarantee will be issued by the Guarantor Banks at the request of the Borrower
if the following additional conditions are fulfilled:-
(1) not later than 10 a.m. on the tenth Singapore
Business Day before the proposed date of the issue of
the EDB Guarantee (or, as the case may be, such later
time as may be acceptable to the Agent and the
Guarantor Banks for the purpose of the request), the
Agent has received from the Borrower:-
<PAGE> 16
13
(a) a notice substantially in the form set out
in Schedule 4 specifying:-
(i) the proposed date of the issue of
the EDB Guarantee, which must be a
Singapore Business Day falling on or
before 30th June, 2000;
(ii) the maximum amount of the Guarantee
Outstanding Amount, which must be
equal to or less than the total
amount of the Guarantee Commitments
of all the Guarantor Banks; and
(iii) the proposed date for the expiry of
the EDB Guarantee, which must not be
later than 30th June, 2006; and
(b) a certified copy of the EDB Loan Agreement
(which shall be substantially in the
identified form);
(2) all representations and warranties in Clause 14
(except to any extent waived in accordance with
Clause 25(B)) have been complied with and would be
correct in all material respects if repeated on the
proposed date of the issue of the EDB Guarantee by
reference to the circumstances then existing;
(3) no Event of Default or Potential Event of Default has
occurred on or before the proposed date of the issue
of the EDB Guarantee or will occur as a result of the
issue of the EDB Guarantee, other than any waived in
accordance with Clause 25(B); and
(4) not later than 10 a.m. on the proposed date of the
issue of the EDB Guarantee, the Agent has received
and found satisfactory such additional information,
legal opinions and/or other documents relevant in the
context of or relating to the Financing Documents as
it may reasonably request not later than 10 a.m. on
the second Business Day before the proposed date of
the issue of the EDB Guarantee as a result of
circumstances which have arisen or come to its
attention since the date of this Agreement.
(B) Notification of Issue Request: The Agent shall promptly notify
each Guarantor Bank of the proposed date of the issue of the EDB Guarantee.
(C) Issue of EDB Guarantee: The EDB Guarantee shall be
substantially in the form of Appendix A with such amendments as shall have been
agreed between the Borrower, the Guarantor Banks and EDB and shall be completed
with the particulars specified in the request of the Borrower referred to in
sub-Clause (A). Subject to this sub-Clause (C), on or prior to the proposed date
of the issue of the EDB Guarantee, each Guarantor Bank shall execute the EDB
Guarantee (or a counterpart of the EDB Guarantee) and shall deliver the executed
document to the Agent for onward transmission to EDB.
(D) Obligations Several: No Guarantor Bank shall be liable for
the failure of any other Guarantor Bank to fulfil its obligations under, or in
<PAGE> 17
14
respect of, the EDB Guarantee and the Borrower shall not be released from its
obligations towards the other Guarantor Banks in case of such failure.
5. INDEMNITY TO GUARANTOR BANKS
(A) Indemnity: In consideration of the Guarantor Banks agreeing
to issue the EDB Guarantee at the request of the Borrower or otherwise acting
under or in connection with this Agreement:-
(1) the Borrower hereby unconditionally and irrevocably
undertakes to and agrees with each of the Guarantor
Banks that it will at all times fully indemnify and
save harmless each of the Guarantor Banks from and
against any and all actions, proceedings,
liabilities, claims, demands, losses, damages,
charges, costs and expenses of whatever nature which
the Guarantor Banks or any of them may at any time
and from time to time directly or indirectly sustain,
incur or suffer (a) by reason of any claim or demand
made under the EDB Guarantee or its payment of any
claim or liability under or in connection with the
EDB Guarantee or otherwise in connection with or
arising out of the EDB Guarantee, (b) by reason of
this Agreement, (c) as a result of any default by the
Borrower in the due and punctual payment of any sum
payable by it under or in connection with this
Agreement or the EDB Loan Agreement and/or (d) as a
result of any default by the Borrower in the due and
punctual performance of any of its other obligations
under this Agreement or the EDB Loan Agreement
(excluding, for the avoidance of doubt, any actions,
proceedings, liabilities, claims, demands, losses,
damages, charges, costs and expenses incurred by any
of the Guarantor Banks by reason of its negligence or
wilful misconduct or those of its officers, employees
or agents);
(2) without prejudice to the generality of the provisions
of paragraph (1), the Borrower covenants and
undertakes to pay to each of the Guarantor Banks by
way of indemnity at any time and from time to time
immediately upon demand by the Agent or that
Guarantor Bank all moneys and liabilities whatsoever
which may from time to time be claimed or demanded
from that Guarantor Bank or which that Guarantor Bank
may pay or is liable to pay or sustain, incur or
suffer under or by reason of or in connection with
the EDB Guarantee (excluding, for the avoidance of
doubt, any moneys or liabilities sustained, incurred
or suffered by any of the Guarantor Banks by reason
of its negligence or wilful misconduct or those of
its officers, employees or agents). The Borrower
shall make payment to the Agent or that Guarantor
Bank following such claim or demand notwithstanding
that at the time of the claim or demand that
Guarantor Bank is not liable under or required by law
to make any payment under or in connection with the
EDB Guarantee and notwithstanding any other fact or
circumstance which may constitute a defence or
discharge to that Guarantor Bank in respect of the
claim or demand made against it under or in
connection with the EDB Guarantee; and
<PAGE> 18
15
(3) the Borrower further agrees to pay to each of the
Guarantor Banks on demand interest on all sums
demanded by the Agent or that Guarantor Bank from it
pursuant to the provisions of this sub-Clause (A)
from and including the relevant due date of demand
for payment of the same until the date of actual
payment (both before and after judgment), part of a
day being treated as a complete day. Interest payable
pursuant to the provisions of this paragraph (3)
shall be calculated and paid at the rate per annum
(as determined by the Agent) equal to the sum of
0.625 per cent. and the cost to that Guarantor Bank
of funding such sums for such period or periods as
that Guarantor Bank may determine by whatever means
it reasonably determines to be most appropriate
(including the cost to that Guarantor Bank occasioned
by or attributable to complying with reserves,
liquidity, deposit or other requirements for the time
being imposed on it by the relevant authority or
authorities). Such interest shall accrue from day to
day and shall be calculated on the basis of a year of
365 days and the actual number of days elapsed. In
this paragraph (3), the expression "due date of
demand for payment" means the date on which that
Guarantor Bank has made a payment under or in
connection with the EDB Guarantee in respect of which
that Guarantor Bank's right to indemnity arises under
this sub-Clause (A) (whether or not a demand for
indemnity under this sub-Clause (A) was actually made
by that Guarantor Bank on that day).
(B) Further Authority: The Guarantor Banks may at all times
immediately pay, discharge and satisfy upon demand by EDB any amounts claimed by
EDB under or in connection with the EDB Guarantee without any reference or
further authority from the Borrower, without further investigation or inquiry
and without inquiring and without requiring proof or the agreement of the
Borrower that the amounts so demanded are due and notwithstanding that the
Borrower disputes the validity of any such demands or payments (whether or not
such dispute is disclosed to any of the Guarantor Banks). The Guarantor Banks
need not concern themselves with the propriety of any claim or demand made or
purported to be made under or in connection with the EDB Guarantee and it shall
not be a defence to any demand made of the Borrower, nor shall the liability of
the Borrower under this Clause be affected or impaired by the fact, that any of
the Guarantor Banks was or might have been justified in refusing payment in
whole or in part of the amounts so demanded.
(C) Good Faith: The Borrower further agrees that any action or
step taken by any of the Guarantor Banks in good faith under or in connection
with this Agreement shall be binding on it and shall not place that Guarantor
Bank under any liability to it.
(D) Obligations Continuing: The obligations of the Borrower under
this Clause are and will remain in full force and effect by way of continuing
security until no sum remains payable by the Borrower under this Agreement or by
any of the Guarantor Banks under the EDB Guarantee and the Guarantee Commitments
cease to remain in effect. Furthermore, those obligations are
<PAGE> 19
16
additional to, and not instead of, any other agreement, security, indemnity,
guarantee, right, remedy or lien at any time existing in favour of any person,
whether from the Borrower or otherwise.
(E) No Discharge: The Borrower shall not be discharged, nor shall
its liability under this Clause or any other provision of this Agreement be
affected, by any matter or thing whatsoever (including, without limitation, (1)
any time, indulgence, waiver, forbearance, concession or consent at any time
given to any of the Guarantor Banks, the Borrower, any Shareholder or any other
person, (2) any amendment or supplement to any provision of the EDB Guarantee,
this Agreement or any other agreement, security, indemnity, guarantee, right,
remedy or lien, (3) the making or absence of any demand on the Borrower, any
Shareholder or any other person for payment, (4) the enforcement or absence of
enforcement of the EDB Guarantee, this Agreement or any other agreement,
security, indemnity, guarantee, right, remedy or lien, (5) the taking, existence
or release of any agreement, security, indemnity, guarantee, right, remedy or
lien, (6) the insolvency, winding-up, amalgamation, reconstruction or
reorganisation of the Borrower, any Shareholder or any other person (or the
commencement of any of the foregoing) and (7) the illegality, invalidity or
unenforceability of, or any defect in, any provision of the EDB Guarantee, this
Agreement or any other agreement, security, indemnity, guarantee, right, remedy
or lien or of any obligations of the Borrower under this Agreement or any other
agreement, security, indemnity, guarantee, right, remedy or lien).
(F) Non-Amendment of EDB Guarantee: Each of the Guarantor Banks
agree with the Borrower that (without prejudice to the obligations of the
Borrower under or in connection with this Agreement), they will not amend or
agree to any amendment of the EDB Guarantee without the prior consent in writing
of the Borrower. Notwithstanding the foregoing provisions of this sub-Clause
(F), nothing in this sub-Clause (F) shall affect or prejudice the obligations of
the Borrower under or in connection with this Agreement or release the Borrower
from any of its obligations under or in connection with this Agreement
(notwithstanding any amendment made to the EDB Guarantee without the prior
consent in writing of the Borrower).
6. ADVANCES
(A) Advances: Subject to the provisions of this Agreement,
Advances will be made by the Lending Banks to the Borrower at its request if the
following additional conditions are fulfilled:-
(1) not later than 10 a.m. on the fifth Singapore
Business Day before the proposed date of the relevant
Advance (or, as the case may be, such later time as
may be acceptable to the Agent and the Lending Banks
for the purpose of the relevant request), the Agent
has received from the Borrower a notice substantially
in the form set out in Schedule 5 specifying:-
(a) the proposed date of that Advance, which
must be a Business Day falling on or before
the Commitment Termination Date;
(b) the amount of that Advance, which must be
equal to or less than the Available Term
Amount of the Utilisation Period during
which the proposed date of that Advance
<PAGE> 20
17
falls and, if less than that Available Term
Amount, must be US$5,000,000 or a higher
integral multiple of US$1,000,000; and
(c) details of the bank (which must be in New
York City) and account to which the Borrower
wishes the proceeds of that Advance to be
made available by the Agent;
(2) none of the events mentioned in Clause 12(C) occurs
in relation to the first Interest Period for that
Advance;
(3) all representations and warranties in Clause 14
(except to any extent waived in accordance with
Clause 25(B)) have been complied with and would be
correct in all material respects if repeated on the
proposed date of that Advance by reference to the
circumstances then existing;
(4) no Event of Default or Potential Event of Default has
occurred on or before the proposed date of that
Advance, or will occur as a result of making that
Advance, other than any waived in accordance with
Clause 25(B); and
(5) not later than 10 a.m. on the proposed date of that
Advance, the Agent has received and found
satisfactory such additional information, legal
opinions and/or other documents relevant in the
context of or relating to the Financing Documents as
it may reasonably request not later than 10 a.m. on
the second Business Day before the proposed date of
that Advance as a result of circumstances which have
arisen or come to its attention since the date of
this Agreement.
(B) Notification of Drawdown Requests: The Agent shall promptly
(and in any event by 5 p.m. on the fourth Business Day before the proposed date
of each Advance) notify each Lending Bank of the proposed date of, and the
amount of that Lending Bank's share of, each Advance.
(C) Participation in Advances: Each Lending Bank will participate
in each Advance to be made to the Borrower under this Agreement in the
proportion borne by its Available Commitment to the Available Facility when the
Agent receives the notice requesting that Advance (unless, between then and the
time for making that Advance, its Available Commitment is reduced to zero, in
which case the amount of that Advance will be reduced accordingly).
7. REPAYMENT AND PREPAYMENT
(A) Repayment: Subject as otherwise provided in this Agreement,
the Advances outstanding at the end of the Commitment Termination Date shall be
repaid by the Borrower in six equal semi-annual instalments, one instalment
falling due on each Repayment Date. For the avoidance of doubt, the Borrower
shall repay any outstanding Advances in full on the Final Maturity Date.
(B) Prepayment of All Lending Banks: The Borrower may prepay any
Advance, or any part of it which is US$5,000,000 or a higher integral multiple
of US$1,000,000 thereof without premium or penalty on any Interest Payment Date
relating to that Advance after the Commitment Termination Date if it gives to
the Agent not less than ten days' notice of the Advance to be prepaid and the
<PAGE> 21
18
date and amount of the prepayment. Any such prepayment must be accompanied by
accrued interest on the amount prepaid and by any other sum then due under this
Agreement.
(C) Of Certain Lending Banks: If (1) the Borrower becomes obliged
to pay any tax or other amount for the account of any Lending Bank under Clause
11(B) or 12(B) or the Agent gives a notification on behalf of any Lending Bank
under Clause 12(D), and (2) the Borrower gives to that Lending Bank not less
than ten days' notice of the date of prepayment, the Borrower may prepay all
(but not part only) of that Lending Bank's share of the Advances without premium
or penalty at any time. Upon the Agent receiving that notice, that Lending
Bank's Commitment (if any) shall be cancelled. Any such prepayment must be
accompanied by accrued interest on that Lending Bank's share of the Advances and
by any other sum then due to that Lending Bank under Clause 19(A) or any other
provision of this Agreement.
(D) Effect of Prepayments: Any prepayment under sub-Clause (B)
will be applied in or towards repaying the remaining repayment instalments of
the Advances under sub-Clause (A) in inverse order of maturity.
(E) Miscellaneous: Any notice of prepayment given by the Borrower
under this Agreement will oblige the Borrower to prepay in accordance with that
notice. The Borrower may not repay or prepay all or any part of the Advances
except as expressly provided in this Agreement and may not re-borrow any amount
repaid or prepaid.
8. CANCELLATION
(A) Of All Lending Banks: The Borrower may cancel the Available
Facility, or any part of it which is US$5,000,000 or a higher integral multiple
of US$1,000,000, at any time before the Commitment Termination Date by giving to
the Agent not less than ten days' notice of the date and amount of the
cancellation. Any such partial cancellation shall reduce each Lending Bank's
Term Commitment rateably. On the date on which the cancellation takes effect,
the Borrower shall pay to the Agent for the account of the Lending Banks a
cancellation fee of 0.0625 per cent. of the amount of that cancellation.
(B) Of Certain Lending Banks: If the Borrower becomes obliged to
pay any tax or other amount for the account of any Lending Bank under Clause
11(B) or 12(B) or the Agent gives a notification on behalf of any Lending Bank
under Clause 12(D), the Borrower may cancel all (but not part only) of that
Lending Bank's Term Commitment without premium or penalty at any time before the
Commitment Termination Date by giving to that Lending Bank not less than ten
days' notice of the date of the cancellation.
(C) Cancellation Rights Limited: The Borrower may not cancel all
or any part of the Term Commitments except as expressly provided in this
Agreement and any amount cancelled shall not be reinstated.
9. INTEREST
(A) Interest Periods: Interest shall be calculated on each Advance
by reference to successive Interest Periods. Each Interest Period shall apply to
all Advances made or outstanding on the first day of that Interest Period and
shall be of six months' duration, except as follows:-
<PAGE> 22
19
(1) the first Interest Period relating to any Advance
shall begin on the proposed date of that Advance and
shall end (in the case of the first Advance) on the
date falling six months thereafter and (in the case
of any subsequent Advance) on the same date as the
then current Interest Period relating to the first
Advance; and
(2) any Interest Period which commences before 30th June
in each year shall instead end on 30th June of that
year and any Interest Period which commences before
31st December (but after 30th June) in each year
shall instead end on 31st December of that year.
(B) Normal Interest Rate: The rate of interest applicable to an
Advance for all or any part of a particular Interest Period relating to that
Advance shall be the rate per annum (as determined by the Agent) equal to the
sum of the Margin and the arithmetic mean (rounded up, if necessary, to the next
1/16 per cent.) of the respective rates (as quoted to the Agent) at which each
Reference Bank is offering deposits in US Dollars for that Interest Period in an
amount comparable to the Advance to which that Interest Period relates to prime
banks in the Singapore inter-bank market at or about 11 a.m. on the second
Business Day before the first day of that Interest Period. If any Reference Bank
does not supply any quotation required from it for the purpose of this
Agreement, the relevant arithmetic mean (rounded up, if necessary, to the next
1/16 per cent.) shall be determined on the basis of the quotations supplied by
the remaining Reference Banks.
(C) Notification of Interest Periods and Rates: The Agent shall
promptly notify the Borrower and the Lending Banks of each rate of interest
determined in accordance with sub-Clause (B).
(D) Payment of Interest: Subject as otherwise provided in this
Agreement, on the last day of each Interest Period relating to an Advance, the
Borrower shall pay the unpaid interest accrued during that Interest Period on
that Advance at the rate applicable to that Interest Period.
10. FEES
(A) Guarantee Fee: The Borrower shall pay to the Guarantor Banks:-
(1) on each Guarantee Fee Payment Date a guarantee fee
calculated at the rate of 0.625 per cent. per annum
on the lower of (a) the aggregate amounts of
principal, interest and default interest, if any,
outstanding under the EDB Loan Agreement on that
Guarantee Fee Payment Date and (b) the Maximum
Aggregate Liability (as defined in the EDB Guarantee)
on that Guarantee Fee Payment Date and for the period
commencing on that Guarantee Fee Payment Date and
ending on the next Guarantee Fee Payment Date or, if
earlier, the Expiry Date (such guarantee fee to be
calculated on the basis of a 365 day year); and
(2) on each date (other than a Guarantee Fee Payment
Date) on which the principal amount of the EDB Loan
is increased (each an "Increase Date"), a guarantee
fee calculated at the rate
<PAGE> 23
20
of 0.625 per cent. per annum on the amount by which
the EDB Loan has increased on that Increase Date (but
not including that part of the EDB Loan exceeding
S$225,695,203) and for the period commencing on that
Increase Date and ending on the next Guarantee Fee
Payment Date or, if earlier, the Expiry Date (such
guarantee fee to be calculated on the basis of a 365
day year).
The guarantee fee shall be payable in Singapore Dollars and shall be
non-refundable notwithstanding any reduction of the EDB Loan or Guarantee
Outstanding Amount after the relevant Guarantee Fee Payment Date or, as the case
may be, Increase Date or any reduction or cancellation of the Guarantee
Commitments after the relevant Guarantee Fee Payment Date or, as the case may
be, Increase Date.
(B) Commitment Fee: (1) (a) The Borrower shall pay to the
Guarantor Banks on each Commitment Fee Payment Date a commitment fee (which
shall be payable in Singapore Dollars) calculated as follows:-
(i) in relation to the Available EDB Amount, at the rate
of 0.125 per cent. per annum on the Available EDB
Amount from day to day during the Utilisation Period
ending on that Commitment Fee Payment Date; and
(ii) in relation to the Unavailable EDB Amount, at the
rate of 0.0625 per cent. per annum on the Unavailable
EDB Amount from day to day during the Utilisation
Period ending on that Commitment Fee Payment Date.
(b) If, in relation to any Utilisation Period, the
Available EDB Amount for such Utilisation Period exceeds the aggregate principal
amount of the advances made by EDB to the Borrower under the EDB Loan Agreement
during such Utilisation Period, the Available EDB Amount for the next succeeding
Utilisation Period will be increased by an amount equal to such excess.
(c) The Borrower may, by giving not less than 30 days'
notice to the Agent, increase the Available EDB Amount during any Utilisation
Period and on the date specified in the notice, the Available EDB Amount for
such Utilisation Period shall be increased by the amount specified in the
notice. For the avoidance of doubt, the commitment fee payable on the Commitment
Fee Payment Date in relation to that Utilisation Period shall be 0.125 per cent.
per annum on the increased Available EDB Amount from day to day beginning with
the date specified in the notice for such Utilisation Period and ending on that
Commitment Fee Payment Date.
(d) If, in relation to any Utilisation Period, the
Borrower has requested for an increase of the Available EDB Amount in accordance
with sub-paragraph (c) above, the Available EDB Amount for the next succeeding
Utilisation Period shall be reduced by an amount equal to such increase. For the
avoidance of doubt, if the Available EDB Amount for any Utilisation Period
exceeds the aggregate principal amount of the advances made by EDB to the
Borrower under the EDB Loan Agreement during that Utilisation Period, the
Available EDB Amount for the next succeeding Utilisation Period will be
increased by an amount equal to such excess in accordance with the provisions of
sub-paragraph (b) above.
<PAGE> 24
21
(2) (a) The Borrower shall pay to the Lending Banks on each
Commitment Fee Payment Date a commitment fee (which shall be payable in US
Dollars) calculated as follows:-
(i) in relation to the Available Term Amount, at
the rate of 0.125 per cent. per annum on the
Available Term Amount from day to day during
the Utilisation Period ending on that
Commitment Fee Payment Date; and
(ii) in relation to the Unavailable Term Amount,
at the rate of 0.0625 per cent. per annum on
the Unavailable Term Amount from day to day
during the Utilisation Period ending on that
Commitment Fee Payment Date.
(b) If, in relation to any Utilisation Period, the
Available Term Amount for such Utilisation Period exceeds the Advances made by
the Lending Banks to the Borrower during such Utilisation Period, the Available
Term Amount for the next succeeding Utilisation Period will be increased by an
amount equal to such excess.
(c) The Borrower may, by giving not less than 30 days'
notice to the Agent, increase the Available Term Amount during any Utilisation
Period and on the date specified in the notice, the Available Term Amount for
such Utilisation Period shall be increased by the amount specified in the
notice. For the avoidance of doubt, the commitment fee payable on the Commitment
Fee Payment Date in relation to that Utilisation Period shall be 0.125 per cent.
per annum on the increased Available Term Amount from day to day beginning with
the date specified in the notice for such Utilisation Period and ending on that
Commitment Fee Payment Date.
(d) If, in relation to any Utilisation Period, the
Borrower has requested for an increase of the Available Term Amount in
accordance with sub-paragraph (c) above, the Available Term Amount for the next
succeeding Utilisation Period shall be reduced by an amount equal to such
increase. For the avoidance of doubt, if the Available Term Amount for any
Utilisation Period exeeds the aggregate principal amount of the Advances made by
the Lending Banks to the Borrower under this Agreement during that Utilisation
Period, the Available Term Amount for the next succeeding Utilisation Period
will be increased by an amount equal to such excess in accordance with the
provisions of sub-paragraph (b) above.
(C) Participation Fee: (1) The Borrower shall pay to the Agent for
the account of the Banks a participation fee in the amount, at the time and in
the manner stated in a letter (the "Fee Letter") of today's date from the Agent
to the Borrower and countersigned by the Borrower.
(2) On receipt of the participation fee, the Agent shall pay to
each Bank its share of the participation fee in the amount already agreed
between the Agent and that Bank.
(D) Arrangement Fee: The Borrower shall pay to the Agent for the
account of the Arranger an arrangement fee in the amount, at the time and in the
manner stated in the Fee Letter.
(E) Agency Fee: The Borrower shall pay to the Agent for its own
account
<PAGE> 25
22
an agency fee in the amounts, at the times and in the manner stated in the Fee
Letter.
11. TAXES
(A) Payments to be Free and Clear: All sums payable by the
Borrower under this Agreement shall be paid (1) free of any restriction or
condition, (2) free and clear of and (except to the extent required by law)
without any deduction or withholding for or on account of any tax and (3)
without deduction or withholding (except to the extent required by law) on
account of any other amount, whether by way of set-off or otherwise.
(B) Grossing-up of Payments: (1) If the Borrower or any other
person (whether or not a party to, or on behalf of a party to, this Agreement)
must at any time deduct or withhold any tax or other amount from any sum paid or
payable by, or received or receivable from, the Borrower under this Agreement,
the Borrower shall pay such additional amount as is necessary to ensure that the
Agent or, as the case may be, the Bank to which that sum is due receives on the
due date and retains (free from any liability other than tax on its own overall
net income) a net sum equal to what it would have received and so retained had
no such deduction or withholding been required or made.
(2) If the Borrower or any other person (whether or not a party
to, or on behalf of a party to, this Agreement) must at any time pay any tax or
other amount on, or calculated by reference to, any sum received or receivable
by the Agent or, as the case may be, any Bank under this Agreement (except for a
payment by the Agent or a Bank of tax on its own overall net income), the
Borrower shall pay or procure the payment of that tax or other amount before any
interest or penalty becomes payable or, if that tax or other amount is payable
and paid by the Agent or any Bank, shall reimburse it on demand for the amount
paid by it.
(3) Within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after the due
date of payment of any tax or other amount which it is required by paragraph (2)
to pay, the Borrower shall deliver to the Agent evidence satisfactory to the
Agent or, as the case may be, the relevant Bank of that deduction, withholding
or payment and (where remittance is required) of the remittance thereof to the
relevant taxing or other authority.
(4) As soon as the Borrower is aware that any such deduction,
withholding or payment is required (or of any change in any such requirement),
it shall notify the Agent.
(C) Goods and Services Tax: The Borrower shall also pay to the
Agent and each Bank on demand, in addition to any amount payable by the Borrower
to the Agent or, as the case may be, the relevant Bank under this Agreement, any
goods and services, value added or other similar tax payable in respect of that
amount (and references in this Agreement to that amount shall be deemed to
include any such taxes payable in addition to it).
(D) Refund of Tax Credits: If:-
(1) the Borrower makes a payment under sub-Clause (B)(1)
or (2) (a "Tax Payment") in respect of a payment to a
Bank under this Agreement; and
<PAGE> 26
23
(2) that Bank determines in its absolute discretion that
it has obtained a refund of tax or obtained and used
a credit against tax on its overall net income (a
"Tax Credit") which that Bank in its absolute
discretion is able to identify as attributable to
that Tax Payment,
then, if in its absolute discretion it can do so without any adverse
consequences for that Bank, that Bank shall reimburse the Borrower such amount
as that Bank in its absolute discretion determines to be such proportion of that
Tax Credit as will leave that Bank (after that reimbursement) in no better or
worse position in respect of its worldwide tax liabilities than it would have
been in if no Tax Payment had been required. A Bank shall have an absolute
discretion as to whether to claim any Tax Credit (and, if it does claim, the
extent, order and manner in which it does so) and whether any amount is due from
it under this sub-Clause (D) (and, if so, what amount and when). No Bank shall
be obliged to disclose any information regarding its tax affairs and
computations.
12. CHANGES IN CIRCUMSTANCES
(A) Illegality: (1) If at any time any Guarantor Bank reasonably
determines that it is or will become unlawful or contrary to any directive of
any agency of any state for it to allow all or part of its Guarantee Commitment
to remain outstanding and/or to carry out all or any of its other obligations
under this Agreement or all or any of its obligations under the EDB Guarantee,
upon that Guarantor Bank notifying the Borrower (through the Agent):-
(a) that Guarantor Bank's Guarantee Commitment shall be
cancelled (but without prejudice to the obligations
of that Guarantor Bank under the EDB Guarantee);
(b) the Borrower shall procure the release by EDB of all
of the obligations of that Guarantor Bank under the
EDB Guarantee on or prior to such date (the "Relevant
Date") as that Guarantor Bank shall certify to be
necessary to comply with the relevant law or
directive but if the Borrower is unable for any
reason to procure the release by EDB of all of the
obligations of that Guarantor Bank under the EDB
Guarantee by the Relevant Date, the Borrower shall
pay to the Agent for the account of that Guarantor
Bank on the Relevant Date an amount equal to that
Guarantor Bank's share of the Guarantee Outstanding
Amount (which shall be held by the Agent for the
account of that Guarantor Bank and applied towards
the discharge of the obligations of the Borrower to
that Guarantor Bank under or in connection with this
Agreement and shall only be released to the Borrower
as and to the extent that the maximum contingent
liability of the Borrower to that Guarantor Bank
under this Agreement is reduced) and shall pay, on
the date of payment of such amount, any sum then due
from the Borrower to that Guarantor Bank under this
Agreement.
Without prejudice to the other provisions of this paragraph (1) and any rights
to which that Guarantor Bank may be entitled, in the event that the Borrower is
unable for any reason to procure the release by EDB of all of the obligations
<PAGE> 27
24
of that Guarantor Bank under the EDB Guarantee by the Relevant Date, that
Guarantor Bank may:-
(i) prepay on behalf of the Borrower or purchase itself
or procure the purchase by a nominee of all or any of
the obligations of that Guarantor Bank under the EDB
Guarantee, and any such prepayment or purchase shall
be treated as a payment made pursuant to a demand by
EDB under the EDB Guarantee and the provisions of
Clause 5 shall apply to such prepayment or purchase;
(ii) negotiate any compromise, release, discharge,
reduction or retirement of all or any part of the
obligations of that Guarantor Bank under the EDB
Guarantee and any payment made pursuant to the same
shall be treated as a payment made pursuant to a
demand by EDB under the EDB Guarantee and the
provisions of Clause 5 shall apply to such payment;
and
(iii) pay any amount received by it under sub-paragraph (b)
above to EDB in exchange for such payment of a
release by EDB, to the extent of such payment, of the
obligations of that Guarantor Bank under the EDB
Guarantee, and the provisions of Clause 5 shall apply
to such payment by that Guarantor Bank as if such
payment had been made pursuant to a demand by EDB
under the EDB Guarantee.
(2) If at any time any Lending Bank reasonably determines that it
is or will become unlawful or contrary to any directive of any agency of any
state for it to allow all or part of its Term Commitment to remain outstanding,
to make, fund or allow to remain outstanding all or part of its share of the
Advances and/or to carry out all or any of its other obligations under this
Agreement, upon that Lending Bank notifying the Borrower (through the Agent):-
(a) that Lending Bank's Term Commitment shall be
cancelled; and
(b) the Borrower shall prepay that Lending Bank's share
of each Advance on such date as that Lending Bank
shall certify to be necessary to comply with the
relevant law or directive with all unpaid accrued
interest thereon, all unpaid fees accrued to that
Lending Bank and any other sum then due to that
Lending Bank under Clause 19(A) or any other
provision of this Agreement.
(B) Increased Costs: (1) If the Agent or (as the case may be) any
Bank reasonably determines that as a result of (a) the introduction of or any
change in, or in the interpretation or application of, any law (which shall for
this purpose include any removal or modification of any exemption currently in
force in favour of the Borrower) or (b) compliance by the Agent or that Bank
with the introduction of or any change in, or the interpretation or application
of, any directive of any agency of any state (including, without limitation, a
directive which affects the manner in which that Bank allocates capital
resources to its obligations under this Agreement):-
(i) the cost to that Bank of maintaining all or any part
of its Commitments and/or of making, maintaining or
funding all or any part of its Outstandings or any
overdue sum is increased;
<PAGE> 28
25
and/or
(ii) any sum received or receivable by the Agent or (as
the case may be) that Bank under this Agreement or
the effective return to it under this Agreement or
the overall return on its capital is reduced (except
on account of tax on its overall net income); and/or
(iii) the Agent or (as the case may be) that Bank makes any
payment (except on account of tax on its overall net
income) or forgoes any interest or other return on or
calculated by reference to the amount of any sum
received or receivable by it under this Agreement,
the Borrower shall indemnify the Agent or (as the case may be) that Bank against
that increased cost, reduction, payment or forgone interest or other return
(except to the extent that it results from a deduction or withholding of tax)
and, accordingly, shall from time to time on demand (whenever made) pay to the
Agent for its own account or (as the case may be) for the account of that Bank
the amount certified by it to be necessary so to indemnify it.
(2) The indemnity given to a Bank by the Borrower in this sub-
Clause (B) shall not apply to or in respect of any increased cost, reduction,
payment or foregone interest or other return to the extent that it is
attributable solely to the requirement of any central bank or other fiscal,
monetary or other authority which regulates that Bank which is imposed on that
Bank by reason of that Bank's misconduct and not generally imposed by that
central bank or other fiscal, monetary or other authority on banks of the same
or similar kind or class regulated by that central bank or other fiscal,
monetary or other authority.
(C) Change in Market Conditions: (1) If, in relation to any
Interest Period relating to an Advance:-
(a) no, or only one, Reference Bank supplies a quotation
as and when required by Clause 9(B); or
(b) the Agent is notified by the Lending Banks to whom
more than 66 2/3 per cent. of that Advance is (or, if
made, would be) owing that (i) they are unable to
obtain matching deposits in the Singapore inter-bank
market at or about 11 a.m. on the second Business Day
before the first day of that Interest Period in
sufficient amounts to fund their respective shares of
that Advance during that Interest Period, or (ii) the
arithmetic mean (rounded up, if necessary, to the
next 1/16 per cent.) of the quotations used for
fixing the interest rate under Clause 9(B) does not
reflect the cost to those Lending Banks of obtaining
such deposits, or (iii) by reason of circumstances
affecting the Singapore inter-bank market, adequate
and fair means do not or will not exist for
determining the rate of interest applicable to that
Advance for that Interest Period,
the Agent shall promptly notify the Borrower and the Lending Banks.
(2) The Agent (on behalf of and after consultation with the
Lending
<PAGE> 29
26
Banks) shall then negotiate with the Borrower with a view to agreeing on an
alternative basis for calculating the interest payable on and/or for making,
maintaining and/or funding that Advance to which that Interest Period relates.
Any alternative basis agreed in writing by the Agent (on behalf of and with the
consent of all the Lending Banks) and the Borrower within 25 days of the Agent's
notification of the event in question shall take effect in accordance with its
terms.
(3) If an alternative basis is not so agreed, each Lending Bank's
share of that Advance shall during that Interest Period bear interest at the
rate per annum equal to the sum of the Margin and the cost to it (expressed as a
rate per annum) of funding its share during that Interest Period by whatever
means it determines to be appropriate (including the cost to it occasioned by or
attributable to complying with reserves, liquidity, deposit or other
requirements for the time being imposed on it by the relevant authority or
authorities). Each Lending Bank shall certify that cost to the Borrower as soon
as practicable after the end of that 25 day period (but in any event at least
two Business Days before the end of that Interest Period).
(D) Individual Non-Availability: (1) If, in relation to any
Interest Period relating to an Advance, any Lending Bank notifies the Agent
that:-
(a) by reason of circumstances affecting the Singapore
inter-bank market, or a particular category (which
includes that Lending Bank) of banks dealing in that
market, it is unable to obtain matching deposits in
the Singapore inter-bank market at or about 11 a.m.
on the second Business Day before the first day of
that Interest Period in sufficient amounts to fund
its share of that Advance during that Interest
Period; or
(b) by reason of circumstances affecting that market or a
particular category (which includes that Lending
Bank) of banks dealing in that market, the arithmetic
mean (rounded up, if necessary, to the next 1/16 per
cent.) of the quotations used for fixing the interest
rate under Clause 9(B) does not reflect the cost to
it of obtaining such deposits,
the Agent shall promptly notify the Borrower accordingly unless it has already
given a notification to the Borrower in relation to that Interest Period under
sub-Clause (C).
(2) The Borrower, the Agent and that Lending Bank shall then
negotiate (unless and until sub-Clause (C) comes into operation in relation to
that Interest Period) with a view to agreeing on an alternative basis for
calculating the interest payable on and/or for making, maintaining and/or
funding that Lending Bank's share of that Advance. Any alternative basis agreed
in writing by the Borrower, the Agent and that Lending Bank within 25 days of
the Agent's notification under paragraph (1) shall take effect in accordance
with its terms. If an alternative basis is not so agreed and sub-Clause (C) has
not come into operation in relation to that Interest Period, that Lending Bank's
share of that Advance shall during that Interest Period bear interest at the
rate per annum equal to the sum of the Margin and the cost to it (expressed as a
rate per annum) of funding its share during that Interest Period by whatever
means it determines to be appropriate (including the cost to it occasioned by or
attributable to complying with reserves, liquidity, deposit
<PAGE> 30
27
or other requirements for the time being imposed on it by the relevant authority
or authorities). That Lending Bank shall certify that cost to the Borrower as
soon as practicable after the end of that 25 day period (but in any event at
least two Business Days before the end of that Interest Period). The Borrower
may, by notice to that Lending Bank, request that Lending Bank to assign and
transfer all of the rights and obligations of that Lending Bank to such person
as may be named by the Borrower in its notice and that Lending Bank shall take
such steps, at the cost and request of the Borrower, as may be necessary to
assign and transfer such rights and obligations to such person (and, for the
avoidance of doubt, such Lending Bank shall not be obliged to take any such step
until it has been indemnified against any and all costs and expenses (including
legal fees) which it may incur as a result).
(E) Mitigation: If any circumstances arise which result, or would
on the giving of notice (or the like) result, in the Borrower having to make a
payment to or for the account of the Agent or any Bank under sub-Clause (B) or
in the Guarantee Commitments or any part thereof or the Term Commitments or any
part thereof, being cancelled under sub-Clause (A), then without in any way
limiting, reducing or otherwise qualifying any of the obligations of the
Borrower under this Clause, the Borrower and the Agent or, as the case may be,
the relevant Bank shall enter into consultation with each other with a view
towards the Agent or, as the case may be, that Bank assigning or transferring
some or all of its rights or obligations under this Agreement to another person
acceptable to the Borrower and willing to take that assignment or transfer
(provided that no obligation whatsoever shall be imposed on the Agent or, as the
case may be, such Bank to procure any person to accept that assignment or
transfer) and/or the mitigation of the effect of those circumstances on the
Borrower. However, none of the Banks nor the Agent shall be obliged to take any
such steps which would or might have an adverse effect on the Agent or, as the
case may be, such Bank.
13. PAYMENTS
(A) By Lending Banks: (1) On each date on which an Advance is to
be made, each Lending Bank shall make available to the Agent its share (if any)
of that Advance available to the Agent by payment in US Dollars and in funds
which are for same day settlement in the New York Clearing House Interbank
Payments System (or, if such funds cease to exist or, in the Agent's opinion,
cease to be customary for the settlement in New York City of international
banking transactions in US Dollars, such other US Dollar funds as the Agent may
from time to time determine to be customary for that purpose), so as to be
received before 11 a.m. (local time in New York City) to such account of the
Agent with such bank in New York City as the Agent may from time to time
designate.
(2) The Agent shall make the amounts so received by it from the
Lending Banks available to the Borrower before close of business in New York
City by payment in the same currency and funds as received by the Agent to such
account of the Borrower with a bank in New York City as the Borrower shall have
specified in the request for that Advance. If any Lending Bank makes its share
of an Advance available to the Agent later than required by paragraph (1), the
Agent shall make that share available to the Borrower as soon as practicable
thereafter.
(B) To Banks: (1) Unless otherwise provided by this Agreement, all
repayments of principal and payments of interest, commitment fee, guarantee
commission and any other sums due from the Borrower to the Banks under this
<PAGE> 31
28
Agreement (for the purposes of this sub-Clause (B) collectively called
"Payments") shall be made in the following manner and upon the following terms:-
(a) any Payment to be made in respect of principal of an
Advance or of any commitment fee pursuant to Clause
10(B)(2) shall be made in US Dollars, any Payment to
be made in respect of interest shall be made in the
currency provided in Clause 9(D) or 18(A) (as the
case may be) and each other Payment shall be made in
Singapore Dollars; and
(b) Payments shall be made:-
(i) if that sum is due in Singapore Dollars, by
payment in Singapore Dollars and in
immediately available and freely
transferable funds, so as to be received
before 11 a.m., to such account of the Agent
with such bank in Singapore as the Agent may
from time to time designate; and
(ii) if that sum is due in US Dollars, by payment
in US Dollars and in funds which are for
same day settlement in the New York Clearing
House Interbank Payment System (or, if such
funds cease to exist or, in the Agent's
opinion, cease to be customary for the
settlement in New York City of international
banking transactions in US Dollars, such
other US Dollar funds as the Agent may from
time to time determine to be customary for
that purpose), so as to be received before
11 a.m. (local time in New York City) to
such account of the Agent with such bank in
New York City as the Agent may from time to
time designate.
(2) The Agent shall make available to each Bank its pro rata
share (if any) of any sum so received by it from the Borrower before close of
business in the Centre of the relevant currency on that date by payment in the
same currency and funds as received by the Agent to such account of that Bank
with such bank in that Centre as it shall have specified to the Agent. If any
sum is made available to the Agent later than required by paragraph (1), the
Agent shall make each Bank's share (if any) available to it as soon as
practicable thereafter.
(C) Order of Distribution: (1) If the amount received by the
Agent from the Borrower for the account of the Guarantor Banks on any date is
less than the total sum remaining and/or becoming due to the Guarantor Banks
under this Agreement on that date, the Agent shall apply that amount in or
towards payment of the following sums in the following order:-
(1) first, any sum then due to the Agent in its capacity
as such;
(2) secondly, in or towards payment pro rata of any sums
(other than interest or principal) then due to the
Guarantor Banks (or any of them);
(3) thirdly, in or towards payment pro rata of any
interest then due to the Guarantor Banks (or any of
them); and
<PAGE> 32
29
(4) fourthly, in or towards payment pro rata of any
principal then due to the Guarantor Banks (or any of
them).
Any such applications shall override any purported appropriation by any person.
(2) If the amount received by the Agent from the Borrower for the
account of the Lending Banks on any date is less than the total sum remaining
and/or becoming due to the Lending Banks under this Agreement on that date, the
Agent shall apply that amount in or towards payment of the following sums in the
following order:-
(1) first, any sum then due to the Agent in its capacity
as such;
(2) secondly, in or towards payment pro rata of any sums
(other than principal of or interest on the Advances)
then due to the Lending Banks (or any of them);
(3) thirdly, in or towards payment pro rata of any
interest then due on the Advances to the Lending
Banks (or any of them); and
(4) fourthly, in or towards payment pro rata of any
principal then due to the Lending Banks (or any of
them).
Any such applications shall override any purported appropriation by any person.
(D) Refunding of Payments: The Agent shall not be obliged to make
available to any person any sum which it is expecting to receive for the account
of that person until it has been able to establish that it has received that
sum. However, it may do so if it wishes. If and to the extent that it does so
but it transpires that it had not then received the sum which it paid out:-
(1) the person to whom the Agent made that sum available
shall on request refund it to the Agent; and
(2) that person or (at the option of the Agent) the
person by whom that sum should have been made
available shall on request pay to the Agent the
amount (as certified by the Agent) which will
indemnify the Agent against any funding or other
cost, loss, expense or liability sustained or
incurred by it as a result of paying out that sum
before receiving it but without prejudice to the
rights of any party hereto against such defaulting
party.
(E) Non-Business Days: (1) If any Interest Payment Date or
Repayment Date would otherwise fall on a non-Business Day, it shall instead fall
on the next Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(2) Any payment to be made by the Borrower on a day which is not
an Interest Payment Date or Repayment Date and which would otherwise be due on a
non-Business Day shall instead be due on the next Business Day.
14. REPRESENTATIONS AND WARRANTIES
<PAGE> 33
30
The Borrower represents and warrants to and for the benefit of
each other party to this Agreement as follows:-
(1) Status: it is a company duly incorporated and validly
existing under the laws of Singapore and has the
power and authority to own its assets and to conduct
the business which it conducts and/or proposes to
conduct;
(2) Powers: it has the power to enter into, exercise its
rights and perform and comply with its obligations
under the Financing Documents, to undertake the
Project and to operate the Plant;
(3) Authorisation and Consents: save for the payment of
stamp duty on this Agreement in Singapore (which
shall be effected within two Business Days from the
date of this Agreement), all action, conditions and
things required to be taken, fulfilled and done
(including the obtaining of any necessary consents)
in order (a) (i) to enable it lawfully to enter into,
exercise its rights and perform and comply with its
obligations under the Financing Documents, (ii) to
ensure that those obligations are valid, legally
binding and enforceable, (iii) to ensure that those
obligations rank and will at all times rank in
accordance with Clause 16(1) and (iv) to make the
Financing Documents admissible in evidence in the
courts of Singapore and the Netherlands and (b) to
undertake the Project and to operate the Plant have
been taken, fulfilled and done;
(4) Non-Violation of Laws: its entry into, exercise of
its rights and/or performance of or compliance with
its obligations under the Financing Documents do not
and will not violate, or exceed any borrowing or
other power or restriction granted or imposed by, (a)
any law to which it is subject or (b) its Memorandum
or Articles of Association;
(5) Obligations Binding: its obligations under the
Financing Documents are valid, binding and
enforceable;
(6) Non-Violation of Other Agreements: its entry into,
exercise of its rights and/or performance of or
compliance with its obligations under the Financing
Documents do not and will not (a) violate, to an
extent or in a manner which has or will have a
material adverse effect on it, any agreement to which
it is a party or which is binding on it or its
assets, or (b) result in the existence of, or oblige
it to create, any security over those assets;
(7) No Default: no Event of Default or Potential Event of
Default has occurred, or will occur as a result of
the issue of the EDB Guarantee or the making of any
Advance, other than any waived in accordance with
Clause 25(B), and it is not in breach of or default
under any agreement to an extent or in a manner which
has or will have a material adverse effect on it;
<PAGE> 34
31
(8) Existing Security: no security exists on or over any
of its assets except as permitted by Clause 16(2);
(9) Accounts: its audited accounts as at 31st December,
1997 and for the financial year then ended and as
delivered to the Agent (with copies of the reports
and approvals referred to in (a) below):-
(a) include such financial statements as are
required by the laws of Singapore and, save
as stated in the notes thereto, were
prepared, audited, examined, reported on and
approved in accordance with accounting
principles and practices generally accepted
in Singapore and consistently applied and in
accordance with the laws of Singapore and
its Memorandum and Articles of Association;
(b) together with those notes, give a true and
fair view of its state of affairs and
financial condition and operations as at
that date and for the financial year then
ended; and
(c) together with those notes and to the extent
required by accounting principles, standards
and practices generally accepted in
Singapore disclose or reserve against all
liabilities (contingent or otherwise) of the
relevant person(s) as at that date and all
material unrealised or anticipated losses
from any commitment entered into by the
relevant person(s) and which existed on that
date;
(10) No Material Adverse Change: there has been no
material adverse change in its financial condition or
operations since 31st December, 1997;
(11) Litigation: no litigation, arbitration or
administrative proceeding is current or pending (a)
to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or
compliance with its obligations under the Financing
Documents or (b) which has or will have a material
adverse effect on it;
(12) Winding-up: no meeting has been convened for its
winding-up or for the appointment of a receiver,
trustee, judicial manager or similar officer of it,
its assets or any of them, no such step is intended
by it and, so far as it is aware, no petition,
application or the like is outstanding for its
winding-up or for the appointment of a receiver,
trustee, judicial manager or similar officer of it,
its assets or any of them;
(13) Taxes: it has filed or caused to be filed all tax
returns which are required to be filed by it and has
paid all taxes due and payable by it or affecting its
assets or the Project (insofar as they are due and
payable) except to the extent
<PAGE> 35
32
that any such taxes or assessments are being
contested in good faith by appropriate proceedings
(provided that it has established (in the reasonable
opinion of the Agent) prudent reserves against such
liability);
(14) Compliance with Laws: it is in compliance with all
laws and regulations affecting the Project;
(15) Intellectual Property: it has or will have available
to it all intellectual property of every description
(including, without limitation, licences, copyrights,
design registrations and know-how) necessary for the
implementation of the Project and the operation of
the Plant;
(16) Shareholding: (a) CSM is and will be (either directly
or through any one or more of its wholly-owned
subsidiaries) the legal and beneficial owner of at
least 51 per cent. of its issued share capital and
Singapore Technologies Pte Ltd is and will be (either
directly or through any one or more of its
wholly-owned subsidiaries) the legal and beneficial
owner of at least 51 per cent. of the issued share
capital of CSM; and
(b) HP has and will have an effective shareholding in
not less than 30 per cent. of its issued share capital for a
period of not less than four years from the date of the Joint
Venture Agreement;
(17) No Misstatement: (a) the information in the
Information Package relating to, and provided by, it
was true, complete and accurate in all material
respects; and
(b) the opinions, projections and forecasts in the
Information Package relating to, and provided by, it and the
assumptions on which they are based were arrived at after due
and careful consideration and enquiry and genuinely
represented its views; and
(18) Repetition: each of the above representations and
warranties will be correct and complied with on the
date of each request for an Advance, on the date on
which each Advance is to be made, the date of the
request for the issue of the EDB Guarantee, the date
on which the EDB Guarantee is issued and each
Interest Payment Date as if repeated then by
reference to the then existing circumstances.
15. INFORMATION
The Borrower undertakes that, so long as any sum remains to be
lent or remains payable under this Agreement:-
(1) Preparation of Accounts: it will ensure that all
audited accounts to be delivered by it under this
Agreement are prepared in such manner that Clause
14(9) would be complied with if applied to those
accounts by Clause 14(18);
<PAGE> 36
33
(2) Audited Accounts: as soon as reasonably practicable
after the same are available and in any event within
180 days after the end of each of its financial years
(beginning with the current one), it will deliver to
the Agent enough copies for the Banks of its audited
accounts as at the end of and for that financial
year, together with copies of the related reports and
approvals referred to in Clause 14(9)(a);
(3) Semi-Annual Information: as soon as reasonably
practicable after the same are available and in any
event within 45 days after the end of the first six
months of each of its financial years (beginning with
the current one), it will deliver to the Agent enough
copies for the Banks of its unaudited accounts as at
the end of and for that six month period;
(4) Litigation: it will as soon as reasonably practicable
after the same are available, deliver to the Agent
for distribution to the Banks details of any
litigation, arbitration or administrative proceeding
which, if to its knowledge had been current or
pending at the date of this Agreement, would have
rendered the representation and warranty in Clause
14(11) incorrect;
(5) Events of Default: it will notify the Agent of the
occurrence of any Event of Default or Potential Event
of Default (and of any action taken or proposed to be
taken to remedy it) promptly after becoming aware of
it. Promptly after any request made by the Agent from
time to time, it will deliver to the Agent a
certificate signed on its behalf by such person as
may be acceptable to the Agent for that purpose
confirming that, so far as it is aware and (if
applicable) except as previously notified to the
Agent or waived in accordance with Clause 25(B), no
Event of Default or Potential Event of Default has
occurred or (as the case may be) setting out details
of any which has occurred and has not been so
notified and of which it is aware and of any action
taken or proposed to be taken to remedy it;
(6) Progress Reports: it will deliver to the Agent,
within 14 days after the end of each quarter
(beginning with the current one) ending prior to the
date of Completion, a report in the form agreed
between the Borrower and the Banks prior to the date
of this Agreement of the construction and
implementation of the Project;
(7) Suspension of Work: as soon as practicable after it
becomes aware of it, it will inform the Agent if the
construction of the Plant (or any part thereof) is
suspended for more than 60 consecutive days or if the
Plant ceases operation for more than 60 consecutive
days at any time;
(8) Loss or Damage: as soon as practicable after it
becomes aware of it, it will inform the Agent of any
material loss or damage to the Plant (or any part
thereof); and
<PAGE> 37
34
(9) Other Information: it will as soon as reasonably
practicable deliver to the Agent for distribution to
the Banks (a) such other information relating to the
financial condition or business of it as the Agent
(or any Bank through the Agent) may from time to time
reasonably require, and (b) all financial, technical
and other information as the Agent (or any Bank
through the Agent) may from time to time reasonably
require in relation to the Project or the Plant
(except for such information of a proprietary nature
or as is reasonably regarded by it as confidential).
16. UNDERTAKINGS
The Borrower undertakes that, so long as any sum remains to be
lent or remains payable under this Agreement:-
(1) Ranking of Obligations: its payment obligations under
this Agreement rank and will at all times rank at
least equally and rateably in all respects with all
its other unsecured indebtedness except for such
indebtedness as would, by virtue only of the law in
force in Singapore, be preferred in the event of its
winding-up;
(2) Negative Pledge: it will not create or have
outstanding any security on or over its assets,
except for:-
(a) liens arising solely by operation of law (or
by an agreement evidencing the same) in the
ordinary course of its business in respect
of indebtedness which either (i) has been
due for less than 21 days or (ii) is being
contested in good faith and by appropriate
means; and
(b) any other security created with the prior
consent in writing of the Majority Banks
(such consent not to be unreasonably
withheld);
(3) Disposals: it will not, (whether by a single
transaction or a number of related or unrelated
transactions and whether at one time or over a period
of time) sell, transfer, lease out, lend or otherwise
dispose of (whether outright, by a
sale-and-repurchase or sale-and-leaseback
arrangement, or otherwise) all or substantially all
of its assets nor of any part of its assets which,
either alone or when aggregated with all other
disposals required to be taken into account under
this paragraph (3), is substantial in relation to its
assets or the disposal of which (either alone or when
so aggregated) could have a material adverse effect
on it. The following disposals shall not be taken
into account under this paragraph (3):-
(a) disposals in the ordinary course of
operations; and
(b) any disposal which the Majority Banks shall
have agreed shall not be taken into account;
<PAGE> 38
35
(4) Change of Business: it will ensure that there is no
material change in the nature of its business taken
as a whole (whether by a single transaction or a
number of related or unrelated transactions, whether
at one time or over a period of time and whether by
disposal, acquisition or otherwise);
(5) Compliance with Law: it will at all times comply with
all applicable laws relating to the Project or the
operation of the Plant;
(6) Maintenance of Consents: it will maintain or cause to
be maintained in full force and effect all consents
necessary or advisable for the construction of the
Project or the operation of the Plant;
(7) Completion: it will cause Completion to occur by 31st
December, 1999;
(8) Maintenance: it will operate the Plant in accordance
with good industry practice and keep and maintain the
Plant in good working order and condition subject to
normal wear and tear;
(9) Abandonment: it will not abandon the Project;
(10) Other Business: it will not carry on any business or
activity other than the ownership and operation of
wafer fabrication plants or any other businesses
related thereto;
(11) Inspection of Plant: it will permit the Agent, any
Bank and any representative appointed by the Agent,
upon reasonable notice, at reasonable times and with
reasonable frequency (which shall not be more
frequent than once in any calendar year unless the
Agent or that Bank is of the reasonable opinion that
the Plant is in jeopardy), to carry out an inspection
of the Plant and for this purpose provide or procure
the provision to any such person or representative of
reasonable access and cause its agents and employees
to give their full co-operation on the occasion of
any such inspection;
(12) Financial Year: it will not change its financial
year-end from 31st December;
(13) Restricted Payments: it will not pay out any dividend
or repay or redeem any share capital for any of its
financial years unless it has duly made all payments
payable under this Agreement during that financial
year and will not in any event declare or pay out any
dividend or repay or redeem any share capital before
2000;
(14) EDB Loan Agreement: it will (a) not make or agree to
any amendment to the EDB Loan Agreement without the
prior consent in writing of all the Guarantor Banks
and will notify the Agent of the occurrence of any
Event of Default (as defined in the EDB Loan
Agreement) by it under the EDB Loan
<PAGE> 39
36
Agreement, (b) duly perform and comply with its
obligations under the EDB Loan Agreement (including,
without limitation, its obligation to repay the EDB
Loan in accordance with the repayment schedule as set
out in the EDB Loan Agreement), (c) ensure that the
aggregate principal amount of the advances made by
EDB to the Borrower during any Utilisation Period
shall not exceed the Available EDB Amount during that
Utilisation Period (as may be increased in accordance
with the provisions of Clause 10(B)(1)(c)), (d)
request EDB to notify the Guarantor Banks of the
principal amount and date of each advance made under
the EDB Loan Agreement, any repayment or prepayment
thereunder or, as the case may be, the then revised
outstanding balance of principal for the purposes of
Clause 9 of the EDB Guarantee, and (e) as soon as
reasonably practicable and in any event within three
Business Days of the same, notify the Agent of any
repayment or prepayment of the EDB Loan under the EDB
Loan Agreement;
(15) Joint Venture Agreement: it will give to the Agent
(a) not less than 30 days prior notice in writing of
the termination of the Joint Venture Agreement and
(b) as soon as practicable notice in writing of any
material breach by any party of its obligations under
the Joint Venture Agreement;
(16) Financial Covenants: it will ensure that:-
(a) the ratio of its Borrowings to its Net Worth
will not at any time exceed 1.5:1; and
(b) at each Calculation Date falling in 2000 and
2001, DSCR will not be less than 1.1 (as
evidenced by the Current Financial Report
for the Calculation Period ending on that
Calculation Date); and
(c) at each Calculation Date falling after 31st
December, 2001, DSCR will not be less than
1.2 (as evidenced by the Current Financial
Report for the Calculation Period ending on
that Calculation Date);
(17) Insurances: it will:-
(a) effect and maintain or procure that there
shall be effected and maintained, in
accordance with good insurance practice, all
such policies as the Agent may from time to
time reasonably require against such risks
and liabilities customary for businesses
similar to its business covering the
construction phase and the operational phase
of the Project, in each case from the
respective dates and in such manner and on
such terms, including the level of cover, as
may reasonably be required by the Agent with
such reputable insurance companies or
underwriters agreed between the Borrower and
the Banks prior to the date of this
Agreement or such other reputable insurance
companies or underwriters notified by the
Borrower to the Agent from time to time and
until otherwise
<PAGE> 40
37
required or permitted by the Agent, such
insurances will comprise the following:-
(i) prior to completion of the
construction phase for the Plant:-
(aa) statutory workmen's
compensation and employer
liability insurance;
(bb) third party liability
insurance;
(cc) comprehensive automobile
liability insurance, if
applicable;
(dd) erection all risks
insurance; and
(ee) marine cargo insurance;
(ii) after completion of the construction
phase of the Plant:-
(aa) statutory workmen's
compensation and employer
liability insurance;
(bb) third party liability
insurance;
(cc) comprehensive automobile
liability insurance, if
applicable;
(dd) marine cargo insurance;
(ee) property damage insurance;
and
(ff) business interruption
insurance;
(b) pay, or where it is not primarily
responsible for taking out any insurance
policy required by this paragraph (17),
promptly, upon becoming aware that the same
are due and not paid, pay or ensure the
payment of all initial and subsequent
instalments of insurance premiums and not
take or omit to take any action which would
reduce in any material respect or render
void the cover provided by any of the
insurance policies;
(c) from time to time upon reasonable request
supply the Agent with copies of all
contracts and policies (including any
contract notes) issued in respect of the
insurance policies and reinsurance policies
and of receipts (or other evidence of
payment) for such insurances; and
(d) as soon as reasonably practicable and in any
event within seven Business Days after
becoming aware of the same notify the Agent
of any claims in excess of S$1,000,000, or
the equivalent thereof in any other
currency, which it may make under any such
policy of
<PAGE> 41
38
insurance.
The Agent shall be entitled to pay any premiums or
other amounts payable by it, in respect of the insurance
policies and it will forthwith upon demand reimburse the
Agent for all such amounts paid;
(18) No Subsidiaries: it will not establish, incorporate
or acquire any subsidiary or subsidiaries without the
prior consent in writing of the Majority Banks; and
(19) Further Assurance: it will from time to time on
request by the Agent (or by any Bank through the
Agent) do or procure the doing of all such acts and
will execute or procure the execution of all such
documents as the Agent or any Bank may reasonably
consider necessary for giving full effect to the
Financing Documents or securing to the Agent and the
Banks the full benefits of all rights, powers and
remedies conferred upon the Agent and the Banks in
the Financing Documents.
17. EVENTS OF DEFAULT
(A) Events of Default: The following are Events of Default:-
(1) Non-Payment: (a) the Borrower does not pay in the
manner provided in this Agreement any sum payable
under it when due or (b) any Shareholder does not pay
in the manner provided in the Shareholders
Undertaking any sum payable under it when due;
(2) Breach of Other Obligations: (a) the Borrower does
not perform or comply with any one or more of its
obligations (other than the payment obligation of the
Borrower referred to in paragraph (1)) under the
Financing Documents and, if in the reasonable opinion
of the Majority Banks that default is capable of
remedy, it is not in the reasonable opinion of the
Majority Banks remedied within 14 days of its
occurrence; or
(b) any Shareholder does not perform or comply with
any one or more of its obligations (other than the payment
obligations of such Shareholder referred to in paragraph (1))
under the Shareholders Undertaking and, if in the reasonable
opinion of the Majority Banks that default is capable of
remedy, it is not in the reasonable opinion of the Majority
Banks remedied within 14 days of its occurrence;
(Provided that if there is a breach by the Borrower
of its obligations under Clause 16(16)(b) or Clause 16(16)(c)
on any Calculation Date, such a breach will not be regarded as
an Event of Default if (i) the aggregate amount of Shareholder
Funding (as defined in the Shareholders Undertaking) is not
less than S$720,000,000 as at that Calculation Date (assuming
due compliance by the Shareholders of their respective
obligations under Clause 2(A) of the Shareholders Undertaking)
and (ii) the Shareholders (or any of them) have paid to the
Borrower (by way
<PAGE> 42
39
of Shareholder Funding) within 60 days from that Calculation
Date, an amount (as determined by the Agent) to enable the
Borrower to meet any shortfall in its ability to meet all
payments referred to in component "B" of the definition of
DSCR falling due during the next succeeding Calculation
Period);
(3) Breach of Warranty: (a) any representation, warranty
or statement by the Borrower in the Financing
Documents or in any document delivered under the
Financing Documents is not complied with or is or
proves to have been incorrect when made or deemed
repeated and, if in the reasonable opinion of the
Majority Banks that breach is capable of remedy, it
is not in the reasonable opinion of the Majority
Banks remedied within 14 days of its occurrence; or
(b) any representation, warranty or statement by any
Shareholder in the Shareholders Undertaking or in any document
delivered under the Shareholders Undertaking is not complied
with or is or proves to have been incorrect when made or
deemed repeated and, if in the reasonable opinion of the
Majority Banks that breach is capable of remedy, it is not in
the reasonable opinion of the Majority Banks remedied within
14 days of its occurrence;
(4) Cross Default: any other indebtedness of the Borrower
or any Shareholder (other than a Shareholder which
has discharged all its obligations under Clause 2(A)
of the Shareholders Undertaking) in respect of
borrowed money is or is declared to be or is capable
of being rendered due and payable before its normal
maturity by reason of any default, event of default
or the like (however described) or is not paid when
due or, as a result of any default, event of default
or the like (however described) any facility relating
to any such indebtedness is or is declared to be or
is capable of being cancelled or terminated before
its normal expiry date or any person otherwise
entitled to use any such facility is not so entitled.
However, no Event of Default will occur under this
paragraph (4) unless and until the aggregate amount
of the indebtedness in respect of which one or more
of the events mentioned above in this paragraph (4)
has/have occurred equals or exceeds S$20,000,000 or
its equivalent (as reasonably determined by the
Agent);
(5) Insolvency: the Borrower or any Shareholder is (or
is, or could be, deemed by law or a court to be)
insolvent or unable to pay its debts, stops, suspends
or threatens to stop or suspend payment of all or any
part of (or of a particular type of) its indebtedness
(other than the stopping or suspension of payment of
any part of its indebtedness if such indebtedness is
being contested by it in good faith and by
appropriate means), begins negotiations or takes any
other step with a view to the deferral, rescheduling
or other readjustment of all or any part of (or of a
particular type of) its indebtedness (or of any part
which it will or might otherwise be unable to pay
when due), proposes or makes a general assignment or
an arrangement or composition with or
<PAGE> 43
40
for the benefit of the relevant creditors or a
moratorium is agreed or declared in respect of or
affecting all or any part of (or of a particular type
of) the indebtedness of the Borrower or any
Shareholder (other than a Shareholder which has
discharged all its obligations under Clause 2(A) of
the Shareholders Undertaking);
(6) Enforcement Proceedings: a distress, attachment,
execution or other legal process is levied, enforced
or sued out on or against the assets of the Borrower
or any Shareholder (other than a Shareholder which
has discharged all its obligations under Clause 2(A)
of the Shareholders Undertaking) and is not
discharged or stayed within 14 days;
(7) Security Enforceable: any security on or over the
assets of the Borrower or any Shareholder (other than
a Shareholder which has discharged all its
obligations under Clause 2(A) of the Shareholders
Undertaking) becomes enforceable;
(8) Winding-up: any step is taken by any person with a
view to the winding-up of the Borrower or any
Shareholder (other than a Shareholder which has
discharged all its obligations under Clause 2(A) of
the Shareholders Undertaking) or (except for the
purpose of and followed by a reconstruction,
amalgamation, reorganisation, merger or consolidation
on terms approved by the Majority Banks before that
step is taken) or for the appointment of a liquidator
(including a provisional liquidator), receiver,
judicial manager, trustee, administrator, agent or
similar officer of the Borrower or any Shareholder
(other than a Shareholder which has discharged all
its obligations under Clause 2(A) of the Shareholders
Undertaking) or over any part of the assets of the
Borrower or any Shareholder (other than a Shareholder
which has discharged all its obligations under Clause
2(A) of the Shareholders Undertaking);
(9) Cessation of Business: the Borrower or any
Shareholder (other than a Shareholder which has
discharged all its obligations under Clause 2(A) of
the Shareholders Undertaking) ceases or threatens to
cease to carry on all or a substantial part of its
business;
(10) Nationalisation: any step is taken by any person with
a view to the seizure, compulsory acquisition,
expropriation or nationalisation of all or a material
part of the assets of the Borrower or any Shareholder
(other than a Shareholder which has discharged all
its obligations under Clause 2(A) of the Shareholders
Undertaking);
(11) Consents: any action, condition or thing (including
the obtaining of any necessary consent) at any time
required to be taken, fulfilled or done for any of
the purposes stated in Clause 14(3) is not taken,
fulfilled or done, or any such consent ceases to be
in full force and effect without modification or any
condition in or relating to any such consent is not
complied with (unless that consent or
<PAGE> 44
41
condition is no longer required or applicable);
(12) Illegality: it is or will become unlawful for the
Borrower to perform or comply with any one or more of
its obligations under the Financing Documents or for
any Shareholder to perform or comply with any one or
more of its obligations under the Shareholders
Undertaking;
(13) Cessation: any Financing Document ceases for any
reason (or is claimed by the Borrower not) to be the
legal and valid obligations of the Borrower, binding
upon it in accordance with its terms or the
Shareholders Undertaking ceases for any reason (or is
claimed by any Shareholder not) to be the legal and
valid obligations of any Shareholder, binding upon it
in accordance with its terms;
(14) Litigation: any litigation, arbitration or
administrative proceeding (other than those
reasonably determined by the Majority Banks to be of
a frivolous or vexatious nature) is current or
pending (a) to restrain the exercise of any of the
rights and/or the performance or enforcement of or
compliance with any of the obligations of the
Borrower under the Financing Documents or for any
Shareholder to perform or comply with any one or more
of its obligations under the Shareholders Undertaking
or (b) which has or could have a material adverse
effect on the Borrower or on any Shareholder (other
than a Shareholder which has discharged all its
obligations under Clause 2(A) of the Shareholders
Undertaking);
(15) Non-Completion: for any reason Completion has not
occurred by 31st December, 1999;
(16) Abandonment: the Project or any part of the Project
is cancelled or abandoned;
(17) Damage: the Plant or any part of the Plant is damaged
to an extent which, in the reasonable opinion of the
Majority Banks, renders it impossible or
impracticable to reinstate it within any reasonable
period specified by the Majority Banks;
(18) Plant: a total loss or constructive total loss occurs
in relation to the Plant;
(19) Infringement of Rights: at any time after any person
commences a law suit or other legal proceedings
against the Borrower (whether as sole defendant or
jointly with one or more other persons) alleging that
the Borrower has infringed any third party
intellectual property rights in the course of
manufacturing products in Singapore, in the operation
of the Plant in Singapore or otherwise, the Majority
Banks reasonably determine that the potential or
actual liability of the Borrower in respect of such
law suit or other legal proceedings would be
reasonably likely to result in the Borrower being
unable to perform or comply with any of its
obligations under the Financing Documents;
<PAGE> 45
42
(20) Shareholding: (a) CSM ceases for any reason to be
(either directly or through any one or more of its
wholly-owned subsidiaries) the legal and beneficial
owner of at least 51 per cent. of the issued share
capital of the Borrower or Singapore Technologies Pte
Ltd ceases for any reason to be (either directly or
through any one or more of its wholly-owned
subsidiaries) the legal and beneficial owner of at
least 51 per cent. of the issued share capital of
CSM; or
(b) HP ceases for any reason to have an effective
shareholding in at least 30 per cent. of the issued share
capital of the Borrower for a period of not less than four
years from the date of the Joint Venture Agreement;
(21) Declared Company: the Borrower or any Shareholder
(other than a Shareholder which has discharged all
its obligations under Clause 2(A) of the Shareholders
Undertaking) is declared by the Minister for Finance
to be a company to which Part IX of the Companies
Act, Chapter 50 applies;
(22) Analogous Event: any event occurs which, under the
law of any relevant jurisdiction, has an analogous or
equivalent effect to any of the events mentioned in
paragraphs (5), (6), (8) or (10); or
(23) Material Adverse Change: any event occurs or
circumstances arise which the Majority Banks
reasonably determine give(s) reasonable grounds for
believing that the Borrower will not (or will be
unable to) perform or comply with any one or more of
its obligations under any Financing Document or that
any Shareholder (other than a Shareholder which has
discharged all its obligations under Clause 2(A) of
the Shareholders Undertakings) will not (or will be
unable to) perform or comply with any one or more of
its obligations under the Shareholders Undertaking.
(B) Cancellation/Acceleration: (1) If at any time and for any
reason (and whether within or beyond the control of any party to this Agreement)
any Event of Default has occurred then at any time thereafter, while an Event of
Default is continuing, the Agent may and, if so instructed by the Majority
Banks, shall by notice to the Borrower:-
(a) declare the Commitments to be cancelled, whereupon
they shall be cancelled; and/or
(b) declare all Advances, all unpaid accrued interest or
fees and any other sum then payable under this
Agreement to be immediately due and payable,
whereupon they shall become so due and payable;
and/or
(c) demand from the Borrower payment of an amount equal
to the Guarantee Outstanding Amount, whereupon the
Borrower shall pay to the Agent such amount, which
shall be held by the Agent for the account of the
Guarantor Banks and applied towards the discharge of
the obligations of the Borrower to
<PAGE> 46
43
the Guarantor Banks under or in connection with this
Agreement. Without prejudice to the other provisions
of this sub-paragraph (c) and any rights to which the
Agent or any Guarantor Bank may be entitled, the
Agent may:-
(i) prepay on behalf of the Borrower or purchase
itself or procure the purchase by a nominee
of all or any of the obligations of the
Guarantor Banks under the EDB Guarantee, and
any such prepayment or purchase shall be
treated as a payment made pursuant to a
demand by EDB under the EDB Guarantee and
the provisions of Clause 5 shall apply to
such prepayment or purchase;
(ii) negotiate any compromise, release,
discharge, reduction or retirement of all or
any of the obligations of the Guarantor
Banks under the EDB Guarantee and any
payment made pursuant to the same shall be
treated as a payment made pursuant to a
demand by EDB under the EDB Guarantee and
the provisions of Clause 5 shall apply to
such payment; and
(iii) pay any amount received by it under
sub-paragraph (c)(ii) above to EDB in
exchange for such payment of a release by
EDB, to the extent of such payment, of the
obligations of the Guarantor Banks under the
EDB Guarantee, and the provisions of Clause
5 shall apply to such payment by the
Guarantor Banks as if such payment had been
made pursuant to a demand by EDB under the
EDB Guarantee.
(2) Without prejudice to any of the obligations of the Borrower
under this Agreement (including, without limitation, the obligation of the
Borrower to make any payment to the Agent and/or any of the Banks under
paragraph (1) above), the Agent shall, within three Business Days after any
request from the Borrower made at any time after the making of a declaration by
the Agent under paragraph (1) above by reason of the occurrence of an event
referred to in sub-Clause (A)(23) above, notify the Borrower of the grounds for
the determination made by the Majority Banks referred to in that sub-Clause
(A)(23).
18. DEFAULT INTEREST
(A) Interest on Overdue Sums: If the Borrower does not pay any
sum payable under this Agreement (including, without limitation, any sum payable
under this Clause) when due, it shall pay interest on the amount from time to
time outstanding in respect of that overdue sum, in the currency of that overdue
sum, for the period beginning on its due date and ending on the date of its
receipt by the Agent (both before and after judgment) in accordance with this
Clause. For the purpose of this Clause, if any payment is received by the Agent
on the due date, but after the time required by Clause 13(A) and too late to be
made available by the Agent on that due date to the person(s) entitled to it
under Clause 13(C), that payment shall be deemed to be received on the next
Business Day.
(B) Default Interest Periods and Rates: Interest under this
Clause shall be calculated by reference to successive Interest Periods, each of
which
<PAGE> 47
44
(other than the first, which shall begin on the due date) shall begin on the
last day of the previous one. Each such Interest Period shall be of one month or
such other period as the Agent may from time to time select and (1) the rate of
interest applicable to an overdue sum denominated in US Dollars for all or any
part of a particular Interest Period relating to that overdue sum shall be the
rate per annum equal to the sum of three per cent. and the rate which would be
applicable to that overdue sum for (or, as the case may be, for that part of)
that Interest Period under Clause 9(B) if that overdue sum were a non-overdue
Advance and (2) the rate of interest applicable to any other overdue sum
denominated in Singapore Dollars for all or any part of a particular Interest
Period relating to that overdue sum shall, in respect of each person's share of
that overdue sum on each day during that Interest Period, be the rate per annum
equal to the sum of three per cent., the Margin and the cost to that person (as
certified by it to the Agent and expressed as a rate per annum) of funding its
share (including, without limitation, the Swap Rate in relation to that overdue
sum, except as follows:-
(a) subject to the following exceptions, until the third
Business Day after the Agent becomes aware of the
relevant default, each Interest Period relating to
the relevant overdue sum denominated in US Dollars
shall be an "overnight" period beginning on one
Business Day and ending on the next and the rate of
interest for a particular "overnight" period shall be
the rate per annum equal to the sum of three per
cent., the Margin and the arithmetic mean (rounded
up, if necessary, to the next 1/16 per cent.) of the
respective rates quoted by each Reference Bank to the
Agent on request as the rate at which it is offering
"overnight" deposits for that period in amounts
comparable to that overdue sum;
(b) if the overdue sum is of principal of an Advance and
becomes due otherwise than on an Interest Payment
Date relating to that Advance, the first default
Interest Period applicable to that overdue sum shall
end on that Interest Payment Date and the rate of
interest applicable to that sum for that Interest
Period shall be the rate per annum equal to the sum
of three per cent. and the rate applicable to it
immediately before it became due; and
(c) if any event equivalent to those mentioned in Clause
12(C) occurs in relation to any Interest Period
applicable to an overdue sum, the rate of interest
payable on each person's share of that sum for all or
any part of that Interest Period shall be the sum of
three per cent., the Margin and the cost to that
person (as certified by it and expressed as a rate
per annum) of funding its share during that Interest
Period by whatever means it determines to be
appropriate (including the cost occasioned by or
attributable to complying with reserves, liquidity,
deposit or other requirements for the time being
imposed on it by the relevant authority or
authorities).
(C) Notification of Interest Rates: The Agent shall promptly
notify the Borrower and the Banks of each rate of interest determined in
accordance with sub-Clause (B).
<PAGE> 48
45
(D) Payment and Compounding of Default Interest: (1) On the last
day of each Interest Period, the Borrower shall pay the unpaid interest accrued
during that Interest Period on the overdue sum to which it relates at the rate
applicable for that Interest Period.
(2) Interest accrued under this Clause on an overdue sum shall be
due on demand by the Agent but, if not previously demanded, shall be paid when
due in accordance with paragraph (1). If not paid when due, the interest shall
be added to that overdue sum and itself bear interest accordingly.
19. INDEMNITIES
(A) Miscellaneous Indemnities: The Borrower shall on demand
indemnify each of the Agent, the Arrangers and the Banks against any funding or
other cost, loss, expense or liability sustained or incurred by it as a result
of:-
(1) an Advance not being made by reason of non-fulfilment
of any of the conditions in Clause 6(A) or the
Borrower purporting to revoke a notice requesting an
Advance;
(2) the occurrence or continuance of any Event of
Default; or
(3) the receipt or recovery by any party (or the Agent on
its behalf) of all or any part of an Advance or an
overdue sum otherwise than on the last day of an
Interest Period relating to that Advance or overdue
sum.
(B) Broken Funding Costs: In the case of sub-Clause (A)(1) and
(3) above, the amount payable shall in any event include the amount (if any) by
which:-
(1) the amount of interest which the relevant person is
able to obtain by placing an amount equal to its
share of the relevant Advance or overdue sum on
deposit in the Singapore inter-bank market, for the
remainder of the relevant Interest Period, as soon as
reasonably practicable after it becomes aware that
the relevant Advance is not being made or (as the
case may be) of the relevant receipt or recovery,
is less than:-
(2) the amount of interest which, in accordance with the
expressed terms of this Agreement, would otherwise be
payable to that person on its share of that Advance
for its first Interest Period or (as the case may be)
on the relevant amount so received or recovered for
the remainder of the relevant Interest Period.
(C) Currency Indemnity: (1) Any amount received or recovered by the Agent, any
Arranger or any Bank in respect of any sum expressed to be due to it from the
Borrower under or in connection with this Agreement in a currency (such currency
being referred to as the "Relevant Currency") other than the currency in which
such sum is expressed to be due under this Agreement (such currency being
referred to as the "Currency of Account") whether as a result of, or of the
enforcement of, a judgment or order of a court or tribunal of any jurisdiction,
in the winding-up of the Borrower or otherwise, shall only
<PAGE> 49
46
constitute a discharge to the Borrower to the extent of the amount in the
Currency of Account which the recipient is able, in accordance with its usual
practice, to purchase with the amount of the Relevant Currency so received or
recovered on the date of that receipt or recovery (or, if it is not practicable
to make that purchase on that date, on the first date on which it is practicable
to do so).
(2) If that amount in the Currency of Account is less than the
amount of the Currency of Account due to the recipient under or in connection
with this Agreement, the Borrower shall indemnify it against any loss sustained
by it as a result. In any event, the Borrower shall indemnify the recipient
against the cost of making any such purchase. For the purpose of this sub-Clause
(C), it will be sufficient for the recipient to demonstrate that it would have
suffered a loss had an actual exchange or purchase been made.
(D) Indemnities Separate: Each of the indemnities in this
Agreement constitutes a separate and independent obligation from the other
obligations in this Agreement, shall give rise to a separate and independent
cause of action, shall apply irrespective of any indulgence granted by the
Agent, any Arranger and/or any Bank and shall continue in full force and effect
despite any judgment, order, claim or proof for a liquidated amount in respect
of any sum due under this Agreement or any other judgment or order.
20. THE AGENT AND ARRANGERS
(A) Appointment of Agent: Each Bank irrevocably appoints the
Agent to act as its agent for the purpose of the Financing Documents and
authorises the Agent to take such action and exercise such rights, powers and
discretions as are specifically delegated to the Agent by the Financing
Documents and such other action, rights, powers and discretions as are
reasonably incidental. However, the Agent may not begin any legal action or
proceeding in the name of a Bank without its consent. The relationship between
the Agent and the Banks is of agent and principal only. The Agent shall not be a
trustee for any Bank, nor an agent or trustee for the Borrower, under or in
relation to the Financing Documents.
(B) Agent's Duties: The Agent shall:-
(1) promptly send to each Bank details of each written
communication received by it from the Borrower or any
Shareholder under the Financing Documents, except
that details of any written communication relating to
a particular Bank shall be sent to that Bank only;
(2) promptly send to each Bank a copy of any legal
opinion delivered under this Agreement and of any
document or information received by it under Clause 4
or 15;
(3) subject to the other provisions of this Clause, act
in accordance with any instructions from the Majority
Banks or, if so instructed by the Majority Banks,
refrain from exercising a right, power or discretion
vested in it under the Financing Documents; and
(4) have only those duties, obligations and
responsibilities expressly specified in the Financing
Documents.
<PAGE> 50
47
(C) Agent's Rights: The Agent may:-
(1) perform any of its duties, obligations and
responsibilities under the Financing Documents by or
through its personnel or agents;
(2) refrain from exercising any right, power or
discretion vested in it under the Financing Documents
until it has received instructions from the Majority
Banks as to whether (and, if it is to be, the way in
which) it is to be exercised and shall in all cases
be fully protected when acting, or (if so instructed)
refraining from acting, in accordance with
instructions from the Majority Banks;
(3) treat the Lending Bank which makes available any
share of an Advance as the person entitled to
repayment of that share unless all or part of it has
been transferred (or the Agent has received a notice
of the assignment of all or part of it) in accordance
with Clause 24(C); and may act on any such transfer
or notice until it is superseded by a further
transfer or notice;
(4) refrain from doing anything which would or might in
its opinion be contrary to any law or any directive
of any agency of any state or otherwise render it
liable to any person and may do anything which is in
its opinion necessary to comply with any such law or
directive;
(5) assume that no Event of Default or Potential Event of
Default has occurred unless an officer of the Agent,
while active on the account of the Borrower or any
Shareholder, acquires actual knowledge to the
contrary; and
(6) refrain from taking any step (or further step) to
protect or enforce the rights of any person under the
Financing Documents until it has been indemnified (or
received confirmation that it will be so indemnified)
and/or secured to its satisfaction against any and
all costs, losses, expenses or liabilities (including
legal fees) which it would or might sustain or incur
as a result.
(D) Rights of the Agent and Arrangers: Each of the Agent and the
Arrangers may:-
(1) rely on any communication, certificate, legal opinion
or other document believed by it to be genuine and
assume that any person notified to it by the Borrower
or any Shareholder as duly authorised to take any
action contemplated by the Financing Documents
remains so authorised until it has received notice to
the contrary from the Borrower or such Shareholder
(as the case may be);
(2) rely as to any matter of fact which might reasonably
be expected to be within the knowledge of the
Borrower or any Shareholder on a statement by or on
behalf of the Borrower or
<PAGE> 51
48
such Shareholder (as the case may be);
(3) obtain and pay for such legal or other expert advice
or services as may to it seem necessary or desirable
and rely on any such advice;
(4) retain for its own benefit and without liability to
account any fee or other sum receivable by it for its
own account; and
(5) accept deposits from, lend money to, provide any
advisory or other services to or engage in any kind
of banking or other business with any party to the
Financing Documents or any subsidiary or any
associated company of any such party (and, in each
case, may do so without liability to account).
(E) Exoneration of Agent and Arrangers: Neither the Agent nor the
Arrangers nor any of their respective personnel or agents shall be:-
(1) responsible for the adequacy, accuracy, completeness
or reasonableness of any representation, warranty,
statement, projection, assumption or information in
the Financing Documents or any notice or other
document delivered under or in connection with the
Financing Documents;
(2) responsible for the execution, delivery, validity,
legality, adequacy, enforceability or admissibility
in evidence of the Financing Documents or any such
notice or other document;
(3) obliged to enquire as to the occurrence or
continuation of an Event of Default or Potential
Event of Default; or
(4) liable for anything done or not done by it or any of
them under or in connection with the Financing
Documents save in the case of its or their own gross
negligence or wilful misconduct.
The Arrangers shall not have any duty, obligation or responsibility under or in
connection with the Financing Documents.
For the purposes of this Clause, the Agent shall not be treated as having actual
knowledge of any matter of which any shareholder of the Agent or any of its
holding companies, subsidiaries or associated companies or the corporate finance
department or any other division outside the department, division or team
directly responsible for the management of the Commitments may become aware in
the context of lending, corporate finance or advisory activities from time to
time undertaken by the Agent for the Borrower.
(F) Agent as Bank: The Agent shall have the same rights and
powers with respect to its Commitments (if any) and its Outstandings (if any) as
any other Bank and may exercise those rights and powers as if it were not also
acting as Agent.
(G) Non-Reliance on Agent and Arrangers: Each Bank confirms that
it has itself been, and will at all times continue to be, solely responsible for
making its own independent investigation and appraisal of the business,
<PAGE> 52
49
operations, financial condition, prospects, creditworthiness, status and affairs
of the Borrower, the Shareholders and their respective subsidiaries and has not
relied, and will not at any time rely, on the Agent, any Arranger and/or any
other Bank:-
(1) to provide it with any information relating to the
business, operations, financial condition, prospects,
creditworthiness, status or affairs of the Borrower
or any other person, whether coming into its
possession before or after the issue of the EDB
Guarantee or the making of any Advance (except, in
the case of the Agent, as stated in sub-Clause (B));
or
(2) to check or enquire into the adequacy, accuracy,
completeness or reasonableness of any representation,
warranty, statement, projection, assumption or
information at any time provided by or on behalf of
the Borrower, any Shareholder or any other person
under or in connection with the Financing Documents
(whether or not such information has been or is at
any time circulated to it by the Agent and/or any
Arranger); or
(3) to assess or keep under review the business,
operations, financial condition, prospects,
creditworthiness, status or affairs of the Borrower,
any Shareholder or any other person.
(H) Indemnity to Agent: To the extent that the Borrower does not
do so on demand or is not obliged to do so, each Bank shall on demand indemnify
the Agent in the proportion borne by its Outstandings to all the Outstandings at
the relevant time (or, if there are then no Outstandings, in the proportion
borne by its Commitment to the total Commitments) against any cost, expense or
liability mentioned in Clause 22 or sustained or incurred by the Agent in
complying with any instructions from the Majority Banks or otherwise sustained
or incurred by it in connection with the Financing Documents or its duties,
obligations and responsibilities under the Financing Documents except to the
extent that they are sustained or incurred as a result of the negligence or
wilful misconduct of the Agent or any of its personnel or agents.
(I) Resignation of Agent: Notwithstanding the irrevocable
appointments in sub-Clause (A), the Agent may resign at any time (after
consultation with the Borrower) if it gives at least 30 days' notice to the
Borrower and the Banks. However, no resignation shall be effective until the
successor has been appointed and accepted its appointment in accordance with
this sub-Clause (I). The Majority Banks may appoint a successor to the resigning
Agent but, if the successor has not been so appointed and accepted its
appointment within 15 days after the date of the notice of resignation, the
resigning Agent may appoint a successor Agent, which must be a reputable and
experienced bank or financial institution with an office in Singapore. Any
appointment of a successor must be in writing, signed by the person(s)
appointing that successor and delivered to that successor. Any acceptance of
such appointment must be in writing, signed by the person appointed and
delivered to the person(s) appointing that successor. The other parties to this
Agreement shall be promptly informed of the acceptance by a successor Agent.
Upon the successor accepting its appointment, the resigning Agent shall be
automatically discharged from any further obligation under this Agreement and
its successor and each of the other parties to this Agreement shall have the
same rights and obligations among themselves as they would have had if the
successor had been the original Agent party to this Agreement. The resigning
Agent shall provide its successor with
<PAGE> 53
50
(or with copies of) such records as its successor requires to carry out its
duties under this Agreement.
(J) Transfer Notice: The Borrower, the Arrangers and each Bank
(except for the Lending Bank and the New Lending Bank seeking the relevant
transfer in accordance with Clause 24(C)) irrevocably authorise the Agent to
sign each Novation Notice on their behalf.
21. SET-OFF AND PRO RATA SHARING
(A) Set-Off: The Borrower authorises any other party to this
Agreement to apply (without prior notice) any credit balance (whether or not
then due) to which it is at any time beneficially entitled on any account at,
any sum held to its order by and/or any liability of, any office of that party
in or towards satisfaction of any sum then due from it to that party under this
Agreement and unpaid and, for that purpose, to convert one currency into another
(but so that nothing in this sub-Clause (A) shall be effective to create a
charge). No party shall be obliged to exercise any of its rights under this
sub-Clause (A), which shall be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other right to which it is at any time
otherwise entitled (whether by operation of law, contract or otherwise).
(B) Pro Rata Sharing: If at any time the proportion received or
recovered (whether by direct payment, by exercise of any right of set-off,
combination of accounts or lien, or otherwise) by any Bank in respect of the
total sum which has become due to it from the Borrower under this Agreement
before that time exceeds the proportion received or recovered by the Bank(s)
receiving or recovering the smallest proportion (if any), then:-
(1) within two Business Days after receiving a request
from the Agent, that Bank shall pay to the Agent an
amount equal to the excess;
(2) the Agent shall distribute that payment as if it were
paid by the Borrower; and
(3) as between the Borrower and the Banks, that excess
amount shall be treated as having been paid to the
Banks to which (and in the proportions in which) it
is distributed under paragraph (2), rather than as
having been paid to that Bank.
Within two Business Days after any Bank receives or recovers any such sum
otherwise than by payment through the Agent, that Bank shall notify the Agent of
the amount and currency so received or recovered, how it was received or
recovered and whether it represents principal, interest or other sums. If all or
part of any amount so received or recovered by that Bank has to be refunded by
it (with or without interest), each Bank to whom any part of that amount has
been distributed shall (within two Business Days after receiving a request from
that Bank) in turn pay to that Bank its proportionate share of the amount to be
refunded and of any interest required to be paid by that Bank on that amount in
respect of all or any part of the period from the date of the relevant
distribution to the date of that payment to that Bank.
Any amount received or recovered by a Bank under a novation, assignment,
sub-participation (or the like) shall be ignored for the purpose of this
sub-Clause (B). Furthermore, a Bank shall not be obliged to share any amount
<PAGE> 54
51
which it has received or recovered as a result of taking legal proceedings with
any other Bank which had an opportunity to participate in those legal
proceedings but did not do so and did not take separate legal proceedings.
This sub-Clause (B) shall apply, with any necessary modifications, to any amount
set-off under sub-Clause (A) by any party to this Agreement in respect of any
sum due to any other party under this Agreement.
22. EXPENSES AND STAMP DUTY
Whether or not the EDB Guarantee is issued or any Advance is
made under this Agreement, the Borrower shall pay:-
(1) on demand, all costs and expenses (including legal
fees and all goods and services, value added and
other duties or taxes payable on such costs and
expenses) reasonably incurred by the Agent and/or the
Arrangers in connection with the preparation,
negotiation or entry into of the Financing Documents
and/or any amendment of, supplement to or waiver in
respect of the Financing Documents;
(2) on demand, all costs and expenses (including legal
fees on a full indemnity basis all goods and
services, valued added and other duties or taxes
payable on such costs and expenses) reasonably
incurred by the Agent, the Arrangers or any Bank in
protecting or enforcing any rights under the
Financing Documents and/or any such amendment,
supplement or waiver; and
(3) promptly, and in any event before any interest or
penalty becomes payable, any goods and services,
value added, stamp, documentary, registration or
similar duty or tax payable in connection with the
entry into, enforcement or admissibility in evidence
of the Financing Documents and/or any such amendment,
supplement or waiver, and shall indemnify the Agent,
the Arrangers and the Banks against any liability
with respect to or resulting from any delay in paying
or omission to pay any such duty or tax.
23. CALCULATIONS AND EVIDENCE
(A) Basis of Calculation: All interest (including default
interest) and commitment fee shall accrue from day to day and shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed.
(B) Loan Accounts: The entries made in the accounts maintained by
each Bank in accordance with its usual practice shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower recorded in them.
(C) Certificate Conclusive: A certificate by the Agent, any
Arranger or any Lending Bank as to any sum payable to it under this Agreement,
and any other certificate, determination, notification, opinion or the like of
the Agent, any Arranger, any Bank or the Majority Banks provided for in this
Agreement, shall be conclusive save for manifest error.
24. BENEFIT OF AGREEMENT
<PAGE> 55
52
(A) Benefit and Burden of Agreement: This Agreement shall benefit
and be binding on the parties, any New Lending Bank in respect of which a
Transfer Notice becomes effective in accordance with sub-Clause (C), their
respective assignees and their respective successors. Any reference in this
Agreement to any party shall be construed accordingly.
(B) Borrower: The Borrower may not assign or transfer all or part
of its rights or obligations under this Agreement.
(C) Banks: (1) Any Lending Bank may at any time transfer all or
part of its Outstandings or all or part of its Term Commitment to any person
without the consent of any party (but such Lending Bank shall give to the
Borrower prior notice of such transfer). Any such transfer shall be made by
delivering to the Agent a duly completed and executed Transfer Notice. On
receipt of such a notice, the Agent shall countersign it for and on behalf of
itself and the other parties to this Agreement and, subject to the terms of that
Transfer Notice:-
(a) to the extent that in that Transfer Notice the
relevant Lending Bank seeks to novate its
Outstandings and/or its Term Commitment, the Borrower
and that Lending Bank shall each be released from
further obligations to each other and their
respective rights against each other shall be
cancelled (such rights and obligations being referred
to as "discharged rights and obligations");
(b) the Borrower and the relevant New Lending Bank shall
each assume new obligations towards each other and/or
acquire new rights against each other which differ
from the discharged rights and obligations only
insofar as the Borrower and that New Lending Bank
have assumed and acquired the same in place of the
Borrower and that Lending Bank; and
(c) the New Lending Bank and the other parties to this
Agreement (other than the Borrower) shall acquire the
same rights and assume the same obligations between
themselves as they would have acquired and assumed
had that New Lending Bank been an original party to
this Agreement as a Lending Bank with the rights
and/or obligations acquired or assumed by it as a
result of that novation (and, to that extent, the
original Lending Bank and those other parties shall
each be released from further obligations to each
other).
(2) On the date on which a transfer takes effect pursuant to
paragraph (1), the New Lending Bank in respect of such transfer shall pay to the
Agent for its own account a transfer fee of S$500. If any New Lending Bank fails
to pay any transfer fee payable by it under this paragraph (2) on its due date,
the Agent may at any time deduct an amount equal to such fee from any moneys
from time to time held by the Agent for account of such New Lending Bank.
(3) Any Bank may at any time assign all or part of its
Outstandings to any person without the consent of any party (but such Bank shall
give to the Borrower prior notice of such assignment).
(4) The Borrower shall not be liable for any costs or expenses
which
<PAGE> 56
53
may be incurred in connection with any assignment or transfer of the
Outstandings or the Term Commitments.
(D) Disclosure of Information: The Agent, any Arranger or any of
the Banks may disclose on a confidential basis to any other party to the
Financing Documents or any of its other branches or its headquarters or to an
actual or potential New Lending Bank, assignee, sub-participant or the like such
information about the Borrower or any other person as it may think fit and may
disclose to any other person such information about the Borrower with the prior
consent in writing of the Borrower (Provided that, at any time and from time to
time after the making of a declaration under Clause 17(B), (1) no such consent
will be required for any such disclosure and (2) the Agent, the relevant
Arranger or the relevant Bank making any such disclosure shall, if practicable,
consult with the Borrower prior to making any such disclosure and shall consider
in good faith any request from the Borrower to the Agent, such Arranger or such
Bank not to make any such disclosure or to delay making any such disclosure).
(E) Limitation on Certain Obligations of Borrower: If, at the
time of any assignment or transfer by a Lending Bank, circumstances exist which
would oblige the Borrower to pay to the New Lending Bank under Clause 11(B) or
12(B) any sum in excess of the sum (if any) which it would have been obliged to
pay to that Lending Bank under the relevant Clause in the absence of that
assignment or transfer, the Borrower shall not be obliged to pay that excess.
25. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS
(A) No Implied Waivers: No failure on the part of the Agent, any
Arranger or any Bank to exercise, and no delay on its part in exercising, any
right or remedy under this Agreement will operate as a waiver thereof, nor will
any single or partial exercise of any right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies provided in this Agreement are cumulative and not exclusive
of any other rights or remedies (whether provided by law or otherwise).
(B) Amendments, Waivers and Consents: Any provision of this
Agreement may be amended or supplemented only if the Borrower and the Majority
Banks so agree in writing and any Event of Default, Potential Event of Default,
provision or breach of any provision of this Agreement may be waived before or
after it occurs only if the Majority Banks so agree in writing but:-
(1) an amendment, supplement or waiver which puts one or
more Banks in a better or worse position than one or
more other Banks or changes or relates to (a) the
amount of the Available Facility or any Bank's
Commitment or Available Term Commitment, (b) the
Commitment Termination Date, (c) the amount or
currency of the Advances, (d) the amount or date of
any repayment installment, (e) the length of Interest
Periods, (f) the rate or dates of payment of
interest, (g) the amount or date(s) of payment of any
fee payable under Clause 10, (h) the currency of any
payment, (i) the definition of "Majority Banks", (j)
this sub-Clause (B) or (k) any Clause which by its
terms requires the consent of all the Banks, shall
require the agreement of all the Banks and (in the
case of an amendment or supplement) the Borrower
also; and
<PAGE> 57
54
(2) an amendment, supplement or waiver which changes or
relates to the rights and/or obligations of the Agent
or any Arranger shall require its agreement also.
Any consent by the Agent, any Arranger, any Lending Bank or the Majority Banks
under any provision of this Agreement must also be in writing. Any such waiver
or consent may be given subject to any conditions thought fit by the person
giving it and shall be effective only in the instance and for the purpose for
which it is given.
26. COMMUNICATIONS
(A) Addresses: Each communication under this Agreement shall be
made by fax, telex or otherwise in writing. Each communication or document to be
delivered to any party under this Agreement shall be sent to that party at the
fax number, telex number or address, and marked for the attention of the person
(if any), from time to time designated by that party to the Agent (or, in the
case of the Agent, by it to each other party) for the purpose of this Agreement.
The initial fax number, telex number, address and person (if any) so designated
by each party are set out under its name at the end of this Agreement. Any
communication or document from or to the Borrower under this Agreement shall be
sent to, by or through the Agent.
(B) Deemed Delivery: Any communication from the Borrower shall be
irrevocable, and shall not be effective until received by the Agent. Any other
communication from one party to another party shall be deemed to be received by
such other party (if sent by fax or telex) on the day of despatch or (in any
other case) when left at the address required by sub-Clause (A) or within two
days after being sent by prepaid post addressed to it at that address.
27. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any
provision of this Agreement under the law of any jurisdiction shall not affect
its legality, validity or enforceability under the law of any other jurisdiction
nor the legality, validity or enforceability of any other provision.
28. NATURE OF RIGHTS AND OBLIGATIONS
(A) Liability Several: The liability of the Banks is several. No
party to this Agreement shall be responsible for the obligations of any other
party. The failure of a Bank to perform its obligations shall not release any
other party from its obligations.
(B) Rights Several: The rights of the Banks are also several. The
amount at any time owing by the Borrower to any party under this Agreement shall
be a separate and independent debt from the amount owing to any other party.
Each party shall have the right to protect and enforce its rights arising out of
this Agreement and it shall not be necessary for any Arranger, the Agent or any
Bank to be joined as an additional party in any proceedings for this purpose.
29. GOVERNING LAW
This Agreement shall be governed by, and construed in
accordance with, the laws of Singapore.
<PAGE> 58
55
S C H E D U L E 1
BANKS AND COMMITMENTS
Part A - Guarantor Banks and Guarantee Commitments
<TABLE>
<CAPTION>
Guarantor Bank Guarantee Commitment
- -------------- --------------------
<S> <C>
ABN AMRO Bank, N.V.,
Singapore Branch S$37,400,000
Bayerische Landesbank Girozentrale,
Singapore Branch S$37,400,000
Citibank, N.A.,
Singapore Branch S$37,400,000
Overseas Union Bank Limited S$40,700,000
The Sumitomo Bank, Limited,
Singapore Branch S$37,400,000
The Sanwa Bank, Limited,
Singapore Branch S$16,500,000
The Bank of Tokyo-Mitsubishi, Ltd.,
Singapore Branch S$15,000,000
Den Danske Bank Aktieselskab,
Singapore Branch S$15,000,000
------------
S$236,800,000
=============
</TABLE>
<PAGE> 59
56
Part B - Lending Banks and Term Commitments
<TABLE>
<CAPTION>
Lending Bank Term Commitment
- ------------ ---------------
<S> <C>
ABN AMRO Bank, N.V.,
Singapore Branch US$24,000,000
Bayerische Landesbank Girozentrale,
Singapore Branch US$24,000,000
Citibank, N.A.,
Singapore Branch US$24,000,000
Overseas Union Bank Limited US$28,400,000
The Sumitomo Bank, Limited,
Singapore Branch US$24,000,000
The Bank of Tokyo-Mitsubishi, Ltd.,
Singapore Branch US$8,800,000
Den Danske Bank Aktieselskab,
Singapore Branch US$10,000,000
--------------
US$143,200,000
==============
</TABLE>
<PAGE> 60
57
S C H E D U L E 2
FORM OF TRANSFER NOTICE
To: ABN AMRO Bank N.V.,
Singapore Branch,
63, Chulia Street,
Singapore 049514.
Attention: [name and title of relevant person]
Chartered Silicon Partners Pte Ltd
Credit Agreement
dated 12th March, 1998
1. This Transfer Notice relates to the above Credit Agreement.
Terms defined in the Credit Agreement have the same meaning in this Transfer
Notice.
2. The undersigned Existing Lending Bank confirms that, to the
extent details appear below under the heading "Rights and/or Obligations to be
Transferred", those details accurately summarise the rights and/or obligations
which are to be novated and which are, upon delivery of this Transfer Notice to
the Agent (but subject to 3 below), cancelled and discharged in accordance with
Clause 24(C) of the Credit Agreement.
3. The undersigned New Lending Bank agrees that it assumes and
acquires new rights and/or obligations in accordance with Clause 24(C) of the
Credit Agreement on and with effect from [ ], 19[ ] [subject only to the Agent's
having received tested telex confirmation from [ ] that the sum of [ ] has been
credited to the Existing Lending Bank's account with [ ] for value that date].
4. The undersigned New Lending Bank:-
(1) confirms that, until further notice, its lending
office and details for communications are as set out
below;
(2) agrees to perform and comply with the obligations
expressed to be imposed on it by Clause 24(C) of the
Credit Agreement as a result of this Transfer Notice
taking effect; and
(3) if not already a Lending Bank, appoints the Agent to
act as its agent as provided in the Credit Agreement
and agrees to be bound by the Credit Agreement
(including, but not limited to, Clause 20 and
particularly, but not limited to, Clauses 20(E), (G)
and (H)).
5. The above confirmations and agreements are given to and for
the benefit of and made with each of the other parties to the Credit Agreement.
6. This Transfer Notice shall be governed by, and construed in
accordance with, the laws of Singapore.
<PAGE> 61
58
Existing Lending Bank
Name:
By:
Authorised Signatory
Date: 19
New Lending Bank
Name:
By:
Authorised Signatory
Date: 19
Lending Office
Address:
Fax Number:
Telex Number:
Attention:
Rights and/or Obligations to be Transferred
1. Existing Lending Bank's Term Commitment to be novated:
2. Existing Lending Bank's Outstandings to be novated:
Agent
Agreed for and on behalf of itself as Agent and the other parties to the Credit
Agreement.
Name:
By:
Authorised Signatory
Date: 19
<PAGE> 62
59
S C H E D U L E 3
CONDITIONS PRECEDENT
1. A certified copy of each of (1) the certificate of
incorporation of the Borrower, (2) the Memorandum and Articles of Association of
the Borrower, (3) the certificate of incorporation (or equivalent) of each
Shareholder and (4) the Memorandum and Articles of Association (or equivalent)
of each Shareholder.
2. A copy, certified true by an authorised officer of the
Borrower as being in full force and effect on the date thereof, of:-
(1) all actions required to be taken by the Borrower (a)
authorising the entry into of the Financing Documents
and (b) authorising appropriate persons to execute
and deliver the Financing Documents on behalf of the
Borrower and to take any action contemplated in the
Financing Documents; and
(2) all necessary consents required by the Borrower for
the execution, delivery and performance of the
Financing Documents or, if no such consents are
necessary, a certificate to that effect from a person
duly authorised by the Borrower so to certify.
3. Specimen signatures of the respective persons referred to in
paragraph 2 above, duly certified, together with certificates of incumbency,
also duly certified, in respect of each such person.
4. A copy, certified true by an authorised officer of each
Shareholder as being in full force and effect on the date thereof, of:-
(1) all actions required to be taken by that Shareholder
(a) authorising the entry into of the Shareholders
Undertaking and (b) authorising appropriate persons
to execute and deliver the Shareholders Undertaking
on behalf of that Shareholder and to take any action
contemplated in the Shareholders Undertaking; and
(2) all necessary consents required by that Shareholder
for the execution, delivery and performance of the
Shareholders Undertaking or, if no such consents are
necessary, a certificate to that effect from a person
duly authorised by that Shareholder so to certify.
5. Specimen signatures of the respective persons referred to in
paragraph 4 above, duly certified, together with certificates of incumbency,
also duly certified, in respect of each such person.
<PAGE> 63
60
6. A certified copy of the following consents for the Project:-
(1) the permission to carry out earthworks from the Urban
Renewal Authority; and
(2) the permit for the commencement of piling, the notice
of approval - sub-structure, the notice of approval -
super-structure and the permit for commencement of
building work from the Building Control Department.
7. The Shareholders Undertaking duly executed by the
Shareholders, the Borrower and the Agent.
8. Evidence of the acceptance by the process agent appointed in
Clause 14(E) of the Shareholders Undertaking of its appointment as such for the
purpose of the Shareholders Undertaking.
9. Legal opinions dated on or after the date of this Agreement
from:-
(1) Nauta Dutilh, legal advisers in the Netherlands to
the Agent, the Arrangers and the Banks, as to such
matters of the laws of the Netherlands relevant to
the Shareholders Undertaking as the Agent may
request; and
(2) Allen & Gledhill, legal advisers in Singapore to the
Agent, the Arrangers and the Banks, as to such
matters of Singapore law relevant to the Financing
Documents as the Agent may request.
10. The completed Drawdown Schedule (the particulars of which must
be acceptable to the Agent).
11. A certified copy of the Joint Venture Agreement.
12. A certified copy of the letter of undertaking dated 13th
March, 1997 issued by HP to CSM and EDBI for the obligations of HPE under the
Joint Venture Agreement.
<PAGE> 64
61
S C H E D U L E 4
FORM OF REQUEST FOR ISSUE OF EDB GUARANTEE
To: ABN AMRO Bank N.V.,
Singapore Branch,
63, Chulia Street,
Singapore 049514.
For the attention of: [name and title of relevant person]
Dear Sirs,
Chartered Silicon Partners Pte Ltd
Credit Agreement
dated 12th March, 1998
We refer to the above Credit Agreement between (1) ourselves,
as Borrower, (2) yourselves, Bayerische Landesbank Girozentrale, Singapore
Branch, Citibank, N.A., Overseas Union Bank Limited and The Sumitomo Bank,
Limited, Singapore Branch, as Arrangers, (3) the Guarantor Banks named therein,
as Guarantor Banks, (4) the Lending Banks named therein, as Lending Banks, and
(5) yourselves, as Agent. Terms defined in the Credit Agreement have the same
meaning in this notice.
We give you notice that we request the EDB Guarantee to be
issued by the Guarantor Banks under the Credit Agreement as follows:-
(1) Amount: S$
(2) Issue Date: , 19 (or, if that is not a
Singapore Business Day, the next
succeeding Singapore Business Day)
(3) Expiry Date:
We confirm that no Event of Default or Potential Event of
Default has occurred or will occur as a result of the issue of the EDB Guarantee
we represent and warrant that the representations and warranties contained in
Clause 14 of the Credit Agreement have been complied with and would be correct
in all respects if repeated today by reference to the circumstances now existing
and we confirm that all the undertakings on our part contained in Clauses 15 and
16 of the Credit Agreement have been fully performed and observed by us.
Dated , 1998.
Yours faithfully,
For and on behalf of
CHARTERED SILICON PARTNERS PTE LTD
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE> 65
62
S C H E D U L E 5
FORM OF REQUEST FOR ADVANCE
To: ABN AMRO Bank N.V.,
Singapore Branch,
63, Chulia Street,
Singapore 049514.
For the attention of: [name and title of relevant person]
Dear Sirs,
Chartered Silicon Partners Pte Ltd
Credit Agreement
dated 12th March, 1998
We refer to the above Credit Agreement between (1) ourselves,
as Borrower, (2) yourselves, Bayerische Landesbank Girozentrale, Singapore
Branch, Citibank, N.A., Overseas Union Bank Limited and The Sumitomo Bank,
Limited, Singapore Branch, as Arrangers, (3) the Guarantor Banks named therein,
as Guarantor Banks, (4) the Lending Banks named therein, as Lending Banks, and
(5) yourselves, as Agent. Terms defined in the Credit Agreement have the same
meaning in this notice.
We give you notice that we request an Advance to be made to us
under the Credit Agreement as follows:-
(1) Amount: US$
(2) Date of Advance: , 19 (or, if that is
not a Business Day, the next
succeeding Business Day)
We confirm that no Event of Default or Potential Event of
Default has occurred or will occur as a result of the making of the above
Advance, we represent and warrant that the representations and warranties
contained in Clause 14 of the Credit Agreement have been complied with and would
be correct in all respects if repeated today by reference to the circumstances
now existing and we confirm that all the undertakings on our part contained in
Clauses 15 and 16 of the Credit Agreement have been fully performed and observed
by us.
<PAGE> 66
63
You are requested to make the proceeds of this Advance
available to us by credit to our account with [details of bank account] in New
York City.
Dated , 19 .
Yours faithfully,
For and on behalf of
CHARTERED SILICON PARTNERS PTE LTD
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE> 67
64
S C H E D U L E 6
FORM OF DRAWDOWN SCHEDULE
<TABLE>
<CAPTION>
(1) (2) (3)
Utilisation Period Available EDB Amount Available Term Amount
- ------------------ -------------------- ---------------------
<S> <C> <C> <C>
(1) 1st July, 1998 to S$0
US$18,750,000
30th September, 1998
(2) 1st October, 1998 to S$10,000,000 US$53,130,000
31st December, 1998
(3) 1st January, 1999 to S$20,000,000 US$18,750,000
31st March, 1999
(4) 1st April, 1999 to S$65,000,000 US$31,250,000
30th June, 1999
(5) 1st July, 1999 to S$110,000,000
US$21,320,000
30th September, 1999
(6) 1st October, 1999 to S$31,800,000 US$0
31st December, 1999
------------- --------------
S$236,800,000 US$143,200,000
============= ==============
</TABLE>
<PAGE> 68
65
A P P E N D I X A
FORM OF EDB GUARANTEE
To: Economic Development Board
1. We refer to an EDB Loan Agreement (the "EDB Loan Agreement")
dated [ ], 1998 made between yourselves and Chartered Silicon Partners Pte Ltd
(the "Borrower") pursuant to which you have agreed to make available to the
Borrower a loan facility in an aggregate amount not exceeding S$450,000,000.
2. In consideration of your agreeing subject, inter alia, to the
delivery of this Guarantee to enter into and accept liabilities under the EDB
Loan Agreement and subject to the due observance of the provisions of Clause 5
of the EDB Loan Agreement, we, the Guarantor Banks whose names appear in the
signature pages hereto unconditionally and irrevocably:-
(1) guarantee the payment by the Borrower of each amount
which may from time to time fall due to yourselves
from the Borrower in respect of:-
(a) payments of principal advanced under the EDB
Loan Agreement up to a maximum aggregate
amount at any time equal to the Maximum
Principal Liability (as defined below) at
that time;
(b) payments of interest under Clause 7.2 of the
EDB Loan Agreement but not including default
interest under Clause 7.5 of the EDB Loan
Agreement, up to a maximum aggregate amount
at any time being the lesser of six months
interest and the Maximum Interest Liability
(as defined below) at that time; and
(c) payments of default interest under Clause
7.5 of the EDB Loan Agreement, up to a
maximum aggregate amount at any time equal
to the Maximum Default Interest Liability
(as defined below) at that time,
and agree to pay to yourselves, within three Business
Days (as such term is defined in the EDB Loan
Agreement) of demand by yourselves, unless such
demand is made on a day which is not a business day
or after 12.00 noon on any Business Day, in which
event payment shall be made within three Business
Days from the next immediately succeeding Business
Day:-
(i) any and every sum or sums of money which the
Borrower shall at any time be liable to pay
to yourselves under or pursuant to the EDB
Loan Agreement by way of principal and shall
fail to pay on the due date therein provided
up to the Maximum Principal Liability
<PAGE> 69
66
at that time;
(ii) any and every sum or sums which the Borrower
shall at any time be liable to pay to
yourselves under or pursuant to Clause 7.2
of the EDB Loan Agreement by way of interest
(but excluding default interest under Clause
7.5 thereof), and shall fail to pay on the
due date therein provided up to the lesser
of six months interest and the Maximum
Interest Liability at that time; and
(iii) any and every sum or sums which the Borrower
shall at any time be liable to pay to
yourselves under or pursuant to the EDB Loan
Agreement by way of default interest under
Clause 7.5 thereof, and shall fail to pay on
the due date therein provided up to the
Maximum Default Interest Liability at that
time; and
(2) agree as a primary obligation to indemnify yourselves
on demand from and against any loss, cost or expense
incurred by yourselves as a result of the obligations
guaranteed pursuant hereto being or becoming void,
voidable, unenforceable or ineffective for any reason
whatsoever, whether or not known to yourselves, the
amount of such loss being the amount which you would
otherwise have been entitled to recover from
ourselves.
3. The liability of each of us in respect of any sum at any time
due to you hereunder is several and shall be limited to the fraction of such sum
which appears opposite our respective names in Schedule 1 hereto.
4. The total amount at any time payable by us hereunder shall not
exceed the Maximum Aggregate Liability (as defined below) at that time.
Notwithstanding the foregoing, the total amount at any time payable by us
hereunder in respect of interest under Clause 7.2 of the EDB Loan Agreement
shall not exceed the lesser of six months interest and the Maximum Interest
Liability at that time, the total amount at any time payable by us hereunder in
respect of default interest under Clause 7.5 of the EDB Loan Agreement shall not
exceed the Maximum Default Interest Liability at that time and the total amount
at any time payable by us hereunder in respect of principal shall not exceed the
Maximum Principal Liability at that time, Provided that this Guarantee shall not
extend to any advances made by yourselves to the Borrower at any time after you
have received notice from ABN AMRO Bank N.V., Singapore Branch (the "Agent") of
the occurrence of an Event of Default (as defined in the Credit Agreement dated
12th March, 1998 made between (1) the Borrower, as borrower, (2) the Arrangers
named therein, as arrangers, (3) ourselves, as guarantor banks, (4) the Lending
Banks named therein, as lending banks, and (5) the Agent, as agent).
5. In this Guarantee:-
"Maximum Aggregate Liability" means, at any time during a
Relevant Period, the amount specified against that Relevant
Period in column (2) of Schedule 2 hereto;
"Maximum Interest Liability" means, at any time during a
Relevant
<PAGE> 70
67
Period, the amount specified against that Relevant Period in
column (3) of Schedule 2 hereto;
"Maximum Default Interest Liability" means, at any time during
a Relevant Period, the amount specified against that Relevant
Period in column (4) of Schedule 2 hereto;
"Maximum Principal Liability" means, at any time during a
Relevant Period, the amount specified against that Relevant
Period in column (5) of Schedule 2 hereto; and
"Relevant Periods" means each of the periods specified as a
Relevant Period in column (1) of Schedule 2 hereto.
6. We each represent and warrant that we have full power to enter
into this Guarantee and have taken all necessary steps to authorise its
execution on our behalf and have obtained all necessary governmental and other
consents required to enable us each to perform our obligations hereunder and
that this Guarantee is legal, valid and binding on each of us.
7. This Guarantee shall be a continuing security and accordingly
(1) shall extend to cover the balance of principal due at any time from the
Borrower to you and (2) shall not be discharged by any intermediate payment or
settlement of account between the Borrower and yourselves.
8. (1) If any sum due and payable by any of us hereunder or under
any order or judgment given or made in relation hereto has to be converted from
the currency (the "First Currency") in which the same is payable hereunder or
under such order or judgment into another currency (the "Second Currency") for
the purpose of (a) making or filing a claim or proof against us whether in our
liquidation or otherwise, (b) obtaining an order or judgment in any court or
other tribunal or (c) enforcing any order or judgment given or made in relation
hereto, that such of us that is so obliged to pay such sum shall indemnify and
hold harmless each of the persons to whom such sum is due and payable from and
against any loss suffered as a result of any discrepancy between (i) the rate of
exchange used for such purpose to convert the sum in question from the First
Currency into the Second Currency and (ii) the rate or rates of exchange at
which such person may in the ordinary course of business purchase the First
Currency with the Second Currency upon receipt by it of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
(2) The foregoing indemnity shall constitute a separate obligation
distinct from our other respective obligations hereunder and shall survive the
giving or making of any order or judgment in relation to all or any of such
other obligations.
9. Each time you make an advance to the Borrower pursuant to the
provisions of the EDB Loan Agreement or receive a repayment or prepayment of
principal thereunder, upon request by the Borrower, you shall notify us in
writing of the principal amount and date of such advance or, as the case may be,
repayment or prepayment, and of the then revised outstanding balance of
principal. We hereby agree that a certificate from yourselves as to the amount
due from the Borrower by way of principal or interest under the EDB Loan
Agreement at the date of such certificate shall, in the absence of manifest
error, be conclusive and binding on us for all purposes and we further agree to
cause the Agent to promptly notify you of the occurrence of any Event of
<PAGE> 71
68
Default under the Credit Agreement whereby the Advances made thereunder are
declared immediately due and payable.
10. Any demand to be made on us hereunder shall be made by telex
or letter to our agent, ABN AMRO Bank N.V., Singapore Branch (the "Agent"), at
63, Chulia Street, Singapore 049514, Telex Number RS 24396 and shall specify
whether such demand is made in respect of principal or interest and, if both,
the respective amounts of such claim and, where such demand is made in respect
of interest, the period in respect of which such claim is made. Such demand
shall also specify, if relevant, the provision of Clause 15.2 pursuant to which
indebtedness under the EDB Loan Agreement was accelerated. You shall be entitled
to make any number of demands on us hereunder.
11. This Guarantee shall remain in full force and effect until
the earlier of (1) the date on which you certify that there is no amount owing,
due or payable by the Borrower to yourselves by way of principal under the EDB
Loan Agreement and no amounts of interest accrued but unpaid, a copy of which
certification shall be sent to the Agent, and (2) 30th June, 2006 or, if such
day is not a Business Day, the immediately preceding Business Day.
12. This Guarantee may be executed by each party hereto on
separate counterparts, each of which shall be binding on such party and all of
which shall constitute one and the same document.
13. This Guarantee shall be governed by, and construed in
accordance with, the laws of Singapore.
<PAGE> 72
69
I N W I T N E S S W H E R E O F this Guarantee has been
entered into on __, 1998.
ABN AMRO BANK N.V., SINGAPORE BRANCH,
By: ___________________________
Name: _________________________
Title: ________________________
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
CITIBANK, N.A., SINGAPORE BRANCH,
By: ___________________________
Name: _________________________
Title: ________________________
<PAGE> 73
70
OVERSEAS UNION BANK LIMITED,
By: ___________________________
Name: _________________________
Title: ________________________
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH,
By: ___________________________
Name: _________________________
Title: ________________________
THE SANWA BANK, LIMITED, SINGAPORE BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
<PAGE> 74
71
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SINGAPORE BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
DEN DANSKE BANK AKTIESELSKAB,
SINGAPORE BRANCH
By: ___________________________
Name: _________________________
Title: ________________________
<PAGE> 75
72
SCHEDULE 1
<TABLE>
<CAPTION>
Guarantor Bank Fraction
-------------- --------
<S> <C> <C>
(1) ABN Amro Bank N.V.,
Singapore Branch 37.4/236.8
(2) Bayerische Landesbank Girozentrale,
Singapore Branch 37.4/236.8
(3) Citibank, N.A.,
Singapore Branch 37.4/236.8
(4) Overseas Union Bank Limited 40.7/236.8
(5) The Sumitomo Bank, Limited,
Singapore Branch 37.4/236.8
(6) The Sanwa Bank, Limited,
Singapore Branch 16.5/236.8
(7) The Bank of Tokyo-Mitsubishi, Ltd.,
Singapore Branch 15/236.8
(8) Den Danske Bank Aktieselskab,
Singapore Branch 15/236.8
</TABLE>
<PAGE> 76
73
SCHEDULE 2
<TABLE>
<CAPTION>
============================================================================================================================
Relevant Period Maximum Aggregate Maximum Interest Maximum Default Maximum Principal
Liability Liability Interest Liability Liability
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Date of first advance
under the EDB Loan
Agreement to X* 236,800,000 4,796,023 6,308,774 225,695,203
- ----------------------------------------------------------------------------------------------------------------------------
X + 1 day
to X + six months 213,366,365 4,556,222 5,684,460 203,125,683
- ----------------------------------------------------------------------------------------------------------------------------
X + six months + 1 day
to X + 12 months 189,686,366 4,076,620 5,053,583 180,556,163
- ----------------------------------------------------------------------------------------------------------------------------
X + 12 months + 1 day
to X + 18 months 166,006,365 3,597,017 4,422,705 157,986,643
- ----------------------------------------------------------------------------------------------------------------------------
X + 18 months + 1 day
to X + 24 months 142,326,366 3,117,415 3,791,828 135,417,123
- ----------------------------------------------------------------------------------------------------------------------------
X + 24 months + 1 day
to X + 30 months 118,646,367 2,637,813 3,160,951 112,847,603
- ----------------------------------------------------------------------------------------------------------------------------
X + 30 months + 1 day
to X + 36 months 94,966,366 2,158,210 2,530,073 90,278,083
- ----------------------------------------------------------------------------------------------------------------------------
X + 36 months + 1 day
to X + 42 months 71,286,367 1,678,608 1,899,196 67,708,563
- ----------------------------------------------------------------------------------------------------------------------------
X + 42 months + 1 day
to X + 48 months 47,606,367 1,199,006 1,268,318 45,139,043
- ----------------------------------------------------------------------------------------------------------------------------
X + 48 months + 1 day
to earlier of (X + 54
months and 30th June,
2006) 23,926,368 719,404 637,441 22,569,523
============================================================================================================================
</TABLE>
* "X" means the date of the first repayment of principal under the EDB Loan
Agreement (being not later than 31st March, 2002).
<PAGE> 77
74
I N W I T N E S S W H E R E O F this Agreement has been
entered into on the date stated at the beginning.
The Borrower
CHARTERED SILICON PARTNERS PTE LTD
60, Woodland Industrial Park D,
Street 2, Singapore 738406.
Fax Number: 3622909
Attention: Legal Department
By: /s/ Tan Bock Seng Witness: /s/ Rick Hodgman
---------------------------- ----------------------------
Name: Tan Bock Seng Name: Rick Hodgman
-------------------------- -------------------------------
Title: Director Address: General Manager
------------------------- ----------------------------
The Arrangers
ABN AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 231 7324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Rajan Ray By: /s/ Goh Chong Theng
---------------------------- ---------------------------------
Name: Rajan Ray Name: Goh Chong Theng
-------------------------- -------------------------------
Title: Country Manager Title: Head, Corporate Banking
------------------------- Division
------------------------------
<PAGE> 78
75
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Chandrashekar Gupta By: /s/ Ng Chong Inn
---------------------------- ---------------------------------
Name: Chandrashekar Gupta Name: Ng Chong Inn
-------------------------- -------------------------------
Title: Exec. V.P./G.M. Title: Asst. V.P., Institutional
------------------------- & Corporate Banking
------------------------------
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Ms Chow Wan Thonh
By: /s/ Chua Tian Chu
-------------------------------
Name: Chua Tian Chu
-----------------------------
Title: Head of Corporate Bank
----------------------------
<PAGE> 79
76
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Jeffrey Ling
------------------------------
Name: Jeffrey Ling
----------------------------
Title: V.P.
---------------------------
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ Koichi Inagaki
------------------------------
Name: Koichi Inagaki
----------------------------
Title: Joint General Manager
---------------------------
<PAGE> 80
77
Guarantor Banks
ABN-AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 231 7324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Rajan Ray By: /s/ Goh Chong Theng
---------------------------- --------------------------------
Name: Rajan Ray Name: Goh Chong Theng
-------------------------- ------------------------------
Title: Country Manager Title: Head, Corporate Banking
------------------------- Division
-----------------------------
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Chandrashekar Gupta By: /s/ Ng Chong Inn
----------------------------- ---------------------------------
Name: Chandrashekar Gupta Name: Ng Chong Inn
--------------------------- -------------------------------
Title: Exec. V.P./G.M. Title: Asst. V.P., Institutional
-------------------------- & Corporate Banking
------------------------------
<PAGE> 81
78
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Ms Chow Wan Thonh
By: /s/ Chua Tian Chu
-----------------------------
Name: Chua Tian Chu
---------------------------
Title: Head of Corporate Bank
--------------------------
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Jeffrey Ling
------------------------------
Name: Jeffrey Ling
----------------------------
Title: V.P.
---------------------------
<PAGE> 82
79
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ Koichi Inagaki
------------------------------
Name: Koichi Inagaki
----------------------------
Title: Joint General Manager
---------------------------
THE SANWA BANK, LIMITED,
SINGAPORE BRANCH
6, Raffles Quay, #24-01,
John Hancock Tower,
Singapore 048580.
Fax Number: 538 4636
Telex Number: RS 28573
Attention: Ms Loh Soh Wah/Mr Lim Wee Hian
By: /s/ Masatsugu Shirakura
------------------------------
Name: Masatsugu Shirakura
----------------------------
Title: Deputy General Manager
---------------------------
<PAGE> 83
80
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SINGAPORE BRANCH
9, Raffles Place, #01-01,
Republic Plaza,
Singapore 048619.
Fax Number: 538 8083
Telex Number: RS 24363
Attention: Ms Beatrice Chan (Loan Administration Department)/
Mr Gan Boon Seng (Corporate Finance Department)
By: /s/ Gn Hiang Chiang
------------------------------
Name: Gn Hiang Chiang
----------------------------
Title: Snr. Asst. G.M.
---------------------------
DEN DANSKE BANK AKTIESELSKAB,
SINGAPORE BRANCH
50, Raffles Place, #24-01,
Singapore Land Tower,
Singapore 048623.
Fax Number: 224 3320
Telex Number: 28030 DDBSIN
Attention: Mr Jorgen Faenoe/Ms Maureen Wee
By: /s/ Jorgen Faenoe By: /s/ Thomas Tang
----------------------------- ---------------------------------
Name: Jorgen Faenoe Name: Thomas Tang
--------------------------- -------------------------------
Title: Manager & Head of Credit Title: Deputy Manager, Corporate
Risk & Management Banking
-------------------------- ------------------------------
<PAGE> 84
81
The Lending Banks
ABN-AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 536 7816
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Rajan Ray By: /s/ Goh Chong Theng
----------------------------- ---------------------------------
Name: Rajan Ray Name: Goh Chong Theng
--------------------------- -------------------------------
Title: Country Manager Title: Head, Corporate Banking
-------------------------- Division
------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Chandrashekar Gupta By: /s/ Ng Chong Inn
----------------------------- ---------------------------------
Name: Chandrashekar Gupta Name: Ng Chong Inn
--------------------------- -------------------------------
Title: Exec. V.P./G.M. Title: Asst. V.P., Institutional
--------------------------- & Corporate Banking
------------------------------
<PAGE> 85
82
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584/426 8959
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Ms Chow Wan Thonh
By: /s/ Chua Tian Chu
-----------------------------
Name: Chua Tian Chu
---------------------------
Title: Head of Corporate Bank
--------------------------
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Jeffrey Ling
------------------------------
Name: Jeffrey Ling
----------------------------
Title: V.P.
---------------------------
<PAGE> 86
83
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ Koichi Inagaki
-----------------------------
Name: Koichi Inagaki
---------------------------
Title: Joint General Manager
--------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SINGAPORE BRANCH
9, Raffles Place, #01-01,
Republic Plaza,
Singapore 048619.
Fax Number: 538 8083
Telex Number: RS 24363
Attention: Ms Beatrice Chan (Loan Administration Department)/
Mr Gan Boon Seng (Corporate Finance Department)
By: /s/ Gn Hiang Chiang
------------------------------
Name: Gn Hiang Chiang
----------------------------
Title: Snr. Asst. G.M.
---------------------------
<PAGE> 87
84
DEN DANSKE BANK AKTIESELSKAB,
SINGAPORE BRANCH
50, Raffles Place, #24-01,
Singapore Land Tower,
Singapore 048623.
Fax Number: 224 3320
Telex Number: 28030 DDBSIN
Attention: Mr Jorgen Faenoe/Ms Maureen Wee
By: /s/ Jorgen Faenoe By: /s/ Thomas Tang
------------------------------ ---------------------------------
Name: Jorgen Faenoe Name: Thomas Tang
---------------------------- -------------------------------
Title: Manager & Head of Credit Title: Deputy Manager, Corporate
Risk & Management Banking
---------------------------- ------------------------------
The Agent
ABN AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 536 7816
Telex Number: RS 24396
Attention: Ms Sally Loh/Ms Patricia Teo
By: /s/ Rajan Ray By: /s/ Goh Chong Theng
----------------------------- --------------------------------
Name: Rajan Ray Name: Goh Chong Theng
--------------------------- ------------------------------
Title: Country Manager Title: Head, Corporate Banking
-------------------------- Division
-----------------------------
<PAGE> 88
CONFORMED COPY
DATED 14TH DECEMBER, 1998
CHARTERED SILICON PARTNERS PTE LTD
AS BORROWER
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
AS ARRANGERS
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS SENIOR LEAD MANAGER
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
AS LEAD MANAGER
THE SANWA BANK, LIMITED, SINGAPORE BRANCH
AS MANAGER
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
THE SANWA BANK, LIMITED, SINGAPORE BRANCH
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS GUARANTOR BANKS
ABN AMRO BANK N.V., SINGAPORE BRANCH
BAYERISCHE LANDESBANK GIROZENTRALE, SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
AS LENDING BANKS
- AND -
ABN AMRO BANK N.V., SINGAPORE BRANCH
AS AGENT
------------------------------------------
FIRST SUPPLEMENTAL AGREEMENT
(BEING SUPPLEMENTAL TO THE CREDIT AGREEMENT FOR
(1) A S$236,800,000 GUARANTEE FACILITY
(2) A US$143,200,000 TERM LOAN FACILITY
DATED 12TH MARCH, 1998)
------------------------------------------
ALLEN & GLEDHILL,
36, ROBINSON ROAD, #18-01,
CITY HOUSE,
SINGAPORE 068877.
<PAGE> 89
i
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
1. INTERPRETATION 1
2. AMENDMENTS TO CREDIT AGREEMENT 2
3. REPRESENTATIONS AND WARRANTIES 3
4. INCORPORATION 3
5. EXPENSES AND STAMP DUTY 4
6. GOVERNING LAW 4
SCHEDULE 1 - THE GUARANTOR BANKS AND
THE LENDING BANKS 5
SCHEDULE 2 - CONDITIONS PRECEDENT 6
SCHEDULE 3 - FORM OF DRAWDOWN SCHEDULE 7
APPENDIX - FORM OF FIRST SUPPLEMENTAL
SHAREHOLDERS UNDERTAKING 8
</TABLE>
<PAGE> 90
T H I S F I R S T S U P P L E M E N T A L
A G R E E M E N T is made on 14th December, 1998 B E T W E E N:-
(1) CHARTERED SILICON PARTNERS PTE LTD (the "Borrower");
(2) ABN AMRO BANK N.V., SINGAPORE BRANCH, BAYERISCHE LANDESBANK
GIROZENTRALE, SINGAPORE BRANCH, CITIBANK, N.A., OVERSEAS UNION
BANK LIMITED and THE SUMITOMO BANK, LIMITED, SINGAPORE BRANCH
(the "Arrangers");
(3) THE SEVERAL BANKS AND FINANCIAL INSTITUTIONS named in Part A
of Schedule 1 (the "Guarantor Banks");
(4) THE SEVERAL BANKS AND FINANCIAL INSTITUTIONS named in Part B
of Schedule 1 (the "Lending Banks"); and
(5) ABN AMRO BANK N.V., SINGAPORE BRANCH, as agent for and on
behalf of the Banks (in such capacity, the "Agent", which
expression shall include any of its successors in such
capacity).
and is supplemental to a Credit Agreement (the "Credit Agreement") dated 12th
March, 1998 made between (1) the Borrower, (2) the Arrangers, (3) the Guarantor
Banks, (4) the Lending Banks and (5) the Agent.
W H E R E A S:-
(A) Pursuant to the Credit Agreement, (1) the Guarantor Banks
agreed to grant to the Borrower a S$236,800,000 guarantee facility and (2) the
Lending Banks agreed to grant to the Borrower a US$143,200,000 term loan
facility, upon the terms and subject to the conditions of the Credit Agreement.
(B) The Borrower wishes to amend certain provisions of the Credit
Agreement and has requested the Arrangers, the Guarantor Banks, the Lending
Banks and the Agent to make, and the Arrangers, the Guarantor Banks, the Lending
Banks and the Agent have agreed on the terms and subject to the conditions set
out in this Supplemental Agreement to make, the amendments to the Credit
Agreement set out in this Supplemental Agreement.
I T I S A G R E E D as follows:-
1. INTERPRETATION
(A) In this Supplemental Agreement, except where the context
otherwise requires:-
"Effective Date" has the meaning ascribed to it in Clause 2;
and
"First Supplemental Shareholders Undertaking" means the first
supplemental shareholders undertaking between (1) the
Borrower, as borrower, (2) the Shareholders, as shareholders,
and (3) the Agent, as agent, substantially in the form of the
Appendix (or in such other form as may be agreed by the Agent,
the Shareholders and the Borrower).
(B) All terms and references used in this Supplemental Agreement
and which are defined or construed in the Credit Agreement but are not defined
or construed in this Supplemental Agreement shall have the same meaning and
construction in this Supplemental Agreement.
(C) The headings in this Supplemental Agreement are inserted for
convenience only and shall be ignored in construing this Supplemental Agreement.
Unless otherwise stated, references to the "Clauses", the "Schedules" and the
"Appendix" are to be construed as references to the clauses of, the schedules to
and the appendix to this Supplemental Agreement.
<PAGE> 91
2
2. AMENDMENTS TO CREDIT AGREEMENT
The Borrower and each other party to this Supplemental
Agreement agree that with effect from 14th December, 1998 (or such other date as
may be agreed between the Borrower and each other party to this Supplemental
Agreement) (the "Effective Date"), the Credit Agreement shall be amended as
follows:-
(1) Clause 1(A) of the Credit Agreement shall be amended
as follows:-
(a) the definition of "Commitment Termination
Date" shall be amended by substituting the
date "31st December, 1999" with the date
"31st December, 2000"; and
(b) by substituting the definition of "Repayment
Dates" with the following definition:-
""Repayment Dates" means 31st December,
2000, 30th June, 2001, 31st December, 2001
and the Final Maturity Date;";
(2) Clause 4(A)(1)(a)(i) of the Credit Agreement shall be
amended by substituting the date "30th June, 2000"
appearing in line 3 thereof with the date "30th
September, 2000";
(3) Clause 7(A) of the Credit Agreement shall be amended
by substituting the word "six" appearing in line 3
thereof with the word "four";
(4) Clause 10(B) of the Credit Agreement shall be amended
as follows:-
(a) Clause 10(B)(1)(a) of the Credit Agreement
shall be amended as follows:-
(i) paragraph (i) shall be amended by
substituting the figure "0.125"
before the words "per cent."
appearing in line 2 thereof with the
figure "0.25"; and
(ii) paragraph (ii) shall be amended by
substituting the figure "0.0625"
before the words "per cent."
appearing in line 2 thereof with the
figure "0.15"; and
(b) Clause 10(B)(2)(a) of the Credit Agreement
shall be amended as follows:-
(i) paragraph (i) shall be amended by
substituting the figure "0.125"
before the words "per cent."
appearing in line 2 thereof with the
figure "0.25"; and
(ii) paragraph (ii) shall be amended by
substituting the figure "0.0625"
before the words "per cent."
appearing in line 2 thereof with the
figure "0.15";
(5) Clause 16(7) of the Credit Agreement shall be amended
by substituting the date "31st December, 1999"
appearing in line 2 thereof with the date "31st
December, 2000";
(6) Clause 17(A)(15) of the Credit Agreement shall be
amended by substituting the
<PAGE> 92
3
date "31st December, 1999" appearing in line 2
thereof with the date "31st December, 2000"; and
(7) Schedule 6 of the Credit Agreement shall be deleted
in its entirety and substituted with Schedule 3 to
this Supplemental Agreement,
provided that (I) on or before the Effective Date, the Agent has notified the
Borrower that it has received (in form and substance satisfactory to it) each of
the documents specified in Schedule 2 and (II) on the Effective Date (aa) the
representations and warranties contained in Clause 14 of the Credit Agreement
and in Clause 3 of this Supplemental Agreement are true and correct in all
respects as of the Effective Date as if made on the Effective Date with respect
to the facts and circumstances existing at such date and (bb) no Event of
Default or Potential Event of Default has occurred.
3. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to and for the benefit of
each other party to this Supplemental Agreement that:-
(1) all action, conditions and things required to be
taken, fulfilled and done (including the obtaining of
any necessary consents) in order (a) to enable it
lawfully to enter into, exercise its rights and
perform and comply with its obligations under this
Supplemental Agreement and (b) to make this
Supplemental Agreement admissible in evidence in the
courts of Singapore, have been taken, fulfilled and
done;
(2) its entry into, exercise of its rights and/or
performance of or compliance with its obligations
under this Supplemental Agreement do not and will not
violate (a) any law to which it is subject, (b) its
Memorandum and Articles of Association or (c) any
agreement to which it is a party or which is binding
on it or its assets;
(3) this Supplemental Agreement and the Credit Agreement
(as amended by this Supplemental Agreement)
constitute its valid, binding and enforceable
obligations; and
(4) it is not in breach of any of its obligations under
the Credit Agreement.
4. INCORPORATION
(A) The Credit Agreement and this Supplemental Agreement shall be
read and construed as one document and this Supplemental Agreement shall be
considered as part of the Credit Agreement and, without prejudice to the
generality of the foregoing, where the context so allows, references in the
Credit Agreement to "this Agreement", howsoever expressed, shall be read and
construed as references to the Credit Agreement as amended, modified or
supplemented by this Supplemental Agreement.
(B) Except to the extent expressly amended by the provisions of
this Supplemental Agreement, the terms and conditions of the Credit Agreement
and all other instruments and agreements executed, delivered or entered into
thereunder or pursuant thereto are hereby confirmed and shall remain in full
force and effect.
5. EXPENSES AND STAMP DUTY
The Borrower shall pay:-
(i) on demand, all costs and expenses (including legal
fees and all goods and
<PAGE> 93
4
services, value added and other duties or taxes
payable on such costs and expenses) reasonably
incurred by the Agent and/or the Arrangers in
connection with the preparation, negotiation or entry
into of this Supplemental Agreement and the First
Supplemental Shareholders Undertaking; and
(ii) promptly, and in any event before any interest or
penalty becomes payable, any stamp, goods and
services, value added, documentary, registration or
similar duty or tax payable in connection with the
entry into, enforcement and admissibility in evidence
of this Supplemental Agreement and the First
Supplemental Shareholders Undertaking and shall
indemnify the Agent, the Arrangers, the Guarantor
Banks and the Lending Banks against any liability
with respect to or resulting from any delay in paying
or omission to pay any such duty or tax.
6. GOVERNING LAW
This Supplemental Agreement shall be governed by, and
construed in accordance with, the laws of Singapore.
<PAGE> 94
5
S C H E D U L E 1
Part A - Guarantor Banks
1. ABN AMRO Bank, N.V., Singapore Branch
2. Bayerische Landesbank Girozentrale, Singapore Branch
3. Citibank, N.A., Singapore Branch
4. Overseas Union Bank Limited
5. The Sumitomo Bank, Limited, Singapore Branch
6. The Sanwa Bank, Limited, Singapore Branch
7. The Bank of Tokyo-Mitsubishi, Ltd., Singapore Branch
8. Den Danske Bank Aktieselskab, Singapore Branch
Part B - Lending Banks
1. ABN AMRO Bank, N.V., Singapore Branch
2. Bayerische Landesbank Girozentrale, Singapore Branch
3. Citibank, N.A., Singapore Branch
4. Overseas Union Bank Limited
5. The Sumitomo Bank, Limited, Singapore Branch
6. The Bank of Tokyo-Mitsubishi, Ltd., Singapore Branch
7. Den Danske Bank Aktieselskab, Singapore Branch
<PAGE> 95
6
S C H E D U L E 2
CONDITIONS PRECEDENT
1. A copy, certified true by an authorised officer of the
Borrower as being in full force and effect on the date thereof, of:-
(1) all actions required to be taken by the Borrower (a)
authorising the entry into of this Supplemental
Agreement and (b) authorising appropriate persons to
execute and deliver this Supplemental Agreement on
behalf of the Borrower and to take any action
contemplated in this Supplemental Agreement; and
(2) all necessary consents required by the Borrower for
the execution, delivery and performance of this
Supplemental Agreement or, if no such consents are
necessary, a certificate to that effect from a person
duly authorised by the Borrower so to certify.
2. Specimen signatures of the respective persons referred to in
paragraph 1 above, duly certified by an authorised officer of the Borrower,
together with certificates of incumbency, also duly certified, in respect of
each such person.
3. A copy, certified true by an authorised officer of each of the
Shareholders as being in full force and effect on the date thereof, of:-
(1) all actions required to be taken by that Shareholder
(a) authorising the entry into of the First
Supplemental Shareholders Undertaking and (b)
authorising appropriate persons to execute and
deliver the First Supplemental Shareholders
Undertaking on behalf of that Shareholder and to take
any action contemplated in the First Supplemental
Shareholders Undertaking; and
(2) all necessary consents required by that Shareholder
for the execution, delivery and performance of the
First Supplemental Shareholders Undertaking or, if no
such consents are necessary, a certificate to that
effect from a person duly authorised by that
Shareholder so to certify.
4. Specimen signatures of the respective persons referred to in
paragraph 3 above, duly certified by an authorised officer of each of the
Shareholders, together with certificates of incumbency, also duly certified, in
respect of each such person.
3. The First Supplemental Shareholders Undertaking, duly executed
by the Borrower, each of the Shareholders and the Agent.
<PAGE> 96
7
S C H E D U L E 3
S C H E D U L E 6
FORM OF DRAWDOWN SCHEDULE
<TABLE>
<CAPTION>
(1) (2) (3)
Utilisation Period Available EDB Amount Available Term Amount
- ------------------ ------------------- ---------------------
<S> <C> <C> <C>
(1) 1st July, 1998 to S$0 US$18,750,000
30th September, 1998
(2) 1st October, 1998 to S$10,000,000 US$53,130,000
31st December, 1998
(3) 1st January, 1999 to S$20,000,000 US$18,750,000
31st March, 1999
(4) 1st April, 1999 to S$65,000,000 US$31,250,000
30th June, 1999
(5) 1st July, 1999 to S$110,000,000 US$21,320,000
30th September, 1999
(6) 1st October, 1999 to S$31,800,000 US$0
31st December, 1999
(7) 1st January, 2000 to
31st March, 2000 S$0 US$0
(8) 1st April, 2000 to
30th June, 2000 S$0 US$0
(9) 1st July, 2000 to
30th September, 2000 S$0 US$0
-------------
S$236,800,000
=============
(10) 1st October, 2000 to
31st December, 2000 US$0
----------------
US$143,200,000 "
================
</TABLE>
<PAGE> 97
8
I N W I T N E S S W H E R E O F this Supplemental Agreement
has been entered into on the date stated at the beginning.
THE BORROWER
CHARTERED SILICON PARTNERS PTE LTD
60, Woodland Industrial Park D,
Street 2,
Singapore 738406.
Fax Number: 362 2909
Attention: Legal Department
By: /s/ Barry Waite Witness: /s/ Rick Hodgman
---------------------------- ---------------------------
Name: Barry Waite Name: Rick Hodgman
--------------------------- ------------------------------
Title: Director Title: General Manager
-------------------------- -----------------------------
THE ARRANGERS
ABN AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 231 7324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Goh Chong Theng By: /s/ Chan Peng Fun
----------------------------- --------------------------------
Name: Goh Chong Theng Name: Chan Peng Fun
---------------------------- ------------------------------
Title: Head, Corporate Banking Title: Vice President
Division, Senior -----------------------------
Vice President
----------------------------
<PAGE> 98
9
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Patricia Sum By: /s/ Ng Chong Inn
----------------------------- --------------------------------
Name: Patricia Sum Name: Ng Chong Inn
--------------------------- ------------------------------
Title: Vice President Title: Assistant Vice President
-------------------------- -----------------------------
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Mr Lim Shien Kwok
By: /s/ Bill Chua
-----------------------------------------
Name: Bill Chua
---------------------------------------
Title: Director, Head of Public Sector Unit
--------------------------------------
<PAGE> 99
10
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Gracy Choo
--------------------------------
Name: Gracy Choo
------------------------------
Title: EVP (N)
-----------------------------
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ N. Ishizuka
--------------------------------
Name: N. Ishizaku
------------------------------
Title: Joint General Manager
-----------------------------
<PAGE> 100
11
GUARANTOR BANKS
ABN-AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 231 7324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Goh Chong Theng By: /s/ Chan Peng Fun
------------------------------------ -------------------------------
Name: Goh Chong Theng Name: Chan Peng Fun
---------------------------------- -----------------------------
Title: Head, Corporate Banking Title: Vice President
Division, Senior Vice President ----------------------------
---------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Patricia Sum By: /s/ Ng Chong Inn
------------------------------ --------------------------------
Name: Patricia Sum Name: Ng Chong Inn
---------------------------- ------------------------------
Title: Vice President Title: Assistant Vice President
--------------------------- -----------------------------
<PAGE> 101
12
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Mr Lim Shien Kwok
By: /s/ Bill Chua
------------------------------------------
Name: Bill Chua
-----------------------------------------
Title: Director, Head of Public Sector Unit
----------------------------------------
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Gracy Choo
-------------------------------
Name: Gracy Choo
-----------------------------
Title: EVP (N)
----------------------------
<PAGE> 102
13
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ N. Ishizuka
-------------------------------
Name: N. Ishizaku
-----------------------------
Title: Joint General Manager
----------------------------
THE SANWA BANK, LIMITED,
SINGAPORE BRANCH
6, Raffles Quay, #24-01,
John Hancock Tower,
Singapore 048580.
Fax Number: 538 4636
Telex Number: RS 28573
Attention: Ms Loh Soh Wah/Mr Lim Wee Hian
By: /s/ Masao Yano
---------------------------------
Name: Masao Yano
-------------------------------
Title: Assistant General Manager
------------------------------
<PAGE> 103
14
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SINGAPORE BRANCH
9, Raffles Place, #01-01,
Republic Plaza,
Singapore 048619.
Fax Number: 538 8083
Telex Number: RS 24363
Attention: Ms Beatrice Chan (Loan Administration Department)/
Mr Gan Boon Seng (Corporate Finance Department)
By: /s/ Yutaka Tabata
---------------------------------
Name: Yutaka Tabata
-------------------------------
Title: Deputy General Manager
------------------------------
DEN DANSKE BANK AKTIESELSKAB,
SINGAPORE BRANCH
50, Raffles Place, #24-01,
Singapore Land Tower,
Singapore 048623.
Fax Number: 224 3320
Telex Number: 28030 DDBSIN
Attention: Mr Jorgen Faenoe/Ms Maureen Wee
By: /s/ Mogens Sondergaard By: /s/ Jorgen Faenoe
------------------------------ -----------------------------------
Name: Mogens Sondergaard Name: Jorgen Faenoe
----------------------------- ---------------------------------
Title: General Manager Title: Manager, Head of Credit and
---------------------------- Risk Management
--------------------------------
<PAGE> 104
15
THE LENDING BANKS
ABN-AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 536 7816
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
By: /s/ Goh Chong Theng By: /s/ Chan Peng Fun
------------------------------------ ----------------------------
Name: Goh Chong Theng Name: Chan Peng Fun
---------------------------------- --------------------------
Title: Head, Corporate Banking Title: Vice President
Division, Senior Vice President -------------------------
---------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE,
SINGAPORE BRANCH
300, Beach Road, #37-01,
The Concourse,
Singapore 199555.
Fax Number: 293 3171
Telex Number: RS 21445 BAYSIN
Attention: Mr Stefan Hattenkofer/Mr Ng Chong Inn
By: /s/ Patricia Sum By: /s/ Ng Chong Inn
----------------------------- -----------------------------------
Name: Patricia Sum Name: Ng Chong Inn
--------------------------- ---------------------------------
Title: Vice President Title: Assistant Vice President
-------------------------- --------------------------------
<PAGE> 105
16
CITIBANK, N.A., SINGAPORE BRANCH
5, Shenton Way, #37-03,
UIC Building,
Singapore 068808.
Fax Number: 225 1584/426 8959
Telex Number: RS 24584 CITBANK
Attention: Mr Bill Chua/Mr Lim Shien Kwok
By: /s/ Bill Chua
-------------------------------------------
Name: Bill Chua
------------------------------------------
Title: Director, Head of Public Sector Unit
-----------------------------------------
OVERSEAS UNION BANK LIMITED
1, Raffles Place, 10th Floor,
OUB Centre,
Singapore 048616.
Fax Number: 532 2686/538 2449
Telex Number: RS 23916
Attention: Mr Jeffrey Ling/Ms Seah Siew Kee
By: /s/ Gracy Choo
-------------------------------
Name: Gracy Choo
-----------------------------
Title: EVP (N)
----------------------------
<PAGE> 106
17
THE SUMITOMO BANK, LIMITED,
SINGAPORE BRANCH
6, Shenton Way, #27-08,
DBS Tower Two,
Singapore 068809.
Fax Number: 225 9647
Telex Number: RS 21656 SUMITBK
Attention: Mr Koichi Inagaki/Mr Kazushige Goto/
Ms Serene Chee
By: /s/ N. Ishizuka
-------------------------------
Name: N. Ishizuka
-----------------------------
Title: Joint General Manager
----------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SINGAPORE BRANCH
9, Raffles Place, #01-01,
Republic Plaza,
Singapore 048619.
Fax Number: 538 8083
Telex Number: RS 24363
Attention: Ms Beatrice Chan (Loan Administration Department)/
Mr Gan Boon Seng (Corporate Finance Department)
By: /s/ Yutaka Tabata
---------------------------------
Name: Yutaka Tabata
-------------------------------
Title: Deputy General Manager
-------------------------------
<PAGE> 107
18
DEN DANSKE BANK AKTIESELSKAB,
SINGAPORE BRANCH
50, Raffles Place, #24-01,
Singapore Land Tower,
Singapore 048623.
Fax Number: 224 3320
Telex Number: 28030 DDBSIN
Attention: Mr Jorgen Faenoe/Ms Maureen Wee
By: /s/ Mogens Sondergaard By: /s/ Jorgen Faenoe
-------------------------------- --------------------------------
Name: Mogens Sondergaard Name: Jorgen Faenoe
------------------------------- ------------------------------
Title: General Manager Title: Manager, Head of Credit and
------------------------------- Risk Management
-----------------------------
THE AGENT
ABN AMRO BANK N.V.,
SINGAPORE BRANCH
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 536 7816
Telex Number: RS 24396
Attention: Ms Sally Loh/Ms Patricia Teo
By: /s/ Goh Chong Theng By: /s/ Chan Peng Fun
------------------------------------ -----------------------------
Name: Goh Chong Theng Name: Chan Peng Fun
----------------------------------- ---------------------------
Title: Head, Corporate Banking Title: Vice President
Division, Senior Vice President --------------------------
----------------------------------
<PAGE> 1
EXHIBIT 10.25
DATED JULY 1, 1998
CHARTERED SILICON PARTNERS PTE LTD
AS BORROWER
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
EDB INVESTMENTS PTE LTD
HEWLETT PACKARD EUROPE B.V.
AS SHAREHOLDERS
- AND -
ABN AMRO BANK N.V., SINGAPORE BRANCH
AS AGENT
-------------------------------------------
SHAREHOLDERS UNDERTAKING
-------------------------------------------
ALLEN & GLEDHILL,
36, ROBINSON ROAD, #18-01,
CITY HOUSE,
SINGAPORE 068877.
<PAGE> 2
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
- ------ ------- ----
<S> <C> <C>
1. INTERPRETATION 1
2. UNDERTAKINGS BY SHAREHOLDERS 4
3. SUBORDINATION 6
4. AGREEMENT BY BORROWER AND SHAREHOLDERS 7
5. REPRESENTATIONS AND WARRANTIES 8
6. UNDERTAKINGS 12
7. PAYMENTS 13
8. NATURE OF RIGHTS AND OBLIGATIONS 15
9. EXPENSES 17
10. BENEFIT OF AGREEMENT 17
11. WAIVERS 18
12. COMMUNICATIONS 19
13. PARTIAL INVALIDITY 19
14. GOVERNING LAW AND JURISDICTION 19
</TABLE>
<PAGE> 3
T H I S A G R E E M E N T is made on July 1, 1998
B E T W E E N:-
(1) CHARTERED SILICON PARTNERS PTE LTD (the "Borrower");
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), EDB
INVESTMENTS PTE LTD ("EDBI") and HEWLETT PACKARD EUROPE B.V.
("HPE"); and
(3) ABN AMRO BANK N.V., SINGAPORE BRANCH, as agent for and on
behalf of the Banks defined below (in such capacity, the
"Agent", which expression shall include any of its successors
in such capacity).
W H E R E A S:-
(A) By a Credit Agreement (the "Credit Agreement") dated 12th
March, 1998 made between (1) the Borrower, as borrower, (2) ABN AMRO Bank N.V.,
Singapore Branch, Bayerische Landesbank Girozentrale, Singapore Branch,
Citibank, N.A., Singapore Branch, Overseas Union Bank Limited and The Sumitomo
Bank, Limited, Singapore Branch, as arrangers, (3) the Guarantor Banks named
therein (the "Guarantor Banks"), as guarantor banks, (4) the Lending Banks named
therein (the "Lending Banks"), as lending banks, and (5) the Agent, as agent,
the Guarantor Banks agreed to grant to the Borrower a S$236,800,000 guarantee
facility and the Lending Banks agreed to grant to the Borrower a US$143,200,000
term loan facility, upon the terms and subject to the conditions of the Credit
Agreement.
(B) (1) CSM is the legal and beneficial owner of 51 per cent. of the
issued shares in the capital of the Borrower.
(2) EDBI is the legal and beneficial owner of 19 per cent. of the
issued shares in the capital of the Borrower.
(3) Hewlett Packard Company is the legal and beneficial owner of
99.8 per cent. of the issued shares in the capital of Hewlett Packard World
Trade Services Inc. ("HPWTS") and HPWTS is the legal and beneficial owner of 100
per cent. of the issued shares in the capital of HPE and HPE is the legal and
beneficial owner of 30 per cent. of the issued shares in the capital of the
Borrower.
(C) It is a condition precedent to the issue of the EDB Guarantee
by the Guarantor Banks under the Credit Agreement and the making of the first
Advance by the Lending Banks under the Credit Agreement that the parties to this
Agreement shall have entered into this Agreement.
(D) Each of the Shareholders (as defined below) (after giving due
consideration to the terms and conditions of the Credit Agreement and satisfying
itself that there are reasonable grounds for believing that the entry into by it
of this Agreement will benefit it) has agreed to enter into this Agreement and
give the undertakings provided in this Agreement in consideration of the
Guarantor Banks making available to the Borrower the guarantee facility referred
to in Recital (A) above and the Lending Banks making available to the Borrower
the term loan facility referred to in Recital (A) above.
<PAGE> 4
I T I S A G R E E D as follows:-
1. INTERPRETATION
(A) Definitions: In this Agreement, except to the extent that the
context requires otherwise:-
"Agent" includes its successors in title and assigns and any
company with which it may amalgamate and all other persons for
the time being the agent for the Banks under this Agreement;
"Banks" means the Guarantor Banks and the Lending Banks (and
includes their respective successors and assigns);
"Completion" means the physical completion of the Plant (which
shall be evidenced by the grant of the temporary occupation
permit for the Plant pursuant to the Building Control Act,
Chapter 29 of Singapore) and the commencement of commercial
production by the Plant (which shall be the date on which the
Plant achieves a production rate of an aggregate of 2,000
wafers start per month);
"Discharge Date" means the date on which the Senior
Indebtedness has been discharged in full and on which the
Borrower and the Shareholders cease to be under any liability
to the Agent and the Banks under or in connection with the
Financing Documents;
"Equity Commitment Percentage" means:-
(1) in relation to CSM, 51/100;
(2) in relation to EDBI, 19/100; and
(3) in relation to HPE, 30/100;
"Excluded Transaction" means any genuine and good faith
commercial transaction entered into between the Borrower and
any one or more of the Shareholders which is not primarily
financial in nature and is contemplated under the Joint
Venture Agreement;
"HP Entities" means:-
(1) Hewlett-Packard Company, a company incorporated in
California;
(2) HPWTS, a company incorporated in Delaware;
(3) Hewlett-Packard Ireland (Holdings) Ltd., a company
incorporated in Ireland;
(4) Hewlett-Packard (Manufacturing) Ltd., a company
incorporated in Ireland;
2
<PAGE> 5
(5) Hewlett-Packard S.A., a company incorporated in
Switzerland;
(6) Hewlett-Packard Singapore Pte. Ltd., a company
incorporated in Singapore; and
(7) Hewlett-Packard Holdings Singapore Pte Ltd., a
company incorporated in Singapore;
"Joint Venture Agreement" has the meaning ascribed to it in
Clause 1(A) of the Credit Agreement;
"Scheduled Completion Date" means 31st December, 1999;
"Senior Indebtedness" means all sums (whether principal,
interest, fee or otherwise) which are or at any time may be or
become due from or owing by the Borrower to the Agent and/or
the Banks (or any of them), whether actually or contingently,
under or in connection with, or which the Borrower has
covenanted to pay or discharge under or pursuant to, any of
the Financing Documents;
"Shareholder Funding" means:-
(1) subscription moneys paid by any Shareholder for
shares in the Borrower for which that Shareholder has
subscribed (and which have not been returned to that
Shareholder); or
(2) loans made by any Shareholder to the Borrower which
are subordinated to the Senior Indebtedness in
accordance with this Agreement;
"Shareholders" means CSM, EDBI and HPE (and includes their
respective successors and permitted assignees and
transferees);
"Subordinated Indebtedness" means all sums made or to be made
available by the Shareholders (or any of them) to the Borrower
under or in connection with this Agreement (including, without
limitation, under Clause 2);
"Termination Date" means, in relation to a Shareholder, the
earlier of (1) the date on which that Shareholder has
fulfilled all its obligations under Clause 2(A) and (2) the
date on which all Shareholder Funding provided by it, if any,
in accordance with this Agreement has been converted into
shares in the capital of the Borrower; and
"Total Indebtedness" means, at any particular time, all sums
(whether principal, interest, fee or otherwise) which are then
due from or owing by the Borrower to the Agent and the Banks,
whether actually or contingently, under or in connection with,
any of the Financing Documents to which the Borrower is a
party.
(B) Construction: All terms and references used in this Agreement
and which are defined or construed in the Credit Agreement but are not defined
or construed in this Agreement shall have the same meaning and construction in
this Agreement. The provisions of Clause 1(C) of the Credit Agreement shall
3
<PAGE> 6
apply to this Agreement as though they are set out in full in this Agreement
(mutatis mutandis) except that references to the Credit Agreement are to be
construed as references to this Agreement. All references in this Agreement to a
Financing Document include that Financing Document as amended, modified or
supplemented from time to time and any document which amends, modifies or
supplements that Financing Document.
(C) Miscellaneous: The headings in this Agreement are inserted for
convenience only and shall be ignored in construing this Agreement. Unless the
context otherwise requires, words denoting the singular number only shall
include the plural and vice versa. References to "Clauses" are to be construed
as references to the clauses of this Agreement. Any reference to a sub-Clause or
a paragraph is to a sub-Clause or paragraph of the Clause in which such
reference appears.
2. UNDERTAKINGS BY SHAREHOLDERS
(A) Shareholders Support: In consideration of the Guarantor Banks
agreeing, at the request of the Shareholders, to make available to the Borrower
the guarantee facility referred to in Recital (A) above and the Lending Banks
agreeing, at the request of the Shareholders, to make available to the Borrower
the term loan facility referred to in Recital (A) above and/or the Banks (or any
of them) acting under or in connection with the Credit Agreement:-
(1) Completion Guarantee: (a) subject to sub-paragraph
(c) below, (i) each Shareholder agrees to procure
that the Borrower will not abandon the Project and to
procure that Completion is achieved by not later than
the Scheduled Completion Date and (ii) each
Shareholder shall indemnify each Bank and keep each
Bank indemnified against any losses, damages,
liabilities, costs and expenses (including, without
limitation, legal costs on a full indemnity basis)
suffered by that Bank if Completion is not achieved
by the Scheduled Completion Date and which would not
have been suffered if Completion had been so
achieved;
(b) each Shareholder agrees to undertake such
expenditures as are required in order to ensure its
compliance with the provisions of sub-paragraph (a)
above and agrees to take all steps necessary to
ensure that Completion is achieved by not later than
the Scheduled Completion Date (provided that, without
prejudice to the obligations of the Shareholders
under sub-paragraph (a)(ii) above or any other
provision of this Agreement, the aggregate amount of
the expenditures by the Shareholders under
sub-paragraphs (a)(i) and (b) at any time shall not
exceed the difference between S$720,000,000 and the
aggregate amount of Shareholding Funding provided by
the Shareholders immediately prior to that time); and
(c) any payment obligation of a Shareholder arising
under sub-paragraph (a) or (b) above shall be limited
to that Shareholder's Equity Commitment Percentage of
the total amount payable by the Shareholders provided
always that the maximum aggregate liability of the
Shareholders at any time
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<PAGE> 7
under sub-paragraph (a)(ii) above shall not exceed
the Total Indebtedness at that time;
(2) Equity Support: if, on 31st December, 2001, the ratio
of the Borrowings of the Borrower to its Net Worth is
in excess of 1:1, each Shareholder shall (without
demand by the Borrower, the Agent or any Bank)
severally provide Shareholder Funding to the Borrower
within 14 days after that date in an amount equal to
its Equity Commitment Percentage of the difference
between (a) S$720,000,000 and (b) the aggregate
amount of Shareholder Funding immediately prior to
the provision of Shareholder Funding by that
Shareholder on that date; and
(3) DSCR: if, on any Calculation Date, there is a breach
by the Borrower of its obligations under Clause
16(16)(b) or Clause 16(16)(c) of the Credit
Agreement, each Shareholder shall (without demand by
the Borrower, the Agent or any Bank) severally
provide Shareholder Funding to the Borrower on that
Calculation Date in an amount equal to its Equity
Commitment Percentage of the lower of (a) the amount
(as determined by the Agent) to enable the Borrower
to meet any shortfall in its ability to meet all
payments referred to in component "B" of the
definition of DSCR falling due during the next
succeeding Calculation Period commencing on that
Calculation Date and (b) the difference between (i)
S$720,000,000 and (ii) the aggregate amount of
Shareholder Funding immediately prior to the
provision of Shareholder Funding by that Shareholder
on that Calculation Date.
(B) Obligations Unconditional: The obligations of the Shareholders under
this Clause are unconditional and absolute, irrespective of (1) any event,
however fundamental, outside the control of the Borrower or any Shareholder or
any other person preventing the Borrower from achieving Completion by the
Scheduled Completion Date, (2) any winding-up, liquidation or dissolution of the
Borrower, (3) any Event of Default or action taken by the Agent or any Bank
under the Financing Documents or any enforcement of any security constituted by
any Financing Document, (4) whether the Project or the business of the Borrower
is being carried on by any receiver, judicial manager or other person and (5)
any other circumstances whatsoever.
(C) Subscription Procedures: (1) The Borrower and each Shareholder shall do
all such things as may be necessary on their part for the provision of
Shareholder Funding required pursuant to this Agreement.
(2) If for any reason whatsoever (including, without limitation,
the winding-up, liquidation or dissolution of the Borrower or failure of the
Borrower to issue shares or to accept payment), a Shareholder does not or cannot
provide Shareholder Funding, that Shareholder will nevertheless, at such times
as are specified in this Clause, pay to the Borrower the amount it would
otherwise have been obliged to pay by way of Shareholder Funding, which shall be
deemed to discharge its obligation to provide that Shareholder Funding.
(3) If a Shareholder makes a payment under paragraph (2), the
Borrower will be liable (on the same terms and conditions) to that Shareholder
for the
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<PAGE> 8
amount of the payment as if it had constituted Shareholder Funding by way of
subscription moneys for shares or subordinated loans (as appropriate).
(D) Subordinated Loans: If the Shareholders' obligations under
this Clause are fulfilled by means of loans to the Borrower (whether from any of
or all the Shareholders or from some other party), each of the Borrower and the
Shareholders agrees that such loans shall:-
(1) be unsecured;
(2) not be subject to any payment of interest until after
the Discharge Date (although interest may accrue on
it prior to the Discharge Date); and
(3) be subordinated to the Senior Indebtedness in the
manner set out in this Agreement (Provided that,
notwithstanding anything to the contrary contained in
this Agreement, the aggregate amount of such loans
which shall be subordinated to the Senior
Indebtedness in the manner set out in this Agreement
shall not exceed the difference between S$720,000,000
and the aggregate amount of Shareholding Funding
provided by the Shareholders by way of subscription
moneys for shares).
3. SUBORDINATION
(A) Subordination: The Shareholders and the Borrower hereby agree
with and undertake to the Agent and each of the Banks that, notwithstanding
anything to the contrary contained in any agreement or other document
constituting or evidencing the Subordinated Indebtedness, before the Discharge
Date the Subordinated Indebtedness and the rights and claims of the Shareholders
in relation to the Subordinated Indebtedness are subordinated to the Senior
Indebtedness and the respective rights and claims of the Banks in relation to
the Senior Indebtedness and accordingly, subject as provided in this Agreement,
payments of any amount of the Subordinated Indebtedness (whether in the event of
the winding-up, liquidation or dissolution of the Borrower or otherwise) are
conditional upon all of the Senior Indebtedness having first been fully
satisfied and discharged and no payment of any amount of the Subordinated
Indebtedness which, but for this Agreement, would otherwise fall due for payment
will fall so due, and instead such payment will fall due only if and when the
Senior Indebtedness has been fully satisfied and discharged and, if the
Subordinated Indebtedness or any part thereof is paid by or on behalf of the
Borrower to any Shareholder, that payment shall be forthwith paid over by that
Shareholder to the Agent.
(B) Turnover: Without prejudice to the provisions of sub-Clause
(A) above, if any amount of Subordinated Indebtedness is discharged or purported
to be discharged by payment, repayment, prepayment, set-off or in any other
manner in contravention of sub-Clause (A) above or Clause 4 (and, for the
avoidance of doubt, any payment of consideration, discount or benefit given or
credit terms granted under any of the Excluded Transactions shall be deemed not
to be a discharge or purported discharge of any part of the Subordinated
Indebtedness), the relevant Shareholder shall:-
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<PAGE> 9
(1) (if the Shareholder actually receives the amount
discharged or purported to be discharged) immediately
pay it to the Agent for application towards the
Senior Indebtedness; and
(2) (if the Shareholder does not, as a result of
discharge by set-off or otherwise, actually receive
the amount discharged or purported to be discharged)
pay to the Agent an amount equal to that discharged
or purported to be discharged.
(C) Application: Any amount received by the Agent from any of the Shareholders,
or any person on its behalf, under sub-Clause (A) or (B) above shall be applied
in the following manner and order:-
(1) first, in or towards payment of any costs, charges
and expenses incurred by the Agent then due and
payable under this Agreement and the other Financing
Documents;
(2) secondly, in or towards payment of the Senior
Indebtedness (and in the event that such sums are
insufficient to satisfy in full the Senior
Indebtedness, such sums shall be paid to the Banks in
proportion to their respective shares of the Senior
Indebtedness at the time of payment); and
(3) thirdly, in payment of any surplus to that
Shareholder or any other person lawfully entitled
thereto.
4. AGREEMENT BY BORROWER AND SHAREHOLDERS
(A) By Borrower: The Borrower agrees and undertakes that prior to
the Discharge Date, it shall not, without the prior consent in writing of the
Agent and the Banks:-
(1) make any loans or advances, whether directly or
indirectly, to any of the Shareholders or provide any
guarantee, indemnity or security for or in connection
with any indebtedness or liabilities of any of the
Shareholders or otherwise enter into any transactions
with any of the Shareholders other than (a) any
transaction on arm's length commercial terms and for
valuable consideration or (b) any Excluded
Transaction;
(2) secure all or any part of the Subordinated
Indebtedness;
(3) redeem, purchase or otherwise acquire any of the
Subordinated Indebtedness;
(4) repay or prepay any, or pay any interest, fees or
commissions (but without prejudice to accrual
thereof) on, or by reference to, any of the
Subordinated Indebtedness otherwise than in
accordance with the terms of this Agreement; or
(5) take or omit to take any action whereby the
subordination of the Subordinated Indebtedness or any
part thereof to the Senior Indebtedness may be
terminated, impaired or adversely affected.
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<PAGE> 10
(B) By Shareholders: Except as otherwise expressly provided in
this Agreement, none of the Shareholders shall, without the prior consent in
writing of the Agent and the Banks, prior to the Discharge Date:-
(1) ask, demand, sue for, take or receive, directly or
indirectly, whether by exercise of set-off,
counterclaim or in any other manner, or recover or
enforce payment of any Subordinated Indebtedness
(provided that, for the avoidance of doubt, nothing
under this paragraph (1) shall prohibit any asking,
demand, suit for, taking or receipt, or recovery or
enforcement of, any payment due by the Borrower under
any of the Excluded Transactions);
(2) take any security from the Borrower or any other
person in respect of any Subordinated Indebtedness
and any security taken notwithstanding the
undertaking in this paragraph (2) shall be held by
the relevant Shareholder in trust for the Agent;
(3) make or enforce any claim or right against the
Borrower or prove in competition with the Agent or
any Bank in respect of the performance of any
obligation under this Agreement;
(4) assign, transfer, sell, charge or purport to assign,
transfer, sell, charge or otherwise dispose or
purport to dispose of the whole or any part of or any
interest in any rights which it may from time to time
and for the time being have against the Borrower in
respect of the Subordinated Indebtedness; or
(5) take or omit to take any action whereby the
subordination of the Subordinated Indebtedness or any
part thereof to the Senior Indebtedness may be
terminated, impaired or adversely affected.
5. REPRESENTATIONS AND WARRANTIES
(A) By Shareholders: Each of the Shareholders severally represents
and warrants to and for the benefit of the Agent and each of the Banks in
relation to itself that:-
(1) Status: it is a company duly incorporated and validly
existing under the laws of Singapore (in the case of
CSM and EDBI) or the Netherlands (in the case of
HPE), and has the power and authority to own its
assets and to conduct the business which it conducts
and/or proposes to conduct;
(2) Powers: it has the power to enter into, exercise its
rights and perform and comply with its obligations
under this Agreement;
(3) Authorisations and Consents: all action, conditions
and things required to be taken, fulfilled and done
(including the obtaining of any necessary consents)
in order (a) to
8
<PAGE> 11
enable it lawfully to enter into, exercise its rights
and perform and comply with its obligations under
this Agreement, (b) to ensure that those obligations
are valid, legally binding and enforceable, and (c)
to make this Agreement admissible in evidence in the
courts of Singapore and the Netherlands have been
taken, fulfilled and done;
(4) Non-Violation of Laws: its entry into, exercise of
its rights and/or performance of or compliance with
its obligations under this Agreement do not and will
not violate, or exceed any power or restriction
granted or imposed by, (a) any law to which it is
subject or (b) its Memorandum and Articles of
Association;
(5) Obligations Binding: its obligations under this
Agreement are valid, binding and enforceable;
(6) Non-Violation of Other Agreements: its entry into,
exercise of its rights and/or performance of or
compliance with its obligations under this Agreement
do not and will not violate, to an extent or in a
manner which has or will have a material adverse
effect on it, any agreement to which it is a party or
which is binding on it or its assets;
(7) Litigation: no litigation, arbitration or
administrative proceeding is current or pending (a)
to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or
compliance with its obligations under this Agreement
or (b) which has or will have a material adverse
effect on it;
(8) Winding-up: no meeting has been convened for its
winding-up or for the appointment of a receiver,
trustee, judicial manager or similar officer of it,
its assets or any of them, no such step is intended
by it and, so far as it is aware, no petition,
application or the like is outstanding for its
winding-up or for the appointment of a receiver,
trustee, judicial manager or similar officer of it,
its assets or any of them;
(9) No Default: as far as it is aware after having made
all due and proper enquiries, no Event of Default or
Potential Event of Default has occurred, and it is
not in breach of or default under any agreement to an
extent or in a manner which has or will have a
material adverse effect on it;
(10) Information Package: at the date of the Information
Package:-
(a) the information in the Information Package
relating to, and provided by, it was true,
complete and accurate in all material
respects; and
(b) the opinions, projections and forecasts in the
Information Package relating to, and provided
by, it and the assumptions on which they are
based were
9
<PAGE> 12
arrived at after due and careful consideration
and enquiry and genuinely represented its
views; and
(11) Repetition: each of the above representations and
warranties will be correct and complied with in all
material respects at all times up to the Termination
Date as if repeated then by reference to the then
existing circumstances.
(B) By CSM: CSM further represents and warrants to and for the
benefit of the Agent and each of the Banks that:-
(1) Shareholding: CSM is (either directly or through any
one or more of its wholly-owned subsidiaries) the
legal and beneficial owner of at least 51 per cent.
of the issued share capital of the Borrower and
Singapore Technologies Pte Ltd is (either directly or
through any one of more of its wholly-owned
subsidiaries) the legal and beneficial owner of at
least 51 per cent. of the issued share capital of
CSM;
(2) Accounts: its audited accounts and consolidated
accounts (if any) as at 31st December, 1996 and for
the financial year then ended and as delivered to the
Agent (with copies of the reports and approvals
referred to in (a) below):-
(a) include such financial statements as are
required by the laws of Singapore and, save as
stated in the notes thereto, were prepared,
audited, examined, reported on and approved in
accordance with accounting principles and
practices generally accepted in Singapore and
consistently applied and in accordance with
the laws of Singapore and its Memorandum and
Articles of Association (or other constitutive
documents);
(b) together with those notes, give a true and
fair view of its state of affairs and
financial condition and operations (or, in the
case of consolidated accounts, the
consolidated state of affairs and financial
condition and operations of CSM and its
subsidiaries) as at that date and for the
financial year then ended; and
(c) together with those notes and to the extent
required by accounting principles, standards
and practices generally accepted in Singapore
disclose or reserve against all liabilities
(contingent or otherwise) of the relevant
person(s) as at that date and all material
unrealised or anticipated losses from any
commitment entered into by the relevant
person(s) and which existed on that date;
(3) No Material Adverse Change: there has been no
material adverse change in its financial condition or
operations since 31st December, 1997 nor in the
consolidated financial condition or operations of it
and its subsidiaries since that date; and
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<PAGE> 13
(4) Repetition: the representation and warranty in
paragraph (1) will be correct and complied with in
all respects so long as any sum remains to be lent or
remains payable under the Credit Agreement as if
repeated then by reference to the then existing
circumstances and each of the representations and
warranties in paragraphs (2) and (3) will be correct
and complied with in all material respects at all
times up to the Termination Date as if repeated then
by reference to the then existing circumstances.
(C) By EDBI: EDBI further represents and warrants to and for the
benefit of the Agent and each of the Banks that EDBI is, on the date of this
Agreement, the legal and beneficial owner of not less than 19 per cent. of the
issued share capital of the Borrower.
(D) By HPE: HPE further represents and warrants and for the
benefit of the Agent and each of the Banks that:-
(1) Shareholding: HPE has an effective shareholding in
not less than 30 per cent. of the issued share
capital of the Borrower and HP (either directly or
through any one or more of its subsidiaries in which
it owns not less than 95 per cent. of the issued
share capital of that subsidiary) has an effective
shareholding in not less than 30 per cent. of the
issued share capital of the Borrower for a period of
not less than four years from the date of the Joint
Venture Agreement;
(2) Accounts: the consolidated accounts (if any) of HP as
at 31st October, 1997 and for the financial year then
ended and as delivered, or cause to be delivered, to
the Agent (with copies of the reports and approvals
referred to in (a) below):-
(a) include such financial statements as are
required by the laws of the United States of
America and, save as stated in the notes
thereto, were prepared, audited, examined,
reported on and approved in accordance with
accounting principles and practices generally
accepted in the United States of America
consistently applied and in accordance with
the laws of the United States of America and
its Memorandum and Articles of Association (or
other constitutive documents);
(b) together with those notes, give a true and
fair view of its state of affairs and
financial condition and operations (or, in the
case of consolidated accounts, the
consolidated state of affairs and financial
condition and operations of HP and its
subsidiaries) as at that date and for the
financial year then ended; and
(c) together with those notes and to the extent
required by accounting principles, standards
and practices generally accepted in the United
States of America
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<PAGE> 14
disclose or reserve against all liabilities
(contingent or otherwise) of the relevant
person(s) as at that date and all material
unrealised or anticipated losses from any
commitment entered into by the relevant
person(s) and which existed on that date;
(3) No Material Adverse Change: there has been no
material adverse change in the financial condition or
operations of HP since 31st October, 1997 nor in the
consolidated financial condition or operations of HP
and the subsidiaries of HP since that date; and
(4) Repetition: the representation and warranty in
paragraph (1) will be correct and complied with in
all respects so long as any sum remains to be lent or
remains payable under the Credit Agreement as if
repeated then by reference to the then existing
circumstances and each of the representations and
warranties in paragraphs (2) and (3) will be correct
and complied with in all material respects at all
times up to the Termination Date as if repeated then
by reference to the then existing circumstances.
6. UNDERTAKINGS
(A) By Shareholders: (1) Each of the Shareholders severally
undertakes that, at all times prior to the Termination Date:-
(a) Litigation: it will, as soon as reasonably
practicable, deliver to the Agent for distribution to
the Banks details of any litigation, arbitration or
administrative proceeding which, if to its knowledge
had been current or pending at the date of this
Agreement, would have rendered the representation and
warranty in Clause 5(A)(7) incorrect;
(b) Other Information: it will, as soon as reasonably
practicable, deliver to the Agent for distribution to
the Banks such other information relating to its
financial condition or business of it as the Agent
(or any Bank through the Agent) may from time to time
reasonably require (except for information of a
proprietary nature or which is reasonably regarded by
it as confidential); and
(c) Further Assurance: it will from time to time on
reasonable request by the Agent acting on the
instructions of the Majority Banks do or procure the
doing of all such acts and will execute or procure
the execution of all such documents as may be
reasonably necessary for giving full effect to this
Agreement or securing to the Agent and the Banks the
full benefits of all rights, powers and remedies
conferred upon the Agent and the Banks in this
Agreement.
(2) Each of the Shareholders severally undertakes that, so long as any
sum remains to be lent or remains payable under the Credit Agreement:-
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<PAGE> 15
(a) No Winding-up: it will not propose or vote in favour
of any resolution for the winding-up, liquidation or
dissolution of the Borrower; and
(b) Dividends: it will exercise all voting rights
attaching to the shares in the capital of the
Borrower for the time being held by it so as to
ensure that the Borrower does not declare or pay any
dividend otherwise then in accordance with Clause
16(13) of the Credit Agreement.
(B) By CSM: (1) CSM further undertakes that, so long as any sum
remains to be lent or remains payable under the Credit Agreement, it will be
(either directly or through any one or more of its wholly-owned subsidiaries)
the legal and beneficial owner of at least 51 per cent. of the issued share
capital of the Borrower and Singapore Technologies Pte Ltd will be (either
directly or through any one or more of its wholly-owned subsidiaries) the legal
and beneficial owner of at least 51 per cent. of the issued share capital of
CSM.
(2) CSM further undertakes that, at all times prior to the
Termination Date, it will, as soon as available and in any event within 180 days
after the end of each of its financial years (beginning with the current one),
deliver to the Agent enough copies for the Banks of its audited accounts (both
consolidated and unconsolidated) as at the end of and for that financial year.
(C) By EDBI: EDBI further undertakes that, at all times prior to
the Termination Date, it will deliver to the Agent as soon as available and in
any event within 180 days after the end of each of its financial years
(beginning with the current one), enough copies for the Banks of a statement as
to its share capital and reserves as at the end of and for that financial year.
(D) By HPE: (1) HPE further undertakes that, so long as any sum
remains to be lent or remains payable under the Credit Agreement, HP (either
directly or through one or more of its subsidiaries in which it owns not less
than 95 per cent. of the issued share capital of that subsidiary) will have an
effective shareholding in not less than 30 per cent. of the issued share capital
of the Borrower for a period of not less than four years from the date of the
Joint Venture Agreement.
(2) HPE further undertakes that, at all times prior to the
Termination Date, it will, as soon as available and in any event within 180 days
after the end of each of its financial years (beginning with the current one),
deliver, or cause to be delivered, to the Agent enough copies for the Banks (on
the basis of one copy for each Bank) of the published annual report of HP as at
the end of and for that financial year.
7. PAYMENTS
(A) Taxes: (1) All sums payable by the Shareholders under this
Agreement shall be paid (1) free of any restriction or condition, (2) free and
clear of and (except to the extent required by law) without any deduction or
withholding for or on account of any tax and (3) without deduction or
withholding (except to the extent required by law) on account of any other
amount, whether by way of set-off or otherwise.
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<PAGE> 16
(2) If any of the Shareholders or any other person (whether or not
a party to, or on behalf of a party to, this Agreement) must at any time deduct
or withhold any tax or other amount from any sum paid or payable by, or received
or receivable from, that Shareholder under this Agreement, that Shareholder
shall pay such additional amount as is necessary to ensure that the Agent or, as
the case may be, the Bank to which that sum is due, receives on the due date and
retains (free from any liability other than tax on its own overall net income) a
net sum equal to what it would have received and so retained had no such
deduction or withholding been required or made.
(3) If any of the Shareholders or any other person (whether or not
a party to, or on behalf of a party to, this Agreement) must at any time pay any
tax or other amount on, or calculated by reference to, any sum received or
receivable by the Agent or, as the case may be, any of the Banks from that
Shareholder under this Agreement (except for a payment by the Agent or a Bank of
tax on its own overall net income), that Shareholder shall pay or procure the
payment of that tax or other amount before any interest or penalty becomes
payable or, if that tax or other amount is payable and paid by the Agent or any
Bank, shall reimburse it on demand for the amount paid by it.
(4) Within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after the due
date of payment of any tax or other amount which it is required by paragraph (3)
above to pay, the relevant Shareholder shall deliver to the Agent evidence
reasonably satisfactory to the Agent or, as the case may be, the relevant Bank
of that deduction, withholding or payment and (where remittance is required) of
the remittance thereof to the relevant taxing or other authority.
(5) As soon as any of the Shareholders is aware that any such
deduction, withholding or payment is required (or any change in any such
requirement), that Shareholder shall notify the Agent.
(B) Goods and Services Tax: Each of the Shareholders shall also
pay to the Agent and each Bank on demand, in addition to any amount payable by
that Shareholder under this Agreement, any goods and services, value added or
other similar tax payable in respect of that amount (and any reference in this
Agreement to that amount shall be deemed to include any such taxes payable in
addition to it).
(C) Refund of Tax Credits: If:-
(1) any Shareholder makes a payment under sub-Clause
(A)(2) or (3) (a "Tax Payment") in respect of a
payment to a Bank under this Agreement; and
(2) that bank determines in its absolute discretion that
it has obtained a refund of tax or obtained and used
a credit against tax on its overall net income (a
"Tax Credit") which that Bank in its absolute
discretion is able to identify as attributable to
that Tax Payment,
then, if in its absolute discretion it can do so without any adverse
consequences for that Bank, that Bank shall reimburse that Shareholder such
amount as that Bank in its absolute discretion determines to be such proportion
of that Tax Credit as will leave that Bank (after that reimbursement) in no
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<PAGE> 17
better or worse position in respect of its worldwide tax liabilities than it
would have been in if no Tax Payment had been required. A Bank shall have an
absolute discretion as to whether to claim any Tax Credit (and, if it does
claim, the extent, order and manner in which it does so) and whether any amount
is due from it under this sub-Clause (C) (and, if so, what amount and when). No
Bank shall be obliged to disclose any information regarding its tax affairs and
computations.
(D) Currency Indemnity: (1) Any amount received or recovered by
the Agent or any Bank in respect of any sum expressed to be due to it from any
Shareholder under or in connection with this Agreement in a currency (such
currency being referred to as the "Relevant Currency") other than the currency
in which such sum is expressed to be due under this Agreement (such currency
being referred to as the "Currency of Account") whether as a result of, or of
the enforcement of, a judgment or order of a court or tribunal of any
jurisdiction, in the winding-up of that Shareholder or otherwise, shall only
constitute a discharge to that Shareholder to the extent of the amount in the
Currency of Account which the recipient is able, in accordance with its usual
practice, to purchase with the amount of the Relevant Currency so received or
recovered on the date of that receipt or recovery (or, if it is not practicable
to make that purchase on that date, on the first date on which it is practicable
to do so).
(2) If that amount in the Currency of Account is less than the
amount of the Currency of Account due to the recipient under or in connection
with this Agreement, that Shareholder shall indemnify it against any loss
sustained by it as a result. In any event, that Shareholder shall indemnify the
recipient against the cost of making any such purchase. For the purpose of this
sub-Clause (D), it will be sufficient for the recipient to demonstrate that it
would have suffered a loss had an actual exchange or purchase been made.
(3) Each of the indemnities in this sub-Clause (D) constitutes a
separate and independent obligation from the other obligations in this
Agreement, shall give rise to a separate and independent cause of action, shall
apply irrespective of any indulgence granted by the Agent, any Arranger and/or
any Bank and shall continue in full force and effect despite any judgment,
order, claim or proof for a liquidated amount in respect of any sum due under
this Agreement or any other judgment or order.
8. NATURE OF RIGHTS AND OBLIGATIONS
(A) No Release: The obligations of the Shareholders under this
Agreement (excluding, for the avoidance of doubt, any obligation of the
Shareholders under this Agreement which has been discharged) shall not be
discharged, impaired or otherwise affected by any act, omission, matter or thing
which, but for this sub-Clause (A), may operate to release or otherwise
exonerate any of the Shareholders from its obligations under this Agreement in
whole or in part, including without limitation and whether or not known to it or
any other person:-
(1) any variation in or to the Project;
(2) any time, indulgence, concession waiver or consent at
any time given by the Agent and/or any of the Banks
in respect of
15
<PAGE> 18
the Senior Indebtedness or any part thereof or to the
Borrower, any Shareholder or any other person;
(3) any amendment or supplement to any provision of any
Financing Document or any other agreement, security,
guarantee or indemnity;
(4) the making or the absence of any demand on the
Borrower, any Shareholder or any other person for
payment;
(5) the enforcement or absence of enforcement of or
release of any of the Financing Documents or any
other agreement, security, guarantee or indemnity
held in respect of the Senior Indebtedness;
(6) the winding-up, insolvency, bankruptcy, amalgamation,
reconstruction or reorganisation of the Borrower, any
Shareholder or any other person;
(7) the illegality, invalidity or unenforceability of or
any defect in any provision of any Financing Document
or any other agreement, security, guarantee or
indemnity or any of the obligations of the Borrower,
any Shareholder or any other person thereunder,
whether on the grounds of ultra vires, not being in
the interests of the Borrower or any other person,
not having been duly authorised, executed or
delivered by the Borrower or any other person or for
any reason whatsoever; or
(8) any other act, event or omission which but for this
provision would or might operate to impair or
discharge the obligations of any Shareholder under
this Agreement.
(B) Continuing Obligations: The obligations of the Shareholders
and the Borrower under this Agreement are continuing obligations, will not be
discharged by any intermediate payment and will remain in full force and effect
until the obligations have been fulfilled (for the avoidance of doubt, nothing
in this sub-Clause (B) shall affect any obligations of the Borrower or any
Shareholder which has been discharged by the due and proper performance by the
Borrower or such Shareholder of such obligations).
(C) Reinstatement: (1) Any settlement or discharge between the
Agent or any of the Banks and any of the Shareholders shall be conditional upon
no security or payment to the Agent or such Bank by the Borrower or any other
person being avoided or reduced by virtue of any provision or enactment relating
to bankruptcy, insolvency or winding-up for the time being in force or by virtue
of any obligation to give effect to any preference or priority and the Agent or
such Bank (as the case may be) shall be entitled to recover the value or amount
of any such security or payment from that Shareholder subsequently as if such
settlement or discharge had not occurred.
(2) Without prejudice to the provisions of paragraph (2), where
any discharge (whether in respect of the obligations of any Shareholder or any
security for those obligations or otherwise) is made in whole or in part or any
arrangement is made on the faith of any payment, security or other disposition
which is avoided or must be repaid on bankruptcy, insolvency or winding-up or
16
<PAGE> 19
otherwise without limitation, the liability of the Shareholders under this
Agreement shall, unless the Agent and the Banks agree otherwise, continue as if
the discharge or arrangement, as the case may be, had not occurred.
(D) Failure by Shareholder: The failure of a Shareholder or the
Borrower to perform or comply with any of its obligations under this Agreement
shall not release any other Shareholder or the Borrower of its obligations under
this Agreement.
(E) Immediate Recourse: Each Shareholder waives any right which it
may have of first requesting the Agent or any of the Banks to proceed against or
enforce any other rights or security or claim payment from the Borrower, any
other Shareholder or any other person before claiming from the Shareholder under
this Agreement.
(F) Additional Security: This Agreement shall be in addition to
and shall not in any way be prejudiced by any other security now or hereafter
held by the Agent or any Bank as security for the obligations of the Borrower
under the Credit Agreement.
9. EXPENSES
(A) By Shareholders: Each of the Shareholders shall pay on demand
all costs and expenses (including legal expenses on a full indemnity basis)
reasonably incurred by the Agent and/or any of the Banks in protecting or
enforcing any rights against it under this Agreement.
(B) By Borrower: The Borrower shall pay on demand all costs and
expenses (including legal expenses on a full indemnity basis) reasonably
incurred by the Agent and/or any of the Banks in protecting or enforcing any
rights against it under this Agreement.
10. BENEFIT OF AGREEMENT
(A) Shareholders/Borrower: The Borrower may not assign or transfer
any of its rights, benefits or obligations under this Agreement. None of the
Shareholders may assign or transfer any of their respective rights, benefits or
obligations under this Agreement other than in the following manner and upon the
following terms:-
(1) in the case of EDBI, it may transfer all of its
rights, benefits and obligations under this Agreement
to any of its wholly-owned subsidiaries which has
acquired all the shares owned by EDBI in the
Borrower, provided that (a) the transferee shall have
agreed in writing to the other parties to this
Agreement to assume all the obligations of EDBI under
this Agreement and (b) EDBI and the transferee shall
have undertaken to the other parties to this
Agreement to ensure that, in the event that the
transferee ceases to be a wholly-owned subsidiary of
EDBI, the transferee shall transfer all its rights,
benefits and obligations under this Agreement to EDBI
or a wholly-owned subsidiary of EDBI; and
(2) in the case of HPE, it may transfer all of its
rights, benefits and obligations under this Agreement
to a HP Entity
17
<PAGE> 20
(provided that, at the time of such transfer, HP owns
at least 95 per cent. of the issued share capital of
such HP Entity) which has acquired all the shares
owned by HPE in the Borrower, provided that (a) such
HP Entity shall have undertaken to the other parties
to this Agreement to assume all the obligations of
HPE under this Agreement and (b) HPE and such HP
Entity shall have undertaken to the other parties to
this Agreement to ensure that, in the event HP ceases
to own at least 95 per cent. of the issued share
capital of such HP Entity, such HP Entity shall
transfer all its rights, benefits and obligations
under this Agreement to HP, HPE or another HP Entity
(of which HP owns at least 95 per cent. of its issued
share capital).
(B) Agent/Banks: (1) Each of the Agent and the Banks may assign
all or part of its rights under this Agreement without the consent of any party
to any assignee or transferee under the Credit Agreement (but the assignor shall
give to the Borrower prior notice of such assignment or transfer). Any such
assignee shall be entitled to the full benefit of this Agreement to the same
extent as if it were an original party in respect of the rights assigned to it.
(2) None of the Shareholders and the Borrower shall be liable for
any costs or expenses which may be incurred in connection with any assignment or
transfer of any of the rights of the Agent or any of the Banks under this
Agreement.
(C) Disclosure of Information: The Agent or any of the Banks may
disclose on a confidential basis to any other party to the Financing Documents
or any of its other branches or its headquarters or to an actual or potential
New Lending Bank, assignee, sub-participant or the like such information about
the Borrower, any Shareholder or any other person as it may think fit and may
disclose to such party such information about the Borrower or any of the
Shareholders with the prior consent in writing of the Borrower or, as the case
may be, such Shareholder (Provided that, at any time and from time to time after
the making of a declaration under Clause 17(B) of the Credit Agreement, (1) no
such consent will be required for any such disclosure and (2) the Agent or the
relevant Bank making any such disclosure shall, if practicable, consult with the
Borrower or, as the case may be, such Shareholder prior to making any such
disclosure and shall consider in good faith any request from the Borrower or, as
the case may be, such Shareholder to the Agent or such Bank not to make any such
disclosure or to delay making any such disclosure).
(D) Limitation on Certain Obligations: If, at the time of any
assignment or transfer by a Bank, circumstances exist which would oblige any
Shareholder to pay to the assignee or transfer under Clause 7(A) any sum in
excess of the sum (if any) which it would have been obliged to pay to that Bank
under that Clause in the absence of that assignment or transfer, that
Shareholder shall not be obliged to pay that excess.
11. WAIVERS
No failure on the part of the Agent or any of the Banks to
exercise, and no delay on its part in exercising, any right or remedy under this
Agreement will operate as a waiver thereof, nor will any single or partial
exercise of any right or remedy preclude any other or further exercise thereof
18
<PAGE> 21
or the exercise of any other right or remedy. The rights and remedies provided
in this Agreement are cumulative and not exclusive of any other rights or
remedies (whether provided by law or otherwise).
12. COMMUNICATIONS
(A) Addresses: Each communication under this Agreement shall be
made by fax, telex or otherwise in writing. Each communication or document to be
delivered to any party under this Agreement shall be sent to that party at the
fax number, telex number or address, and marked for the attention of the person
(if any), from time to time designated by that party to the Agent (or, in the
case of the Agent, by it to each other party) for the purpose of this Agreement.
The initial fax number, telex number, address and person (if any) so designated
by each party are set out against its name at the end of this Agreement.
(B) Deemed Delivery: Any communication under this Agreement shall
be deemed to have been received (if sent by fax or telex) on the day of despatch
or (in any other case) when left at the address required by sub-Clause (A) above
or within five days after being sent by prepaid post (by airmail if to another
country) addressed to it at that address.
13. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any
provision of this Agreement under the law of any jurisdiction shall not affect
its legality, validity or enforceability under the law of any other jurisdiction
nor the legality, validity or enforceability of any other provision.
14. GOVERNING LAW AND JURISDICTION
(A) Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of Singapore.
(B) Singapore Courts: For the benefit of the Agent and each Bank,
all the parties irrevocably agree that the courts of Singapore are to have
jurisdiction to settle any disputes which may arise out of or in connection with
this Agreement and that, accordingly, any legal action or proceedings arising
out of or in connection with this Agreement ("Proceedings") may be brought in
those courts and each of the Borrower and the Shareholders irrevocably submits
to the jurisdiction of those courts.
(C) Other Competent Jurisdiction: Nothing in this Clause shall
limit the right of the Agent and/or any Bank to take Proceedings against the
Borrower or any of the Shareholders in any other court of competent jurisdiction
nor shall the taking of Proceedings in one or more jurisdictions preclude the
Agent and/or any Bank from taking Proceedings in any other jurisdiction, whether
concurrently or not.
(D) Venue: Each of the Borrower and the Shareholders irrevocably
waives any objection which it may at any time have to the laying of the venue of
any Proceedings in any court referred to in this Clause and any claim that any
such Proceedings have been brought in an inconvenient forum.
19
<PAGE> 22
(E) Service of Process: (1) HPE irrevocably appoints
Hewlett-Packard Far East Pte Ltd (now of 396, Alexander Road, #13-00, BP Tower,
Singapore 119954, Attention: Ravinder Singh (Company Secretary and International
Counsel) to receive, for it and on its behalf, service of process in any
Proceedings in Singapore. Such service shall be deemed completed on delivery to
the process agent (whether or not it is forwarded to and received by HPE). If
for any reason the process agent ceases to be able to act as such or no longer
has an address in Singapore, HPE irrevocably agrees to appoint a substitute
process agent acceptable to the Agent, and to deliver to the Agent a copy of the
new agent's acceptance of that appointment, within 30 days. Nothing shall affect
the right to serve process in any other manner permitted by law.
(F) Consent to Enforcement, etc.: Each of the Borrower and the
Shareholders irrevocably and generally consents in respect of any Proceedings
anywhere to the giving of any relief or the issue of any process in connection
with those Proceedings including, without limitation, the making, enforcement or
execution against any assets whatsoever (irrespective of their use or intended
use) of any order or judgment which may be made or given in those Proceedings.
(G) Waiver of Immunity: Each of the Borrower and the Shareholders
irrevocably agrees that, should the Agent or any Bank take any Proceedings
anywhere (whether for an injunction, specific performance, damages or
otherwise), no immunity (to the extent that it may at any time exist, whether on
the grounds of sovereignty or otherwise) from those Proceedings, from attachment
(whether in aid of execution, before judgment or otherwise) of its assets or
from execution of judgment shall be claimed by it or on its behalf or with
respect to its assets, any such immunity being irrevocably waived. Each of the
Borrower and the Shareholders irrevocably agrees that it and its assets are, and
shall be, subject to such Proceedings, attachment or execution in respect of its
obligations under this Agreement.
20
<PAGE> 23
I N W I T N E S S W H E R E O F this Agreement has been
entered into on the date stated at the beginning.
The Shareholders
The Common Seal of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD )
was hereunto affixed )
in the presence of:- )
/s/ Barry Waite Director
- -------------------------------------
/s/ Chua Su Li Secretary
- -------------------------------------
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406.
Fax Number: 3622909
Attention: Legal Department
The Common Seal of )
EDB INVESTMENTS PTE LTD )
was hereunto affixed )
in the presence of:- )
/s/ Ho Meng Kit Director
- -------------------------------------
/s/ Sara Liew Secretary
- -------------------------------------
250, North Bridge Road,
#27-04, Raffles City Tower,
Singapore 179101.
Fax Number: 3362503
Attention: General Manager
21
<PAGE> 24
Signed for and on behalf of )
HEWLETT PACKARD EUROPE B.V. )
in the presence of:- )
/s/ Christine Chan /s/ Robert Paul Wayman
Startbaan 16,
1187 XR AMSTELVEEN,
The Netherlands.
Fax Number: (3120) 5477703
Attention: Legal Department
with copy to:-
Hewlett-Packard Company,
3000, Hanover Street,
MS 20BQ,
Palo Alto, CA 94304,
USA.
Attention: General Counsel
The Borrower
The Common Seal of )
CHARTERED SILICON PARTNERS PTE LTD )
was hereunto affixed )
in the presence of:- )
/s/ Barry Waite Director
- ---------------
/s/ Chua Su li Secretary
- ---------------
60, Woodland Industrial Park D,
Street 2,
Singapore 738406.
Fax Number: 3622909
Attention: Legal Department
22
<PAGE> 25
The Agent
Signed, Sealed and Delivered by )
Goh Chong Theng and ) /s/ Goh Chong Theng and
Matthew Wong as )
attorneys for and on behalf of )
ABN AMRO BANK N.V., ) /s/ Matthew Wong
SINGAPORE BRANCH )
in the presence of:- )
/s/ Ong Yu En
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 2317324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
23
<PAGE> 26
CONFORMED COPY
DATED 16TH DECEMBER, 1998
CHARTERED SILICON PARTNERS PTE LTD
AS BORROWER
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
EDB INVESTMENTS PTE LTD
HEWLETT-PACKARD EUROPE B.V.
AS SHAREHOLDERS
- AND -
ABN AMRO BANK N.V., SINGAPORE BRANCH
AS AGENT
------------------------------------------
FIRST SUPPLEMENTAL SHAREHOLDERS
UNDERTAKING
(BEING SUPPLEMENTAL TO THE SHAREHOLDERS
UNDERTAKING DATED 1ST JULY, 1998)
------------------------------------------
ALLEN & GLEDHILL,
36, ROBINSON ROAD, #18-01,
CITY HOUSE,
SINGAPORE 068877.
<PAGE> 27
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
------ ------- ----
<S> <C> <C>
1. INTERPRETATION 1
2. AMENDMENTS TO SHAREHOLDERS UNDERTAKING 2
3. REPRESENTATIONS AND WARRANTIES 2
4. UNDERTAKING FROM SHAREHOLDERS 2
5. INCORPORATION 3
6. CONFIRMATION 3
7. GOVERNING LAW 3
</TABLE>
<PAGE> 28
T H I S F I R S T S U P P L E M E N T A L
U N D E R T A K I N G is made on 16th December, 1998 B E T W E E N:-
(1) CHARTERED SILICON PARTNERS PTE LTD (the "Borrower");
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, EDB INVESTMENTS PTE
LTD and HEWLETT-PACKARD EUROPE B.V. (together, the
"Shareholders"); and
(3) ABN AMRO BANK N.V., SINGAPORE BRANCH, as agent for and on
behalf of the Banks defined below (in such capacity, the
"Agent", which expression shall include any of its successors
in such capacity).
and is supplemental to a Shareholders Undertaking (the "Shareholders
Undertaking") dated 1st July, 1998 made between (1) the Borrower, (2) the
Shareholders and (3) the Agent.
W H E R E A S:-
(A) Pursuant to a Credit Agreement (the "Credit Agreement") dated
12th March, 1998 made between (1) the Borrower, as borrower, (2) ABN AMRO Bank
N.V., Singapore Branch, Bayerische Landesbank Girozentrale, Singapore Branch,
Citibank, N.A., Singapore Branch, Overseas Union Bank Limited and The Sumitomo
Bank, Limited, Singapore Branch, as arrangers, (3) the Guarantor Banks named
therein (the "Guarantor Banks"), as guarantor banks, (4) the Lending Banks named
therein (the "Lending Banks"), as lending banks, and (5) the Agent, as agent,
the Guarantor Banks agreed to grant to the Borrower a S$236,800,000 guarantee
facility (the "Guarantee Facility") and the Lending Banks agreed to grant to the
Borrower a US$143,200,000 term loan facility (the "Term Loan Facility"), upon
the terms and subject to the conditions of the Credit Agreement.
(B) The Credit Agreement has been amended by a first supplemental
agreement (the "First Supplemental Agreement") dated 14th December, 1998 made
between the parties to the Credit Agreement to provide for (1) the deferment of
Completion (as defined in the Credit Agreement) by one year to 31st December,
2000, (2) the extension of the proposed date of the issue of the EDB Guarantee
(as defined in the Credit Agreement) from 30th June, 2000 to 30th September,
2000, (3) the extension of the Commitment Termination Date (as defined in the
Credit Agreement) from 31st December, 1999 to 31st December, 2000, (4) the
revision of the Repayment Dates (as defined in the Credit Agreement) and (5) the
increase in the commitment fees for the Available EDB Amount, the Unavailable
EDB Amount, the Available Term Amount and the Unavailable Term Amount on, inter
alia, the condition that the Borrower and the Shareholders deliver this
Supplemental Undertaking executed by each of them to the Agent.
I T I S A G R E E D as follows:-
1. INTERPRETATION
(A) In this Supplemental Undertaking, except where the context
otherwise requires, "Effective Date" has the meaning ascribed to it in Clause 2.
(B) All terms and references used in this Supplemental Undertaking
and which are defined or construed in the Credit Agreement, the First
Supplemental Agreement or the Shareholders Undertaking but are not defined or
construed in this Supplemental Undertaking shall have the same meaning and
construction in this Supplemental Undertaking.
(C) The headings in this Supplemental Undertaking are inserted for
convenience only and shall be ignored in construing this Supplemental
Undertaking. Unless otherwise stated, references to the
<PAGE> 29
"Clauses" are to be construed as references to the clauses of this Supplemental
Undertaking.
2. AMENDMENTS TO SHAREHOLDERS UNDERTAKING
Each of the Borrower, the Shareholders and the Agent agree
that with effect from the date of this Supplemental Undertaking (the "Effective
Date"), the Shareholders Undertaking shall be amended as follows:-
(1) Recital (A) to the Shareholders Undertaking shall be
amended by inserting the words ", as amended by a
first supplemental agreement dated [ ], 1998 made
between the parties to the Credit Agreement" after
the word "agent" appearing in line 8 thereof; and
(2) the definition of "Scheduled Completion Date" in
Clause 1(A) of the Shareholders Undertaking shall be
amended by substituting the date "31st December,
1999" with the date "31st December, 2000".
3. REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Shareholders represents and
warrants to and for the benefit of the Agent that:-
(1) all action, conditions and things required to be
taken, fulfilled and done (including the obtaining of
any necessary consents) in order (a) to enable it
lawfully to enter into, exercise its rights and
perform and comply with its obligations under this
Supplemental Undertaking, (b) to ensure that those
obligations are valid, legally binding and
enforceable, and (c) to make this Supplemental
Undertaking admissible in evidence in the courts of
Singapore and the Netherlands have been taken,
fulfilled and done;
(2) its entry into, exercise of its rights and/or
performance of or compliance with its obligations
under this Supplemental Undertaking do not and will
not violate, or exceed any power or restriction
granted or imposed by, (a) any law to which it is
subject or (b) its Memorandum and Articles of
Association;
(3) its obligations under this Supplemental Undertaking
and the Shareholders Undertaking (as amended by this
Supplemental Undertaking) are valid, binding and
enforceable; and
(4) it is not in breach of any of its obligations under
the Shareholders Undertaking.
4. UNDERTAKING FROM SHAREHOLDERS
Chartered Semiconductor Manufacturing Ltd ("CSM") undertakes
to ensure that its shareholders shall pay into the capital of CSM by way of the
purchase price for the subscription of shares in the issued share capital of CSM
an additional amount of not less than S$300,000,000 by not later than 31st
December, 1998.
5. INCORPORATION
(A) The Shareholders Undertaking and this Supplemental Undertaking
shall be read and construed as one document and this Supplemental Undertaking
shall be considered as part of the Shareholders Undertaking and, without
prejudice to the generality of the foregoing, where the context so
2
<PAGE> 30
allows, references in the Shareholders Undertaking to "this Agreement",
howsoever expressed, shall be read and construed as references to the
Shareholders Undertaking as amended, modified or supplemented by this
Supplemental Undertaking.
(B) Except to the extent expressly amended by the provisions of
this Supplemental Undertaking, the terms and conditions of the Shareholders
Undertaking and all other instruments and agreements executed, delivered or
entered into thereunder or pursuant thereto are hereby confirmed and shall
remain in full force and effect.
6. CONFIRMATION
Each of the Shareholders hereby irrevocably and
unconditionally consent to the amendments to the provisions of the Credit
Agreement in the manner set out in the First Supplemental Agreement and hereby
confirm that the Shareholders Undertaking remains in full force and effect and
is binding on each of the Shareholders and shall continue in full force and
effect and be binding on each of the Shareholders notwithstanding the amendments
to the Credit Agreement in the manner provided in the First Supplemental
Agreement.
7. GOVERNING LAW
This Supplemental Undertaking shall be governed by, and
construed in accordance with, the laws of Singapore.
3
<PAGE> 31
I N W I T N E S S W H E R E O F this Supplemental
Undertaking has been entered into on the date stated at the beginning.
THE SHAREHOLDERS
The Common Seal of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD ) sealed
was hereunto affixed )
in the presence of:- )
/s/ Barry Waite Director
- -----------------------------------------
/s/ Ho Ching Director
- -----------------------------------------
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406.
Fax Number: 3622909
Attention: Legal Department
The Common Seal of )
EDB INVESTMENTS PTE LTD ) sealed
was hereunto affixed )
in the presence of:- )
/s/ Philip Yeo Director
- -----------------------------------------
/s/ Sara Liew Secretary
- -----------------------------------------
250, North Bridge Road,
#27-04, Raffles City Tower,
Singapore 179101.
Fax Number: 3362503
4
<PAGE> 32
Attention: General Manager
Signed for and on behalf of )
HEWLETT-PACKARD EUROPE B.V. ) /s/ Robert Wayman
in the presence of:- )
/s/ Christine Chua
Startbaan 16, 1187 XR AMSTELVEEN, The Netherlands.
Fax Number: (3120) 5477703
Attention: Legal Department
with copy to:-
Hewlett-Packard Company,
3000 Hanover Street,
MS 20BQ,
Palo Alto, CA 94304,
USA.
Attention: General Counsel
THE BORROWER
The Common Seal of )
CHARTERED SILICON PARTNERS PTE LTD )
was hereunto affixed )
in the presence of:- )
/s/ Barry Waite Director
- -----------------------------------------
/s/ Choong Chan Yong Director
- -----------------------------------------
60, Woodland Industrial Park D,
Street 2,
Singapore 738406.
Fax Number: 3622909
Attention: Legal Department
5
<PAGE> 33
THE AGENT
Signed, Sealed and Delivered by )
Goh Chong Theng and ) sealed
Chan Peng Fun as )
attorneys for and on behalf of ) /s/ Goh Chong Theng
ABN AMRO BANK N.V., )
SINGAPORE BRANCH ) /s/ Chan Peng Fun
in the presence of:- )
/s/ Ong Yu En
- ----------------------------
63, Chulia Street, 5th Floor,
Singapore 049514.
Fax Number: 2317324
Telex Number: RS 24396
Attention: Ms Quek Toi Wee/Ms Samantha Chew
6
<PAGE> 1
EXHIBIT 10.26
DATED THE 3RD DAY OF SEPTEMBER 1999
SILICON MANUFACTURING PARTNERS PTE LTD
as Borrower
ABN AMRO BANK N.V., SINGAPORE BRANCH
CITIBANK, N.A., SINGAPORE BRANCH
OVERSEAS UNION BANK LIMITED
as Lead Arrangers
THE BANKS AND FINANCIAL INSTITUTIONS
as Lenders
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
as Facility Agent
And
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
as Security Agent
================================================================================
SYNDICATED CREDIT FACILITIES AGREEMENT
================================================================================
TSM&P
THIO SU MIEN & PARTNERS, Advocates & Solicitors
30 Raffles Place, #26-01 Caltex House, Singapore 048622
Telephone: (065) 534 4877 -- Facsimile: (065) 534 4822
<PAGE> 2
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE PAGE NO
===================================================================================
<S> <C> <C>
1. INTERPRETATION............................................................1
2. PURPOSE AND USE OF THE FACILITIES........................................21
3. CONDITIONS PRECEDENT.....................................................23
4. THE FACILITIES...........................................................24
5. REPAYMENT, PREPAYMENT AND CANCELLATION...................................27
6. INTEREST.................................................................30
7. ISSUE OF EDB GUARANTEE UNDER TRANCHE B[G] FACILITY.......................31
8. DEMANDS UNDER THE EDB GUARANTEE..........................................33
9. BORROWER'S LIABILITIES IN RELATION TO THE EDB GUARANTEE..................34
10. FEES.....................................................................36
11. CHANGE IN CIRCUMSTANCES..................................................37
12. TAXES....................................................................41
13. PAYMENTS.................................................................43
14. REPRESENTATIONS AND WARRANTIES...........................................45
15. FINANCIAL COVENANTS......................................................48
16. COVENANTS RELATING TO THE PROJECT ACCOUNTS...............................51
17. POSITIVE COVENANTS.......................................................53
18. NEGATIVE COVENANTS.......................................................60
19. EVENTS OF DEFAULT........................................................62
20. DEFAULT INTEREST.........................................................68
21. INDEMNITIES..............................................................70
22. APPLICATION OF PROCEEDS..................................................71
23. THE AGENTS...............................................................72
24. SET-OFF AND PRO-RATA SHARING.............................................77
25. EXPENSES AND STAMP DUTY..................................................78
26. CALCULATIONS AND EVIDENCE................................................79
27. SUCCESSORS AND ASSIGNS...................................................80
28. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS...............................82
29. COMMUNICATIONS...........................................................83
30. SEVERABILITY.............................................................84
31. COUNTERPARTS.............................................................84
32. NATURE OF RIGHTS AND OBLIGATIONS.........................................84
33. GOVERNING LAW AND JURISDICTION...........................................85
SCHEDULE
1 LENDERS' COMMITMENT......................................................86
2 CONDITIONS PRECEDENT.....................................................87
3 NOTICE OF DRAWING........................................................89
4 REQUEST FOR ISSUE OF EDB GUARANTEE.......................................90
5 PROJECT DOCUMENTS........................................................91
6 LIST OF SECURITY DOCUMENTS...............................................92
7 SWAP RATE................................................................93
8 REPAYMENT SCHEDULE OF TRANCHE A OUTSTANDINGS.............................94
9 INSURANCE................................................................95
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
10 FORM OF EDB GUARANTEE....................................................96
11A REPAYMENT SCHEDULE (S$).................................................104
11B REPAYMENT SCHEDULE (US$)................................................105
12 SHAREHOLDERS UNDERTAKING................................................106
APPENDIX
A FORM OF TRANSFER CERTIFICATE............................................129
</TABLE>
<PAGE> 4
THIS AGREEMENT is made the 3rd day of September One thousand nine hundred and
ninety-nine (1999) Between:
(1) SILICON MANUFACTURING PARTNERS PTE LTD (the "Borrower");
(2) ABN AMRO BANK N.V., SINGAPORE BRANCH, CITIBANK, N.A., SINGAPORE BRANCH and
OVERSEAS UNION BANK LIMITED (the "Lead Arrangers" and each a "Lead
Arranger");
(3) THE BANKS AND FINANCIAL INSTITUTIONS, listed under the heading "Lenders" at
the end of this Agreement (the "Lenders" and each a "Lender");
(4) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED, (the "Facility Agent") as
facility agent for the Lenders; and
(5) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED, (the "Security Agent") as
security agent for the Lenders.
WHEREAS:
(A) By a joint venture agreement dated 19th December 1997 between Chartered
Semiconductor Manufacturing Ltd and Lucent Technologies Microelectronics
Pte Ltd, they agreed to establish and operate a joint venture company in
Singapore for the equipping, installation, construction and operation of a
semiconductor wafers and circuits manufacturing plant.
(B) The Borrower was incorporated in Singapore on 3rd January 1998 to
establish, own and operate the Plant (defined below).
(C) The Lenders have agreed to make available to the Borrower the Facilities as
defined herein, in order to assist the Borrower in the financing of the
costs of the Project (defined below).
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: In this Agreement, except to the extent that the context
requires otherwise:
"Advance" means an advance made or to be made by the Lenders to the
Borrower under the Tranche A Facility and/or the Tranche B[T] Facility or,
as the case may be, the
<PAGE> 5
2
principal amount of any such Advance, and "Advances" means two or more such
Advances;
"Agent" means Facility Agent or Security Agent (as the case may be), and
"Agents" means both of them;
"Agreed Form" in relation to any document means the form initialled by the
Facility Agent (acting in accordance with the instructions of the Lenders)
and the Borrower or such other form as they may agree from time to time;
"Annual Business Plan" means the Business Plan which is amended annually in
accordance with the Joint Venture Agreement;
"Approved Capital Expenditure" means, at any time, costs and expenses of a
capital (but not operating) nature (as construed in accordance with
generally accepted accounting principles in Singapore) incurred by the
Borrower in carrying out the Project as set out in the Business Plan
current at such time;
"Approved Hedges" means the hedging agreements for interest or exchange
rates exposure arising from the Facilities between the Borrower and the
Approved Hedging Counterparties providing protection to the Borrower
against variations in interest rates or variations in exchange rates;
"Approved Hedging Counterparties" means (a) any of the Lead Arrangers, or
(b) any of the other Lenders which has a long term credit rating of not
less than A by Standard and Poor's Corporation or A2 by Moody's Investor
Services Inc. that enters into an Approved Hedge with the Borrower;
"ASAD Agreement" means the assured supply and demand agreement dated 17th
February 1998 made between CSM, LTM and the Borrower;
"Assets" means all assets of the Borrower including future assets;
"Assignment of Contract Proceeds" means the assignment executed or to be
executed (as the context may require) by the Borrower in favour of the
Security Agent in respect of the assignment of the rights to payment of and
proceeds paid or payable to the Borrower under the ASAD Agreement and the
CSM Undertaking, as security for the Secured Liabilities;
"Authorised Signatory" means, at any time, in relation to the Borrower or a
Shareholder, any person who is duly authorised at such time to sign and
issue documents and certificates on behalf of the Borrower, or as the case
may be, such Shareholder and in respect of whom the Facility Agent has
received a certificate signed by a director or another Authorised Signatory
of the first-mentioned person setting out the name of and signature of such
person and confirming such person's authority to act;
<PAGE> 6
3
"Availability Period" means the period starting from Financial Close to (a)
in relation to the Tranche A Facility, the earlier of the date falling (i)
2.5 years from the date of the first Advance under the Tranche A Facility
and (ii) 2.75 years from the date of this Agreement; and (b) in relation to
the Tranche B Facility, the earlier of the date falling (i) 3 years from
the date of the first Advance or first issue of the EDB Guarantee, as the
case may be, under the Tranche B Facility and (ii) 3.25 years from the date
of this Agreement, but in no event shall the Availability Period for either
Tranche extend beyond the date on which the Commitments are cancelled
pursuant to Clauses 5.4 or 19.2.3 hereof;
"Available Cashflow" means in respect of any period, the sum of all
revenues of whatever kind and from whatever source received by the
Borrower, including interest and other returns paid on, and profits made on
the disposal of, Permitted Investments made pursuant to Clause 16.5, less
the aggregate of all operating expenses, Approved Capital Expenditure, any
changes in working capital, taxes and other non-Debt Service related costs
and other expenses made or paid by the Borrower during such period;
"Available Commitment" means, in relation to a Lender, its Commitment less
(a) that part of its Commitment (if any) which has been cancelled in
accordance with this Agreement and (b) its Outstandings and "Available
Commitments" means two or more such commitments;
"Available Tranche A Commitment" means, at any particular time, in relation
to a Tranche A Lender, its Tranche A Commitment less (a) that part of its
Tranche A Commitment (if any) which has been cancelled in accordance with
this Agreement and (b) the aggregate amount previously advanced by it under
the Tranche A Facility and "Available Tranche A Commitments" means the
commitments of all Tranche A Lenders;
"Available Tranche B Commitment" means, at any particular time, in relation
to a Tranche B Lender, its Tranche B Commitment less (a) that part of its
Tranche B Commitment (if any) which has been cancelled in accordance with
this Agreement, (b) in respect of Tranche B[T] Facility the aggregate
amount previously advanced by it under the Tranche B[T] Facility, and (c)
in respect of Tranche B[G] Facility, the aggregate amount of the maximum
actual and/or contingent liability of that Tranche B Lender under or in
connection with the EDB Guarantee and "Available Tranche B Commitments"
means the commitments of all Tranche B Lenders;
"Base Case" means the financial model in relation to the Project and its
implementation showing, inter alia, a milestone schedule, estimated CP
Date, schedule of disbursements under this Agreement and the relevant EDB
Financing Document, schedule of Equity Contribution, underlying assumptions
and financial projections including the D/E Ratio and Debt Service Coverage
Ratio, in the Agreed Form;
"Bridge Loan Agreement" means the Credit Agreement between the Borrower and
Citibank, N.A. dated 29th May 1998 for an amount up to US$150,000,000;
<PAGE> 7
4
"Business Day" means (a) in relation to (i) Tranche A Facility and (ii)
Tranche B[T] Facility where it is drawn in US Dollars, a day (other than
Saturday or Sunday) on which US Dollar deposits may be dealt in on the
London inter-bank market and on which commercial banks, the Lenders and the
Facility Agent are open for business in London and Singapore and, if on
that day a transfer of funds is to be made in US Dollars under this
Agreement, New York City and (b) in relation to Tranche B[T] Facility where
it is drawn in Singapore Dollars, a day (other than Saturday or Sunday) on
which Singapore Dollar deposits may be dealt in on the Singapore inter-bank
market, and on which commercial banks are open for business in Singapore
and, if on that day the Swap Rate is to be determined under this Agreement,
New York City;
"Business Plan" means the business plan which includes the Base Case,
incorporating amongst other things, the operating budget, approved by the
board of directors of the Borrower and as from time to time amended in
accordance with Clause 3 of the Joint Venture Agreement;
"Centre" means (a) in relation to Singapore Dollars, Singapore, and (b) in
relation to US Dollars, New York City;
"Commercial Production" means the date on which production of not less than
18,000 wafer starts per month utilising 21 mask layers of LTM's 0.25 micron
technology is achieved (and delivered "Ex-Work" as required in the ASAD
Agreement) as evidenced by delivery to the Facility Agent of a certificate
to that effect signed by the general manager of the Borrower;
"Commitment" means, in relation to a Lender and subject as provided in this
Agreement, the commitment of that Lender set opposite its name in Schedule
1 and "Commitments" means two or more such Commitments;
"Completion" means the date on which the Plant achieves commercial
production at the rate of an aggregate of not less than 26,000 wafer starts
per month utilising 21-mask layers of LTM's 0.25 micron technology;
"Contingency Shareholders Loan" means a loan to be extended by the
Shareholders severally to the Borrower up to a maximum of US$18,000,000 to
finance any shortfalls for payments of interest and principal under the
Facilities pursuant to the Shareholders Undertaking;
"Conversion Date" means the date on which the Borrower repays the Tranche
B[T] Outstandings pursuant to Clauses 2.1.3.2 and 2.1.4.2;
"CP Date" means the date falling on the earliest of:
(a) the first day falling 2.5 years from the date of initial drawdown of
the Facilities or any part thereof;
(b) the first day falling 2.75 years from the date of this Agreement; and
<PAGE> 8
5
(c) the first day of the first Interest Period falling after the Borrower
achieves Commercial Production;
"CSM" means Chartered Semiconductor Manufacturing Ltd., a company
incorporated in Singapore and having its registered office at 60, Woodlands
Industrial Park D Street 2, Singapore 738406;
"CSM Undertaking" means the undertaking of CSM under Clause 2.2.2 of the
Shareholders Undertaking;
"Current Financial Report" means at any time, the then most recent
financial report delivered by the Borrower to the Facility Agent or the
Lenders pursuant to Clauses 15.2 and 15.3 including any update which has
been accepted by the Lenders;
"D/E Ratio" means at any particular time, the ratio of (a) the Total
Indebtedness to (b) Tangible Net Worth;
"Debenture" means the deed of debenture executed or to be executed (as the
context may require) by the Borrower in favour of the Security Agent in
respect of a charge over certain assets of the Borrower (both present and
future), as security for the Secured Liabilities;
"Debt Service" means, in relation to the Facilities and the EDB Loan, to
the extent guaranteed under the EDB Guarantee which is issued, on any date
or in respect of any period, the sum of (a) all amounts payable by the
Borrower in respect of scheduled principal payments in respect of
indebtedness relating thereto, (b) all amounts payable by the Borrower in
respect of interest (including default interest) in respect of indebtedness
relating thereto and (c) all fees and expenses including the guarantee
commission payable (in each case, upon the payment date thereof, by
acceleration or otherwise) thereunder and scheduled principal and interest
payments and all fees and expenses in relation to any New Debt outstanding
during such period payable by the Borrower in respect of such period;
"Debt Service Coverage Ratio" at any time means, the ratio of the Available
Cashflow for the full semi-annual period ("first semi-annual period")
preceding the date on which the said ratio is determined to the aggregate
amount of Debt Service for the full semi-annual period immediately after
the first semi-annual period;
"EDB" means the Economic Development Board of Singapore;
"EDB Cash Cover" means, in relation to the Tranche B[G] Facility, a deposit
into the EDB Cash Cover Account;
"EDB Cash Cover Account" means an account of the Security Agent named as
such opened or to be opened for the deposit of the EDB Cash Cover by the
Borrower under the terms of this Agreement;
<PAGE> 9
6
"EDB Financing Document" means the EDB loan agreement in form and substance
satisfactory to the Facility Agent executed or to be executed between (a)
the Borrower and (b) EDB relating to the EDB Loan;
"EDB Guarantee" means the guarantee on a several basis issued or to be
issued (as the context may require) by the Tranche B Lenders in favour of
the EDB under or pursuant to Clause 7 in substantially the form set out in
Schedule 10;
"EDB Loan" means at any time the aggregate principal amount advanced by the
EDB under the EDB Loan Facility (as reduced by any repayment or prepayment)
to the Borrower, at that time and all accrued and unpaid interest including
default interest;
"EDB Loan Facility" means the loan facility in an amount not exceeding
S$240,000,000 extended or to be extended (as the context may require) by
the EDB to the Borrower on the terms and subject to the conditions of the
EDB Financing Document;
"EDB Loan Repayment Schedule" means the dates and the principal amount(s)
of the EDB Loan to be repaid on such dates, as set out in Schedule B of
Schedule 10;
"Encumbrance" means (a) a mortgage, charge, pledge, lien or other
encumbrance securing any obligation of any person, (b) any arrangement
(excluding arrangements relating to any asset of the Borrower which has
been released by the Security Agent from the Security Interest) under which
money or claims to, or the benefit of, a bank or other account may be
applied, set off or made subject to a combination of accounts so as to
effect discharge of any sum owed or payable to any person or (c) any other
type of preferential arrangement (including any title transfer and
retention arrangement) having a similar effect;
"Environmental Claim" with respect to any person means any notice, claim,
demand or similar communication by any other person alleging potential
liability for investigatory costs, clean-up costs, governmental response
costs, natural resources damages, property damages, personal injuries,
fines or penalties arising out of, based on or resulting from any
environmental matters relating to the Project;
"Equity Contribution" means equity contribution made by the Shareholders in
accordance with the Shareholders Undertaking or Joint Venture Agreement, as
the case may be;
"Equity Contribution Commitment" means the several commitment by the
Shareholders to make Equity Contribution to the Borrower;
"Event of Default" means any of the events of default described in Clause
19.1;
"Expiry Date" means the date specified in the EDB Guarantee as the latest
date on which any claim or demand may be made by EDB for payment by any of
the Tranche B Lenders under the EDB Guarantee which shall not be later than
30th November 2005
<PAGE> 10
7
"Facilities" means the Tranche A Facility and the Tranche B Facility;
"Facility Office" in relation to any Secured Creditor means the office
identified with its signature below (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a party as Transferee)
or such other offices as it may select by notice to the Facility Agent;
"Fee Letters" means the fee letters between the Borrower and respectively
the Lead Arrangers and each of the Agents dated on or prior to the date of
this Agreement setting out the fees payable by the Borrower pursuant to
Clause 10 of this Agreement;
"Final Repayment Date" means (a) in relation to the Tranche A Facility, the
date on which the final instalment of the Tranche A Outstandings is repaid
under Clause 5.1, which shall be a date falling no later than 5.75 years
from the date of this Agreement, and (b) in relation to the Tranche B
Facility, the date falling 6.25 years from the date of this Agreement;
"Financial Close" means the date on which the first Advance is made in
accordance with the terms hereunder;
"Financing Documents" means this Agreement, the Security Documents and any
other agreement which it is agreed, between the Facility Agent and the
Borrower, constitutes a Financing Document for the purpose of this
Agreement and "Financing Document" means any of them;
"Force Majeure" means fire, flood, explosion, war, strike, embargo,
government requirement, civil or military authority, act of God, or other
similar causes beyond the control of the non-performing party and without
the fault or negligence of the delayed or non-performing party or its
subcontractors;
"Guarantee Fee" means, in relation to a Guarantee Fee Payment Date, the
guarantee fee computed at the applicable per annum rate specified below on
the Maximum Amount of the EDB Guarantee on that Guarantee Fee Payment Date
for the period commencing on that Guarantee Fee Payment Date and ending on
the next Guarantee Fee Payment Date, or the Expiry Date, if earlier (such
guarantee fee to be calculated on the basis of a 365 day year):
(a) prior to the CP Date, 1.45%;
(b) thereafter, where the D/E Ratio is:
(i) D/E Ratio > 2.0, 1.45%;
(ii) 1.5 < D/E Ratio < 2, 1.3%;
-
(iii) 1 < D/E Ratio < 1.5, 1.2%; and
-
(iv) D/E Ratio < 1, 1.1%;
<PAGE> 11
8
"Guarantee Fee Payment Date" means (a) the date of the first drawing under
the EDB Financing Document to be notified by the Borrower to the Lenders or
(b) the first day of each successive quarter thereafter (provided that no
Guarantee Fee Payment Date shall fall later than the Expiry Date);
"Guarantee Limit" means the Tranche B Commitments under the Tranche B[G]
Facility as from time to time reduced by the aggregate amounts of principal
repaid or prepaid by the Borrower to EDB;
"Holding Company" means, in relation to a Lender, its holding company which
is a bank regulated by the Bank of International Settlements capital
adequacy rules and by the applicable local monetary authority of the
country of incorporation;
"IDC" means all fees, interest, commission, charges, costs and expenses
payable by the Borrower under the Financing Documents and all hedging costs
payable by the Borrower under the Approved Hedges prior to Completion;
"Independent Insurance Consultant" means an insurance expert appointed by
the Facility Agent referred to in Clause 17.20.3 and being Alexander Forbes
at the date of this Agreement;
"Information Memorandum" means the document concerning the Borrower, its
Shareholders and the Project which, at the Borrower's request and on its
behalf, was prepared in relation to this transaction;
"Insurance Proceeds" means proceeds of the Insurances received by the
Borrower as loss payee or otherwise for its own account or received or
receivable by the Security Agent as loss payee, assignee or otherwise for
its own account or on behalf of any or all of the Secured Creditors;
"Insurances" means all policies and contracts of insurance which are now or
may hereafter be taken out or effected in respect of or in connection with
the Project or the Property or any part thereof, (whether in the sole name
of the Borrower or in the joint names of the Borrower and any party to any
Transaction Document) and shall include the Borrower's interest, if any, in
any reinsurances taken out in relation to such Insurances;
"Interest Payment Date" means the last day of an Interest Period;
"Interest Period" means the interest period of one (1), three (3) or six
(6) months as elected by the Borrower pursuant to Clause 6.1 or of three
(3) months' duration as provided in Clause 6.1.3 or a period by reference
to which interest is calculated on an Advance or overdue sum;
"Joint Venture Agreement" means the joint venture agreement dated 19th
December 1997 made between CSM and LTM;
<PAGE> 12
9
"JTC" means the Jurong Town Corporation, a body corporate incorporated
under the Jurong Town Corporation Act and having its head office at Jurong
Town Hall, Jurong Town Hall Road, Singapore;
"Lender" means any financial institution which is a Tranche A Lender or
Tranche B Lender and shall include any other bank or financial institution
which becomes a party hereto pursuant to a transfer in accordance with
Clause 27, and any reference herein to the "Lenders" shall, unless the
context otherwise requires, be construed as a reference to the Lenders and
each other bank or financial institution (if any) which shall have so
become a party hereto;
"LIBOR" means, in relation to any Advance or unpaid sum on which interest
for a specified period is to accrue:
(a) the rate per annum determined by the Facility Agent to be the
offered rate (if any) appearing on page 3750 of the Telerate
screen which displays the British Bankers Association Interest
Settlement Rate for deposits in US Dollars and for the specified
period or any equivalent successor to such page at or about 11
a.m. on the Quotation Date for the specified period; or
(b) if no such offered rate appears on the Telerate screen, such rate
per annum which is determined by the Facility Agent to be the
arithmetic mean (rounded upwards, if not already such a multiple,
to the nearest whole multiple of one-sixteenth of one per cent.)
of the offered rates (if any) appearing on the LIBO page of the
Reuters screen for deposits in US Dollars and for the specified
period or any equivalent successor to such page at or about 11
a.m. on the Quotation Date for the specified period; or
(c) if no such offered rate appears on the Reuters screen, the rate
per annum determined by the Facility Agent to be equal to the
arithmetic mean (rounded upwards, if not already such a multiple,
to the nearest whole multiple of one-sixteenth of one per cent.)
of the rates (as notified to the Facility Agent) at which each of
the Reference Banks was offering to prime banks in the London
Interbank Market deposits in US Dollars and for the specified
period at or about 11 a.m. on the Quotation Date for such period;
and, for the purposes of this definition, "specified period" means the
Interest Period of such Advance or, as the case may be, the period in
respect of which LIBOR falls to be determined in relation to such unpaid
sum;
"License and Technology Transfer Agreement" means the license and
technology transfer agreement dated 17th February 1998 made between CSM,
LTM and the Borrower;
<PAGE> 13
10
"LTM" means Lucent Technologies Microelectronics Pte. Ltd., a company
incorporated in Singapore and having its registered office at 36 Robinson
Road #18-01, City House, Singapore 068877;
"Majority Lenders" means any Lender or collection of Lenders whose
outstandings (or, if there are no outstandings, Available Commitments)
amount in aggregate to 662/3% or more of the aggregate Outstandings (or, if
there are no outstandings, the aggregate Available Commitments) of all the
Lenders;
"Margin" means:
(1) in relation to the Tranche A Facility, the rate per annum
determined as follows:
(a) prior to the CP Date, 1.35%; and
(b) thereafter, where the D/E Ratio is:
(i) D/E Ratio > 2.0, 1.35%;
(ii) 1.5 < D/E Ratio < 2.0, 1.2%;
-
(iii) 1 < D/E Ratio < 1.5, 1.1%; and
-
(iv) D/E Ratio < 1.0, 1%;
(2) in relation to the Tranche B[T] Facility, the rate per annum
determined as follows:
(a) prior to the CP Date, 1.45%; and
(b) thereafter, where the D/E Ratio is:
(i) D/E Ratio > 2.0, 1.45%;
(ii) 1.5 < D/E Ratio < 2.0, 1.3%;
-
(iii) 1 < D/E Ratio < 1.5, 1.2%; and
-
(iv) D/E Ratio < 1.0, 1.1%;
"Material Adverse Effect" means an effect which would:
(a) (i) impair the ability of the Borrower or any Shareholder in any
capacity to perform or comply with its obligations under, (ii)
affect the legality, binding nature, validity or enforceability
of or (iii) cause the suspension, cancellation, revocation or
termination of, any of the Transaction Documents to which it is
expressed to be a party;
(b) impair the capacity, efficiency or performance of the whole or a
substantial part of the Project; or
<PAGE> 14
11
(c) impair the financial condition or business of the Borrower,
and, would do so in a manner or to an extent which in the reasonable
opinion of the Majority Lenders is materially prejudicial to the interests
of the Secured Creditors under the Financing Documents or in a manner or to
an extent which, in the reasonable opinion of the Majority Lenders, is
likely materially and adversely to affect the construction, operation,
maintenance or development of the Project;
"Maximum Amount" means, in relation to the EDB Guarantee, the total
contingent liabilities under the EDB Guarantee at any given time as reduced
pursuant to Clause 7.3 which shall not at any time be in excess of an
amount equal to S$240,000,000 less the aggregate of all principal
repayments and prepayments of the EDB Loan plus interest payable under the
EDB Loan for a six month period and default interest payable under the EDB
Loan subject to an aggregate cap of S$10,000,000;
"New Debt" means any debt of the Borrower other than under the Facilities
incurred after the date of this Agreement and as permitted by this
Agreement;
"Notice of Drawing" means a notice substantially in the terms set out in
Schedule 3;
"Obligors" means CSM and LTM, and such other parties as may be agreed in
writing between the Borrower and the Facility Agent from time to time to be
included as an Obligor, and "Obligor" means any of them;
"Operating Costs" means at any time the operating costs (as construed in
accordance with generally accepted accounting principles in Singapore) as
set out in the Business Plan current at such time;
"Original Scope Assets" means the assets of the Borrower within the
Original Scope of Project and includes all assets from any expansion of the
Project which affect or integrate with the operation of the Original Scope
of Project;
"Original Scope of Project" means the investment in all assets, and any
contractual requirements, contemplated in the Business Plan current as of
the date of this Agreement enabling the Borrower to produce 26,000 wafer
starts per month utilising 21 mask layers of LTM's 0.25 micron technology;
"Permitted Encumbrances" means:
(a) any Security Interests;
(b) liens arising solely by operation of law;
(c) liens arising in the ordinary course of the Borrower's business and
operating lease;
<PAGE> 15
12
(d) encumbrances created over equipment or inventory in favour of the
suppliers only for the purpose of securing the deferred payment of
purchase price of such equipment or inventory in the ordinary course
of business provided that in the case of an encumbrance over Original
Scope Assets such encumbrance shall be discharged (i) within twelve
(12) months of its creation and (ii) in any event before the expiry of
the Availability Period of the Tranche A Facility provided further
that conditions (i) and (ii) shall not apply to assets which are not
Original Scope Assets;
(e) any other security created with the prior consent in writing of the
Facility Agent; and
(f) any security given for New Debt and/or for any hedging for New Debt
both incurred in accordance with Clauses 17.21 and 17.22;
provided that in the case of (c) and (d), such liens and encumbrances shall
in aggregate not exceed US$50,000,000 or the equivalent thereof in any
other currency;
"Outstandings means the aggregate amount of the Tranche A Outstandings and
the Tranche B Outstandings;
"Permitted Investments" means:
(a) demand deposits, short term time deposits or short term certificates
of deposit with or issued by financial institutions incorporated under
the laws of Singapore and having at the time of deposit a rating of at
least A-1 by Standard and Poor's Corporation and at least P-1 by
Moody's Investor Services Inc. and in the event that ratings cease to
exist for any financial institution, the said financial institution
shall be deemed acceptable;
(b) demand deposits, short term time deposits or short term certificates
of deposit with financial institutions other than those referred to in
(a) above having a rating at the time of deposit of at least A by
Standard and Poor's Corporation or at least P-1 by Moody's Investor
Services Inc.;
(c) commercial paper or promissory notes issued by any company having a
rating at the time of purchase of at least A-1 by Standard and Poor's
Corporation or at least P-1 by Moody's Investor Services Inc. and
which obligations mature not more than 12 months after the date of
purchase;
(d) obligations maturing or capable of redemption by the holder not more
than 12 months after the date of purchase and issued or guaranteed by
the Government of Singapore; or
(e) any other investments permitted by the Majority Lenders;
<PAGE> 16
13
"Plant" means the wafer fabrication facilities occupied or to be occupied
and operated or to be operated (as the context may require in each
instance), by the Borrower on the Property;
"Potential Event of Default" means any event or circumstances which would
become (with the giving of notice, the passage of time, the making of any
determination or any combination thereof as provided in Clause 19.1) an
Event of Default;
"Project" means the equipping, installation, construction and subsequent
operation of the Plant undertaken by or on behalf of the Borrower on and
located on the Property;
"Project Accounts" means (a) a US$ account and (b) a S$ account opened or
to be opened (as the context may require) by the Borrower with the Project
Account Bank for the deposit into the US$ account all US$ receipts and into
the S$ account all S$ receipts of the Borrower including Advances drawndown
hereunder or under the EDB Loan Agreements, Equity Contribution,
Shareholders Loans, Insurance Proceeds, all revenues and all sums due to
the Borrower under the ASAD Agreement and "Project Account" means any of
these accounts;
"Project Account Bank" means Citibank, N.A., Singapore Branch, or such
other bank may be approved by the Majority Lenders where the Project
Accounts are opened or to be opened and maintained by the Borrower;
"Project Costs" means the cost of all design, construction, erection,
equipment, utilities diversion, financing fees, goods and services tax,
costs under the sub-lease agreements and insurance costs up to Completion
incurred by the Borrower for the completion of the Original Scope of
Project;
"Project Documents" means the documents listed in Schedule 5 and such other
documents entered into and from time to time entered into in respect of the
Project which is designated as a "Project Document" by agreement between
the Borrower and the Facility Agent;
"Property" means the land and premises together with the buildings erected
thereon at 60 Woodlands Industrial Park D, Street 2, Singapore 738406 and
comprised in Private Lots A12787(a) and A12787(b) of Mukim 13;
"Property Leases" means (a) the two building agreements both dated 17th
February 1998 made between JTC and STPL, (b) the agreements for sub-licence
and sub-lease both dated 17th February 1998 and made between STPL and CSM
and the Sub-Lease;
"Pro Rata" means in relation to a Lender its portion of the amounts
extended and guaranteed by the Lenders, being the portion each Lender's
Commitment bears to the Total Commitment;
<PAGE> 17
14
"Quotation Date" means in relation to any Interest Period for which an
interest rate is to be determined hereunder, the second Business Day before
the first day of that Interest Period;
"Reference Banks" means ABN AMRO Bank N.V., Citibank, N.A. and Overseas
Union Bank Limited;
"Related Corporations" means corporations related to the Borrower as
defined under Sections 5 and 6 of the Companies Act (Cap. 50);
"Repayment Date" means, in relation to Tranche A Facility any of the dates
referred to in Clause 5.1 for the payment of the principal instalments
under the Tranche A Outstandings and in relation to Tranche B[T] Facility,
any of the repayment dates set out in Schedule 11A or Schedule 11B (as the
case may be);
"Secured Creditors" means the Lead Arrangers, Lenders, Approved Hedging
Counterparties who have entered into a secured Approved Hedge, Facility
Agent and Security Agent and "Secured Creditor" means any of them;
"Secured Liabilities" means the sum total of the Borrower's liabilities to
the Secured Creditors whether actual or contingent, arising out of or in
connection with any of the Financing Documents or any secured Approved
Hedges including, without limitation, interest, commission and all fees and
charges payable in respect of the Facilities including all other sums due
under the Financing Documents or any secured Approved Hedges, at any given
time;
"Security Documents" means the documents set out in Schedule 6;
"Security Interests" means the security or any part thereof created
pursuant to or evidenced by all or any of the Security Documents;
"Shareholder" means either CSM or LTM and "Shareholders" means both of
them;
"Shareholders Loans" means all loans made in favour of the Borrower by the
Shareholders;
"Shareholders Undertaking" means the agreement in form and substance
satisfactory to the Lenders entered into on or about the date of this
Agreement between the Shareholders, the Borrower and the Security Agent, as
security for the Secured Liabilities containing inter alia the undertakings
from the Shareholders as set out in Schedule 12;
"Shares" means the shares in the issued and paid-up capital of the
Borrower;
"Singapore Dollars" or "S$" means the lawful currency of Singapore;
<PAGE> 18
15
"Sponsors" means Lucent Technologies International Inc. and STPL;
"STPL" means Singapore Technologies Pte Ltd, a company incorporated in
Singapore and having its registered office at 51 Cuppage Road #09-05,
Singapore 229469;
"Sub-Lease" means the sub-lease agreement dated 17th February 1998 made
between CSM and the Borrower;
"Swap Rate" on any date shall have the meaning set out in Schedule 7;
"Tangible Net Worth" means, at any particular time but without double
counting, the sum of:
(a) the amount paid up or credited as paid up on the issued share capital
of the Borrower (other than any redeemable share capital);
(b) the amount standing to the credit of the capital and revenue reserves
of the Borrower; and
(c) the aggregate outstanding amount of all indebtedness of the Borrower
to either Shareholder or any Related Corporation of the Borrower which
are subordinated to the Secured Liabilities,
as set out in the then Current Financial Report, but less any amount
included in the above which is attributable to:
(i) any debit balance on the profit and loss account as at the date (the
"balance sheet date") at which the then Current Financial Report was
prepared;
(ii) goodwill or other intangible assets;
(iii) amounts set aside for taxation;
(iv) minority interests in subsidiaries;
(v) so far as not otherwise excluded as attributable to minority
interests, the amount by which the book value of any asset has been
written up after the date of this Agreement by way of revaluation.
However, no deduction shall be made to the extent that a revaluation
is based on, and the written-up value does not exceed the value shown
by, a written valuation prepared by a suitable independent
professional valuer; and
(vi) any dividend or other distribution declared, recommended or made by
the Borrower out of profits earned up to and including the balance
sheet date but not provided for in it;
<PAGE> 19
16
"Total Commitments" means, at any time, the aggregate of the Commitments of
all the Lenders;
"Total Indebtedness" means, at any particular time but without double
counting, the aggregate outstanding principal, capital or nominal amount of
the indebtedness of the Borrower in respect of borrowed money (whether
actual or contingent) other than the Contingency Shareholders' Loan and, to
the extent not otherwise taken into account, shall in any event include:
(a) any indebtedness for moneys borrowed or raised by the Borrower;
(b) any indebtedness of the Borrower to any bank or other financial
institution under any guarantee, indemnity, security or other
commitment designed to assure any creditor against loss in respect of
any indebtedness of any other person;
(c) any indebtedness under any acceptance or other credit opened on behalf
of the Borrower;
(d) the principal amount of any factored debts and discounted receivables
for which there is recourse to the Borrower;
(e) any indebtedness under any debenture, note, bill of exchange or
commercial paper on which the Borrower is liable as drawer, acceptor,
endorser, issuer or otherwise; and
(f) any amounts payable under any financial lease or agreement entered
into by the Borrower primarily for the purposes of raising or
obtaining finance whether in respect of land, machinery, equipment or
under any hire purchase agreement or any agreement for the conditional
sale of goods or equipment on deferred terms (excluding, for the
avoidance of doubt, any operating lease in respect of machinery or
equipment entered into by the Borrower on normal commercial terms in
the ordinary course of business),
but less any indebtedness of the Borrower to either Shareholder or any
Related Corporation of the Borrower which is subordinated to the Secured
Liabilities;
"Tranche A Commitment" means, in relation to a Tranche A Lender and subject
as provided in this Agreement, the Commitment of that Tranche A Lender
under the Tranche A Facility set opposite its name in Part A of Schedule 1
and "Tranche A Commitments" means such commitments of all Tranche A
Lenders;
"Tranche A Facility" means the term loan facility extended or to be
extended (as the context may require) by the Tranche A Lenders to the
Borrower pursuant to Clauses 2.1.1 and 4.1;
<PAGE> 20
17
"Tranche A Lenders" means the Lenders set out in Part A of Schedule 1 and
their successors, permitted assignees and permitted transferees;
"Tranche A Outstandings" means the aggregate principal amount advanced by
the Tranche A Lenders under the Tranche A Facility as reduced by any
repayment or prepayment at that time together with accrued interest and all
sums owing under the Tranche A Facility;
"Tranche B Commitment" means, in relation to a Tranche B Lender and subject
as provided in this Agreement, the Commitment of that Tranche B Lender
under the Tranche B Facility set opposite its name in Part B of Schedule 1
and "Tranche B Commitments" means such commitments of all Tranche B
Lenders;
"Tranche B Facility" means the Tranche B[G] Facility or, as the case may
be, the Tranche B[T] Facility which in the aggregate shall not at any time
exceed S$250,000,000 if drawn in Singapore Dollars or US$145,000,000 if
drawn in US Dollars;
"Tranche B Lenders" means the Lenders set out in Part B of Schedule 1 and
their successors, permitted assignees and permitted transferees;
"Tranche B[G] Facility" means the S$ guarantee facility extended or to be
extended (as the context may require) by the Tranche B Lenders to the
Borrower pursuant to Clauses 2.1.2 and 7;
"Tranche B[G] Outstandings" means the sum of (i) the aggregate amount of
the maximum actual and/or contingent liability of the Tranche B Lenders
under or in connection with the EDB Guarantee, (ii) the amounts paid by the
Tranche B Lenders under or in connection with the EDB Guarantee and not
reimbursed by the Borrower to it under this Agreement at that time and
(iii) accrued interest and all sums owing under the Tranche B[G] Facility
at that time; or
"Tranche B[T] Facility" means the US$ term loan facility or S$ term loan
facility extended or to be extended (as the context may require) by the
Tranche B Lenders to the Borrower pursuant to Clauses 2.1.2 and 4.2;
"Tranche B[T] Outstandings" means the aggregate principal amount advanced
by the Tranche B Lenders under the Tranche B[T] Facility as reduced by any
repayment or prepayment accrued interest and all sums owing under the
Tranche B[T] Facility at that time;
"Transaction Documents" means the Financing Documents and the Project
Documents;
"Transfer Certificate" means a certificate substantially in the form set
out in Appendix A signed by a Lender and a Transferee whereby:
<PAGE> 21
18
(a) such Lender seeks to procure the transfer to such Transferee of all or
a part of such Lender's rights and obligations hereunder upon and
subject to the terms and conditions set out in Clause 27.3; and
(b) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Facility Agent as
is contemplated in Clause 27.3;
"Transfer Date" means in relation to any Transfer Certificate, the date of
making of the transfer as specified in such Transfer Certificate;
"Transferee" means a bank or financial institution to which a Lender seeks
to transfer all or part of such Lender's rights and obligations hereunder;
"Transferor" means a Lender which seeks to transfer all or part of its
rights and obligations under the Financing Documents;
"US Dollars" or "US$" means the lawful currency of the United States of
America; and
"Y2K Program" means a program which, in the Borrower's reasonable opinion
(taking into account the practice of comparable companies operating in the
same industry), is designed to address adequately and on a timely basis the
"Year 2000 Issue" (that is, the risk that material assets, processes and
technologies used by the Borrower may be unable to recognise and perform
properly date-sensitive functions involving certain dates prior to and any
date after 31 December 1999) affecting the material operations of the
Borrower in generally the same manner in which the Year 2000 Issue is being
so addressed by other comparable companies operating in the same industry
as that of the Borrower.
1.2 CONSTRUCTION OF CERTAIN REFERENCES: Except to the extent that the context
requires otherwise, any reference in this Agreement to:
an "agreement" also includes a deed;
any agreement (including this Agreement), deed, contract, licence,
indenture, instrument, or any other document includes such agreement, deed,
contract, licence, indenture, instrument or document as from time to time
amended, renewed, supplemented, novated or modified;
the "assets" of any person shall be construed as a reference to the whole
or any part of its business, undertaking, property, assets and revenues
including rights to receive revenues and uncalled capital from issued but
not fully paid up shares;
any accounting term or expression which is not otherwise defined is to be
construed or interpreted in accordance with generally accepted accounting
principles in Singapore;
<PAGE> 22
19
"borrowed money" includes any indebtedness for or in respect of money
borrowed or raised (whether or not for cash), by whatever means (including
acceptances, with recourse discounting and factoring, finance leases, hire
purchase, sale-and-leaseback, sale-and-repurchase and any form of
"off-balance sheet" financing but shall, for the avoidance of doubt,
exclude operating leases and credit sales on normal commercial terms in the
ordinary course of trading);
a "consent" also includes an approval, authorisation, exemption, filing,
licence, order, permission, recording or registration (and references to
obtaining consents shall be construed accordingly);
"current exchange rate" in relation to any amount denominated in Singapore
Dollars, the spot rate of exchange determined by the Facility Agent based
on quotes by the Reference Banks at or about 11 a.m. for the purchase of US
Dollars with Singapore Dollars for delivery two (2) Business Days
thereafter;
a "directive" includes any present or future directive, regulation or
request requirement (in each case, whether or not having the force of law
but, if not having the force of law, the compliance with which is in
accordance with the general practice of persons to whom the directive is
addressed);
the "dissolution" of a person also includes the winding-up or liquidation
of that person, and any equivalent or analogous procedure under the law of
any jurisdiction in which that person is incorporated, domiciled or
resident or carries on business or has assets;
a "guarantee" also includes any other obligation (whatever called) of any
person to pay, purchase, provide funds (whether by the advance of money,
the purchase of or subscription for shares or other securities, the
purchase of assets or services, or otherwise) for the payment of, indemnify
against the consequences of default in the payment of, or otherwise be
responsible for, any indebtedness of any other person;
"hedging" includes any interest rate swap, currency swap, forward foreign
exchange transaction, cap, floor, collar or option transaction or any
combination thereof or any other transaction entered into in connection
with protection against or benefit from fluctuation in any rate or price;
"indebtedness" includes any obligation (whether present or future, actual
or contingent, secured or unsecured, as principal or surety) for the
payment or repayment of money;
"include", "includes", "included" or "including" shall be construed as a
reference to "include", "includes", "included" or "including", in each
case, without limitation;
a "law" shall be construed as any law (including common or customary law),
statute, constitution, decree, judgement, treaty, regulation, bye-law,
order or any other legislative measure in each case of any jurisdiction
whatsoever;
<PAGE> 23
20
a "person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organisation, trust, state or
agency of a state (in each case, whether or not having separate legal
personality);
"provision of any statute or any regulation made thereunder" shall be
deemed also to refer to any statutory modification or extension or
re-enactment thereof or any statutory instrument, order or regulation made
under such re-enactment thereto;
"repay" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "prepay" (or, as the case may be, the
corresponding derivative form thereof);
"security" includes any mortgage, pledge, lien, hypothecation, security
interest or other charge or encumbrance and any other agreement or
arrangement having substantially the same economic effect (including any
"hold-back" or "flawed asset" arrangement);
"tax(es)" includes any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by
whomsoever and wherever imposed, levied, collected, withheld or assessed in
Singapore;
"tax on overall net income" of a person shall be construed as a reference
to tax imposed by the jurisdiction in which (a) (in the case of a Lender)
its Facility Office or (b) (in the case of any other person) its principal
office is located on all or part of the net income, profits or gains of
that person (whether worldwide, or only insofar as such income, profits or
gains are considered to arise in or to relate to a particular jurisdiction,
or otherwise);
a "time of the day" is to Singapore time unless otherwise stated;
a "day, month, quarter or year" shall be construed by reference to the
Gregorian calendar;
a "successor" shall be construed so as to include an assignee or successor
in title of such party and any person who under the laws of its
jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under any Transaction Document or to which, under
such laws, such rights and obligations have been transferred; and
the "winding-up", "dissolution" or "administration" of a company or
corporation shall be construed so as to include any equivalent or analogous
proceedings under the law of the jurisdiction in which such company or
corporation is incorporated or any jurisdiction in which such company or
corporation carries on business including the seeking of liquidation,
winding-up, reorganisation, dissolution, administration, judicial
management, arrangement, adjustment, protection or relief of debtors.
1.3 HEADINGS: The headings and content pages in this Agreement are inserted for
convenience only and shall be ignored in construing this Agreement. Unless
the context requires, words denoting the singular number only shall include
the plural and vice versa. The words "written" and "in writing" include
printing, engraving, lithography or other
<PAGE> 24
21
means of visible reproduction. References to "Clauses", "Schedules" and
"Appendices" unless the context requires otherwise, are to be construed
as references to Clauses of and schedules and appendices to this
Agreement.
1.4 Any reference herein or in any Financing Document to the "relevant
Project Account", the "appropriate Project Account" or the "applicable
Project Account" shall be construed as a reference to, where the amount
to be credited or debited to such Project Account is denominated in US
Dollars, the Project Account applicable to such payment which is
maintained in US Dollars and, where the amount to be credited or debited
to such Project Account is denominated in Singapore Dollars, the Project
Account applicable to such payment which is maintained in Singapore
Dollars.
1.5 All calculations or determinations to be made under the Financing
Documents shall, if such calculation or determination is to be made by
reference to Singapore Dollars, be made with amounts in Singapore
Dollars expressed in US Dollars and for the purposes of conversion so as
to enable calculations to be made in US Dollars, by applying the then
prevailing current exchange rate save for the purpose of Clauses 15.8
and 15.9 in relation to which the exchange rate used in Current
Financial Report shall apply.
2. PURPOSE AND USE OF THE FACILITIES
2.1 AVAILABILITY: The Borrower and the Shareholders have requested the
Lenders and the Lenders have agreed to make available to the Borrower
the following Facilities, for the purposes herein stated upon the terms
and subject to the conditions of this Agreement:
2.1.1 TRANCHE A FACILITY: the Tranche A Lenders have agreed to extend
to the Borrower a term loan facility in an aggregate amount not
exceeding US$300,000,000;
2.1.2 TRANCHE B FACILITY: the Tranche B Lenders have agreed to extend
to the Borrower at the Borrower's election:
2.1.2.1 the Tranche B[T] Facility in an amount not exceeding
S$240,000,000 or US$145,000,000; or
2.1.2.2 the Tranche B[G] Facility in an amount not exceeding
S$250,000,000 inclusive of interest on the EDB Loan and
default interest in aggregate up to S$10,000,000;
2.1.3 TRANCHE B[T] FACILITY: subject to the terms and conditions of
this Agreement and in particular to all the conditions in Clause
3 and Clause 4 being satisfied:
2.1.3.1 if the Borrower elects during the Availability Period to
utilise the Tranche B[T] Facility, it shall in its
Notice of Drawing
<PAGE> 25
22
made pursuant to Clause 4.2.1.1 stipulate the currency
and amount of the Advance to be drawn. The Tranche B[T]
Facility shall be drawn as one Advance and any undrawn
amounts shall be cancelled. No cancellation fee will be
payable; and/or
2.1.3.2 the Borrower may after drawing on the Tranche B[T]
Facility elect at any time during the Availability
Period of the Tranche B Facility, to make one drawdown
under the Tranche B[G] Facility (and such drawing may be
made up to a maximum of S$250,000,000), upon giving the
Facility Agent not less than five (5) Business Days'
prior written notice. Such notice shall be accompanied
by the executed EDB Financing Document and evidence
satisfactory to the Facility Agent that the full amount
of the EDB Loan Facility when drawn would be sufficient
to repay the Tranche B[T] Outstandings in the currency
in which the Advance is made or if insufficient,
evidence satisfactory to the Facility Agent that the
Borrower has additional funds from the Tranche A
Facility, equity or its cashflow to repay such shortfall
on the proposed drawdown date;
2.1.4 TRANCHE B[G] FACILITY: subject to the terms and conditions of
this Agreement and in particular to all the conditions in Clause
3 and 7 being satisfied:
2.1.4.1 if the Borrower elects to utilise the Tranche B[G]
Facility, it shall by a Request for Issue of EDB
Guarantee accompanied by an executed copy of the EDB
Financing Document give the Facility Agent not less than
five (5) Business Days' notice of such election and
request for the issuance of the EDB Guarantee; or
2.1.4.2 in the event that the Borrower elects to utilise the
Tranche B[G] Facility after it has drawn on the Tranche
B[T] Facility under Clause 2.1.3.1, it shall subject to
compliance with Clause 2.1.3.2 repay in full the Tranche
B[T] Outstandings in the currency in which the Advance
is made on the date of issuance of the EDB Guarantee
whereupon the Tranche B[T] Facility shall be cancelled.
No cancellation fee shall be payable.
2.2 PURPOSE: The Facilities shall be utilised by the Borrower as follows:
2.2.1 the proceeds of the Tranche A Facility and the Tranche B[T]
Facility shall be utilised by the Borrower:
<PAGE> 26
23
(a) to be applied towards payment of all outstanding
indebtedness of the Borrower, including accrued interest
and any fees payable under the Bridge Loan Agreement
save that the amount payable towards the principal
amount of any such outstanding indebtedness shall not
exceed US$150,000,000; and/or
(b) to pay for Project Costs and working capital
requirements of the Borrower; and/or
(c) to pay for IDC accrued under the Tranche A Facility;
and/or
(d) to pay for any IDC accrued on the Tranche B[T] facility
accrued to the Lenders from the date of first drawdown
of the Tranche B[T] Facility up to and including the
Conversion Date; and
2.2.2 the Tranche B[G] Facility shall be utilised for the issuance of
the EDB Guarantee as security for the EDB Loan.
2.3 APPLICATION: Without prejudice to the obligations of the Borrower under
Clause 2.2, neither the Agents nor any of the Lenders shall be obliged
to concern themselves with the application of the amounts raised by the
Borrower hereunder.
3. CONDITIONS PRECEDENT
3.1 TO FIRST ADVANCE: Subject to the terms and conditions herein contained,
the Borrower may not deliver the first Notice of Drawing or Request for
Issue of EDB Guarantee unless the following conditions have been
satisfied:
3.1.1 the Facility Agent has received all the documents and evidences
listed in Schedule 2 in Agreed Form or in form and substance
satisfactory to the Facility Agent (acting on the instructions
of the Lenders);
3.1.2 the Borrower has opened the Project Accounts with the Project
Account Bank; and
3.1.3 there being no material adverse change in the assets and
financial condition of the Sponsors, since the date of the
Sponsor's latest financial statements which will have a material
adverse effect on the Borrower's ability to repay the Facilities
or the Shareholders' ability to fulfil their respective
obligations under the ASAD Agreement.
3.2 TO FIRST AND SUBSEQUENT ADVANCES: The Borrower may not deliver any
Notice of Drawing or Request for Issue of EDB Guarantee unless the
following conditions have been satisfied:
<PAGE> 27
24
3.2.1 no Event of Default or Potential Event of Default has occurred
and is continuing;
3.2.2 all representations and warranties in the Financing Documents
are true and correct in all material respects when made or
deemed repeated; and
3.2.3 there being no material adverse change in the assets and
financial condition of the Borrower or Shareholders, since the
date of the Borrower's Current Financial Report or, as the case
may be, the Shareholders' latest financial statement, and no
event which has a material adverse effect on the Shareholder
affecting the Borrower's ability to repay the Facilities or the
Shareholder's ability to fulfil their respective obligations
under the ASAD Agreement.
4. THE FACILITIES
4.1 CONDITIONS OF UTILISATION OF TRANCHE A FACILITY:
4.1.1 NOTICE OF ADVANCE: Subject to the provisions of this Agreement,
Advances under the Tranche A Facility will be made by the
Tranche A Lenders to the Borrower if:
4.1.1.1 not later than 10 a.m. on the fifth Business Day before
the proposed Advance date, the Facility Agent has
received from the Borrower a Notice of Drawing
substantially in the form set out in Schedule 3,
specifying:
(a) the proposed Advance date, which must be a
Business Day falling within the Availability
Period relating to the Tranche A Facility and is
not less than five (5) Business Days after the
date upon which the immediately preceding
Tranche A Advance, if any, is made;
(b) the proposed amount of that Advance which must
be an amount equal to or less than the Available
Tranche A Commitment and, if less than the
Available Tranche A Commitment, must be
US$10,000,000 or a higher whole multiple of
US$1,000,000;
(c) the Interest Period relating to that Advance;
<PAGE> 28
25
(d) the manner in which the proceeds of that Advance
is to be made available to the Borrower;
4.1.1.2 not later than 10 a.m. on the proposed Advance date, the
Facility Agent has received and found satisfactory such
additional information, legal opinions and/or other
documents which are in the Borrower's possession or
which may be procured by the Borrower and which are
relevant in the context of or relating to the Financing
Documents, as the Facility Agent may reasonably request
in good faith not later than 10 a.m. on the second
Business Day before the proposed Advance date as a
result of circumstances which have arisen or come to its
attention since the date of this Agreement; and
4.1.1.3 either (a) no Event of Default or Potential Event of
Default has occurred and is continuing and (b) all
representations and warranties in the Financing
Documents are true and correct in all material respects
when made or deemed repeated on the date of the proposed
Advance by reference to the circumstances then existing
or each of the Tranche A Lenders agrees (notwithstanding
any matter mentioned at (a) or (b) above that has been
disclosed to the Tranche A Lenders in writing prior to
the relevant date of the proposed Advance) to
participate in the making of such Tranche A Advance.
4.1.2 RECEIPT OF NOTICE: Subject to Clause 4.1.1 above, when the
Facility Agent actually receives a Notice of Drawing it shall
notify each of the Tranche A Lenders promptly of the proposed
amount and date of the Advance, and each Tranche A Lender will,
subject to the provisions hereof participate through its
Facility Office in each Advance made pursuant to Clause 4.1.1
above in the proportion borne by its Tranche A Commitment to the
Tranche A Facility.
4.1.3 SUPPORTING DOCUMENTS: Each Notice of Drawing for an Advance to
be utilised towards payment of Project Costs pursuant to Clause
4.1.1, shall be supported by, until Commercial Production, a
certificate signed by a director or an Authorised Signatory of
the Borrower that such drawdown is for the purchase of equipment
costing a stated sum.
4.1.4 LIMIT OF ADVANCE: Each Advance to be utilised for the purchase
of equipment under the Tranche A Facility drawn for the purposes
stated in Clause 4.1.3 shall not exceed the sum stated in the
certificate referred to in Clause 4.1.3.
<PAGE> 29
26
4.1.5 EFFECTIVE AND BINDING NOTICE: Every Notice of Drawing shall be
irrevocable and effective only upon receipt by the Facility
Agent, and the Borrower shall be obliged to borrow in accordance
with the terms stated in such notice.
4.1.6 REDUCTION OF AVAILABLE COMMITMENT: If the Available Commitment
is reduced after the Facility Agent receives a Notice of Drawing
and such reduction was not taken into account in the calculation
of the Available Commitment then the amount of the Advance shall
be reduced accordingly.
4.1.7 CANCELLED FACILITY: Principal amounts of the Tranche A Facility
not drawndown by the expiry of the Availability Period of the
Tranche A Facility shall be cancelled and shall not be
reinstated.
4.2 CONDITIONS OF UTILISATION OF TRANCHE B[T] FACILITY:
4.2.1 NOTICE OF DRAWING: Subject to the provisions of this Agreement
and in particular those of Clause 2 and Clause 3, the Borrower
may make one drawdown under the Tranche B[T] Facility if:
4.2.1.1 not later than 10 a.m. on the fifth Business Day before
the proposed Advance date, the Facility Agent has
received from the Borrower a Notice of Drawing
substantially in the form set out in Schedule 3
specifying:
(a) the proposed Advance date, which must be a
Business Day falling within the Availability
Period relating to the Tranche B Facility;
(b) the Interest Period relating to that Advance;
(c) the manner in which the proceeds of that Advance
is to be made available to the Borrower;
4.2.1.2 not later than 10 a.m. on the proposed Advance date, the
Facility Agent has received and found satisfactory such
additional information, legal opinions and/or other
documents which are in the Borrower's possession or
which may be procured by the Borrower and which are
relevant in the context of or relating to the Financing
Documents, as the Facility Agent may reasonably request
in good faith not later than 10 a.m. on the second
Business Day before the proposed Advance date as a
result of circumstances which have arisen or come to its
attention since the date of this Agreement; and
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4.2.1.3 either (a) no Event of Default or Potential Event of
Default has occurred and is continuing and (b) all
representations and warranties made in the Financing
Documents are true and correct in all material respects
when made or deemed repeated on the proposed Advance
date by reference to the circumstances then existing or
each of the Tranche B[T] Lenders agrees (notwithstanding
any matter mentioned at (a) or (b) above that has been
disclosed to the Tranche B[T] Lenders in writing prior
to the relevant proposed Advance date) to participate in
the making of such Tranche B[T] Advance.
4.2.2 RECEIPT OF NOTICE: Subject to Clause 4.2.1 above, when the
Facility Agent actually receives a Notice of Drawing it shall
notify each of the Tranche B Lenders promptly of the proposed
amount and date of the Advance, and each Tranche B Lender will,
subject to the provisions hereof participate through its
Facility Office in each Advance made pursuant to Clause 4.2.1
above in the proportion borne by its Tranche B Commitment to the
Tranche B Facility.
4.2.3 EFFECTIVE AND BINDING NOTICE: Every Notice of Drawing shall be
effective only upon receipt by the Facility Agent and be
irrevocable and the Borrower shall be obliged to borrow in
accordance with the terms stated in such notice.
4.2.4 CANCELLED FACILITY: Principal amounts of the Tranche B[T]
Facility not drawndown by the expiry of Availability Period of
the Tranche B Facility or on the Conversion Date whichever is
the earlier, shall be deemed to be cancelled.
5. REPAYMENT, PREPAYMENT AND CANCELLATION
5.1 REPAYMENT OF TRANCHE A FACILITY: The Borrower shall repay the principal
amounts under the Tranche A Outstandings in US Dollars in seven (7)
equal semi-annual instalments, as set out in Schedule 8. The Facility
Agent shall upon the expiry of the Availability Period, provide to the
Lenders and the Borrower certificates (which shall become an integral
part of this Agreement) setting out the aggregate of Advances made under
the Tranche A Facility and a schedule of repayments calculated in
accordance with Schedule 8 setting out the amounts repayable on each
Repayment Date in accordance with this Clause 5. Any such certificate
shall be conclusive and binding on all parties save in the case of
manifest error.
5.2 REPAYMENT OF TRANCHE B[T] FACILITY: The Borrower shall repay the Tranche
B[T] Outstandings in the currency in which it is outstanding and if in
Singapore Dollars, in
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28
accordance with the dates specified in Schedule 11A and in the case of
US Dollars, in accordance with the dates specified in Schedule 11B
Provided that in the event that the Borrower elects to utilise the
Tranche B[G] Facility after it has drawn on the Tranche B[T] Facility
under Clause 2.1.3.1, it shall subject to compliance with Clause 2.1.3.2
repay in full the Tranche B[T] Outstandings in the currency in which the
Advance is made on the date of issuance of the EDB Guarantee whereupon
the Tranche B[T] Facility shall be cancelled.
5.3 PREPAYMENT OF FACILITIES:
5.3.1 The Borrower may, by giving the Facility Agent not less than
thirty (30) days' prior written notice (a) prepay any Advance or
any part of it on an Interest Payment Date relating to that
Advance which is US$10,000,000 or a higher whole multiple of
US$5,000,000 or the remaining Advances outstanding under the
Tranche A Facility or the Tranche B[T] Facility, as the case may
be, or (b) discharge in whole or in part or otherwise reduce the
Maximum Amount otherwise than by a repayment of the EDB Loan in
accordance with the EDB Loan Repayment Schedule (which for the
purposes of this Clause 5.3 shall be deemed a prepayment of the
Tranche B[G] Facility) together in each case, with the
prepayment fee referred to in Clause 5.3.6, and accrued interest
on the amounts prepaid, and if the EDB Guarantee is to be
discharged in whole, written confirmation from EDB that the EDB
Guarantee will be so discharged on the date specified in such
notice. If a partial prepayment is to be made during the
Availability Period, the Borrower shall furnish together with
the notice of prepayment evidence reasonably satisfactory to the
Lenders that the Borrower has sufficient funds to complete the
Project.
5.3.2 If (a) the Borrower becomes obliged to pay any tax or other
amount for the account of any Lender under Clause 11.2 or 12.2
or the Facility Agent gives a notification on behalf of any
Lender under Clause 11.4, and (b) the Borrower gives to that
Lender not less than ten (10) days' notice of the date of
prepayment, the Borrower may prepay all (but not part only) of
that Lender's share of the Advances without premium or
prepayment fee. Upon the Facility Agent receiving that notice,
that Lender's Commitment (if any) shall be cancelled. Any such
prepayment must be accompanied by accrued interest on that
Lender's share of the Advances and by any other sum then due to
that Lender under Clause 21.1 or any other provision of this
Agreement.
5.3.3 All Insurance Proceeds in respect of total loss of a substantial
portion of the Project, declared by the insurers, required to be
paid into the Project Accounts pursuant to Clause 16.2.7 shall
be applied immediately towards prepayment of the Outstandings.
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5.3.4 Any prepayments made pursuant to Clause 5.3.1 above shall be
applied towards reduction of the Tranche A Outstandings or
Tranche B[T] Outstandings, as the case may be, in the inverse
order of maturity. Any prepayments made pursuant to Clause 5.3.2
shall be applied to reduce the Tranche A Outstandings and
Tranche B Outstandings in respect of Tranche B[T] Facility owed
to the relevant Lender. Any prepayments made pursuant to Clause
5.3.3 and prepayments not otherwise specified for Tranche A
Outstandings or Tranche B[T] Outstandings shall be applied so as
to reduce the Tranche A Outstandings and Tranche B[T]
Outstandings rateably.
5.3.5 Any notice of prepayment given by the Borrower under this
Agreement will oblige the Borrower to prepay in accordance with
that notice. The Borrower cannot prepay all or any part of the
Outstandings except as expressly provided in this Agreement, and
amounts prepaid may not be re-borrowed; any amount prepaid as
aforesaid shall cause the Tranche A Commitments or the Tranche B
Commitments (as the case may be) or both to be accordingly
reduced.
5.3.6 The Borrower shall in respect of amounts prepaid pursuant to
Clause 5.3.1 within (a) the first two (2) years of the date of
this Agreement, and (b) the third and fourth year of the date of
this Agreement, pay a prepayment fee of 1% and 0.5% respectively
on such sums prepaid during the said period. No prepayment fee
will be levied in respect of sums prepaid after the fourth year
of this Agreement.
5.3.7 No partial payment of the Outstandings or any part thereof shall
relieve the Borrower of its obligation under the Financing
Documents except to the extent of the amount prepaid (plus the
amount of all previous prepayments, if any).
5.4 CANCELLATION OF FACILITIES:
5.4.1 The Borrower may, by giving the Facility Agent not less than
thirty (30) days' prior written notice, cancel any undrawn or
unutilised portion of the Tranche A Facility, Tranche B[T]
Facility and Tranche B[G] or any of them Provided Always that in
relation to a cancellation of the Tranche B Facility, the
Borrower shall submit together with the notice of cancellation
evidence reasonably satisfactory to the Lenders that it has
sufficient funds to complete the Project.
5.4.2 If the Borrower becomes obliged to pay any tax or other amount
for the account of any Lender under Clause 11.2 or 12.2 or the
Facility Agent gives a notification on behalf of any Lender
under Clause 11.4, the Borrower may cancel all (but not part
only) of that Lender's Commitment without premium penalty or
cancellation fee at any time within the
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30
Availability Period by giving to that Lender not less than ten
(10) days' notice of the date of the cancellation.
5.4.3 Any notice of cancellation given by the Borrower shall be
irrevocable and effective only upon receipt by the Facility
Agent, and will oblige the Borrower to cancel the Facilities or
any part thereof in accordance with that notice, except in the
instance where the evidence provided to the Lenders pursuant to
Clause 5.4.1 is not reasonably satisfactory to them.
5.4.4 The Borrower shall, in respect of amounts cancelled, under
Clause 5.4.1 within (a) the first two (2) years of this
Agreement, and (b) the third and fourth year of this Agreement,
pay a cancellation fee of 1% and 0.5% respectively on the
amounts cancelled. No cancellation fee will be levied in respect
of sums cancelled after the fourth year of this Agreement. The
Borrower shall pay such cancellation fee on the expiry of the
notice referred to in Clause 5.4.1.
5.4.5 The Borrower may not cancel all or any part of the Facilities
except as expressly provided in this Agreement, and amounts
cancelled may not be reinstated, re-borrowed or re-drawn
hereunder.
6. INTEREST
6.1 INTEREST PERIODS: The Borrower shall in a notice to be received by the
Facility Agent not later than 11 a.m. (Singapore time) on the fourth
Business Day before the first day of the relevant Interest Period opt
for an interest period of one (1), three (3) or six (6) months' duration
save that prior to 30th November 1999 the Borrower may opt for an
interest period of one (1) week, unless such option shall have been made
by the Borrower in the Notice of Drawing. The first Interest Period
relating to an Advance shall begin on the date of drawdown of that
Advance and each subsequent Interest Period of that Advance shall begin
on the last day of the previous Interest Period except that:
6.1.1 in the case of each Advance other than the first Advance, the
first Interest Period in respect of each such subsequent Advance
shall commence on the drawdown date of that Advance and end on
the same day as the expiry date of the then current Interest
Period in respect of any previous Advance, so that each such
subsequent Advance shall be consolidated with the previous
Advance and dealt with as a single Advance for the purpose of
selecting an Interest Period;
6.1.2 an Interest Period which would otherwise extend beyond the
applicable Final Repayment Date shall instead end on that Final
Repayment Date; and
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6.1.3 subject to the above exception, any Interest Period for which no
such selection notice is received by the Facility Agent shall be
of three (3) months' duration.
6.2 INTEREST RATES:
6.2.1 The rate of interest applicable to an Advance for a particular
Interest Period shall be the rate per annum (as determined by
the Facility Agent on the Quotation Date) equal to the sum of
the applicable Margin and (i) LIBOR, in the case of Tranche A
Facility or in the case where Tranche B[T] Facility is drawn in
US Dollars or (ii) Swap Rate, in the case of Tranche B[T]
Facility drawn in Singapore Dollars. Interest at the rate
aforesaid shall be calculated and based on a 360 day year for
US$ Advances and a 365-day year for S$ Advances under the
Tranche B[T] Facility.
6.2.2 The Facility Agent shall promptly notify the Borrower of each
rate of interest determined in accordance with Clause 6.2.1
above.
6.3 NO QUOTATION: If the Facility Agent does not receive a quotation of the
relevant rate from the Reference Banks, in order for the Facility Agent
to determine the applicable LIBOR or Swap Rate in relation to any
Interest Period, Clause 11.3 shall apply.
6.4 PAYMENT OF INTEREST: The Borrower shall pay the unpaid interest accrued
during that Interest Period on the Advance to which it relates at the
rate applicable to that Interest Period, and subject as otherwise
provided in this Agreement, on the last day of each Interest Period.
7. ISSUE OF EDB GUARANTEE UNDER TRANCHE B[G] FACILITY
7.1 UTILISATION OF THE TRANCHE B[G] FACILITY: Subject to the terms and
conditions of this Agreement and in particular to all the conditions in
Clauses 2, 3 and 7 being satisfied, the Tranche B Lenders will during
the Availability Period of the Tranche B Facility issue the EDB
Guarantee if:
7.1.1 not less than five (5) Business Days before the proposed date
for the issue of the EDB Guarantee, the Facility Agent has
received a request from the Borrower in the form of Schedule 4,
which shall be irrevocable together with the evidence as set out
in Clause 2.1.3.2;
7.1.2 the proposed date for the issue of the EDB Guarantee is a
Business Day falling within the Availability Period of the
Tranche B Facility;
7.1.3 the proposed date for the expiry of the EDB Guarantee is a
Business Day falling on or before the Final Repayment Date of
the Tranche B Facility;
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7.1.4 the Maximum Amount requested for the EDB Guarantee must be less
than or equal to the aggregate of all the Available Tranche B
Commitments;
7.1.5 the Facility Agent is satisfied that the issue of the EDB
Guarantee shall be against repayment of all Outstandings under
the Tranche B[T] Facility together with accrued interest thereon
on or prior to the Conversion Date;
7.1.6 not later than 10 a.m. on the proposed date of issue of the EDB
Guarantee, the Facility Agent and/or Lenders have received and
found satisfactory such other additional information and/or
other documents which are in the Borrower's possession or which
may be procured by the Borrower and which are relevant in the
context of or relating to the Financing Documents as the
Facility Agent may reasonably request in good faith, not later
than 10 a.m. on the second Business Day before the proposed date
of issue of the EDB Guarantee as a result of circumstance which
have arisen or come to its attention since the date of this
Agreement; and
7.1.7 on and as of the proposed date for the issue of the EDB
Guarantee, (a) no Event of Default or Potential Event of Default
is continuing and (b) the representations and warranties are
true and correct in all material respects and not misleading.
7.2. ISSUE OF THE GUARANTEE:
7.2.1 The EDB Guarantee to be issued by the Tranche B Lenders under
the Tranche B[G] Facility shall be (a) in the form set out in
Schedule 10; (b) denominated in Singapore Dollars; (c) for a
Maximum Amount equal to or less than the Tranche B Commitments
on the date of the issue of the EDB Guarantee; and (d) of such
nature that no claim or demand may be made on or against the
Tranche B Lenders under or in connection with the EDB Guarantee
after the Final Repayment Date of the Tranche B Facility.
7.2.2 The Facility Agent shall prepare the execution copies of the EDB
Guarantee and subject to the provisions of this Clause, on the
proposed date for the issue of the EDB Guarantee, the Tranche B
Lenders shall execute the EDB Guarantee and shall deliver the
same to the Facility Agent for onward transmission to EDB on the
proposed date for the issue of the EDB Guarantee.
7.2.3 The Tranche B Lenders agree not to amend the EDB Guarantee
without the prior consent in writing by the Borrower.
Notwithstanding the
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foregoing provision of this Clause 7.2.3, nothing in this Clause
shall affect or prejudice the obligations of the Borrower under
or in connection with this Agreement or release the Borrower
from any of its obligations under or in connection with this
Agreement notwithstanding any amendment made to the EDB
Guarantee without the prior consent in writing of the Borrower.
7.3 GUARANTEE LIMIT: The Tranche B Lenders' Commitments in relation to the
Tranche B[G] Facility shall proportionately be reduced in accordance
with the EDB Loan Repayment Schedule such that the Maximum Amount of the
EDB Guarantee shall at all times correspond or be equal to the aggregate
of the principal amount up to an amount not exceeding S$240,000,000,
interest on such principal amount for a six month period and default
interest in an aggregate amount of up to S$10,000,000.
7.4 GUARANTEE FEE: The Borrower shall pay to the Facility Agent for the
account of the Tranche B Lenders, on each Guarantee Fee Payment Date,
the Guarantee Fee.
7.5 ADJUSTMENT OF GUARANTEE FEE:
7.5.1 The Borrower shall pay to the Facility Agent on each date (other
than a Guarantee Fee Payment Date) on which the principal amount
of the EDB Loan is increased (each an "Increased Date"), a
guarantee fee calculated at the applicable rate per annum as set
out in the definition of "Guarantee Fee" on the amount by which
the Maximum Amount has increased on that Increase Date and for
the period commencing on that Increase Date and ending on the
next Guarantee Fee Payment Date or, if earlier, the Expiry Date
(such guarantee fee to be calculated on the basis of a 365 day
year); and
7.5.2 Where the Guarantee Fee has been paid and the Maximum Amount on
which such Guarantee Fee was calculated and paid is subsequently
reduced prior to the next Guarantee Fee Payment Date, such part
of the Guarantee Fee paid in respect of the reduced amount for
the period from the date of the reduction to the next Guarantee
Fee Payment Date shall be refunded to the Borrower.
7.6 OBLIGATION SEVERAL: No Tranche B Lender shall be liable for the failure
of any other Tranche B Lender to fulfil its obligations under, or in
respect of, the EDB Guarantee and the Borrower shall not be released
from its obligations towards the other Tranche B Lenders in case of such
failure.
8. DEMANDS UNDER THE EDB GUARANTEE
8.1 NOTIFICATION OF DEMANDS: If, at any time, a demand for payment is made
under the EDB Guarantee to a Tranche B Lender:
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8.1.1 that Tranche B Lender shall notify the Facility Agent and the
other Tranche B Lenders of such demand; and
8.1.2 the Facility Agent shall on behalf of the Tranche B Lenders make
a demand to the Borrower under Clause 9 for an amount equal to
the claims of EDB.
8.2 RIGHT TO MAKE PAYMENTS UNDER EDB GUARANTEE: The Tranche B Lenders and
the Facility Agent on their behalf shall at all times be entitled to
make any payment under the EDB Guarantee for which a demand has been
made under the EDB Guarantee and without any reference to or further
authority from the Borrower and/or any other investigation or enquiry
and need not concern themselves or itself with the propriety of any
claim made or purported to be made under and in the manner required by
the terms of the EDB Guarantee and shall be entitled to assume that EDB
is entitled to make demands or receive payments under the EDB Guarantee.
Accordingly, it shall not be a defence to any demand made of the
Borrower hereunder, nor shall the Borrower's obligations hereunder be
impaired by the fact (if it be the case), that the Tranche B Lenders
were or might have been justified in refusing payment, in whole or in
part, of the amounts so claimed or demanded.
9. BORROWER'S LIABILITIES IN RELATION TO THE EDB GUARANTEE
9.1 BORROWER'S INDEMNITY TO TRANCHE B LENDERS: The Borrower irrevocably and
unconditionally at all times undertakes as a primary obligation to
indemnify on demand of the Facility Agent or any Tranche B Lender, from
and against any and all actions, proceedings, liabilities, claims,
demands, losses, damages, charges, costs and expenses of whatever nature
which any Agent and Tranche B Lender or any or all of them, may at any
time and from time to time directly or indirectly sustain, incur or
suffer arising out of or in connection with the EDB Guarantee or under
this Agreement excluding any actions, proceedings, liabilities, claims,
demands, losses, damages, charges, costs and expenses incurred by either
such Agent or Tranche B Lender by reason of its gross negligence or
wilful misconduct or those of its officers, employees or agents.
9.2 PAYMENT OF GUARANTEED SUM BY BORROWER: Without prejudice to the
generality of the provisions of Clause 9.1, the Borrower covenants and
undertakes to pay to each of the Tranche B Lenders by way of indemnity
at any time and from time to time immediately upon demand by the
Facility Agent or such Tranche B Lender all moneys and liabilities
whatsoever which may from time to time be claimed or demanded from such
Tranche B Lender or which such Tranche B Lender may pay or become liable
to pay or sustain, incur or suffer under or by reason of or in
connection with the EDB Guarantee excluding any moneys or liabilities
sustained, incurred or suffered by either such Agent or Tranche B Lender
by reason of its gross negligence or wilful misconduct or those of its
officers, employees or agents. The Borrower shall make payment to the
Facility Agent or such Tranche B Lender following any claim or demand
against that Tranche B Lender
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notwithstanding that the demand is subsequently withdrawn or that at the
time of the claim or demand such Tranche B Lender is not liable under or
required by law to make any payment under or in connection with its EDB
Guarantee and notwithstanding any other fact or circumstance which may
constitute a defence or discharge to such Tranche B Lender in respect of
the claim or demand made against it under or in connection with its EDB
Guarantee.
9.3 PRESERVATION OF RIGHTS: Neither the obligations of the Borrower set out
in this Clause 9 nor the rights, powers and remedies conferred on any
Tranche B Lender by this Agreement or by law shall be discharged,
impaired or otherwise affected by:
9.3.1 the winding-up, dissolution, judicial management or
reorganisation of such Tranche B Lender, the Borrower or any
other person or any change in its status, function, control or
ownership;
9.3.2 any of the obligations of any Tranche B Lender, the other
Lenders, the Borrower, or any other person hereunder or under
the EDB Guarantee or under any other security taken in respect
of the Borrower's obligations hereunder or otherwise in
connection with the EDB Guarantee being or becoming illegal,
invalid, unenforceable or ineffective in any respect;
9.3.3 time or other indulgence being granted or agreed to be granted
to any Tranche B Lender, the other Lenders, the Borrower or any
other person in respect of its obligations hereunder or under or
in connection with the EDB Guarantee or under any such other
security;
9.3.4 the making or absence of any demand on the Borrower or any other
person for payment;
9.3.5 the enforcement or absence of enforcement of this Agreement, the
other Financing Documents or any other security, guarantee,
indemnity, right, remedy or lien;
9.3.6 the release of any security constituted by any of the Security
Documents or any other security, guarantee, indemnity, right,
remedy or lien;
9.3.7 any amendment to, or any variation, waiver or release of, any
obligation of any Tranche B Lender, the other Lenders or any
other person under the EDB Guarantee or this Agreement; and
9.3.8 any other act, event or omission which, but for this Clause 9,
might operate to discharge, impair or otherwise affect any of
the obligations of the Borrower set out in this Clause 9 or any
of the rights, powers or remedies conferred upon any Lender by
this Agreement or by law.
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The obligations of the Borrower set out in this Clause 9 shall be in
addition to and independent of every other security which any Lender
may at any time hold in respect of the Borrower's obligations
hereunder.
9.4 GOOD FAITH: The Borrower further agrees that any action or step taken by
any of the Tranche B Lenders or the Facility Agent in good faith under
or in connection with the EDB Guarantee shall be binding on it and shall
not place any of the Tranche B Lenders or the Facility Agent under any
liability to it.
10. FEES
10.1 COMMITMENT FEE:
10.1.1 The Borrower shall pay to the Facility Agent for account of the
Tranche A Lenders, a commitment fee at the rate of 0.375% per
annum on the daily amount of the Available Tranche A Commitment
during the period beginning on the date of this Agreement and
ending on the expiry of the Availability Period in relation to
the Tranche A Facility. The commitment fee shall be payable in
arrear quarterly for the period from the date of this Agreement
and on the expiry of the Availability Period in relation to the
Tranche A Facility or any earlier date on which the Available
Tranche A Commitment equals zero.
10.1.2 The Borrower shall pay to the Facility Agent for account of the
Tranche B Lenders, a commitment fee at the rate of 0.375% per
annum on the daily amount of the Available Tranche B Commitment
during the period beginning on the date of this Agreement and
ending on the expiry of the Availability Period in relation to
the Tranche B Facility. The commitment fee shall be payable in
arrear quarterly for the period from the date of this Agreement
and on the expiry of the Availability Period in relation to the
Tranche B Facility or any earlier date on which the Available
Tranche B Commitment equals zero.
10.2 FACILITY ARRANGEMENT FEE: The Borrower shall pay to the Lead Arrangers a
non-refundable facility arrangement fee at the times and in the amounts
and on the terms specified in a Fee Letter between the Borrower and the
Lead Arrangers dated on or prior to the date of this Agreement.
10.3 AGENCY FEE: The Borrower shall pay to the Agents annually in advance on
the date of signing of this Agreement and on each anniversary thereof
until the Borrower has fully discharged its obligations hereunder, the
agency fee in the amount at the time and in the manner (if prescribed)
specified in a letter dated the same day as this Agreement from the
Facility Agent to the Borrower and countersigned by the Borrower.
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11. CHANGE IN CIRCUMSTANCES
11.1 ILLEGALITY: If at any time a Lender reasonably determines that it is or
will become unlawful or contrary to any directive of any agency of any
state for it to allow all or any part of the Facilities to remain
outstanding, to make, fund or allow to remain outstanding all or any
part of the Outstandings or to carry out all or any of its other
obligations under any of the Financing Documents, upon that Lender
notifying the Borrower through the Facility Agent:
11.1.1 its Commitment shall be cancelled; and
11.1.2 its portion of the Outstandings shall become due and payable on
such date ("Relevant Date") as that Lender shall certify to be
necessary to comply with the relevant law or directive, the
Borrower shall prepay that Lender's share of the Advances
(without premium or penalty) with all unpaid accrued interest
thereon, all unpaid fees accrued to that Lender and any other
sum then due to that Lender under Clause 21 and in respect of a
Tranche B Lender, procure the release by EDB of all of the
obligations of that Tranche B Lender under the EDB Guarantee on
or prior to the Relevant Date but if the Borrower is unable for
any reason to procure the release by EDB of all of the
obligations of that Tranche B Lender's share under the EDB
Guarantee by the Relevant Date, the Borrower shall pay to the
Security Agent for the account of that Tranche B Lender on the
Relevant Date an amount equal to that Tranche B Lender's share
of the Tranche B[G] Outstandings (which shall be held by the
Security Agent for the account of that Tranche B Lender and
applied towards the discharge of the obligations of the Borrower
to that Tranche B Lender under or in connection with this
Agreement and shall only be released to the Borrower as and to
the extent that the maximum contingent liability of the Borrower
to that Tranche B Lender under this Agreement is reduced) and
shall pay, on the date of payment of such amount, any sum then
due from the Borrower to that Tranche B Lender under this
Agreement.
Without prejudice to the other provisions of this Clause 11.1 and any
rights to which that Tranche B Lender may be entitled, in the event that
the Borrower is unable for any reason to procure the release by EDB of
all of the obligations of that Tranche B Lender under the EDB Guarantee
by the Relevant Date, that Tranche B Lender may:
(a) prepay on behalf of the Borrower or purchase itself or procure
the purchase by a nominee of all or any of the obligations of
that Tranche B Lender under the EDB Guarantee, and any such
prepayment or purchase shall be treated as a payment made
pursuant to a demand by EDB under the EDB Guarantee and the
provisions of Clause 9 shall apply to such prepayment or
purchase;
(b) negotiate any compromise, release, discharge, reduction or
retirement of all or any of the obligations of that Tranche B
Lender under the EDB Guarantee and
<PAGE> 41
38
any payment made pursuant to the same shall be treated as a
payment made pursuant to a demand by EDB under the EDB Guarantee
and the provisions of Clause 9 shall apply to such payment; and
(c) pay any amount received by it under Clause 11.1.2 above to EDB
in exchange for such payment of a release by EDB, to the extent
of such payment, of the obligations of that Tranche B Lender
under the EDB Guarantee, and the provisions of Clause 9 shall
apply to such payment by the Tranche B Lenders as if such
payment had been made pursuant to a demand by EDB under the EDB
Guarantee.
11.2 INCREASED COSTS: If any Lender or Agent reasonably determines that, as a
result of (a) the introduction of or any change in, or in the
interpretation or application of, any law which shall for this purpose
include any removal or modification of any exemption currently in force
in favour of the Borrower or (b) compliance by that Agent or that Lender
or its Holding Company with any directive coming into effect after the
date of this Agreement including without limitation, a directive which
affects the manner in which that Lender allocates capital resources to
its obligations under this Agreement:
11.2.1 the cost to that Lender or any Holding Company of such Lender of
maintaining all or any part of the Commitment and/or of making,
maintaining or funding all or any part of any Outstandings or
any overdue sum is increased; and/or
11.2.2 any sum received or receivable by that Agent or that Lender or
its Holding Company (as the case may be) under the Financing
Documents or the effective return to it under the Financing
Documents or the overall return on its capital is reduced
(except on account of tax on its overall net income); and/or
11.2.3 that Agent or that Lender (as the case may be) makes any payment
(except on account of tax on its overall net income) or foregoes
any interest or other return calculated by reference to the
amount of any sum received or receivable by it under the
Financing Documents, that Agent or the relevant Lender shall as
soon as reasonably practicable notify the Borrower.
The Borrower shall indemnify that Agent or that Lender against that
increased cost, reduction, payment or foregone interest or other return
(except to the extent that it results from a deduction or withholding of
tax) and, accordingly, shall from time to time on demand pay to that
Agent for the account of itself and/or that Lender the amount certified
by it (together with, to the extent practicable and reasonable, a
statement of the reason(s) without disclosure of confidential or
proprietary information) to be necessary so to indemnify it.
<PAGE> 42
39
The indemnity given to that Agent or Lender by the Borrower in this
Clause 11.2 shall not apply to or in respect of any increased cost,
reduction, payment or foregone interest or other return to the extent
that it is attributable solely to the requirement of any central bank or
other fiscal, monetary or other authority which regulates an Agent or
Lender which is imposed on that Agent or Lender by reason of that
Agent's or Lender's misconduct and not generally imposed by that central
bank or other fiscal, monetary or other authority on banks of the same
or similar kind or class regulated by that central bank or other fiscal,
monetary or other authority.
11.3 CHANGE IN MARKET CONDITIONS:
11.3.1 If, in relation to any Interest Period:
11.3.1.1 the Facility Agent is notified by the Lenders to whom
more than 662/3% of the Advance(s) to which that
Interest Period relates is (or, if made, would be) owing
that adequate and fair means do not or will not exist in
the Singapore inter-bank market or the London inter-bank
market (as the case may be) for determining the rate of
interest applicable for that Interest Period; or
11.3.1.2 the Facility Agent is notified by the Lenders to whom
more than 662/3% of the Advance(s) to which that
Interest Period relates is (or, if made, would be) owing
that LIBOR or Swap Rate, as the case may be, does not
reflect the cost to those Lenders of obtaining such
deposits,
the Facility Agent shall promptly notify the Borrower and the
Lenders of such event (a "Suspension Notice").
11.3.2 The Facility Agent (on behalf of and after consultation with the
Lenders) shall then negotiate in good faith with the Borrower
with a view to agreeing an alternative basis for calculating the
interest payable on and/or for making, maintaining and/or
funding the Advances. Any alternative basis agreed in writing by
the Facility Agent (on behalf of and with the consent of all the
Lenders) and the Borrower within twenty-five (25) days of the
Suspension Notice shall take effect in accordance with its
terms. If an alternative basis is not so agreed, each Lender's
share of that Advance shall during that Interest Period bear
interest at the rate per annum equal to the aggregate of the
applicable Margin and the cost to it (expressed as a rate per
annum) of funding its share of that Advance for such Interest
Period by whatever means it determines to be appropriate
(including the cost to it occasioned by or attributable to
complying with reserves, liquidity, deposit or other
requirements for the time being imposed on it by the relevant
authority or authorities). Each Lender shall certify that cost
to the Borrower (together with, to the extent practicable and
reasonable, a
<PAGE> 43
40
statement of the reasons(s) without disclosure of confidential
or proprietary information) as soon as practicable after the end
of that twenty-five (25) day period (but in any event at least
two (2) Business Days before the end of that Interest Period).
11.4 INDIVIDUAL NON-AVAILABILITY:
11.4.1 If, in relation to any Interest Period commencing after the
period of twelve (12) months from the date of this Agreement,
any Lender notifies the Facility Agent within the two (2)
Business Days before the first day of that Interest Period that
by reason of circumstances affecting the London inter-bank
market or Singapore inter-bank market as the case may be or a
particular category (which includes that Lender) of banks
dealing in that market, LIBOR or Swap Rate, as the case may be,
does not reflect the cost to it of obtaining such deposits, the
Facility Agent shall promptly notify the Borrower accordingly
unless it has already given a notification to the Borrower in
relation to that Interest Period under Clause 11.3.1.
11.4.2 The Borrower, the Facility Agent and that Lender shall then
negotiate in good faith (unless and until Clause 11.3.2 comes
into operation in relation to that Interest Period) with a view
to agreeing an alternative basis for calculating the interest
payable on and/or for making, maintaining and/or funding that
Lender's share of such Advance(s) for that Interest Period as
notified to the Borrower pursuant to Clause 11.4.1. Any
alternative basis agreed in writing by the Borrower, the
Facility Agent and that Lender within twenty-five (25) days of
the Facility Agent's notification under Clause 11.4.1 shall take
effect in accordance with its terms. If an alternative basis is
not so agreed and Clause 11.3.2 has not come into operation in
relation to that Interest Period, that Lender's share of such
Advance(s) shall during that Interest Period bear interest at
the rate per annum equal to the sum of the applicable Margin and
the cost to it (expressed as a rate per annum) of funding its
share (including, without limitation, the cost to it occasioned
by or attributable to complying with reserves, liquidity,
deposit or other requirements imposed on it by any relevant
authority or authorities) during that Interest Period by
whatever means it determines to be appropriate provided that the
increase, as determined above, in the rate of such cost to such
Lender over LIBOR or Swap Rate, as the case may be, shall not
exceed twenty-five (25) basis points. That Lender shall certify
that cost to the Borrower (together with, to the extent
practicable and reasonable, a statement of the reason(s) without
disclosure of confidential or proprietary information) as soon
as practicable after the end of that 25 day period (but in any
event at least two Business Days before the end of that Interest
Period).
11.5 MITIGATION: If any circumstances arise which result, or would on the
giving of notice (or the like) result, in the Commitment being cancelled
under Clause 11.1 or in the Borrower
<PAGE> 44
41
having to make a payment to or for account of a Lender under Clause 11.2
or Clause 12.2, then without in any way limiting, reducing or otherwise
qualifying any of the obligations of the Borrower under Clauses 11.1,
11.2 or 12.2, such Lender shall use its reasonable efforts (for a period
not exceeding thirty (30) days) to mitigate the effect of those
circumstances (such as changing its Facility Office, restructuring its
participation in the Facilities or any part thereof and/or novating some
or all of its rights or obligations under this Agreement and/or the
Security Documents to another person acceptable to the Borrower and
willing to take that novation). However, such Lender shall not be
obliged to take such steps which would or might in its opinion result in
it suffering any economic, legal, regulatory or other disadvantage or
cause its business, operations or financial condition to be prejudiced.
12. TAXES
12.1 PAYMENTS TO BE FREE AND CLEAR: All sums payable by the Borrower under
the Financing Documents shall be paid (a) free of any restriction or
condition, (b) free and clear of and (except to the extent required by
law) without any deduction or withholding for or on account of any tax
and (c) without deduction or withholding (except to the extent required
by law) on account of any other amount, whether by way of set-off or
otherwise.
12.2 GROSSING-UP OF PAYMENTS:
12.2.1 If the Borrower or any other person (whether or not a party to,
or on behalf of a party to, this Agreement) must at any time
deduct or withhold any tax or other amount from any sum paid or
payable by, or received or receivable from, the Borrower under
this Agreement, the Borrower shall pay such additional amount as
is necessary to ensure that the Agent or, as the case may be,
the Lender to which that sum is due receives on the due date and
retains (free from any liability other than tax on its own
overall net income) a net sum equal to what it would have
received and so retained had no such deduction or withholding
been required or made;
12.2.2 If the Borrower or any other person (whether or not a party to,
or on behalf of a party to, this Agreement) must at any time pay
any tax or other amount on, or calculated by reference to, any
sum received or receivable by any Agent or, as the case may be,
any Lender under this Agreement (except for a payment by the
Agent or a Lender of tax on its own overall net income), the
Borrower shall pay or procure the payment of that tax or other
amount before any interest or penalty becomes payable or, if
that tax or other amount is payable and paid by the Agent or any
Lender, shall reimburse such Agent or such Lender on demand for
the amount paid by it;
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42
12.2.3 Within thirty (30) days after paying any sum from which it is
required by law to make any deduction or withholding, and within
thirty (30) days after the due date of payment of any tax or
other amount which it is required by Clause 12.2.2 to pay, the
Borrower shall deliver to the Facility Agent evidence
satisfactory to the Facility Agent or, as the case may be, the
relevant Lender of that deduction, withholding or payment and
(where remittance is required) of the remittance thereof to the
relevant taxing or other authority; and
12.2.4 As soon as the Borrower is aware that any such deduction,
withholding or payment is required (or of any change in any such
requirement), it shall notify the Facility Agent.
12.3 GOODS AND SERVICES TAX: The Borrower shall also pay to the Lenders and
the Agents on demand, in addition to any amount payable by the Borrower
to the Lenders and the Agents under any of the Financing Documents, any
goods and services, value added or other similar tax payable in respect
of that amount (and references in the Financing Documents to that amount
shall be deemed to include any such taxes payable in addition to it or
in place thereof).
12.4 REFUND OF TAX CREDITS: If:
12.4.1 the Borrower makes a payment under Clause 12.2.1 or 12.2.2 (a
"Tax Payment") in respect of a payment to a Lender under this
Agreement; and
12.4.2 that Lender determines in its absolute discretion that it has
obtained a refund of tax or obtained and used a credit against
tax on its overall net income (a "Tax Credit") which the Lender
in its absolute discretion is able to identify as attributable
to that Tax Payment,
then, if in its absolute discretion it can do so without any adverse
consequences for that Lender, that Lender shall reimburse the Borrower
such amount as that Lender in its absolute discretion determines to be
such proportion of that Tax Credit as will leave that Lender (after that
reimbursement) in no better or worse position in respect of its
worldwide tax liabilities than it would have been in if no Tax Payment
had been required. A Lender shall have an absolute discretion as to
whether to claim any Tax Credit (and, if it does claim, the extent,
order and manner in which it does so) and whether any amount is due from
it under this Clause 12.4 (and, if so, what amount and when). No Lender
shall be obliged to disclose any information regarding its tax affairs
and computations.
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43
13. PAYMENTS
13.1 PAYMENTS BY BORROWER: On each date on which any sum is due from the
Borrower it shall make that sum available to the Facility Agent, by
payment, if in Singapore Dollars, in Singapore Dollars and in
immediately available and freely transferable funds, so as to be
received before 11 a.m. Singapore time to such account of the Facility
Agent as may be designated by the Facility Agent to the Borrower, and
will at the same time notify the Facility Agent of such payment; and if
in US Dollars, in US Dollars and in funds which are for the same day
settlement in the New York Clearing House Interbank Payments System (or,
if such funds cease to exist or, in the Facility Agent's opinion, cease
to be customary for the settlement in New York City of international
banking transactions in US Dollars, such other US Dollar funds as the
Facility Agent may from time to time determine to be customary for that
purpose), so as to be received before 11 a.m. local time in New York
City to such account of the Facility Agent and/or such other bank in New
York City as the Facility Agent shall have designated to it for that
purpose.
13.2 PAYMENTS BY LENDERS:
13.2.1 On each date on which an Advance is to be made, each Trache A
Lender or Tranche B Lender, as the case may be, shall make
available to the Facility Agent its share (if any) of that
Advance by payment in US Dollars in respect of the Tranche A
Facility and Singapore Dollars in respect of the Tranche B[T]
Facility.
13.2.2 Payments shall be made (a) if that sum is due in Singapore
Dollars, by payment in Singapore Dollars and in immediately
available and freely transferable funds, so as to be received
before 11 a.m., to such account of the Facility Agent with such
bank in Singapore as the Facility Agent may from time to time
designate, and (b) if that sum is due in US Dollars, by payment
in US Dollars and in funds which are for same day settlement in
the New York Clearing House Interbank Payment Scheme (or, if
such funds cease to exist or, in the Facility Agent's opinion,
cease to be customary for the settlement in New York City of
international banking transactions in US Dollars, such other US
Dollar funds as the Facility Agent may from time to time
determine to be customary for that purpose), so as to be
received before 11 a.m. (local time in New York City) to such
account of the Facility Agent with such bank in New York City as
the Facility Agent may from time to time designate; and
13.2.3 The Facility Agent shall make the amounts so received by it from
the Lenders available to the Borrower before close of business
in the relevant Centre on that date by payment in the same
currency and funds as received by the Facility Agent to such
account of the Borrower with a bank in that Centre as the
Borrower shall have specified in the request for that Advance.
If any Lender makes its share of an Advance available to the
Facility Agent later than required by Clause 13.2.1, the
Facility Agent
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44
shall make that share available to the Borrower as soon as
practicable thereafter.
13.3 DISTRIBUTION TO LENDERS: The Facility Agent shall make available to each
Lender, before close of business in Singapore or New York City as the
case may be on that day Pro Rata any sum (if any) so received by the
Facility Agent in the same currency and funds as received by the
Facility Agent to such account of that Lender and/or such bank in
Singapore or New York City as the case may be as it shall have specified
to the Facility Agent. If any sum is made available to the Facility
Agent later than required by Clause 13.1 above, the Facility Agent shall
make each Lender's share (if any) available to it as soon as practicable
thereafter.
13.4 REFUNDING OF PAYMENTS: If and to the extent or for any reason that the
Facility Agent makes funds available to the Borrower or any person
pursuant to Clause 13.1 and Clause 13.2 and it transpires that the
Facility Agent had not then received or does not receive the sum which
it paid out:
13.4.1 the Borrower or that person shall on demand refund such sum to
the Facility Agent; and
13.4.2 the person by whom that sum should have been made available
shall on request pay to the Facility Agent the amount (as
certified by the Facility Agent) which will indemnify the
Facility Agent (as the case may be) against any funding or other
cost, loss, expense or liability sustained or incurred by it as
a result of paying out that sum before receiving it or does not
receive the sum for which it had paid out.
13.5 NON-BUSINESS DAYS:
13.5.1 If at 11 a.m. on the Quotation Date for any Interest Period it
is apparent to the Facility Agent that the Interest Period would
otherwise end on a non-Business Day, it shall instead end on the
next Business Day in the same calendar month (if there is one)
or the preceding Business Day (if there is not) and in the
instance where the Final Repayment Date falls on a non-Business
Day. All calculations of interest shall be adjusted accordingly.
13.5.2 Any payment to be made by the Borrower and the Lenders on a day
which is not a Business Day shall instead be due on the next
Business Day in the same calendar month (if there is one) or on
the preceding Business Day (if there is not) and all
calculations of interest (if any) shall be adjusted accordingly.
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45
14. REPRESENTATIONS AND WARRANTIES
14.1 BENEFIT OF WARRANTY: The Borrower hereby represents and warrants to and
for the benefit of the Lenders as follows and acknowledges that the
Lenders have entered into the Financing Documents in reliance on these
representations and warranties:
14.1.1 STATUS OF BORROWER: it is a company with limited liability duly
incorporated and validly existing under the laws of Singapore
and has the power and authority to own assets and to conduct the
business which it conducts and/or proposes to conduct;
14.1.2 POWERS: it has the power to enter into, exercise its rights and
perform and comply with its obligations under Transaction
Documents, to undertake the Project and to operate the Plant;
14.1.3 OBLIGATIONS: its obligations under the Transaction Documents are
legal, valid, binding and enforceable in accordance with their
respective terms;
14.1.4 AUTHORISATIONS AND CONSENTS: all action, conditions and things
required to be taken, fulfilled and done (including the
obtaining of any necessary consents) in order (i) to enable it
lawfully to enter into, exercise its rights and perform and
comply with its obligations under the Transaction Documents,
(ii) to ensure that those obligations are valid, legally binding
and enforceable, (iii) to make such Transaction Documents
admissible in evidence other than stamping in the courts of
Singapore and (iv) to undertake the Project and to operate the
Plant, have been taken, fulfilled and done (except for
registration of the Security Documents which shall be fulfilled
and done within the required statutory period);
14.1.5 NON-VIOLATION OF LAWS ETC.: its entry into, exercise of its
rights and/or performance of or compliance with its obligations
under the Transaction Documents do not and will not violate (i)
any law to which it is subject or (ii) any of the documents
constituting the Borrower or (iii) any agreement to which it is
a party or which is binding on it or its assets to an extent or
in a manner which has or will have a Material Adverse Effect on
it, and do not and will not result in the existence of, or
oblige it to create, any security over those assets;
14.1.6 TAXES: it has filed or caused to be filed all tax returns which
are required to be filed by it and has paid all taxes due and
payable by it or affecting its assets or the Project (insofar as
they are due and payable) except to the extent that any such
taxes or assessments are being contested in good faith and by
appropriate proceedings (provided that it has established (in
the reasonable opinion of the Facility Agent) prudent reserves
against such liability);
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46
14.1.7 LITIGATION: no litigation, arbitration or administrative
proceeding is current or pending against the Borrower including
any Environmental Claim which will have a Material Adverse
Effect;
14.1.8 EVENT OF DEFAULT: no Event of Default or Potential Event of
Default has occurred and is continuing (other than any waived in
accordance with Clause 28.2) or, will occur as a result of the
making any Advance or the issuance of the EDB Guarantee and it
is not in breach of or default under any agreement to an extent
or in a manner which has or would have a Material Adverse
Effect;
14.1.9 MATERIAL ADVERSE CHANGE: there is no material adverse change in
the assets, financial condition, operations or management of the
Borrower;
14.1.10 WINDING-UP: no meeting has been convened for its winding-up or
for the appointment of a receiver, trustee, judicial manager or
similar officer of it, its assets or any of them, no such step
is intended by it and so far as it is aware no petition,
application or the like is outstanding for its winding-up or for
the appointment of a receiver, trustee, judicial manager or
similar officer of it, its assets or any of them;
14.1.11 APPROVALS RELATING TO PROJECT: all approvals as may be necessary
(a) for its lease of such part of the premises comprised in the
Property the absence of which would otherwise lead to a
forfeiture of such lease, and (b) for the Borrower to undertake
the Project other than any which will not have a Material
Adverse Effect on the Project, have been obtained or will be
obtained from the competent authorities and are or will be in
full force and effect and all conditions specified therein have
been or will be complied with, and in respect of the approvals
which are to be obtained hereafter, they will be obtained and
when obtained all the conditions specified therein will be
complied with;
14.1.12 COMPLIANCE WITH PROJECT DOCUMENTS: there is no breach by it of
(a) any of the terms and conditions of any of the Project
Documents save as notified to the Lenders or (b) any of the
Property Leases which would lead to a forfeiture of such lease;
14.1.13 COMPLIANCE WITH LAWS: it is in compliance in all material
respect with all applicable laws and regulations including but
not limited to environmental law relating to the Project or the
operation of the Plant;
14.1.14 INTELLECTUAL PROPERTY: it has or will have available to it all
intellectual property of every description (including, without
limitation, licenses, copyrights, design registrations and
know-how) necessary for the implementation of the Project and
the operation of the Plant;
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47
14.1.15 MOVABLE ASSETS: the moveable Assets including the assets
identified in Schedule 2 of the Debenture are not affixed to the
Property in such a manner as that their removal may cause
structural damage to the Property;
14.1.16 OWNERSHIP OF ASSETS: save for Permitted Encumbrances, no
Encumbrance exists over all or any of the present or future
revenues or assets of the Borrower, and the Borrower is or will
be the sole legal and beneficial owner of the properties and
interest charged and/or assigned in the Security Documents to
which it is a party as therein set out;
14.1.17 NO MISSTATEMENT: on the date upon which the Information
Memorandum was published, the information contained therein and
in the exhibits referred to therein and on the date hereof was
and is true, complete and accurate in all material respects (or,
in the case of any assumption upon which the financial
projections contained in the Information Memorandum or any other
written information supplied by any person or any agent or
advisor of the Borrower to the Agents and the Lenders or any of
them in connection with the Project were made, such assumption
was reasonable when made) and the Borrower is not aware of any
material facts or circumstances that have not been disclosed to
the Lenders which would render the information contained in the
Information Memorandum or otherwise supplied to the Agents and
the Lenders or any of them misleading in any material respect;
14.1.18 YEAR 2000 READINESS: the Y2K Program has been implemented and
will be completed in time in relation to material assets,
processes and technologies used in the Project;
14.1.19 AMENDMENTS TO PROJECT DOCUMENTS: it has not agreed to any
amendment, modification, variation, supplement, assignment,
novation or substitution of or to any Project Document referred
to in Schedule 5 other than as permitted hereunder or which does
not have a Material Adverse Effect and all amendments to any
such Project Document which would have a Material Adverse Effect
have been approved by the Lenders;
14.1.20 LIABILITIES: it has no material liabilities (actual or
contingent) in excess of an aggregate amount of S$10,000,000
other than those contemplated for the Original Scope of the
Project and those liabilities as set out in the Borrower's
latest financial statements or as separately notified to the
Secured Creditors prior to the date hereof;
14.1.21 AUDITED FINANCIAL STATEMENTS: the most recent audited financial
statements of the Borrower:
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14.1.21.1 were prepared in accordance with accounting principles
generally accepted in Singapore and consistently
applied;
14.1.21.2 to the extent required by accounting principles,
standards and practices generally accepted in
Singapore, disclose or reserve against all
material liabilities (contingent or otherwise)
and all material unrealised or anticipated
losses of the Borrower; and
14.1.21.3 save as disclosed therein, give a true and fair view
of the financial condition and operations of the
Borrower during the relevant financial year;
14.1.22 INSURANCES: the Insurances referred to in Clause 17.20 are in
full force and effect and the Borrower is not aware of any facts
or circumstances that have not been disclosed to the Borrower's
insurers and which might reasonably be expected, if so disclosed
in the opinion of the Independent Insurance Consultant, to
affect materially and adversely the nature or extent of the
cover to be provided under such Insurances;
14.1.23 PROJECT AGREEMENTS: as at Financial Close, there is no other
material agreement, other than the Transaction Documents,
necessary or anticipated to be necessary in connection with the
Project; and
14.1.24 REPETITION: each of the above representations and warranties
will be correct and complied with on the date of each request
for an Advance or the EDB Guarantee, on the date on which each
Advance or EDB Guarantee is to be made or issued respectively,
and on each day which is an Interest Payment Date and after the
expiry of the Tranche A Facility on each Guarantee Fee Payment
Date and the Expiry Date as if repeated then by reference to the
then existing circumstances except for Clause 14.1.17
(mis-statements) which shall be repeated only on the date of the
request for the first Advance or the EDB Guarantee (as the case
may be).
15. FINANCIAL COVENANTS
The Borrower undertakes to the Agents and the Lenders that, so long as the
Secured Liabilities are outstanding under this Agreement:
15.1 PREPARATION OF ACCOUNTS: it will ensure that all accounts to be
delivered by it under this Agreement are prepared in such manner that
they will:
15.1.1 include such financial statements as are required by the laws of
Singapore and, save as stated in the notes thereto, were
prepared, audited, examined, reported on and approved in
accordance with
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49
accounting principles and practices generally accepted in
Singapore and consistently applied and in accordance with the
laws of Singapore and its Memorandum and Articles of
Association;
15.1.2 together with those notes, give a true and fair view of its
state of affairs and financial condition and operations as at
that date and for the financial year then ended; and
15.1.3 together with those notes and to the extent required by
accounting principles, standards and practices generally
accepted in Singapore, disclose or reserve against all
liabilities (contingent or otherwise) of it as at that date and
all material unrealised or anticipated losses from any
commitment entered into by it and which existed on that date;
15.2 AUDITED ACCOUNTS: as soon as reasonably practicable after the same are
available and in any event within 120 days after the end of each of its
financial years (beginning with the current one), it will deliver to the
Facility Agent, with sufficient copies for all the Lenders, copies of
its audited accounts as at the end of and for that financial year,
together with copies of the related reports and approvals referred to in
Clause 15.1 above;
15.3 MANAGEMENT ACCOUNTS: as soon as reasonably practicable after the same
are available and in any event within forty-five (45) days after the end
of the first six months of each of its financial years (beginning with
the current one), it will deliver to the Facility Agent, with sufficient
copies for all the Lenders, copies of its unaudited management accounts
as at the end of and for that six month period;
15.4 AUDITOR'S REPORT: as soon as reasonably practicable after any request
made by the Facility Agent from time to time, it will deliver to the
Facility Agent a report or such certificates signed by the Borrower's
auditor with sufficient copies for all Lenders for that purpose
concerning such matters relating to its books of account and records as
the Facility Agent may reasonably request in its notice provided that
where there is no Event of Default or Potential Event of Default which
is continuing, the Facility Agent may not make more than one such
request per calendar year;
15.5 OTHER INFORMATION: it will as soon as reasonably practicable deliver to
the Facility Agent (a) such other information relating to its financial
condition or business as the Facility Agent or any Lender through the
Facility Agent may from time to time reasonably require, and (b) all
financial, technical and other information as the Facility Agent may
from time to time reasonably require in relation to the Project or the
Plant (except for such information of a proprietary nature or as is
reasonably regarded by the Borrower as confidential including
commercially sensitive information);
15.6 PREPAYMENT OF EDB LOAN: it shall two (2) days prior to the giving any
notice of prepayment or cancellation of the EDB Loan or any part thereof
to EDB, notify the Facility Agent of its intention of giving such notice
to the EDB;
<PAGE> 53
50
15.7 COMPLIANCE WITH FINANCIAL RATIOS: at the end of each semi-annual period
of each of its financial years (and within fourteen (14) days after any
request made by the Facility Agent from time to time), it will deliver
to the Facility Agent within forty-five (45) days from the end of that
semi-annual period a certificate by the Authorised Signatory of the
Borrower:
15.7.1 confirming compliance with Clause 15.8 as at the end of the
relevant semi-annual period (or, as the case may be, as at the
date specified in the Facility Agent's request, which date must
be not less than seven (7) nor more than fourteen (14) days
before the date of the request); and
15.7.2 setting out in reasonable detail and in a form mutually agreed
between the Borrower and the Facility Agent the computations
necessary to demonstrate such compliance;
15.8 DEBT SERVICE COVERAGE RATIO:
15.8.1 it will with effect from the first Repayment Date, maintain a
Debt Service Coverage Ratio of not less than 1.1:1, and the
Facility Agent may on a semi-annual basis based on the Current
Financial Report (based on US Dollars denominated accounts)
determine that such ratio has been maintained; and in the event
of a breach of the provisions hereof, the Borrower shall ensure
that the Shareholders shall upon the occurrence of such event or
upon notification by the Facility Agent, within fourteen (14)
days, inject funds in the Borrower either by way of Contingency
Shareholders Loan or Equity Contribution in accordance with the
provisions of the Shareholders Undertaking or otherwise as
approved by the Facility Agent, to rectify the shortfall and the
Available Cashflow used for the calculation of that Debt Service
Coverage Ratio shall be revised to include such funds injected;
15.8.2 the Agents and the Lenders agree and acknowledge that a breach
of the Debt Service Coverage Ratio itself will not constitute an
Event of Default unless and until the Shareholders fail to
rectify the shortfall in accordance with Clause 15.8.1.
<PAGE> 54
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15.9 FINANCIAL RATIOS: it will ensure that the D/E Ratio will not exceed the
following levels on the specified dates:
<TABLE>
<CAPTION>
DATE MAXIMUM DEBT TO EQUITY
<S> <C>
31 December 2001 2.0x
31 December 2002 1.5x
31 December 2003 1.5x
31 December 2004 1.5x
31 December 2005 1.5x
</TABLE>
For the period from 31st December 2001 to 30th June 2002, D/E Ratio will
not exceed 2.0x. From 30th June 2002 onwards, the Borrower's D/E Ratio
will not exceed 1.5x at any time. The Facility Agent will monitor the
D/E Ratio and it will be tested on a semi-annual basis calculated based
on the Current Financial Report for the period ending on that date.
16. COVENANTS RELATING TO THE PROJECT ACCOUNTS
The Borrower undertakes to the Facility Agent and the Lenders that, so long as
the Secured Liabilities are outstanding under this Agreement:
16.1 OPENING OF ACCOUNTS: it will establish and maintain the Project Accounts
with the Project Account Bank until the Final Repayment Date;
16.2 PAYMENTS INTO ACCOUNTS: it will ensure that:
16.2.1 the gross sale proceeds derived from the ASAD Agreement and
direct sales of wafers produced within the Original Scope of
Project to third parties requested or initiated by CSM;
16.2.2 the proceeds from all Advances and Equity Contribution;
16.2.3 the proceeds of each Advance made by EDB as part of the EDB
Loan;
16.2.4 all payments and/or advances made to the Borrower as Equity
Contribution and Contingency Shareholders Loan;
16.2.5 any capital amount, interest or income received from any
Permitted Investment made pursuant to Clause 16.5;
16.2.6 all amounts paid to it under any completion guarantee,
performance bond, advance payment guarantee or any retention
monies or liquidated damages in relation to or in connection
with the Original Scope of the Project; and
<PAGE> 55
52
16.2.7 aggregate Insurance Proceeds exceeding US$5,000,000 from any one
incident,
are credited in full to the relevant Project Accounts;
16.3 AMOUNTS IN PROJECT ACCOUNTS:
16.3.1 no amount standing to the credit of any Project Account shall be
applied other than in accordance with the terms of and subject
to the conditions of the Financing Documents; and
16.3.2 all amounts withdrawn from any Project Account by the Borrower
for application in or towards making a specific payment or
meeting a specific liability shall be applied in or towards
making that payment or meeting that liability and shall not be
applied in or towards any other purpose;
16.4 it will ensure that withdrawals are made from the Project Accounts only
for the following applications (save for payment pursuant to Clause
5.3.3) and in the following order of priority:
16.4.1 Operating Costs and administration expenses (including
inter-company billings), all capital expenditure of the Original
Scope of Project and pre-operating costs due and payable;
16.4.2 taxes due and payable;
16.4.3 Lenders' fees and interest (including those under the EDB Loan)
which have fallen due and payable;
16.4.4 repayment of the principal amount of the Facilities which have
fallen due and payable;
16.4.5 payments of all other amounts due and payable by the Borrower
under the Financing Documents;
16.4.6 on a Repayment Date, the balance remaining after payments
pursuant to Clauses 16.4.1 to 16.4.5, shall be used for
repayment of advances from Shareholders under the Contingency
Shareholders Loan (subject to Clause 18.2); and
16.4.7 on a Repayment Date, the balance remaining after payments
pursuant to Clauses 16.4.1 to 16.4.6, may be utilised for
dividends or any other payments or distributions (subject to the
conditions in Clause 18.1) and/or for any other purpose as the
Borrower may think fit; and
<PAGE> 56
53
16.5 PERMITTED INVESTMENTS: without limiting the Borrower's
obligations under this Clause 16, and in particular Clause 16.4,
amounts credited to the Project Accounts may be invested in
Permitted Investments.
17. POSITIVE COVENANTS
The Borrower undertakes to the Secured Creditors that, so long as the Secured
Liabilities are outstanding, it shall:
17.1 AUTHORISATION AND CONSENTS: from time to time, obtain, comply with the
terms of and do all that is necessary to maintain in full force and
effect all authorisations, approvals, licences and consents (and all
terms and conditions imposed thereby) necessary or advisable to enable
it lawfully to enter into and perform its obligations under the
Transaction Documents other than licences, approvals and consents, in
relation to which the failure to comply with or obtain the same would
not materially and adversely affect the financial condition of the
Borrower or its ability to perform its obligations under the Transaction
Documents or to ensure the legality, validity, enforceability or
admissibility in evidence in Singapore of the Transaction Documents;
17.2 REPRESENTATIONS: after the delivery of any Notice of Drawdown and before
the proposed making of the Advance requested therein, notify the
Facility Agent of the occurrence of any event which results in or may
reasonably be expected to result in any of the representations contained
herein being untrue in any material respect at or before the time of the
proposed making of such Advance;
17.3 NOTIFICATION: promptly upon it becoming aware of the same, inform the
Facility Agent of the occurrence of any of the following:
17.3.1 an Event of Default or Potential Event of Default which is
continuing together with details of remedial action it proposes
to take;
17.3.2 an event of Force Majeure occurring in connection with the
Project;
17.3.3 any dispute to which it is a party under any of the Project
Documents and any other document which, if determined against
it, would have a Material Adverse Effect;
17.3.4 any litigation, arbitration or other proceeding that is
threatened against the Borrower or its assets which would have a
Material Adverse Effect;
17.3.5 stoppage or suspension (for continuous period of more than
fourteen (14) days) of construction works (if any), equipment
installation or operation of the Project other than routine
stoppage of operations in the normal course of operation and
maintenance activities, material loss or damage to the Plant;
and
<PAGE> 57
54
17.3.6 default, non-availability, termination or non-renewal of, or
imposition of onerous conditions upon, any consent or
authorisation referred to in Clause 17.1 having a Material
Adverse Effect;
17.4 CLAIM PARI PASSU: ensure that at all times the claims of the Agents and
the Lenders against the Borrower under this Agreement and each of the
Financing Documents will rank at least pari passu with the claims of all
creditors that are both unsecured and unsubordinated except indebtedness
preferred solely by laws of general application;
17.5 UTILISATION OF PLANT: unless otherwise agreed by the Majority Lenders,
utilise the Plant to produce semi conductor integrated circuit
wafers/products at technology levels contemplated under the ASAD
Agreement or the Joint Venture Agreement;
17.6 PROJECT IMPLEMENTATION:
17.6.1 ensure that at all times it complies with in all material
respect, and that the Project is constructed and operated and
the Plant maintained in compliance with in all material respect,
all applicable laws including environmental laws; and
17.6.2 all contractors and suppliers complete the Project in accordance
with generally accepted engineering practice and generally
accepted construction procedures and that the Plant is installed
and operated in accordance with good industry practice and keep
and maintain the Plant in good working order and condition
subject to normal wear and tear;
17.7 TRANSACTION WITH AFFILIATES: enter into any material transactions with
the Shareholders or any of their affiliates or subsidiaries only on an
arm's length commercial terms or terms which are no less favourable to
it than on arm's length commercial terms;
17.8 SECURITY INTERESTS: as long as any Secured Liabilities remain unpaid,
maintain the security granted pursuant to the Security Documents;
17.9 DISPUTES UNDER PROJECT DOCUMENTS: (a) notify the Facility Agent in
writing within thirty (30) days of becoming aware of the institution of
any suit or proceeding as referred to in Clause 19(F)(ii) of the Joint
Venture Agreement or Article 6.10(b) of the License and Technology
Transfer Agreement and (b) give the Facility Agent not less than thirty
(30) days prior notice in writing of the termination of the Joint
Venture Agreement and (c) as soon as practicable after becoming aware
give notice in writing of any material breach by any party of its
obligations under the Joint Venture Agreement;
17.10 TRANSACTION DOCUMENTS: (i) observe, comply with and perform all of its
obligations and otherwise comply with all the provisions under each of
the Transaction Documents to which it is expressed to be a party and
(ii) maintain and exercise and enforce all of its rights and remedies
under each of the Transaction Documents to which it is expressed
<PAGE> 58
55
to be a party in each case where the failure to do so would have a
Material Adverse Effect;
17.11 NOTIFICATION: as soon as reasonably practicable notify or deliver to the
Facility Agent:
17.11.1 copies of any additional Project Documents, details of any
amendments or variations to any of the Project Documents and any
other material agreement relating to the Project;
17.11.2 confirmations from the Borrower that by the respective dates as
specified in the Shareholders Undertaking, the share capital of
the Borrower would be not less than the required Equity
Contribution;
17.11.3 notice of any material adverse change since the latest financial
statements in the Borrower's businesses or financial, operations
or management condition;
17.12 PROCEEDS OF ADVANCE: utilise the proceeds of each Advance in accordance
with the provisions of Clause 2.2;
17.13 INSPECTION OF PLANT: provide reasonable access by permitting each of the
Lenders or the Agents and any representative appointed by the Lenders or
any Agent, (a) to carry out an inspection of the Plant subject to
(unless an Event of Default has occurred or the relevant Lender or Agent
is of the reasonable opinion that the Plant is in jeopardy) (i)
practicality and the giving of reasonable notice, and (ii) inspection
being at reasonable times and with reasonable frequency and in
compliance with any applicable procedures of the Borrower; and (b) upon
the occurrence of an Event of Default which is continuing, and subject
to practicality and the giving of reasonable notice, to carry out an
inspection of the Borrower's financial books and records, and, in either
case, for this purpose provide or procure the provision to any such
person or representative of reasonable access and cause its agents and
employees to co-operate on the occasion of any such inspection;
17.14 IMPLEMENTATION REPORTS: until Commercial Production, submit quarterly
reports (in such form and substance as agreed by the Borrower and the
Facility Agent), such reports to indicate that the expected depreciation
plus the then available Contingency Shareholders Loan will exceed the
Outstandings under Tranche A Facility and Tranche B(T) Facility expected
to be repaid under Clause 5.1 and Clause 5.2 and the outstandings of EDB
loan guaranteed under Tranche B[G] Facility expected to be repaid on
each Repayment Date falling after the date of such report; and in the
event the expected depreciation plus the then available Contingency
Shareholders Loan is less than the Outstandings under Tranche A Facility
and Tranche B(T) Facility expected to be repaid under Clause 5.1 and
Clause 5.2 and the outstandings of EDB loan granted under Tranche B[G]
Facility expected to be repaid on each Repayment Date falling after the
date of such report, and the projected Available Cashflow will not be
sufficient to cover the shortfall, the Borrower will within fourteen
(14) days of notification by the Facility
<PAGE> 59
56
Agent, produce to it a remedial action plan acceptable to the Facility
Agent (such acceptance not to be unreasonably withheld), and to
implement such plan in accordance with the terms thereof forthwith upon
the Facility Agent's confirmation that such plan is acceptable. The
first implementation report shall be submitted within thirty (30) days
from Financial Close and the Borrower acknowledges that there shall be
no grace period for remedy of any failure to deliver any implementation
report within the time stipulated above;
17.15 AMENDMENTS TO BUSINESS PLAN: notify the Facility Agent of any material
amendments to the Business Plan as approved by the board of directors of
the Borrower and confirm to the Facility Agent that such amendments are
of no Material Adverse Effect;
17.16 STAMP DUTY AND TAXES: (a) within such period allowed by law, pay or
cause to be paid all stamp duties or similar taxes payable in respect of
the Transaction Documents; (b) from time to time pay all taxes payable
by it as and when the same fall due except to the extent that any such
taxes or assessments are being contested in good faith and by
appropriate proceedings (provided that it has established (in the
reasonable opinion of the Facility Agent) prudent reserves against such
Liability);
17.17 INDEPENDENT INSURANCE CONSULTANT: afford to the Independent Insurance
Consultant all assistance reasonably requested by the Independent
Insurance Consultant;
17.18 INFORMATION: ensure that all factual written information provided by it
is at all times true, complete and accurate in all material respects
when delivered and that all projections, forecasts and opinions provided
are arrived at after due and careful consideration and enquiry and
genuinely represent its view;
17.19 PERMITTED INVESTMENT CREDIT RISK: ensure that if the Facility Agent
notifies it that in the Facility Agent's opinion, any entity with which
a Permitted Investment is made pursuant to Clause 16.5, ceases to be of
sound financial health, the Borrower shall refrain from making any
Permitted Investments pursuant to Clause 16.5 with such entity and the
Borrower shall withdraw any existing investments with such entity
provided that it shall not be obliged to do so if it is prejudicial to
the Borrower taking into account all circumstances including the costs
involved;
17.20 INSURANCES:
17.20.1 effect and maintain or procure that there shall be effected and
maintained, in accordance with good insurance practice all
policies specified in Schedule 9 in such manner and on such
terms (including level of cover) as the Facility Agent may
reasonably require (following consultation with the Independent
Insurance Consultant and the Borrower) in the joint names of the
Borrower and the Security Agent (for and on behalf of the
Lenders and naming the Security Agent as loss payee) for their
respective interests with reputable insurers and underwriters;
<PAGE> 60
57
17.20.2 from time to time upon reasonable request supply the Facility
Agent with a certificate provided by Lucent Technologies Inc.,
CSM and/or STPL certifying that the insurances for the Project
set out in Clause 17.20.1 above are (i) in full force and effect
and (ii) included within the main insurance policy maintained by
Lucent Technologies Inc., CSM or, as the case may be, STPL and
the Borrower shall pay all premium, calls contributions and
other sums due under such insurance policies within applicable
grace periods. To the extent that the Borrower fails to do so,
the Facility Agent shall be entitled (but not obliged) to pay
any premiums or other amounts payable by the Borrower, in
respect of such insurance policies and the Borrower shall
forthwith upon demand reimburse the Facility Agent for all such
amounts paid together with interest under Clause 20.1 on such
amount for the period beginning on the date on which the
Facility Agent made payment up to the date of receipt of the
amount of such payment from the Borrower at the rate equal to
the sum of the Margin and the cost to the Facility Agent and the
relevant Lender (as certified by it to the Borrower) of funding
that amount;
17.20.3 allow and facilitate the Independent Insurance Consultant
appointed by the Facility Agent (which shall initially be
Alexander Forbes or such other insurance expert as shall be
acceptable to the Borrower and the Lenders) to advise the Agents
and the Lenders on all insurance matters and the Borrower shall
make available to the Independent Insurance Consultant all such
information on the insurance policies and the Project as the
Independent Insurance Consultant may reasonably require provided
that a report from such Independent Insurance Consultant may be
required where the Independent Insurance Consultant is unable to
certify that the coverage of any policy from time to time
renewed is less wide than prior to renewal;
17.20.4 enforce the interests and rights of the Borrower and the
Security Agent in the insurance policies and will permit the
Borrower's name to be used as and when required by the Security
Agent for this purpose;
17.20.5 in the event that the Facility Agent requires a claim under the
policies to be made or considered and the Borrower does not or
is unable to make or consider such claim, make available to the
Security Agent upon request certified copies of all policies,
contracts, binders, insurance slips and cover notes relating to
the Project, or any part of the Project and the benefits thereof
to the order of the Security Agent;
17.20.6 on or prior to the expiration of any policy evidencing the
insurance policies or within any grace period, deliver to the
Security Agent certificates of insurance policies issued by the
insurers under the policies required pursuant to this Agreement
or by an insurance broker authorised
<PAGE> 61
58
to bind such insurers evidencing the insurance policies and the
renewal of such insurance policies;
17.20.7 ensure that no reductions in limits of coverage or increases in
deductibles, exclusions or exceptions shall be made to any
insurance effected pursuant to this Agreement without the prior
consent of the Majority Lenders (such consent not to be
unreasonably delayed or withheld after consultation with the
Independent Insurance Consultant); and
17.20.8 promptly notify the Security Agent of any circumstances of which
it is aware which may give rise to an insurance claim or related
claims exceeding in aggregate US$5,000,000 or the equivalent
thereof in any other currency during a policy year;
17.21 NEW DEBT: subject to Clause 17.23, where it proposes to incur a New
Debt, (i) during its fund raising exercise, approach the Secured
Creditors, in addition to other banks or financial institutions, if it
is deemed desirable by the Borrower, for providing such New Debt and
(ii) give to the Lenders an opportunity to match the best terms offered
by the other financial institutions to the Borrower to fund such New
Debt;
17.22 TERMS AND CONDITIONS OF NEW DEBT: unless the Secured Liabilities are
fully repaid or will be fully repaid by the proceeds of the New Debt:
17.22.1 ensure that the terms and conditions of the New Debt shall
include but not be limited to the following:
17.22.1.1 the lender of the New Debt may not object to the
Majority Lenders putting the Borrower into judicial
management or having a receiver and manager appointed
over the Borrower and its assets;
17.22.1.2 the lenders of the New Debt shall not wind up the
Borrower without the prior consent of the Majority
Lenders, such consent shall not be unreasonably
withheld or delayed;
17.22.1.3 the lenders of the New Debt may not prevent the
Majority Lenders or the Facility Agent from selling
the Project as a going concern;
17.22.1.4 the repayment schedule of and any prepayment mechanism
for the New Debt shall not be structured in a manner
such that the repayment to the lenders of the New Debt
ranks ahead of the repayment to the Secured Creditors;
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17.22.2 any New Debt incurred by the Borrower shall not be for the
acquisition of the Original Scope Assets and the Borrower shall
be entitled to incur New Debt (and any hedging in respect of
such New Debt):
(a) to acquire assets apart from the Original Scope Assets
provided that (1) the Lenders shall have received legal
opinions reasonably satisfactory to them confirming
inter alia that the security interests are not and will
not be affected by such debt and (2) the Borrower shall
not incur New Debt for the purpose under this sub-Clause
(a) until the Borrower's financial covenants under
Clauses 15.8 and 15.9 can be tested and have been
achieved and, such covenants will not be breached as a
result (for the avoidance of doubt, there is no limit on
the amount of New Debt incurred under this sub-Clause
(a)); and
(b) to fund the working capital and general funding
requirements of the Borrower (excluding the acquisition
of assets), provided that the aggregate New Debt
incurred under this sub-Clause (b) shall not exceed
US$20,000,000; and
(c) an inter-creditor agreement shall be entered into
between the Secured Creditors and New Debt lenders on
terms reasonably acceptable to the Secured Creditors;
17.23 NEW DEBT AND EVENT OF DEFAULT: ensure that no New Debt shall be incurred
if an Event of Default or Potential Event of Default is continuing or if
the incurring of the New Debt results in the occurrence of an Event of
Default or Potential Event of Default;
17.24 YEAR 2000 READINESS: ensure that the Y2K Program is implemented and
completed in time in relation to material assets, processes and
technologies used in the Project;
17.25 EDB LOAN: (a) not make or agree to any amendment to the EDB Financing
Document without the prior consent in writing of all the Tranche B
Lenders and will notify the Facility Agent of the occurrence of any
Event of Default (as defined in the EDB Financing Document) by it under
the EDB Financing Document, (b) duly perform and comply with its
obligations under the EDB Financing Document (including, without
limitation, its obligation to repay the EDB Loan in accordance with the
repayment schedule as set out in the EDB Financing Document, and (c) as
soon as reasonably practicable and in any event within three (3)
Business Days of the same, notify the Agent of the principal amount and
date of each advance and any repayment or prepayment of the EDB Loan
under the EDB Financing Document together with a certified copy of the
notice of drawdown, repayment or prepayment as the case may be;
17.26 CHANGE OF BUSINESS: save with the prior consent in writing of the
Majority Lenders (such consent not to be unreasonably withheld or
delayed) ensure that there is no material change in the nature of its
business taken as a whole (whether by a single transaction or
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a number of related or unrelated transactions, whether at one time or
over a period of time and whether by disposal, acquisition or otherwise)
and shall carry on the business of ownership and operation of wafer
fabrication plant; and
17.27 NOTIFICATION OF HEDGE: notify the Facility Agent within thirty (30) days
of entering into any hedging agreement where such hedging agreement
entered into by the Borrower is for a nominal amount exceeding US$50
million or the equivalent thereof in any other currency and covering a
period exceeding twelve (12) months.
18. NEGATIVE COVENANTS
The Borrower undertakes to the Secured Creditors that so long as the Secured
Liabilities are outstanding under the Financing Documents, it shall not, without
the prior written consent of the Majority Lenders:
18.1 DIVIDEND: pay, make or declare any dividend or other distribution or
repurchase or redeem equity (under Clause 16.4.7) Provided that the
Borrower shall be entitled to declare a dividend and make payment of the
same to the extent that:
18.1.1 Commercial Production has been achieved;
18.1.2 such dividend, other distribution or other payment is permitted
by applicable law and will not result in the Borrower failing to
satisfy the Debt Service Coverage Ratio;
18.1.3 no Event of Default or Potential Event of Default is continuing
or would occur after giving effect to such payment, dividend,
other distribution or redemption; and
18.1.4 no event of Force Majeure exists which is not cured or any other
event entitling any party to a Project Document to suspend
performance of its obligations under any Project Document has
occurred and is continuing;
18.2 CONTINGENCY SHAREHOLDERS LOAN: repay the Contingency Shareholders Loan,
except only on a Repayment Date after all payment of Debt Service which
is due and payable on that Repayment Date has been made to the Facility
Agent, and there being no Event of Default or Potential Event of Default
or an event of Force Majeure either of which is continuing;
18.3 LOANS AND GUARANTEES: make, or permit to exist, any loans, grant any
credit (save in the ordinary course of business) or give any guarantee,
bond or indemnity (save in the ordinary course of business) to or for
the benefit of any person (save for such loans, indemnities or
undertakings to be given in respect of or for the benefit of any
employee or director of the Borrower) or otherwise voluntarily assume,
or permit to exist, any liability, whether actual or contingent, in
respect of any obligation of any other person or incur, or permit to
exist, any indebtedness for borrowed money other than New Debt,
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Shareholders Loans, any indebtedness of the type described in paragraphs
(c) and (d) of the definition of "Permitted Encumbrances" and any
indebtedness incurred pursuant to this Agreement;
18.4 EQUITY INJECTION: save for the purposes of effecting any equity
injections by the Shareholders as contemplated by the Financing
Documents and the Shareholders' Undertaking and then only to such extent
as shall not affect the proportional interests of the Shareholders in
the voting capital of the Borrower, issue any further shares or alter
any rights attaching to its issued shares in existence at the date
hereof;
18.5 DISPOSALS: save for disposal in the ordinary course of business or as
the Majority Lenders may consent (such consent not to be unreasonably
withheld) (whether by a single transaction or a number of related or
unrelated transactions and whether at one time or over a period of time)
sell, transfer, lease out, lend or otherwise dispose of (whether
outright, by a sale-and-repurchase or sale-and-leaseback arrange, or
otherwise) all or any part of its assets the aggregate net book value of
which either alone or when aggregated with all other disposals required
to be taken into account under this Clause 18.5 exceeds 5% of its total
assets in accordance with the Current Financial Report) and for the
avoidance of doubt such limit applies to total assets disposed in
aggregate over the duration of the Facilities, not individual years or,
merge or enter into any business unrelated to the Project;
18.6 NO SUBSIDIARIES: establish, incorporate or acquire any subsidiary or
subsidiaries without the prior consent in writing of the Facility Agent
acting on the instructions of the Majority Lenders;
18.7 RECONSTRUCTION, AMALGAMATION, ETC.: undertake or permit any merger,
reconstruction, amalgamation, reorganisation, merger, takeover,
substantial change of shareholders or any other schemes of compromise or
arrangement affecting its present constitution;
18.8 TERMINATION OF PROJECT DOCUMENTS: (i) terminate, or (ii) waive or amend
any of the Project Documents in any way that would have a Material
Adverse Effect;
18.9 COMPROMISE: accept liability in respect of, or compromise any, claim by
any third party that the Borrower has infringed any third party
intellectual property rights in the course of manufacturing products, in
the operation of the Plant or otherwise, where to do so would result in
any liability or require the Borrower to make any payment either of
which would reasonably be expected to have a Material Adverse Effect;
18.10 OPERATING LEASES: enter into any operating lease in the capacity of a
lessee except for any such lease entered into on commercial arm's length
terms in the ordinary course of its operations and so long as the value,
as reasonably determined by the Facility Agent, of the assets which are
the subject of such lease (when aggregated with the value of the assets
which are the subject of other leases required to be taken into account
under this Clause 18.10) does not exceed the limits specified in the
definition of "Permitted Encumbrance";
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18.11 ASSIGNMENT OF PROJECT DOCUMENTS: (other than as contemplated in the
Project Documents in particular, the assignment of monies due or to
become due to the Borrower to the Security Agent in accordance with the
Assignment of Contract Proceeds) assign or transfer any of its rights
and obligations under the Project Documents;
18.12 DEPRECIATION POLICY: effect any change to its depreciation policy
without the prior written consent of the Majority Lenders such consent
not to be unreasonably withheld;
18.13 NEGATIVE PLEDGE: create or have outstanding any Encumbrance on or over
any of the Assets, except for Permitted Encumbrance; and
18.14 HEDGING: without limiting the rights of the Borrower to enter into
hedging agreements in respect of New Debt in accordance with Clause
17.22, enter into any secured hedging transactions with any counterparty
save for an Approved Hedging Counterparty, or enter into any hedging
transactions with any counterparty unless (a) such counterparty (if not
an Approved Hedging Counterparty) has a long term credit rating of not
less than A by Standard and Poor's Corporation or A2 by Moody's Investor
Services Inc, (b) the hedging transactions are on terms at least as
favourable to the Borrower as those available to the Borrower in the
market based on quotes from two leading banks which generally operate in
the swap market, and (c) such hedging transactions are unsecured.
19. EVENTS OF DEFAULT
19.1 EVENTS OF DEFAULT: It shall be an Event of Default if:
19.1.1 NON-PAYMENT: the Borrower or any Shareholder does not pay in the
manner and in the currency provided in any Financing Document or
the Shareholders Undertaking respectively any sum payable
thereunder when due unless such default is due solely to
technical reasons affecting the banking system unrelated to the
Borrower's ability to pay, and, such default is remedied within
three (3) Business Days of its occurrence;
19.1.2 BREACH OF OTHER OBLIGATIONS: the Borrower or any Obligor does
not perform or comply with any one or more of its obligations
(other than the payment obligation of the Borrower referred to
in Clause 19.1.1) under the Financing Documents, and, if in the
reasonable opinion of the Majority Lenders that default is
capable of remedy, it is not in the reasonable opinion of the
Majority Lenders remedied within fourteen (14) days of its
occurrence;
19.1.3 BREACH OF WARRANTY: any representation, warranty or statement by
the Borrower or any Obligor in the Financing Documents or in any
document
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delivered by them thereunder proves to have been incorrect,
untrue or misleading in any material respect when made or deemed
repeated and such default is not remedied within fourteen (14)
days of written notice to the Borrower or (as the case may be)
such Obligor;
19.1.4 CROSS DEFAULT: any indebtedness of the Borrower or any Obligor
in respect of borrowed money or any hedging transaction is or is
declared to be due and payable before its normal maturity by
reason of any default, event of default or the like (however
described) or is not paid when due or, as a result of any
default, event of default or the like (however described) any
facility relating to any such indebtedness is or is declared to
be or is capable of being cancelled or terminated before its
normal expiry date or any person otherwise entitled to use any
such facility is not so entitled. However, no Event of Default
will occur under this Clause 19.1.4 unless and until the
aggregate amount of the indebtedness in respect of which one or
more of the events mentioned above in this Clause 19.1.4
has/have occurred equals or exceeds US$7,500,000 in the case of
the Borrower or US$20,000,000 in the case of each of the
Obligors or its equivalent in other currencies (as determined by
the Facility Agent) and in this regard, reference to
indebtedness in relation to any hedging transaction shall be the
net amount payable to the hedging counterparty in accordance
with the terms of the hedging agreement;
19.1.5 INSOLVENCY: the Borrower or any Obligor is (or is, or could be,
deemed by law or a court to be) insolvent or unable to pay its
debts, stops, suspends or threatens to stop or suspend payment
of all or a material part of its indebtedness (other than the
stopping or suspension of payment of any part of its
indebtedness if such indebtedness is being contested by it in
good faith and by appropriate means), begins negotiations or
takes any other step with a view to the deferral, rescheduling
or other readjustment of all or a material part of its
indebtedness (or of any part which it will or might otherwise be
unable to pay when due), proposes or makes a general assignment
or an arrangement or composition with or for the benefit of the
relevant creditors or a moratorium is agreed or declared in
respect of or affecting all or a material part of the
indebtedness of the Borrower or that Obligor;
19.1.6 ENFORCEMENT PROCEEDINGS: a distress, attachment, execution or
other legal process is levied, enforced or sued out on or
against the assets of the Borrower or any Obligor and is not
discharged or stayed within fourteen (14) days;
19.1.7 SECURITY ENFORCEABLE: any security on or over the assets of the
Borrower or any Obligor becomes enforceable;
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19.1.8 WINDING-UP: any step is taken by any person with a view to the
winding-up of the Borrower or any Obligor (except for the
purpose of and followed by a reconstruction, amalgamation,
reorganisation, merger or consolidation on terms approved by the
Majority Lenders before that step is taken) or for the
appointment of a liquidator (including a provisional
liquidator), receiver, judicial manager, trustee, administrator,
agent or similar officer of the Borrower or any Obligor or over
any part of the assets of the Borrower or that Obligor;
19.1.9 CESSATION OF BUSINESS: the Borrower or any Obligor ceases or
threatens to cease to carry on all or a substantial part of its
business;
19.1.10 NATIONALISATION: any step is taken by any person with a view to
the seizure, compulsory acquisition, expropriation or
nationalisation of all or a material part of the assets of the
Borrower or any Obligor;
19.1.11 CONSENTS: any action, condition or thing (including the
obtaining of any necessary consent) at any time required to be
taken, fulfilled or done for any of the purposes stated in
Clause 14.1.4 is not taken, fulfilled or done, or any such
consent ceases to be in full force and effect without
modification or any condition in or relating to any such consent
is not complied with (unless that consent or condition is no
longer required or applicable);
19.1.12 ILLEGALITY: (a) it is or will become unlawful for the Borrower
or any Obligor to perform or comply with any one or more of its
obligations under (i) the Project Documents such as to adversely
affect the operation of the Project and/or repayment ability of
the Borrower or (ii) the Financing Documents, or (b) the
Security interest or any part thereof fail or fails to
constitute a valid and perfect first priority Encumbrance;
19.1.13 CESSATION: any of the Transaction Documents ceases for any
reason (or is claimed by the Borrower or any Obligor not) to be
the legal and valid obligations of the Borrower or that Obligor,
binding upon it in accordance with its terms provided that in
the case of a Project Document such cessation would adversely
affect the operation of the Project and/or repayment ability of
the Borrower;
19.1.14 LITIGATION: any litigation, arbitration or administrative
proceeding (other than any reasonably determined by the Majority
Lenders to be of a frivolous or vexatious nature) is current or
pending (a) to restrain the exercise of any of the rights and/or
the performance or enforcement of or compliance with any of the
obligations of the Borrower or any Obligor under the Transaction
Documents provided that in the case of a Project Document such
proceeding would adversely affect the operation of the
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Project and/or repayment ability of the Borrower, or (b) which
has or will have a Material Adverse Effect on the Borrower or
that Obligor;
19.1.15 PLANT: the Plant or any part thereof is compulsorily acquired,
confiscated, nationalised, expropriated or damaged to an extent
which, in the reasonable opinion of the Majority Lenders,
renders it impossible or impracticable to reinstate it within
any reasonable period specified by the Majority Lenders, or if
any of the landlords under the Property Leases determines the
lease(s) thereunder or if there is a breach of any of the terms
of the Property Leases which would result in the termination of
the Lease;
19.1.16 PROJECT: the whole of the Project or any part of the Project
which, in the reasonable opinion of the Majority Lenders, is
material, is cancelled or abandoned;
19.1.17 DECLARED COMPANY: the Borrower or any Obligor is declared by the
Minister for Finance to be a company to which Part IX of the
Companies Act, Chapter 50, applies;
19.1.18 SHAREHOLDING:
19.1.18.1 (a) LTM ceases at any time to own, legally and
beneficially, at least 51% of the Shares or (b) CSM
ceases at any time to own, legally and beneficially,
at least 49% of the Shares;
19.1.18.2 (a) Lucent Technologies International Inc. shall cease
to hold directly or indirectly, a majority
shareholding in LTM or (b) STPL shall cease to hold
directly or indirectly a majority shareholding in CSM;
19.1.19 TOTAL LOSS: the declaration is made by the insurers of an actual
or constructive loss of a substantial portion of the Plant; or
any Force Majeure event or any other uninsurable event which has
a Material Adverse Effect occurs;
19.1.20 INFRINGEMENT OF RIGHTS: at any time after any person commences a
law suit or other legal proceedings against the Borrower
(whether as sole defendant or jointly with one or more other
persons) alleging that the Borrower or that Obligor has
infringed any third party intellectual property rights in the
course of manufacturing products in Singapore, in the operation
of the Plant in Singapore or otherwise, the Facility Agent
reasonably determines that the potential or actual liability of
the Borrower or that Obligor in respect of such law suit or
other legal proceedings
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would reasonably be likely to result in the Borrower being
unable to perform or comply with any obligation under the
Financing Documents;
19.1.21 FINAL JUDGMENT OR COURT ORDER: the Borrower or any Obligor does
not pay under or pursuant to any final judgment or court order
entered against it within ten (10) days of such final judgment
or court order, whether or not any enforcement proceedings have
commenced against the assets of the Borrower or that Obligor;
19.1.22 CHANGE IN CIRCUMSTANCES: any event occurs or circumstances arise
which in the reasonable opinion of the Majority Lenders will
affect the ability of the Borrower or any Obligor to perform or
comply with their respective obligations (a) under any Project
Documents (and in the case of the Obligor, which would have a
material adverse effect on the Borrower's ability to perform its
obligations under the Financing Documents), or (b) under any of
the Financing Documents;
19.1.23 BREACH OF PROJECT DOCUMENTS: (a) any breach of the ASAD
Agreement or the Licence and Technology Transfer Agreement by
any Shareholder which would have a Material Adverse Effect on
the Borrower occurs or (b) any material breach of any of the
Project Documents by any of the parties to that Project Document
occurs and if in the reasonable opinion of the Majority Lenders
that default is capable of remedy, it is not in the reasonable
opinion of the Majority Lenders remedied within ten (10) days of
its occurrence;
19.1.24 PAYMENT INTO PROJECT ACCOUNTS: the Borrower is in breach of its
obligations under Clause 16.2.1;
19.1.25 PRIVILEGES: the Borrower ceases to receive all or any of the
promotional privileges granted by the Singapore government and
referred to in item 17 in Schedule 2 save for the expiry of such
privileges or where loss of the same would not, in the opinion
of the Majority Lenders, result in a Material Adverse Effect;
and
19.1.26 ANALOGOUS EVENT: any event occurs which, under the law of any
relevant jurisdiction, has an analogous or equivalent effect to
any of the events mentioned in Clauses 19.1.5, 19.1.6, 19.1.8
and 19.1.10.
19.2 ACCELERATION AND CANCELLATION: Upon the occurrence of an Event of
Default and unless the Borrower provides evidence reasonably
satisfactory to the Facility Agent that such Event of Default is no
longer continuing, the Facility Agent may (and, if so instructed by the
Majority Lenders, shall) by notice to the Borrower:
19.2.1 declare all or any part of the Advances to be immediately due
and payable (whereupon the same shall become so payable together
with
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accrued interest thereon and any other sums then owed by the
Borrower hereunder) or declare all or any part of the Advances
to be due and payable on demand of the Facility Agent; and/or
19.2.2 require the Borrower to either procure that the liabilities of
each of the Tranche B[G] Lenders under the EDB Guarantee is
promptly reduced to zero or provide EDB Cash Cover for the EDB
Guarantee in an amount specified by the Facility Agent,
whereupon the Borrower shall pay to the Facility Agent such
amount ("EDB Cash Cover"), which shall be deposited in the EDB
Cash Cover Account and applied towards the discharge of the
obligations of the Borrower to the Tranche B Lenders under or in
connection with this Agreement. Without prejudice to the other
provisions of this Clause 19.2.2 and any rights to which the
Facility Agent or any Tranche B Lender may be entitled, the
Facility Agent may:
(a) prepay on behalf of the Borrower or purchase itself or
procure the purchase by a nominee of all or any of the
obligations of the Tranche B Lenders under the EDB
Guarantee, and any such prepayment or purchase shall be
treated as a payment made pursuant to a demand by EDB
under the EDB Guarantee and the provisions of Clause 9
shall apply to such prepayment or purchase;
(b) negotiate any compromise, release, discharge, reduction
or retirement of all or any of the obligations of the
Tranche B Lenders under the EDB Guarantee and any
payment made pursuant to the same shall be treated as a
payment made pursuant to a demand by EDB under the EDB
Guarantee and the provisions of Clause 9 shall apply to
such payment; and
(c) pay any amount received by it under Clause 19.2.2 above
to EDB in exchange for such payment of a release by EDB,
to the extent of such payment, of the obligations of the
Tranche B Lenders under the EDB Guarantee, and the
provisions of Clause 9 shall apply to such payment by
the Tranche B Lenders as if such payment had been made
pursuant to a demand by EDB under the EDB Guarantee;
and/or
19.2.3 declare that any unutilised portion of the Facilities shall be
cancelled, whereupon the same shall be cancelled and the
Available Commitment of each Lender shall be reduced to zero;
19.2.4 without prejudice to any of the obligations of the Borrower
under this Agreement (including, without limitation, the
obligation of the Borrower to make any payment to the Facility
Agent and/or any of the Lenders
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under this Clause 19.2, the Facility Agent shall, within three (3)
Business Days after any request from the Borrower made at any time after
the making of a declaration by the Facility Agent under Clause 19.2.1
above by reason of the occurrence of an event referred to in Clause
19.1.22 above, notify the Borrower of the grounds for the determination
made by the Majority Lenders referred to in that Clause 19.1.22.
19.3 ADVANCES DUE ON DEMAND: If, pursuant to Clause 19.2, the Facility Agent
declares all or any part of the Advances to be due and payable on demand
of the Facility Agent, then, and at any time thereafter, the Facility
Agent may (and, if so instructed by the Majority Lenders, shall) by
notice to the Borrower:
19.3.1 where Advances have been made require repayment of all or such
part of the Advances on such date as it may specify in such
notice (whereupon the same shall become due and payable on the
date specified together with accrued interest thereon and any
other sums then owed by the Borrower hereunder) or withdraw its
declaration with effect from such date as it may specify; and/or
19.3.2 where the EDB Guarantee has been issued, procure the
cancellation of the EDB Guarantee or provide EDB Cash Cover in
an amount equal to the Maximum Amount to the Security Agent;
and/or
19.3.3 select as the duration of any Interest Period which begins
whilst such declaration remains in effect a period of six months
or less.
20. DEFAULT INTEREST
20.1 INTEREST ON OVERDUE SUMS: If the Borrower does not pay any sum payable
under this Agreement (including, without limitation, any sum payable
under this Clause and Clause 9.2) when due or demanded, as the case may
be, it shall pay interest on the amount from time to time outstanding in
respect of that overdue sum for the period beginning on its due date and
ending on the date of its receipt by the Facility Agent (both before and
after judgment) in accordance with this Clause. For the purpose of this
Clause, if any payment is received by the Facility Agent on the due
date, but after the time required by Clause 13.1 and too late to be made
available by the Facility Agent on that due date to the person(s)
entitled to it under Clause 13.4, that payment shall be deemed to be
received on the next Business Day.
20.2 DEFAULT INTEREST PERIODS AND RATES: Interest under this Clause shall be
calculated by reference to successive Interest Periods, each of which
(other than the first, which shall begin on the due date) shall begin on
the last day of the previous one. Each such Interest Period shall be of
one month or such other period as the Facility Agent may from time to
time select and the rate of interest applicable for all or any part of a
particular Interest Period shall be the rate per annum equal to the sum
of 2% and the
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rate which would be applicable to that overdue sum for (or, as the case
may be, for that part of) that Interest Period under Clauses 6.1 and 6.4
if that overdue sum were a non-overdue Advance, except as follows:
20.2.1 subject to the following exceptions, until the third Business
Day after the Facility Agent becomes aware of the relevant
default, each Interest Period relating to the relevant overdue
sum shall be an "overnight" period beginning on one (1) Business
Day and ending on the next and the rate of interest for a
particular "overnight" period shall be the rate per annum equal
to the sum of 2%, the Margin and the rate at which the Lender is
offering "overnight" deposits in US Dollars or Singapore Dollars
(as the case may be), for that period in amounts comparable to
that overdue sum;
20.2.2 if the overdue sum is the principal portion of an Advance or the
Outstandings and becomes due otherwise than on an Interest
Payment Date relating to that Advance or the Outstandings, the
first default Interest Period applicable to that overdue sum
shall end on that Interest Payment Date and the rate of interest
applicable to that sum for that Interest Period shall be the
rate per annum equal to the sum of 2% and the rate applicable to
it immediately before it became due; and
20.2.3 if any event equivalent to that mentioned in Clause 11.3 occurs
in relation to any Interest Period applicable to an overdue sum,
the rate of interest payable on that sum for all or any part of
that Interest Period shall be the sum of 2%, the Margin and the
cost to the Lender (as certified by it to the Facility Agent and
expressed as a rate per annum) of funding that sum during that
Interest Period by whatever means it determines to be
appropriate (including the cost occasioned by or attributable to
complying with reserves, liquidity, deposit or other
requirements for the time being imposed on it by the relevant
authority or authorities).
20.3 NOTIFICATION OF INTEREST RATES: The Facility Agent shall promptly notify
the Borrower of each rate of interest determined in accordance with
Clause 20.2.
20.4 PAYMENT AND COMPOUNDING OF DEFAULT INTEREST:
20.4.1 On the last day of each Interest Period, the Borrower shall pay
the unpaid interest accrued during that Interest Period on the
overdue sum to which it relates at the rate applicable for that
Interest Period.
20.4.2 Interest accrued under this Clause on an overdue sum shall be
due on demand by the Facility Agent but, if not previously
demanded, shall be paid when due in accordance with Clause 20.1.
If not paid when due,
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the interest shall be added to that overdue sum and itself bear
interest accordingly.
21. INDEMNITIES
21.1 MISCELLANEOUS INDEMNITIES: The Borrower shall on demand indemnify each
Secured Creditor against any funding or other cost, loss, expense or
liability sustained or incurred by it as a result of:
21.1.1 an Advance not being made or any EDB Guarantee not being issued,
as the case may be, by reason of non-fulfilment of any of the
conditions in Clauses 3 and 4 or the Borrower purporting to
revoke a notice requesting an Advance or issuance of the EDB
Guarantee;
21.1.2 the occurrence or continuance of any Event of Default or
Potential Event of Default; or
21.1.3 the receipt or recovery by any party (or the Facility Agent on
its behalf) of all or any part of an Advance or an overdue sum
otherwise than on the last day of an Interest Period relating to
that Advance or overdue sum.
21.2 BROKEN FUNDING COSTS: In the case of Clauses 21.1.1 and 21.1.3 above,
the amount payable shall in any event include the amount (if any) by
which:
21.2.1 the amount of interest which the relevant person is able to
obtain by placing an amount equal to its share of the relevant
Advance or overdue sum on deposit in the London or, as the case
may be, Singapore, inter-bank market, for the remainder of the
relevant Interest Period, as soon as reasonably practicable
after it becomes aware that the relevant Advance is not being
made or (as the case may be) of the relevant receipt or
recovery,
is less than:
21.2.2 the amount of interest which, in accordance with the expressed
terms of this Agreement, would otherwise be payable to that
party on its share of relevant Advance for its first Interest
Period or (as the case may be) on the relevant amount so
received or recovered for the remainder of the relevant Interest
Period.
21.3 CURRENCY INDEMNITY:
21.3.1 The currency of account of the Tranche A Outstandings is US
Dollars, and the Tranche B[T] Outstandings is US Dollars where
the Tranche
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B[T] Facility is drawn in US Dollars and, Singapore Dollars
where the Tranche B[T] Facility is drawn in Singapore Dollars;
in respect of liabilities under the EDB Guarantee, the currency
of account is Singapore Dollars.
21.3.2 Any payment or payments made to or for the account of any
Arranger, Agent or Lender (that Arranger, Agent or such Lender,
as the case may be, being hereinafter in this Clause 21.3
referred to as the "Creditor") in a currency (the currency in
which the relevant payment is made being hereinafter referred to
as the "Relevant Currency") other than the currency in which
such payment or payments are expressed to be payable under the
Financing Documents (the currency in which the relevant payment
is expressed to be payable being hereinafter referred to as the
"Currency of Account") (whether as a result of, or of the
enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up of the Borrower or otherwise)
shall only constitute a discharge to the Borrower to the extent
of the Currency of Account which the Creditor is able, in
accordance with its usual practice, to purchase with the amount
so received or recovered in the Relevant Currency on the date of
that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is
practicable to do so). If the amount of the Currency of Account
is less than the amount expressed to be due to the Creditor
under the Financing Documents, the Borrower shall indemnify it
against any loss sustained by it as a result. In any event, the
Borrower shall indemnify the Creditor against the cost of making
any such purchase. For the purpose of this Clause 21.3, it shall
be sufficient for the relevant Arranger, Agent or Lender, as the
case may be, to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
21.4 INDEMNITIES SEPARATE: Each of the above indemnities constitutes a separate
and independent obligation from the other obligations in this Agreement, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by any Agent and/or any Lender and shall
continue in full force and effect despite any judgment, order, claim or proof
for a liquidated amount in respect of any sum due under the Financing Documents
or any judgment or other order.
22. APPLICATION OF PROCEEDS
All and any moneys received from the Borrower or recovered or realised in
whatsoever manner from all or any of the securities created under or pursuant to
the Financing Documents shall be applied towards payment of the following sums
in the following order:
22.1 first, in or towards payment of costs, charges and expenses of and
incidental to the enforcement and/or realisation of the Financing
Documents including but not limited to the remuneration of any receiver
or receiver and manager and all fees (including but not
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limited to the agency fee), costs, charges and expenses whatsoever owing
to or incurred or paid by the Agents;
22.2 secondly, in or towards payment of all interest, fees and commissions
outstanding and owing to the Secured Creditors (on a pro-rata basis in
proportion to each Secured Creditor's share of the Secured Liabilities)
and the Agents under the Financing Documents or any secured Approved
Hedges;
22.3 thirdly, in or towards repayment of all principal amounts at that time
outstanding and owing to the Secured Creditors (on a pro-rata basis in
proportion to each Secured Creditor's share of the Secured Liabilities)
and the Agents under the Financing Documents or any secured Approved
Hedges;
22.4 fourthly, in or towards payment of all other moneys at that time owing
and outstanding to the Secured Creditors (on a pro-rata basis in
proportion to each Secured Creditor's share of the Secured Liabilities)
and the Agents under this Agreement; and
22.5 fifthly, in payment to the Borrower or other person entitled thereto.
23. THE AGENTS
23.1 APPOINTMENT OF AGENTS: Each Lender irrevocably appoints the Facility
Agent to act as its facility agent for the purpose of this Agreement,
and irrevocably appoints the Security Agent to act as its security agent
and security trustee for the purpose of the Security Documents and for
the benefit of the Secured Creditors, and authorises the Facility Agent
and the Security Agent to take such action and exercise such rights,
powers and discretions as are specifically delegated to each of them by
the Financing Documents and such other action, rights, powers and
discretions as are incidental thereto. However, neither the Facility
Agent nor the Security Agent may begin any legal action or proceeding in
the name of a Lender without its consent. The relationship between the
Facility Agent and the Security Agent and the Lenders is of agent and
principal only. The Facility Agent shall not be a trustee for any
Lender, nor an agent or trustee for the Borrower, under or in relation
to the Financing Documents.
23.2 AGENTS' DUTIES: The Agents shall:
23.2.1 promptly send to each Lender details of each communication
received by them from the Borrower under the Financing Documents
except that details of any communication relating to a
particular Lender shall be sent to that Lender only;
23.2.2 promptly send to each Lender any document or information
received by them under this Agreement;
23.2.3 not exercise any right, power, authority, privilege, discretion
or remedy vested in it under the Financing Documents unless and
until instructed by
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the Majority Lenders as to whether or not such right, power,
authority, privilege, discretion or remedy is to be exercised
and, if it is to be exercised, as to the manner in which it
should be exercised whereupon the Agents shall act according to
such instructions, save for those decisions which require the
instruction, consent or approval by all Lenders and correction
of manifest errors;
23.2.4 have only those duties, obligations and responsibilities
expressly specified in the Financing Documents; and
23.2.5 promptly notify the Lenders of the expiry of the Availability
Periods and any reduction in the Tranche B Outstandings.
23.3 AGENTS' RIGHTS: The Agents may:
23.3.1 perform any of their duties, obligations and responsibilities
under the Financing Documents by or through their personnel or
agents;
23.3.2 refrain from exercising any right, power or discretion vested in
them under the Financing Documents until they have received
instructions from the Majority Lenders as to whether (and, if it
is to be, the way in which) it is to be exercised and shall in
all cases be fully protected when acting, or (if so instructed)
refraining from acting, in accordance with instructions from the
Majority Lenders;
23.3.3 treat (i) the Lender which makes available any portion of the
Facilities as the person entitled to repayment in respect of
that portion unless the Facility Agent has received a notice of
the assignment of all or part of it in accordance with Clause 27
and (ii) the office set under a Lender's name at the end of this
Agreement as its Facility Office unless the Facility Agent has
received from that Lender a notice of change of Facility Office
in accordance with Clause 27, and may act on any such notice
until it is superseded by a further such notice;
23.3.4 refrain from doing anything which would or might in its opinion
be contrary to any law of any jurisdiction or any directive of
any agency of any state or otherwise render it liable to any
person and may do anything which is in its opinion necessary to
comply with any such law or directive;
23.3.5 assume that no Event of Default or Potential Event of Default
has occurred and that all representations and warranties are
true when given unless an officer of that Agent, while active on
the account of the Borrower, acquires actual knowledge to the
contrary;
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23.3.6 refrain from taking any step (or further step) to protect or
enforce the rights of any Lender under the Financing Documents
until it has been indemnified (or received confirmation that it
will be so indemnified) and/or secured to its satisfaction
against any and all costs, losses, expenses or liabilities
(including legal fees) which it would or might sustain or incur
as a result; and
23.3.7 without prejudice to the generality of the foregoing the
Security Agent may:
23.3.7.1 hold all title deeds or other Transaction Documents
relating to the property and assets of the Borrower to
which the Security Documents relate as agent of and for
the benefit of the Lenders in accordance with their
respective rights and interests under this Agreement and
under the relevant Security Documents and, upon request
by any of the Lenders, shall produce the same for
inspection by that Lender and upon being reimbursed for
its costs, to provide copies to that Lender;
23.3.7.2 be named as loss payee in all insurances to be taken
out by the Borrower pursuant to the Financing Documents
and to receive all receipts in respect of the payment of
premium thereof as agent of and for the benefit of the
Lenders;
23.3.7.3 execute all such documents and do all such things as it
is by the terms of the Financing Documents, or as it may
consider necessary for the purposes of or in connection
with the Financing Documents and required or entitled to
do;
23.3.7.4 execute and deliver on the Lenders' behalf all and any
such other documents or instruments as the Majority
Lenders may specifically approve in writing relating to
the Security Documents or the creation, maintenance or
protection of any security therefor; and
23.3.7.5 pay any monies received by it and/or the realisation of
the assets and property from and to which the Financing
Documents relate to the Facility Agent for application
in accordance with the provisions of Clause 22.
23.4 RIGHTS OF AGENTS: Each Agent may:
23.4.1 rely on any communication or document believed by it to
be genuine;
<PAGE> 78
75
23.4.2 rely as to any matter of fact which might be expected to
be within the knowledge of any Obligor on a statement by
or on behalf of such Obligor;
23.4.3 obtain and pay for such legal or other expert advice or
services as may to it seem necessary or desirable and
rely on any such advice;
23.4.4 retain for its own benefit and without liability to
account any fee or other sum receivable by it for its
own account; and
23.4.5 accept deposits from, lend money to or engage in any
kind of banking or other business with any party to any
Transaction Document or any subsidiary or associated
company of any such party (and, in each case, may do so
without liability to account).
23.5 EXONERATION OF AGENTS AND LEAD ARRANGERS: Neither Agent nor any of its
respective personnel or agents nor any of the Lead Arrangers shall be:
23.5.1 responsible for the adequacy, accuracy or completeness of any
representation, warranty, statement or information in the
Financing Documents or any notice or other document delivered
under the Financing Documents;
23.5.2 responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of the
Financing Documents, any such notice or other document;
23.5.3 obliged to enquire as to the occurrence or continuance of an
Event of Default; or
23.5.4 liable for anything done or not done by it or any of them under
or in connection with the Financing Documents.
Accordingly, none of the Agents and the Lead Arrangers shall be under
any liability (whether in negligence or otherwise) in respect of such
matters, save in the case of gross negligence or wilful misconduct.
Each of the Lenders agrees that it will not assert or seek to assert
against any director, officer or employee of the Agents or any Lead
Arranger any claim it might have against any of them in respect of the
matters referred to in this Clause 23.5.
23.6 AGENTS AS LENDERS: Each Agent shall have the same rights and powers with
respect to its Available Commitment (if any), and Outstandings (if any)
as any other Lender and may exercise those rights and powers as if it
were not also acting as Agent.
<PAGE> 79
76
23.7 NON-RELIANCE ON AGENTS AND LEAD ARRANGERS: Each Lender confirms that it
has itself been, and will at all times continue to be, solely
responsible for making its own independent investigation and appraisal
of the business, financial condition, creditworthiness, status and
affairs of the Borrower and of the adequacy and enforceability of any
security Provided pursuant to this Agreement, and has not relied, and
will not at any time rely, on any Lead Arranger, Agent and/or any other
Lender:
23.7.1 to provide it with any information relating to the business,
financial condition, creditworthiness, status or affairs of the
Borrower or any other person, whether coming into its possession
before or after the drawing down or utilisation of any part of
the Facilities (except, in the case of the Agents, as stated in
Clause 23.2 above);
23.7.2 to check or enquire into the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement,
projection, assumption or information at any time provided by or
on behalf of the Borrower or any other person under or in
connection with the Financing Documents (whether or not such
information has been or is at any time circulated to it by the
Lead Arrangers or Facility Agent); or
23.7.3 to assess or keep under review the business, financial
condition, prospects, creditworthiness, status or affairs of the
Borrower or any other person.
23.8 NO DUTY TO KEEP INFORMED:
23.8.1 None of the Agents or the Lead Arrangers has any duty or
responsibility, either initially or on a continuing basis to
keep itself informed about the performance by the Borrower or
Shareholders of their respective obligations under the Financing
Documents or to provide any of the Lenders with credit or other
information with respect to the Borrower or Shareholders
(whether coming into its possession either before or after
accommodation is provided under the Financing Documents) except
as provided for in this Agreement.
23.8.2 Nothing in this Agreement obliges any of the Agents or the Lead
Arrangers to disclose information relating to the Borrower or
any other person if the disclosure would or, in the opinion of
the relevant Agent or the relevant Lead Arranger could
constitute a breach of law or duty of secrecy or
confidentiality.
23.9 INDEMNITY TO AGENTS: To the extent that the Borrower does not do so on
demand or is not obliged to do so, each Lender shall on demand indemnify
each Agent on a Pro Rata basis (or, if there are then no Outstandings,
in the proportion borne by its Available Commitment to the Available
Commitment of all the Lenders) against any cost, expense or liability
mentioned in Clause 25 or sustained or incurred by that Agent in
complying
<PAGE> 80
77
with any instructions from the Majority Lenders or otherwise sustained
or incurred by it in connection with this Agreement or its duties,
obligations and responsibilities under the Financing Documents except
the routine administrative costs and expenses of that Agent and provided
always that this indemnity shall not extend to any cost, expense or
liability sustained or incurred as a result of or in connection with
gross negligence or wilful default of that Agent.
23.10 RESIGNATION OF AGENT: Notwithstanding the irrevocable appointments in
Clause 23.1, an Agent may resign at any time (after consultation with
the Borrower) if it gives at least thirty (30) days' notice to the
Borrower and the Lenders. However, no resignation shall be effective
until the successor has been appointed and accepted its appointment in
accordance with this Clause 23.10. The Majority Lenders may appoint a
successor to the resigning Agent that is a reputable bank with an office
in Singapore but, if a successor has not been so appointed and accepted
its appointment within fifteen (15) days after the date of the notice of
resignation, the resigning Agent may appoint a successor Agent, which
must be a reputable and experienced bank with an office in Singapore.
Any appointment of a successor must be in writing, signed by the
person(s) appointing that successor and delivered to that successor. Any
acceptance of such appointment must be in writing, signed by the person
appointed and delivered to the person(s) appointing that successor. The
other parties to this Agreement shall be promptly informed of the
acceptance by a successor Agent. Upon the successor accepting its
appointment, the resigning Agent shall be automatically discharged from
any further obligation under the Financing Documents and its successor
and each of the other parties to this Agreement shall have the same
rights and obligations among themselves as they would have had if the
successor had been the original Agent party to this Agreement. The
resigning Agent shall provide its successor with (or with copies of)
such records as its successor requires to carry out its duties under the
Financing Documents.
24. SET-OFF AND PRO-RATA SHARING
24.1 SET-OFF: The Borrower further authorises any other party to this
Agreement to apply (without prior notice) any credit balance (whether or
not then due) to which it is at any time beneficially entitled on any
account any sum held to its order by and/or any liability of, at any
office of that party in or towards satisfaction of any sum then due from
it to that or any other party under the Financing Documents and unpaid
and notice of such application shall be given to the Borrower as soon as
practicable after such application. Such parties shall not be obliged to
exercise any of their rights under this Clause, which shall be without
prejudice to and in addition to any right of set-off, combination of
accounts, lien or other right to which they are at any time otherwise
entitled (whether by operation of law, contract or otherwise).
24.2 PRO RATA SHARING: If at any time the proportion received or recovered
(whether by direct payment, by exercise of any right of debit, set-off,
combination of accounts or lien, or otherwise) by any Lender or Agent in
respect of the total sum which has become due to
<PAGE> 81
78
it from the Borrower under the Financing Documents before that time
exceeds the proportion received or recovered by the Lender(s) receiving
or recovering the smallest proportion:
24.2.1 that Lender shall pay to the Facility Agent an amount equal to the
excess;
24.2.2 the Facility Agent shall distribute that payment as if it were paid by
the Borrower; and
24.2.3 as between the Borrower and the Lenders, that excess amount shall be
treated as having been paid to the Lenders to which (and in the
proportions in which) it is distributed under Clause 24.2.2 above,
rather than as having been paid to that Lender.
Within two (2) Business Days after any Lender receives or recovers any
such sum otherwise than by payment through the Facility Agent, that
Lender shall notify the Facility Agent of the amount and currency so
received or recovered, how it was received or recovered and whether it
represents principal, interest or other sums. If all or part of any
amount so received or recovered by that Lender has to be refunded by it
(with or without interest), each Lender to whom any part of that amount
has been distributed shall (within two (2) Business Days after receiving
a request from that Lender) in turn pay to that Lender its proportionate
share of the amount to be refunded and of any interest required to be
paid by that Lender on that amount, in respect of all or any part of the
period from the date of the relevant distribution to the date of that
payment to that Lender.
Any amount received or recovered by a Lender under a novation,
assignment, sub-participation (or the like) shall be ignored for the
purpose of this Clause 24.2.
24.3 RECOVERY BY LEGAL ACTIONS: Any amount which a Lender has received or
recovered as a result of taking legal proceedings for the enforcement of
the Financing Documents, in which any other Lender had an opportunity to
participate but did not so do nor take separate legal proceedings, shall
nonetheless be applied in accordance with the terms of Clause 24.2 but
each Lender shall indemnify the Lender(s) which take such legal
proceedings for all costs and expenses in connection with such legal
proceedings on a Pro Rata basis. No Lender shall be obliged to share any
amount received or recovered by it as a result of taking legal
proceedings in relation to the enforcement of security given to it other
than the Financing Documents.
25. EXPENSES AND STAMP DUTY
Whether or not any Advance is made or the EDB Guarantee issued under this
Agreement, the Borrower shall pay:
<PAGE> 82
79
25.1 on demand, all costs and expenses (including legal fees and all goods
and services, value added and other duties or taxes payable on such
costs and expenses) reasonably incurred by the Lead Arrangers, the
Agents and the Lenders in connection with the preparation, negotiation
or entry into of the Financing Documents and/or any amendment of,
supplement to or waiver in respect of any Financing Document, such cost
to be in an amount mutually agreed to by the Borrower and the Lead
Arrangers;
25.2 on demand, all costs and expenses (including legal fees and all goods
and services, value added and other duties or taxes payable on such
costs and expenses) reasonably incurred by the Agents and/or the Lenders
in preserving, protecting or enforcing any rights of the Agents and/or
the Lenders under the Financing Documents and/or any such amendment,
supplement or waiver after the occurrence of an Event of Default; and
25.3 promptly, and in any event before any interest or penalty becomes
payable, any goods and services, value added, stamp, documentary,
registration or similar duty or tax payable in connection with the entry
into, performance, enforcement or admissibility in evidence of the
Financing Documents and/or any such amendment, supplement or waiver, and
shall indemnify the Agents and the Lenders against any liability with
respect to or resulting from any delay in paying or omission to pay any
such duty or tax,
Provided Always that such costs and expenses shall, in each case, be
substantiated by the production of documentary evidence.
26. CALCULATIONS AND EVIDENCE
26.1 BASIS OF CALCULATION: All interest and commitment fee shall accrue from
day to day and shall be calculated on the basis of a year of 365 or 360
days as the case may be.
26.2 ACCOUNTS: The entries made in the accounts by each Lender and Agent in
accordance with its usual practice shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower recorded in
them.
26.3 CERTIFICATE CONCLUSIVE: A certificate by any Lead Arranger, Agent or any
Lender as to any sum payable to it under the Financing Documents and any
other certificate, determination, notification or opinion of any Lead
Arranger, Agent or Lender or the Majority Lenders provided for in this
Agreement, shall be conclusive save for manifest error.
26.4 CONTINUATION OF CERTAIN OBLIGATIONS: The obligations of any party under
or in respect of Clauses 11.2, 12, 20, 21, 23.9, 24 and 25 shall
continue even after the Facilities have been cancelled or terminated or
all the Outstandings have been repaid or prepaid.
<PAGE> 83
80
27. SUCCESSORS AND ASSIGNS
27.1 BENEFIT AND BURDEN OF THIS AGREEMENT: This Agreement and the Security
Documents shall benefit and be binding on the parties hereto, their
respective successors and any permitted assignee or transferee of some
or all of a party's rights or obligations under the Financing Documents.
Any reference in the Financing Documents to any party shall be construed
accordingly.
27.2 BORROWER: The Borrower may not assign or transfer all or any part of its
rights or obligations under the Financing Documents.
27.3 LENDERS:
27.3.1 Subject to Clause 27.4, any Lender may assign all or part of its
rights and/or transfer all or part of its obligations under the
Financing Documents provided it remains as Lender on record,
otherwise it will, except for an assignment or transfer by
reason of circumstances within Clause 11.4, obtain the
Borrower's consent (which consent shall not be unreasonably
withheld or delayed) prior to such assignment or transfer.
27.3.2 The assignment and/or transfer by a Lender may be effected by
the delivery to the Facility Agent of a Transfer Certificate
executed by the Transferor and the Transferee (and in respect of
a transfer of a Tranche B Outstandings under the Tranche B[G]
Facility, together with the EDB Guarantee executed by the
Transferee and EDB's written confirmation that the Transferor
will be released from its EDB Guarantee subject to receipt of
the Transferee's EDB Guarantee). On the later of the Transfer
Date specified in a Transfer Certificate and the Business Day
after the date of receipt of such Transfer Certificate by the
Borrower:
27.3.2.1 to the extent that in such Transfer Certificate the
Transferor seeks to transfer its rights and novate its
obligations under the Financing Documents, the Borrower
and the Transferor shall each be released from further
obligations to the other under the Financing Documents
and their respective rights against each other shall be
cancelled (such rights and obligations being referred
to in this Clause 27 as "cancelled rights and
obligations");
27.3.2.2 the Borrower and the Transferee shall each assume
obligations towards each other and/or acquire rights
against each other which differ from such cancelled
rights and obligations only insofar as the Borrower and
the Transferee have assumed and/or acquired the same in
place of the Borrower and the Transferor; and
<PAGE> 84
81
27.3.2.3 all parties shall acquire the same rights and assume
the same obligations with the Transferee between
themselves as they would have acquired and assumed had
the Transferee been an original party to each of the
Financing Documents instead of the Transferor with the
rights and/or obligations acquired or assumed by it as a
result of such transfer.
27.3.3 Any costs (including legal fees and stamp duty) incurred by the
Transferor or the Transferee in connection with the preparation
of the Transfer Certificate and/or otherwise in connection with
such transfer assignment or sub-participation shall be borne by
the Transferor or Transferee as may be agreed between
themselves.
27.3.4 On the date upon which a transfer takes effect pursuant to
Clause 27.3.2, the Transferee in respect of such transfer shall
pay to the Agent for its own account a transfer fee of S$1,000.
If any Transferee fails to pay any transfer fee payable by it
hereunder on the due date thereof, the Facility Agent may at any
time deduct an amount equal to such fee from any moneys from
time to time held by the Facility Agent for account of such
Transferee.
27.3.5 Upon receipt of a Transfer Certificate the Facility Agent shall
forthwith deliver to the Security Agent, the Borrower and the
other Lenders a copy of the Transfer Certificate.
27.3.6 Any such assignee or transferee shall be and be treated as the
Lender and beneficiary for all purposes of the Financing
Documents and shall be entitled to the full benefit of the
Financing Documents, to the same extent as if it were an
original party in respect of the rights or obligations assigned
or transferred to it.
27.4 TRANSFER OF OBLIGATIONS: Where a Lender transfers its obligations or any
part thereof under Clause 27.3, the Borrower shall execute such
documents as are necessary to release that Lender to the extent of the
transfer and join the transferee as a party to this Agreement and any
document related hereto or in connection with this Agreement.
27.5 DISCLOSURE OF INFORMATION: Each Agent or any Lender may disclose on a
confidential basis to any other party to the Financing Documents or any
of its other branches or its headquarters or to an actual or potential
Transferee, assignee, sub-participant or the like such information about
the Borrower or any other person as it may think fit and disclose to any
other person such information about the Borrower with the prior consent
in writing of the Borrower (Provided that at any time and from time to
time after the making of a declaration under Clause 19.2, (1) no such
consent will be required for any such disclosure and (2) each Agent or
the relevant Lender making any such disclosure shall, if practicable,
consult with the Borrower prior to making such disclosure and shall
<PAGE> 85
82
consider in good faith any request from the Borrower to such Agent or
such Lender not to make such disclosure or to delay making any such
disclosure).
27.6 FACILITY OFFICE: The initial Facility Office of each Lender is set out
under its name at the end of this Agreement. Each Lender may at any time
change its Facility Office in relation to all or a specified part of its
Commitment and/or Outstandings by notifying the Borrower of the fax
number, telex number and address of its new Facility Office. Each Lender
agrees that it will, in so far as it is reasonably practicable and to
the extent permitted by any applicable laws, ensure (except where such
change arises by reason of circumstances within Clause 11.1 otherwise
than by the Lender's default) that the Borrower will not be obliged, as
a result of any such change, to pay to that Lender under Clause 11.2 or
12.2 any sum in excess of the sum (if any) which it would have been
obliged to pay to the Lenders under the relevant Clause if such change
in the Facility Office had not taken place.
27.7 LIMITATION ON CERTAIN OBLIGATIONS OF BORROWER: If, at the time of any
assignment or transfer by a Transferor, circumstances exist which would
oblige the Borrower to pay to the Transferee under Clause 11.2 or 12.2
any sum in excess of the sum (if any) which it would have been obliged
to pay to that Transferor under the relevant Clause in the absence of
that assignment or transfer, the Borrower shall not be obliged to pay
that excess.
28. REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS
28.1 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE: No failure on the part of any
Agent or any Lender to exercise, and no delay on its part in exercising,
any right or remedy under any Financing Document will operate as a
waiver thereof, nor will any single or partial exercise of any right or
remedy preclude any other or further exercise thereof or the exercise of
any other right or remedy. The rights and remedies provided in the
Financing Documents are cumulative and not exclusive of any rights or
remedies provided by law.
28.2 AMENDMENTS, WAIVERS AND CONSENTS:
28.2.1 The prior written consent of the Majority Lenders is required
for any waiver (which for the avoidance of doubt, shall not
amount to an amendment for purpose of Clause 28.2.2) of (a) any
Event of Default or any event which with the giving of notice
and/or lapse of time and/or upon the Majority Lenders making any
necessary determination under Clause 19 would constitute an
Event of Default and (b) any breach of any provision of the
Financing Documents.
28.2.2 The prior written consent of the Majority Lenders and the
Borrower is required for any amendment of this Agreement except
that an amendment which changes or relates to (a) the amount or
currency of the Available Facilities or any Lender's Commitment,
(b) the period during which any of
<PAGE> 86
83
the Facilities are available, (c) the amount or date of any
repayment, (d) the rate of interest, Guarantee Fee or other fees
or amounts payable, (e) the definitions of "Majority Lenders",
"Event of Default", "Potential Event of Default", "Permitted
Encumbrance", "Encumbrance", "indebtedness", "Pro-Rata" or
"Total Indebtedness", (f) the discharge of all or any of the
Security Documents, (g) the release of any Obligor from any of
its liabilities or obligations under the Financing Documents,
(h) the creation of any Encumbrance on any of the property and
assets charged or assigned to the Security Agent or the Lenders,
(i) any act or omission by the Borrower which would result in
the alteration or impairment of any of the Security Documents or
any of the rights created thereunder, (j) Final Repayment Dates,
the Repayment Dates, any provision which requires the consent of
all Lenders or all Secured Creditors or (k) this Clause 28.2
shall require the consent of all the Lenders and the Borrower
Provided always that any matter relating only to Tranche A
Facility shall be decided by the Majority Tranche A Lenders or
all of the Tranche A Lenders as the case may be, and any matter
relating only to Tranche B Facility shall be decided by the
Majority Tranche B Lenders or all of the Trache B Lenders, as
the case may be.
28.2.3 Notwithstanding any other provisions hereof, the relevant Agents
and the Lead Arrangers (as the case may be) shall not be obliged
to agree to any such amendment or waiver if the same would:
28.2.3.1 amend or waive this Clause 28, Clause 25 or Clause 23;
or
28.2.3.2 otherwise amend or waive any of the Agents' rights
hereunder or subject the Agents or the Lead Arrangers
to any additional obligations hereunder.
Any waiver or consent shall be effective only in the instance and for
the purpose for which it is given.
29. COMMUNICATIONS
29.1 ADDRESSES: Each communication under this Agreement shall be made in
writing but, unless otherwise stated, may be made by telefax or letter.
Each communication or document to be delivered to any party under this
Agreement shall be sent to that party at the telefax or address, and
marked for the attention of the person (if any), from time to time
designated by that party to the Facility Agent (or, in the case of the
Facility Agent, by it to each other party) for the purpose of this
Agreement. The initial telefax, address and person (if any) so
designated by each party are set out under its name at the end of this
Agreement. Any communication or document from or to the Borrower shall
be sent to, by or through the Facility Agent.
<PAGE> 87
84
29.2 DEEMED DELIVERY: Any communication from the Borrower shall be
irrevocable, and shall not be effective until received by the Agents and
the Lenders or any of them (as the case may be). Any communication to
any person under this Agreement shall be deemed to have been received by
that person (if sent by telefax) on the day of dispatch or (in any other
case) when left at the address required by Clause 29.1 above or two (2)
days after being sent by prepaid post addressed to it at that address
provided always that in the case of communication by fax, the faxes must
be received by that person to whom it is addressed in a complete and
legible form.
30. SEVERABILITY
30.1 If any one or more of the provisions contained in this Agreement shall
be deemed invalid, unlawful or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired.
30.2 The illegality, invalidity or unenforceability of any provision of this
Agreement under any law of any jurisdiction shall not affect its
legality, validity or enforceability under any other jurisdiction nor
the legality, validity or enforceability of any other provision.
31. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of which taken
together and when delivered to the Facility Agent shall constitute one and the
same instrument. Any party may enter into this Agreement by signing any such
counterpart.
32. NATURE OF RIGHTS AND OBLIGATIONS
32.1 LIABILITY SEVERAL: The liability of the Lenders are several. No party to
this Agreement shall be responsible for the obligations of any other
party. The failure of a Lender to perform its obligations shall not
release any other party from its obligations.
32.2 RIGHTS SEVERAL: The rights of the Lenders are also several. The amount
at any time owing by the Borrower to any party under this Agreement
shall be a separate and independent debt from the amount owing to any
other party. Each party shall have the right to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for
any Lead Arranger, any Agent or any Lender to be joined as an additional
party in any proceedings for this purpose.
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85
33. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of
Singapore and the parties hereto hereby submit to the non-exclusive jurisdiction
of the Singapore Courts.
<PAGE> 89
86
SCHEDULE 1
LENDERS' COMMITMENTS
<TABLE>
<CAPTION>
PART A PART B
------------------------------ -------------------------------
Tranche A Tranche B[G]
Lenders Commitments Commitments Tranche B[T] Commitments
------- ----------- ------------ ----------- -----------
(US$) (S$) (S$) (US$)
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
1. ABN AMRO Bank N.V., Singapore 46,000,000 40,000,000 36,660,000 24,000,000
Branch
2. Citibank, N.A., Singapore Branch 46,000,000 40,000,000 36,670,000 24,000,000
3. Overseas Union Bank Limited 46,000,000 40,000,000 36,670,000 24,000,000
4. Banque Nationale de Paris 32,000,000 27,000,000 27,000,000 15,000,000
5. Commerzbank Aktiengesellschaft, 32,000,000 27,000,000 27,000,000 15,000,000
Singapore Branch
6. Den Danske Bank Aktieselskab, 32,000,000 27,000,000 27,000,000 15,000,000
Singapore Branch
7. ING Bank N.V., Singapore Branch 15,000,000 11,000,000 11,000,000 6,000,000
8. The Bank of Tokyo-Mitsubishi, Ltd., 15,000,000 10,000,000 10,000,000 6,000,000
Singapore Branch
9. KBC Bank N.V., Singapore Branch 9,000,000 7,000,000 7,000,000 4,000,000
10. NATEXIS Banque, Singapore 9,000,000 7,000,000 7,000,000 4,000,000
Branch
11. The Norinchukin Bank, Singapore 9,000,000 7,000,000 7,000,000 4,000,000
Branch
12. UniCredito Italiano SpA, Singapore 9,000,000 7,000,000 7,000,000 4,000,000
Branch
----------- ----------- ----------- -----------
Total 300,000,000 250,000,000 240,000,000 145,000,000
=========== =========== =========== ===========
</TABLE>
*Assumption: US$/S$ Exchange Rate = 1.67
<PAGE> 90
87
SCHEDULE 2
CONDITIONS PRECEDENT
1. a copy of each of the Certificate of Incorporation and Memorandum and
Articles of Association of the Borrower and each Shareholder certified by
an Authorised Signatory;
2. a copy of the resolution of the Board of Directors of the Borrower in the
Agreed Form certified by an Authorised Signatory duly authorising:
2.1 the obtaining of the Facilities on the terms and conditions herein
contained;
2.2 the person(s) to sign the Notice of Drawing and all other notices
referred to in Clauses 7 and 29 and all documents related hereto and
the transaction herein with specimen signatures;
2.3 the execution of the Financing Documents;
2.4 the affixing of the Common Seal of the Borrower to the Financing
Documents which are to be executed under seal;
3. a set of specimen signatures of the Authorised Signatories referred to in
paragraph 2.2 above duly authenticated by the Secretary or Director of the
Borrower;
4. a certificate by a director of the Borrower in the terms prescribed by the
Facility Agent certifying, inter alia, that on the date thereof (a) the
documents referred to in items 1 (in relation to the Borrower), 2 and 3
above are in full force and effect, (b) all consents required for its entry
into and performance of its obligations under the Financing Documents have
been obtained or that such consents are not required, (c) it is not under
receivership or judicial management; (d) there are no liquidation or
dissolution proceedings commenced against it; and (e) no notice under
Section 254(2)(a) or Section 344(1) of the Companies Act (Cap. 50) has been
received by it;
5. a duly certified copy of the resolution of the Board of Directors of each
of the Shareholders in respect of its execution of (a) the Shareholders
Undertaking, and (b) an agreement supplemental to the ASAD Agreement (the
"Supplemental ASAD Agreement");
6. a certificate by a director of each of the Shareholders in the terms
prescribed by the Facility Agent certifying, inter alia, that on the date
thereof (a) the resolution passed by it, referred to in item 5 above, is in
full force and effect, (b) all consents required for its entry into and
performance of its obligations under the Shareholders Undertaking and the
Supplemental ASAD Agreement have been obtained or that such consents are
not required, (c) it is not under receivership or judicial management; (d)
there are no liquidation or dissolution proceedings commence against it;
and (e) no notice under
<PAGE> 91
88
Section 254(2)(a) or Section 344(1) of the Companies Act (Cap. 50) has been
received by it;
7. a certified true copy of each of the Project Documents (including the
Supplemental ASAD Agreement);
8. a certified true copy of the Certificate of Statutory Completion in respect
of the Property;
9. the written consent of JTC in respect of the Sub-Lease and a certificate
from a director of the Borrower confirming that all the conditions set out
therein have been complied with;
10. the written consent of STPL in respect of the Sub-Lease;
11. the Business Plan containing the Base Case;
12. a certified true copy of the latest draft EDB Financing Document;
13. the Debenture duly executed by the Borrower together with duly executed
Forms 33 and 34;
14. the Assignment of Contract Proceeds duly executed by the Borrower together
with duly executed Forms 33 and 34;
15. the Shareholders Undertaking duly executed by the Shareholders;
16. evidence satisfactory to the Security Agent that certified copies of all
insurance policies referred to in Clause 17.20 with the Security Agent's
interest as trustee for the Lenders duly endorsed in such policies have
been delivered to and received by (a) Messrs Allen & Gledhill in respect of
certain policies and (b) J&H Marsh & McLennan Singapore Pte Ltd in respect
of certain other policies together with written confirmation that Security
Agent is granted free access thereto for as long as any Secured Liabilities
remain outstanding;
17. certified copy of the report by an Independent Insurance Consultant
acceptable to the Facility Agent confirming inter alia the adequacy of all
insurance coverage in respect of the Project and operation of the Plant,
and that such insurance policies are in full force and effect;
18. a copy of the letter of offer of the ten-year pioneer certificate; and
19. legal opinion issued by Messrs Thio Su Mien & Partners, relating to the
Financing Documents and legal opinion issued by Messrs Allen & Gledhill,
relating to the Project Documents in the Agreed Form.
<PAGE> 92
89
SCHEDULE 3
NAME, ADDRESS AND TELEPHONE NUMBER OF BORROWER
NOTICE OF DRAWING
[Facility Agent]
Dear Sirs,
Pursuant to Clause 4 of the Facility Agreement dated [ ] 1999 (the "Facility
Agreement") in respect of Tranche A Facility/Tranche B[T] Facility* we hereby
give you notice for the following drawdown:
<TABLE>
<S> <C> <C>
Facility : Tranche A Facility/Tranche B[T] Facility*
Amount of Advance : Dollars ($ ) for our
working capital/payment of the Project Costs stated in the
bills and/or invoices attached/repayment of Bridge Loan
(first drawing only)* Date of Drawdown :
*Interest Period : 1, 3 or 6* months
Payee(s) :
</TABLE>
We confirm:
(1) that the Conditions Precedent under Clause 3 of the Facility Agreement have
been complied with;
(2) that each of the Representations and Warranties contained in Clause 14 of
the Facility Agreement are true and accurate in all material respects;
(3) that as at the date hereof, no Event of Default or Potential Event of
Default has occurred and is continuing. We further represent warrant and
undertake that no Event of Default or Potential Event of Default will exist
at the date of the intended drawdown;
[(4) that Commercial Production is or will occur prior to the first Repayment
Date;](1) and
Please credit to our Account [ ] with the Project Account Bank the
proceeds of the Advance herein requested.
All capitalised terms herein shall have the meanings ascribed to them in the
Facility Agreement.
Yours faithfully,
Company Stamp ___________________________________
(Name and Signature of Director)
* Delete as applicable
(1) Required only until Commercial Production
<PAGE> 93
90
SCHEDULE 4
REQUEST FOR ISSUE OF EDB GUARANTEE
[Facility Agent]
Dear Sirs,
Pursuant to Clause 7 of the Facility Agreement dated [] 1999 (the "Facility
Agreement") in respect of Tranche B[G] Facility we hereby request for the
issuance of the EDB Guarantee:
<TABLE>
<S> <C> <C>
Amount : Singapore Dollars
(S$ )
Date of Issuance of EDB Guarantee :
Beneficiary : Economic Development Board
</TABLE>
We confirm:
(1) that the Conditions Precedent under Clause 3 of the Facility Agreement have
been complied with;
(2) that each of the Representations and Warranties contained in Clause 14 of
the Facility Agreement are true and accurate in all material respects;
(3) that as at the date hereof, no Event of Default or Potential Event of
Default has occurred. We further represent warrant and undertake that no
Event of Default or Potential Event of Default will exist at the date of
the intended drawdown;
(4) that Commercial Production is or will occur prior to the first Repayment
Date;
*(5) we are drawing on the EDB Loan on [].
All capitalised terms herein shall the meanings ascribed to them in the Facility
Agreement.
Yours faithfully,
Company Stamp ___________________________________
(Name and Signature of Director)
*Delete as applicable
<PAGE> 94
91
SCHEDULE 5
PROJECT DOCUMENTS
1. the Joint Venture Agreement;
2. the ASAD Agreement and the Supplemental ASAD Agreement (as defined in
Schedule 2);
3. the License and Technology Transfer Agreement;
4 the CSM-SMP Cost Sharing Agreement dated 17th February 1998 and made
between CSM and SMP;
5 the sub-lease dated 17 February 1998 made between CSM and the Borrower;
6. any document designated by the Agents and the Borrower in writing as a
Project Document.
<PAGE> 95
92
SCHEDULE 6
LIST OF SECURITY DOCUMENTS
1. Debenture
2. Assignment of Contract Proceeds (ASADA)
3. Shareholders Undertaking
4. Any other document as may be agreed to in writing between the Agents and
the Borrower
<PAGE> 96
93
SCHEDULE 7
SWAP RATE
"Swap Rate" means, in relation to an Interest Period relating to an Advance or
overdue sum, the rate per annum (as determined by the Facility Agent) appearing
as of 11 a.m. on the second Business Day before the first day of that Interest
Period relating to that Advance or, as the case may be, that overdue sum under
the caption "ASIAN CURRENCY SWAP OFFER RATE FIXING AT 11 A.M. SINGAPORE TIME" on
Telerate page 44178 (or such other page as may replace Telerate Page 44178 for
the purpose of displaying the swap rate of leading reference banks) for the same
period as that Interest Period (or, if the periods are not the same, such period
as the Facility Agent determines to be substantially the same), but if no such
quotation appears, the Swap Rate shall be the rate per annum (expressed as a
percentage) determined by the Facility Agent equal to the arithmetic mean
(rounded up, if necessary, to the next 1/16 per cent) of the respective rates
per annum determined by each of the Reference Banks and quoted by such Reference
Bank to the Facility Agent to be in relation to the Interest Period relating to
that Advance or, as the case may be, that overdue sum equal to Y (which shall be
calculated to the nearest four decimal places) calculated in accordance with the
following formula:
365 F 36500 F 365
Y = ( R x ---) + (- x -----) + (- x R x ---)
360 S N S 360
where:
F = the premium (being a positive number) or the discount (being a negative
number), as the case may be, which would have been paid or received by such
Reference Bank in offering to sell US Dollars forward in exchange for
Singapore Dollars on the last day of that Interest Period relating to that
Advance or, as the case may be, that overdue sum in the Singapore
inter-bank market at or about 11 a.m. on the second Business Day before the
first day of that Interest Period relating to that Advance or, as the case
may be, that overdue sum;
S = the exchange rate at which such Reference Bank sells US Dollars spot in
exchange for Singapore Dollars in the Singapore foreign exchange market, as
quoted by such Reference Bank at or about 11 a.m. on the second Business
Day before the first day of that Interest Period relating to that Advance
or, as the case may be, that overdue sum;
R = the rate at which such Reference Bank is offering US Dollar deposits for
that Interest Period relating to that Advance or, as the case may be, that
overdue sum in an amount comparable to the US Dollar equivalent of that
Advance or, as the case may be, that overdue sum (such US Dollar equivalent
to be determined by such Reference Bank at such rate or rates as such
Reference Bank determines to be most appropriate) to prime banks in the
Singapore inter-bank market at or about 11 a.m. on the second Business Day
before the first day of that Interest Period relating to that Advance or,
as the case may be, that overdue sum; and
N = the actual number of days in that Interest Period relating to that Advance
or, as the case may be, that overdue sum.
<PAGE> 97
94
SCHEDULE 8
REPAYMENT SCHEDULE OF TRANCHE A OUTSTANDINGS
<TABLE>
<CAPTION>
REPAYMENT DATE INSTALMENT AMOUNT
-------------- -----------------
<S> <C>
1. Date falling on the expiry of the Availability Period US$42,857,142.86
("1st Instalment Date")
2. Date falling 6 months from the expiry of the 1st US$42,857,142.86
Instalment Date ("2nd Instalment Date")
3. Date falling 6 months from the expiry of the 2nd US$42,857,142.86
Instalment Date ("3rd Instalment Date")
4. Date falling 6 months from the expiry of the 3rd US$42,857,142.86
Instalment Date ("4th Instalment Date")
5. Date falling 6 months from the expiry of the 4th US$42,857,142.86
Instalment Date ("5th Instalment Date")
6. Date falling 6 months from the expiry of the 5th US$42,857,142.86
Instalment Date ("6th Instalment Date")
7. Date falling 6 months from the expiry of the 6th US$42,857,142.84
Instalment Date
</TABLE>
<PAGE> 98
95
SCHEDULE 9
INSURANCE
1. Prior to Completion of the Plant:
(a) statutory workmen's compensation insurance;
(b) third party liability insurance;
(c) marine cargo insurance; and
2. After Completion of the Plant:
(a) statutory workmen's compensation insurance;
(b) third party liability insurance;
(c) marine cargo insurance;
(d) property damage insurance; and
(e) business interruption insurance.
<PAGE> 99
96
SCHEDULE 10
FORM OF EDB GUARANTEE
[To: Economic Development Board
1. We refer to an EDB Loan Agreement (the "EDB Loan Agreement") dated [] 1999
made between yourselves and Silicon Manufacturing Partners Pte Ltd (the
"Borrower") pursuant to which you have agreed to make available to the
Borrower a loan facility in an aggregate amount not exceeding
S$240,000,000.
2. In consideration of your agreeing subject, inter alia, to the delivery of
this Guarantee to enter into and accept liabilities under the EDB Loan
Agreement and subject to the due observance of the provisions of Clause 5
of the EDB Loan Agreement, we, the Guarantor Banks whose names appear in
the signature pages hereto unconditionally and irrevocably:
(1) guarantee the payment by the Borrower of each amount which may from
time to time fall due to yourselves from the Borrower in respect of:
(a) payments of principal advanced under the EDB Loan Agreement up to
a maximum aggregate amount at any time equal to the Maximum
Principal Liability (as defined below) at that time;
(b) payments of interest under Clause 7.2 of the EDB Loan Agreement
but not including default interest under Clause 7.5 of the EDB
Loan Agreement, up to a maximum aggregate amount at any time
being the lesser of six months interest and the Maximum Interest
Liability (as defined below) at that time; and
(c) payments of default interest under Clause 7.5 of the EDB Loan
Agreement, up to a maximum aggregate amount at any time equal to
the Maximum Default Interest Liability (as defined below) at that
time,
and agree to pay to yourselves, within three (3) Business Days (as
such term is defined in the EDB Loan Agreement) of demand by
yourselves, unless such demand is made on a day which is not a
business day or after 12.00 noon on any Business Day, in which event
payment shall be made within three (3) Business Days from the next
immediately succeeding Business Day:
(i) any and every sum or sums of money which the Borrower shall at
any time be liable to pay to yourselves under or pursuant to the
EDB Loan
<PAGE> 100
97
Agreement by way of principal and shall fail to pay on the due
date therein provided up to the Maximum Principal Liability at
that time;
(ii) any and every sum or sums which the Borrower shall at any time be
liable to pay to yourselves under or pursuant to Clause 7.2 of
the EDB Loan Agreement by way of interest (but excluding default
interest under Clause 7.5 thereof), and shall fail to pay on the
due date therein provided up to the lesser of six months interest
and the Maximum Interest Liability at that time; and
(iii) any and every sum or sums which the Borrower shall at any time
be liable to pay to yourselves under or pursuant to the EDB Loan
Agreement by way of default interest under Clause 7.5 thereof,
and shall fail to pay on the due date therein provided up to the
Maximum Default Interest Liability at that time; and
(2) agree as a primary obligation to indemnify yourselves on demand from
and against any loss, cost or expense incurred by yourselves as a
result of the obligations guaranteed pursuant hereto being or becoming
void, voidable, unenforceable or ineffective for any reason
whatsoever, whether or not known to yourselves, the amount of such
loss being the amount which you would otherwise have been entitled to
recover from ourselves.
3. The liability of each of us in respect of any sum at any time due to you
hereunder is several and shall be limited to the fraction of such sum which
appears opposite our respective names in Schedule A hereto.
4. The total amount at any time payable by us hereunder shall not exceed the
Maximum Aggregate Liability (as defined below) at that time.
Notwithstanding the foregoing, the total amount at any time payable by us
hereunder in respect of interest under Clause 7.2 of the EDB Loan Agreement
shall not exceed the lesser of six months interest and the Maximum Interest
Liability at that time, the total amount at any time payable by us
hereunder in respect of default interest under Clause 7.5 of the EDB Loan
Agreement shall not exceed the Maximum Default Interest Liability at that
time and the total amount at any time payable by us hereunder in respect of
principal shall not exceed the Maximum Principal Liability at that time,
Provided that this Guarantee shall not extend to any advances made by
yourselves to the Borrower at any time after you have received notice from
Citicorp Investment Bank (Singapore) Limited (the "Agent") of the
occurrence of an Event of Default (as defined in the Syndicated Credit
Facilities Agreement dated [ ] made between (1) the Borrower, as
borrower, (2) the Lead Arrangers named therein, as lead arrangers, (3) the
Lenders named therein, as lending banks, (4) Citicorp Investment Bank
(Singapore) Limited as facility agent and (5) Citicorp Investment Bank
(Singapore) Limited as security agent.
<PAGE> 101
98
5. In this Guarantee:
"Maximum Aggregate Liability" means, at any time during a Relevant Period,
the amount specified against that Relevant Period in column (2) of Schedule
B hereto;
"Maximum Interest Liability" means, at any time during a Relevant Period,
the amount specified against that Relevant Period in column (3) of Schedule
B hereto;
"Maximum Default Interest Liability" means, at any time during a Relevant
Period, the amount specified against that Relevant Period in column (4) of
Schedule B hereto;
"Maximum Principal Liability" means, at any time during a Relevant Period,
the amount specified against that Relevant Period in column (5) of Schedule
B hereto; and
"Relevant Periods" means each of the periods specified as a Relevant Period
in column (1) of Schedule B hereto.
6. We each represent and warrant that we have full power to enter into this
Guarantee and have taken all necessary steps to authorise its execution on
our behalf and have obtained all necessary governmental and other consents
required to enable us each to perform our obligations hereunder and that
this Guarantee is legal, valid and binding on each of us.
7. This Guarantee shall be a continuing security and accordingly (1) shall
extend to cover the balance of principal due at any time from the Borrower
to you and (2) shall not be discharged by any intermediate payment or
settlement of account between the Borrower and yourselves.
8. (1) If any sum due and payable by any of us hereunder or under any order
or judgment given or made in relation hereto has to be converted from
the currency (the "First Currency") in which the same is payable
hereunder or under such order or judgment into another currency (the
"Second Currency") for the purpose of (a) making or filing a claim or
proof against us whether in our liquidation or otherwise, (b)
obtaining an order or judgment in any court or other tribunal or (c)
enforcing any order or judgment given or made in relation hereto, that
such of us that is so obliged to pay such sum shall indemnify and hold
harmless each of the persons to whom such sum is due and payable from
and against any loss suffered as a result of any discrepancy between
(i) the rate of exchange used for such purpose to convert the sum in
question from the First Currency into the Second Currency and (ii) the
rate or rates of exchange at which such person may in the ordinary
course of business purchase the First Currency with the Second
Currency upon receipt by it of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
<PAGE> 102
99
(2) The foregoing indemnity shall constitute a separate obligation
distinct from our other respective obligations hereunder and shall
survive the giving or making of any order or judgment in relation to
all or any of such other obligations.
9. Each time you make an advance to the Borrower pursuant to the provisions of
the EDB Loan Agreement or receive a repayment or prepayment of principal
thereunder, upon request by the Borrower, you shall notify us in writing of
the principal amount and date of such advance or, as the case may be,
repayment or prepayment, and of the then revised outstanding balance of
principal. We hereby agree that a certificate from yourselves as to the
amount due from the Borrower by way of principal or interest under the EDB
Loan Agreement at the date of such certificate shall, in the absence of
manifest error, be conclusive and binding on us for all purposes and we
further agree to cause the Agent to promptly notify you of the occurrence
of any Event of Default under the Syndicated Credit Facilities Agreement
whereby the Advances made thereunder are declared immediately due and
payable.
10. Any demand to be made on us hereunder shall be made by telex or letter to
our Facility Agent at 5 Shenton Way #37-03/04 UIC Building Singapore
068808, and shall specify whether such demand is made in respect of
principal or interest and, if both, the respective amounts of such claim
and, where such demand is made in respect of interest, the period in
respect of which such claim is made. Such demand shall also specify, if
relevant, the provision of Clause 15.2 pursuant to which indebtedness under
the EDB Loan Agreement was accelerated. You shall be entitled to make any
number of demands on us hereunder.
11. This Guarantee shall remain in full force and effect until the earlier of
(1) the date on which you certify that there is no amount owing, due or
payable by the Borrower to yourselves by way of principal under the EDB
Loan Agreement and no amounts of interest accrued but unpaid, a copy of
which certification shall be sent to the Agent, and (2) 30th November 2005
("the Expiry Date") or, if such day is not a Business Day, the immediately
preceding Business Day.
12. This Guarantee may be executed by each party hereto on separate
counterparts, each of which shall be binding on such party and all of which
shall constitute one and the same document.
13. This Guarantee shall be governed by, and construed in accordance with, the
laws of Singapore.]
<PAGE> 103
100
SCHEDULE A
<TABLE>
<CAPTION>
GUARANTOR BANK FRACTION
<S> <C>
1. ABN AMRO Bank N.V., Singapore Branch 40/250
2. Citibank, N.A., Singapore Branch 40/250
3. Overseas Union Bank Limited 40/250
4. Banque Nationale de Paris 27/250
5. Commerzbank Aktiengesellschaft, Singapore Branch 27/250
6. Den Danske Bank Aktieselskab, Singapore Branch 27/250
7. ING Bank N.V., Singapore Branch 11/250
8. The Bank of Tokyo-Mitsubishi, Ltd., Singapore Branch 10/250
9. KBC Bank N.V., Singapore Branch 7/250
10. NATEXIS Banque, Singapore Branch 7/250
11. The Norinchukin Bank, Singapore Branch 7/250
12. UniCredito Italiano SpA, Singapore Branch 7/250
</TABLE>
<PAGE> 104
101
SCHEDULE B
<TABLE>
<CAPTION>
Maximum Interest
Liability and Principal Amount
Maximum Aggregate Default Interest Maximum Principal Paid Per
Date of Payment Liability Liability Liability Instalment
--------------- ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
250,000,000 10,000,000 240,000,000 0
1st September 2002 215,714,286 10,000,000 205,714,286 34,285,714
1st March 2003 179,923,016 10,000,000 171,428,572 34,285,714
1st September 2003 143,938,413 10,000,000 137,142,858 34,285,714
1st March 2004 107,953,810 10,000,000 102,857,144 34,285,714
1st September 2004 71,969,207 10,000,000 68,571,430 34,285,714
1st March 2005 35,984,604 10,000,000 34,285,716 34,285,714
1st September 2005 0 0 0 34,285,716
</TABLE>
<PAGE> 105
102
IN WITNESS WHEREOF this Guarantee has been entered into on 1999.
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
<PAGE> 106
103
<PAGE> 107
103
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[ ]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
<PAGE> 108
104
SCHEDULE 11A
REPAYMENT SCHEDULE
TRANCHE B[T] FACILITY (S$)
<TABLE>
<CAPTION>
Principal Amount Paid
Date of Payment Maximum Aggregate Liability Per Instalment
--------------- --------------------------- ---------------------
<S> <C> <C>
240,000,000 0
1st September 2002 215,714,286 34,285,714
1st March 2003 179,923,016 34,285,714
1st September 2003 143,938,413 34,285,714
1st March 2004 107,953,810 34,285,714
1st September 2004 71,969,207 34,285,714
1st March 2005 35,984,604 34,285,714
1st September 2005 0 34,285,716
</TABLE>
<PAGE> 109
105
SCHEDULE 11B
REPAYMENT SCHEDULE
TRANCHE B[T] FACILITY (US$)
<TABLE>
<CAPTION>
Principal Amount Paid
Date of Payment Maximum Aggregate Liability Per Instalment
--------------- --------------------------- ---------------------
<S> <C> <C>
145,000,000
1st September 2002 124,285,714.30 20,714,285.70
1st March 2003 103,571,428.60 20,714,285.70
1st September 2003 82,857,142.90 20,714,285.70
1st March 2004 62,142,857.20 20,714,285.70
1st September 2004 41,428,571.50 20,714,285.70
1st March 2005 20,714,285.80 20,714,285.70
1st September 2005 20,714,285.80
</TABLE>
<PAGE> 110
106
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement.
THE BORROWER
SILICON MANUFACTURING PARTNERS PTE LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Fax Number: 362 2909
By: /s/ Chia Song Hwee
---------------------------------------
Name: Chia Song Hwee
---------------------------------------
Title: Chief Financial Officer
---------------------------------------
THE LEAD ARRANGERS
ABN AMRO BANK N.V., SINGAPORE BRANCH
63 Chulia Street, Level 5
Singapore 049514
Fax Number: 231 8477
By: /s/ Rajan Ray By: /s/ Michiel Kerbert
-------------------------------- ---------------------------------
Name: Rajan Ray Name: Michiel Kerbert
-------------------------------- ---------------------------------
Title: Country Manager Title: Senior Vice President, Head
-------------------------------- ---------------------------------
of Structured Finance Asia
<PAGE> 111
107
CITIBANK, N.A., SINGAPORE BRANCH
5 Shenton Way #37-03, UIC Building
Singapore 068808
Fax Number: 227 8768
By: /s/ SUNIL SNEENIVASAN
---------------------------------------
Name: Sunil Sneenivasan
---------------------------------------
Title: Chief Executive Officer
---------------------------------------
OVERSEAS UNION BANK LIMITED
1 Raffles Place, OUB Centre
Singapore 048616
Fax Number: 532 2686
By: /s/ PETER SEAH
---------------------------------------
Name: Peter Seah
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
<PAGE> 112
108
THE LENDERS
ABN AMRO BANK N.V., SINGAPORE BRANCH
63 Chulia Street, Level 5
Singapore 049514
Fax Number: 231 8477
By: /s/ RAJAN RAY By: /s/ MICHIEL KERBERT
-------------------------------- ---------------------------------
Name: Rajan Ray Name: Michiel Kerbert
-------------------------------- ---------------------------------
Title: Country Manager Title: Senior Vice President, Head of
-------------------------------- ---------------------------------
Structured Finance Asia
---------------------------------
CITIBANK, N.A., SINGAPORE BRANCH
5 Shenton Way #37-03, UIC Building
Singapore 068808
Fax Number: 227 8768
By: /s/ SUNIL SREENIVASAN
---------------------------------------
Name: Sunil Sreenivasan
---------------------------------------
Title: Chief Executive Officer
---------------------------------------
<PAGE> 113
109
OVERSEAS UNION BANK LIMITED
1 Raffles Place, OUB Centre
Singapore 048616
Fax Number: 532 2686
By: /s/ PETER SEAH
---------------------------------------
Name: Peter Seah
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
BANQUE NATIONALE DE PARIS
20 Collyer Quay #01-01, Tung Centre
Singapore 049319
Fax Number: 532 7905
By: /s/ VIJAY CHOPRA
---------------------------------------
Name: Vijay Chopra
---------------------------------------
Title: Director, Project Finance and
Structured Debt, Asia
---------------------------------------
COMMERZBANK AKTIENGESELLSCHAFT, SINGAPORE BRANCH
8 Shenton Way #42-01, Temasek Tower
Singapore 068811
Fax Number: 226 2792
By: /s/ B. LABER By: /s/ A.R. WITHERS
-------------------------------- ---------------------------------
Name: B. Laber Name: A.R. Withers
-------------------------------- ---------------------------------
Title: Manager Title: AGM
-------------------------------- ---------------------------------
<PAGE> 114
110
DEN DANSKE BANK AKTIESELSKAB, SINGAPORE BRANCH
50 Raffles Place #24-01 Singapore Land Tower
Singapore 048623
Fax Number: 224 3320
By: /s/ MOGENS SONDERGAARD By: /s/ EUNICE WARREN
-------------------------------- ---------------------------------
Name: Mogens Sondergaard Name: Eunice Warren
-------------------------------- ---------------------------------
Title: General Manager Title: Assistant General Manager
-------------------------------- ---------------------------------
ING BANK N.V., SINGAPORE BRANCH
9 Raffles Place #19-02 Republic Plaza
Singapore 048619
Fax Number: 534 1672
By: /s/ HAROLD QUAY KOK WEE By: /s/ TON KAI LEONG
-------------------------------- ---------------------------------
Name: Harold Quay Kok Wee Name: Ton Kai Leong
-- ------------------------------- ---------------------------------
Title: Senior Vice President Title: Senior Vice President
-------------------------------- ---------------------------------
<PAGE> 115
111
THE BANK OF TOKYO-MITSUBISHI, LTD., SINGAPORE BRANCH
9 Raffles Place #01-01 Republic Plaza
Singapore 048619
Fax Number: 538 8083
By: /s/ KAZUAKI IWAMOTO
---------------------------------------
Name: Kazuaki Iwamoto
---------------------------------------
Title:
---------------------------------------
KBC BANK N.V., SINGAPORE BRANCH
30 Cecil Street #12-01, Prudential Tower
Singapore 049712
Fax Number: 395 2829
By: /s/ YONG YIN MIN By: /s/ YUEN CHEE OUN
-------------------------------- ---------------------------------
Name: Yong Yin Min Name: Yuen Chee Oun
-------------------------------- ---------------------------------
Title: Head, Corporate Banking Title: Head, Local Corporates
-------------------------------- ---------------------------------
<PAGE> 116
112
NATEXIS BANQUE, SINGAPORE BRANCH
50 Raffles Place #41-01 Singapore Land Tower
Singapore 048623
Fax Number: 224 8651
By: /s/ PHILIPPE SIRAND By: /s/ CLARA HANG
-------------------------------- ---------------------------------
Name: Philippe Sirand Name: Clara Hang
-------------------------------- ---------------------------------
Title: General Manager Title: First Vice President, Head of
-------------------------------- ---------------------------------
Corporate & Institutional Banking
THE NORINCHUKIN BANK, SINGAPORE BRANCH
80 Raffles Place #53-01 UOB Plaza 1
Singapore 048624
Fax Number: 536 3009
By: /s/ MINORU OASHI
---------------------------------------
Name: Minoru Oashi
---------------------------------------
Title: Manager, Corporate Finance
---------------------------------------
UNICREDITO ITALIANO SPA, SINGAPORE BRANCH
80 Raffles Place #51-01 UOB Plaza 1
Singapore 048624
Fax Number: 534 4300
By: /s/ FEDERICO GHIZZONI By: /s/ GIANNI FRANCO PAPA
-------------------------------- ---------------------------------
Name: Federico Ghizzoni Name: Gianni Franco Papa
-------------------------------- ---------------------------------
Title: General Manager Title: Deputy General Manager
-------------------------------- ---------------------------------
<PAGE> 117
113
THE FACILITY AGENT
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
300 Tampines Avenue 5 #07-00, Tampines Junction
Singapore 529653
Fax Number: 426 8056
By: /s/ LAWRENCE YEO
--------------------------------
Name: Lawrence Yeo
--------------------------------
Title: Managing Director
--------------------------------
THE SECURITY AGENT
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
300 Tampines Avenue 5 #07-00, Tampines Junction
Singapore 529653
Fax Number: 426 8056
By: /s/ LAWRENCE YEO
--------------------------------
Name: Lawrence Yeo
--------------------------------
Title: Managing Director
--------------------------------
<PAGE> 118
114
APPENDIX A
FORM OF TRANSFER CERTIFICATE
To: The Facility Agent
as agent for the Lenders referred to below
[ Date ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Agreement") dated [ ] whereby inter alia facilities
totalling [US$300,000,000] was made available to SILICON MANUFACTURING PARTNERS
PTE LTD as Borrower by the Lenders on whose behalf Citicorp Investment Bank
(Singapore) Limited acted as Facility Agent in connection therewith.
1. Terms defined in the Agreement shall, subject to any contrary indication,
have the same meaning herein. The terms Transferor, Transferee and
Participation are defined in the schedule hereto.
2. The Transferor confirms that the Participation is an accurate summary of
its participation in the Agreement and requests the Transferee to accept
and procure the transfer to the Transferee by way of novation of the
portion transferred as specified below by counter-signing and delivering
this Transfer Certificate to the Facility Agent at its address for the
purpose of Clause 27 of the Agreement.
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for
the purposes of Clause 27 of the Agreement so as to take effect in
accordance with the terms thereof on the Transfer Date or on such later
date as may be determined in accordance with the terms thereof.
4. The Transferee warrants that it has received a copy of each of the
Financing Documents executed for the benefit of the Transferor together
with such other information as it has required in connection with this
transaction and that it has not relied and will not hereafter rely on the
Transferor to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information
and further agrees that it has not relied and will not rely on the
Transferor to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of the
Borrower.
5. The Transferee hereby undertakes with the Transferor and each of the other
parties to the Financing Documents that it will perform in accordance with
their terms all those obligations which by the terms of the Financing
Documents will be assumed by it after
<PAGE> 119
115
delivery of this Transfer Certificate to the Facility Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
6. The Transferor makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of the Financing Documents or any document
relating thereto and assumes no responsibility for the financial condition
of the Borrower or the performance and observance by the Borrower of any of
its obligations under the Financing Documents or any document relating
thereto and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
7. The Transferor hereby gives notice that nothing herein or in the Financing
Documents (or any document relating thereto) shall oblige the Transferor to
(i) accept a re-transfer from the Transferee of the whole or any part of
its rights, benefits and/or obligations under the Financing Documents
transferred pursuant hereto or (ii) support any losses directly or
indirectly sustained or incurred by the Transferee for any reason
whatsoever including, without limitation, the non-performance by the
Borrower or any other party to the Financing Documents or any of them (or
any document relating thereto) of its obligations under any such document.
The Transferee hereby acknowledges the absence of any such obligation as is
referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with Singapore
law.
THE SCHEDULE
1. Transferor:
2. Transferee:
3. Transfer Date:
<TABLE>
<CAPTION>
4. Participation Portion Transferred
------------- -------------------
<S> <C> <C>
(i) Available Tranche A Commitment: US$ US$
(ii) Tranche A Outstandings: US$ US$
(iii) Tranche B [T] Outstanding US$/S$ US$/S$
(iv) Tranche B [G] Outstanding S$ S$
[Transferor] [Transferee]
</TABLE>
By:__________________________________ By: ____________________________________
Date: Date:
Address: Address:
<PAGE> 1
EXHIBIT 10.27
DATED THE 3RD DAY OF SEPTEMBER 1999
By
SILICON MANUFACTURING PARTNERS PTE LTD
as Borrower
CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD.
as Shareholders
In Favour Of
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
as Security Agent
===============================================================================
SHAREHOLDERS UNDERTAKING
===============================================================================
TSM&P
THIO SU MIEN & PARTNERS, Advocates & Solicitors
30 Raffles Place, #26-01 Caltex House, Singapore 048622
Telephone: (065) 534 4877 - Facsimile: (065) 534 4822
<PAGE> 2
C O N T E N T S
<TABLE>
<CAPTION>
CLAUSE PAGE NO
========================================================================
<S> <C> <C>
1. DEFINITIONS............................................1
2. SHAREHOLDERS' OBLIGATIONS..............................3
3. REPRESENTATIONS AND WARRANTIES.........................6
5. CONTINUING OBLIGATIONS.................................8
6. CURRENCY INDEMNITY....................................10
7. EXPENSES..............................................10
8. CONFIRMATION..........................................10
9. ASSIGNMENT/TRANSFER...................................10
10. WAIVERS...............................................11
11. COMMUNICATIONS........................................11
12. PARTIAL INVALIDITY....................................12
13. GOVERNING LAW.........................................12
</TABLE>
<PAGE> 3
THIS UNDERTAKING is dated 3 September 1999 and made by:-
(1) SILICON MANUFACTURING PARTNERS PTE LTD (the "Borrower"); and
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD. ("CSM") and LUCENT TECHNOLOGIES
MICROELECTRONICS PTE. LTD. ("LTM") (collectively "the Shareholders" and
each "the Shareholder")
IN FAVOUR OF
(3) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED of 5 Shenton Way #37-03/04 UIC
Building, Singapore 068808 as security trustee for the Secured Creditors
(as hereinafter defined) (in such capacity, "the Security Agent").
WHEREAS:-
(A) CSM and LTM are the legal owners of 49 per cent. and 51 per cent.
respectively, of the issued shares in the capital of the Borrower.
(B) At the request of the Borrower and the Shareholders, the Lenders (as
hereinafter defined below) have agreed to make available to the Borrower
Facilities in the aggregate not exceeding Singapore Dollars Two Hundred and
Fifty Million (S$250,000,000.00) and United States Dollars Three Hundred
Million (US$300,000,000.00) on and subject to the terms and conditions set
out in the Facility Agreement dated September 1999 made between the
Borrower, the banks and financial institutions listed in Schedule 1
thereto, as lenders, Citicorp Investment Bank (Singapore) Limited as
Facility Agent for the Lenders and the Security Agent ("the Facility
Agreement").
(C) In order to induce the Lenders to extend to the Borrower the Facilities the
Shareholders have agreed to give certain undertakings to the Security Agent
as security trustee for and for the benefit of the Secured Creditors and
this Undertaking is executed pursuant thereto.
NOW THIS DEED WITNESSES as follows:-
1. DEFINITIONS
1.1 In this Undertaking:-
"Borrower" includes its successors in title;
<PAGE> 4
"Charged Assets" has the meaning ascribed to it in the Debenture;
"Equity Funding" means the paid up share capital (including ordinary
share capital and preference share capital) in the Borrower;
"Lenders" means the Lenders and includes its successors in title,
assignees and transferees;
"Secured Creditors" has the meaning ascribed to it in the Facility
Agreement;
"Shareholders" means CSM and LTM and includes their respective
successors;
"Shareholding Percentage" means (1) in relation to CSM, 49% and (2) in
relation to LTM, 51%; and
"Sub-Lease Agreement" mans the sub-lease agreement dated 17th February
1998 made between CSM and the Borrower.
1.2 Unless otherwise stated or otherwise so required, terms defined or
qualified in the Facility Agreement have the same meanings where used
in this Undertaking.
1.3 Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Undertaking.
1.4 In this Undertaking, unless the context otherwise requires:-
1.4.1 references to Clauses and Schedules are to be
construed as references to clauses of, and the
schedules to, this Undertaking and references to this
Undertaking include the Schedules;
1.4.2 references to (or to any specified provision of) this
Undertaking or any other document in this Undertaking
(including the recitals herein) shall be construed as
references to this Undertaking, that provision or
that document as in force for the time being and as
amended, supplemented or modified from time to time;
1.4.3 words importing the plural shall include the singular
and vice versa;
1.4.4 references to a person shall be construed as
including references to an individual, firm, company,
corporation, unincorporated body of persons or any
State or any agency thereof;
1.4.5 references to any enactment shall be deemed to
include references to such enactment as re-enacted,
amended or extended; and
2
<PAGE> 5
1.4.6 references to "the Shareholders" and the Shareholders
howsoever expressed in this Undertaking shall be read
as referring to both or (if the context so admits)
any one or more of such persons and all covenants,
agreements, undertakings, terms, stipulations and
other provisions hereof shall unless otherwise
provided, be deemed to be made by and be binding on
both of them severally.
1.5 Unless otherwise stated or otherwise so required, any undertaking or
representation given to, or obligation undertaken by, the Borrower and
the Shareholders in favour of the Security Agent pursuant to this
Undertaking shall be deemed to be given or created to or in favour of
the Security Agent as security trustee for and for the benefit of the
Secured Creditors in accordance with the terms of the Facility
Agreement.
2. SHAREHOLDERS' OBLIGATIONS
2.1 SHAREHOLDERS' UNDERTAKING: In consideration of the Lenders agreeing at
the request of the Shareholders and the Borrower to extend the
Facilities to the Borrower, the Shareholders hereby acknowledge
incurring obligations and giving rights under this Undertaking for
valuable consideration received from the Secured Creditors. Pursuant
thereto, each of the Shareholders hereby severally and irrevocably and
unconditionally undertake to the Security Agent and the Secured
Creditors each for itself that it will for so long as the Secured
Liabilities remain outstanding:-
2.1.1 make Equity Funding in the aggregate amount equal to
its Shareholding Percentage of S$425,000,000 by way
of the subscription of shares (the "Shares") in the
share capital of the Borrower in an aggregate amount
stipulated in the schedule set forth below on or
before:-
<TABLE>
<CAPTION>
DATE AGGREGATED AMOUNT OF SHARE CAPITAL
---- ----------------------------------
<S> <C>
30 June 1999 S$190 million
31 December 1999 S$300 million
30 June 2000 S$350 million
31 December 2000 S$425 million;
</TABLE>
2.1.2 notify the Facility Agent promptly of the Equity
Funding made by it as aforesaid and in the event of
failure to do so to notify the Facility Agent
promptly;
2.1.3 In the event of the occurrence of an Event of
Default, the Shareholders shall accelerate the
payment of their respective Shareholding Percentage
of such remaining unpaid portion of the S$425,000,000
as is sufficient to cure the Event of Default;
3
<PAGE> 6
2.1.4 pay all Equity Funding and monies payable by it under Clause
2.1.3 to the relevant Project Accounts;
2.1.5 cause the Borrower to issue shares to it as aforesaid in
accordance with Clause 2.1.1;
2.1.6 not at any time terminate or take steps to terminate the Joint
Venture Agreement without the prior written consent of the
Majority Lenders;
2.1.7 cause the Borrower to (a) complete physical equipment
installation of the Project (b) to achieve Commercial Production
and (c) to carry out the obligations of the Borrower under the
ASAD Agreement at all times;
2.1.7.1 each of the Shareholders will severally extend to the
Borrower such amounts of the Contingency Shareholders'
Loan up to an aggregate amount at any time not exceeding
its Shareholding Percentage of US$18,000,000 to finance
any shortfall in the payment by the Borrower of the
interest and principal then due under the Facilities
after the sums due under the ASAD Agreement and paid to
the Borrower has been fully utilised and payments by CSM
under Clause 2.2.2 have been fully utilised;
2.1.7.2 the maximum available amount of the Contingency
Shareholders Loan available to the Borrower shall be
reduced in proportion to the reductions of the total
principal outstanding of the Facilities taking into
account any repayment, prepayment and reduction of the
Facilities over the repayment tenor;
2.1.7.3 subject to the then maximum available amount of the
Contingency Shareholders Loan, any amount of the
Contingency Shareholders Loan repaid by the Borrower to
the Shareholders pursuant to Clause 16.4.6 of the
Facility Agreement shall be available to the Borrower for
future drawings pursuant to Clause 2.1.7.1;
2.1.8 not (as a party thereto in any capacity) vary or agree to vary
any of the terms of the Project Documents which would adversely
affect the repayment ability of the Borrower under the Facilities
without the prior written consent of the Majority Lenders such
consent not to be unreasonably withheld or delayed;
2.1.9 not to initiate or continue any proceedings for the winding-up of
the Borrower;
4
<PAGE> 7
2.1.10 not to mortgage, charge or otherwise encumber the Shareholders'
shares in the Borrower.
2.2 CSM UNDERTAKINGS: CSM hereby agrees and undertakes to the Security Agent
and the Secured Creditors that:-
2.2.1 CSM will at all times legally and beneficially own (whether directly
or indirectly) not less than 49% in the issued and paid-up capital of
the Borrower;
2.2.2 in respect of the direct sale by the Borrower of the wafers to
customers designated by CSM ("the Customers"):-
2.2.2.1 the Borrower shall at the end of every month take an account
of the receivables paid for by the sale of wafers to the
Customers and in the event that the Customers fail to pay for
the wafers purchased as aforesaid when due and payable (the
"Purchase Price" which expression shall include all amounts
owing to the Borrower without any deduction or withholding
for or on account of tax by the Customers), CSM undertakes
with the Borrower that it will forthwith pay the Borrower at
the end of that month an amount equal to such unpaid Purchase
Price;
2.2.2.2 if at the end of each month, the amount billed to the
Purchasers and the said Customers is insufficient to cover
the fixed and variable costs for the relevant wafers as
provided in the ASAD Agreement, ("the shortfall") CSM
undertakes with the Borrower that it will forthwith pay the
Borrower at the end of that month the difference between the
amount billed to the Customers during that month and the
amount which would otherwise be payable by CSM under the ASAD
Agreement as is sufficient to cover all fixed and variable
costs of the relevant wafers if such wafers had been sold by
the Borrower to CSM;
2.2.3 in the event that the Sub-Lease Agreement is terminated it shall
promptly inform the Security Agent of the termination. CSM shall at
the written request of the Security Agent, for a further 3-month
period after such termination, to allow the Security Agent the right
to retain the Charged Assets in the Property for the purposes of
disposing the Charged Assets within the 3 month period. Thereafter,
the Security Agent can, if necessary, request for a further extension
subject to CSM's consent which shall not be unreasonably withheld or
delayed;
5
<PAGE> 8
2.2.4 in connection therewith, it will during such 3-month period allow the
Security Agent, any Receiver or their agents and officers to enter
into the Property and to sever (where required) with reasonable care
and remove all the Charged Assets from the Property.
2.3 LTM UNDERTAKING: LTM undertakes that it will at all times legally and
beneficially own (whether directly or indirectly) not less than 51% in the
issued and paid-up capital of the Borrower.
2.4 CONTINUING OBLIGATIONS: The undertakings of the Shareholders under this
Clause shall survive and continue notwithstanding any Event of Default or
action taken by the Secured Creditors or any of them under the Financing
Documents and for so long as the Secured Liabilities remains outstanding.
2.5 CONTINGENCY SHAREHOLDERS LOAN:
2.5.1 The Borrower undertakes to repay the Contingency
Shareholders Loan or any part thereof in accordance
with Clause 16.4.6 of the Facility Agreement;
2.5.2 in the event of a winding-up of the Borrower, the
Contingency Shareholders Loan shall be subordinated
to all amounts of the Secured Liabilities then owing
by the Borrower to the Secured Creditors and that,
accordingly, amounts payable to the Shareholders by
the liquidator in respect of Contingency Shareholders
Loans will be applied:-
2.5.2.1 first, in payment of the Secured Liabilities;
and
2.5.2.2 secondly, towards the payment of the
amount owing to each Shareholder in
respect of the Contingency
Shareholders Loans made by that
Shareholder;
2.6 INDEMNITY: Each of the Shareholders shall severally indemnify the
Security Agent and the Secured Creditors for any loss, liability,
expense or damage arising out of or incurred by reason of any breach by
such Shareholder of this Undertaking. The Security Agent and the
Secured Creditors may enforce their respective rights hereunder without
first having recourse to the Borrower or any other party, security and
guarantee.
3. REPRESENTATIONS AND WARRANTIES
3.1 SHAREHOLDERS' WARRANTIES: Each of the Shareholders severally represents
and warrants each for itself to and for the benefit of the Secured
Creditors that:-
6
<PAGE> 9
3.1.1 STATUS: it is a company duly incorporated and validly
existing under the laws of Singapore and has the
power and authority to own its assets and to conduct
the business which it conducts and/or proposes to
conduct;
3.1.2 POWERS: it has the power to enter into, exercise
its rights and perform and comply with its
obligations under this Undertaking;
3.1.3 AUTHORISATIONS AND CONSENTS: all action, conditions
and things required to be taken, fulfilled and done
(including the obtaining of any necessary consents)
in order (a) to enable it lawfully to enter into,
exercise its rights and perform and comply with its
obligations under this Undertaking, (b) to ensure
that those obligations are valid, legally binding and
enforceable, and (c) to make this Undertaking
admissible in evidence in the courts of Singapore
have been taken, fulfilled and done;
3.1.4 NON-VIOLATION OF LAWS: its entry into, exercise of
its rights and/or performance of or compliance with
its obligations under this Undertaking do not and
will not violate, or exceed any power or restriction
granted or imposed by, (a) any law to which it is
subject or (b) its Memorandum and Articles of
Association;
3.1.5 OBLIGATIONS BINDING: this Undertaking is legally
valid and binding and enforceable against it in
accordance with its terms;
3.1.6 MATERIAL ADVERSE CHANGE: there is no material
adverse change in its assets and financial condition
after its latest management or audited financial
statements;
3.1.7 ACKNOWLEDGEMENT: it benefits by executing this
Undertaking.
3.2 CSM WARRANTIES:
3.2.1 SHAREHOLDING: CSM warrants that CSM is (either
directly or through any one or more of its
wholly-owned subsidiaries) the legal and beneficial
owner of at least 49 per cent of the issued share
capital of the Borrower and Singapore Technologies
Pte Ltd is (either directly or through any one of
more of its wholly-owned subsidiaries) the legal and
beneficial owner of at least 51 per cent of the
issued share capital of CSM; and
3.2.2 JTC CONSENT: CSM warrants that as at the date hereof
JTC has given its consent for the Sub-Lease Agreement
and that the terms and conditions attached to the
consent have been complied with;
3.3 LTM WARRANTIES: LTM warrants that LTM is (either directly or through
any one or more of its wholly-owned subsidiaries) the legal and
beneficial owner of at least 51 per cent of the issued share capital of
the Borrower and Lucent Technologies International Inc is
7
<PAGE> 10
(either directly or through any one of more of its wholly-owned
subsidiaries) the legal and beneficial owner of at least 51 per cent
of the issued share capital of LTM.
3.4 REPETITION: each of the above representations and warranties (save for
that in Clauses 3.1.6 and 3.2.2) will be correct and complied with on
the date of each request for an Advance or the EDB Guarantee, on the
date on which each Advance or EDB Guarantee is to be made or issued
respectively, and on each day which is an Interest Payment Date and
after the expiry of the Tranche A Facility, on each Guarantee Fee
Payment Date and the Expiry Date as if repeated then by reference to
the then existing circumstances.
4. UNDERTAKINGS
Each of the Shareholders severally undertakes to each of the Security Agent and
the Secured Creditors that:-
4.1 AUDITED ACCOUNTS: (a) as soon as reasonably practicable after the same
are available and in any event within 120 days after the end of each of
its financial years (beginning with the current one), it will deliver
to the Facility Agent, with sufficient copies for all the Lenders,
copies of its audited accounts as at the end of and for that financial
year, and (b) as soon as reasonably practicable after the same are
available and in any event within 45 days after the end of the first
six months of each of its financial years (beginning with the six
months ended in 1999) its unaudited accounts as at the end of and for
the relevant six month period;
4.2 FURTHER ASSURANCE: it will from time to time on reasonable request by
the Security Agent do or procure the doing of all such acts and will
execute or procure the execution of all such documents as may be
reasonably necessary for giving full effect to this Undertaking or
securing to the Secured Creditors the full benefits of all rights,
powers and remedies conferred upon the Secured Creditors in this
Undertaking.
4.3 MATERIAL ADVERSE CHANGE: it will notify the Security Agent promptly if
there is a material adverse change in its assets and financial
condition operations or management of it or other conditions which will
have a Material Adverse Effect on it or its ability to perform its
obligations under the Transaction Documents.
4.4 NOTIFICATION OF LITIGATION: promptly upon it becoming aware of the
same, inform the Security Agent of any litigation, arbitration, or
other proceeding that is threatened against it or its assets which
would have a Material Adverse Effect.
5. CONTINUING OBLIGATIONS
5.1 This Undertaking shall be a continuing obligation notwithstanding any
settlement of account or other matters whatsoever and is in addition to
and shall not merge with or
8
<PAGE> 11
otherwise prejudice or affect any contractual or other right or remedy
or any guarantee bill note or Encumbrance (whether created by the
deposit of documents or otherwise) now or hereafter held by or
available to the Security Agent and shall not be in any way prejudiced
or affected thereby or by the invalidity thereof or by the Security
Agent now or hereafter dealing with exchanging releasing varying or
abstaining from perfecting or enforcing any of the same or any right
which it may now or hereafter have or giving time for payment or
indulgence or compounding with the Borrower or any other person
liable.
5.2 This Undertaking shall be a continuing obligation and be valid and
binding for all purposes notwithstanding:-
5.2.1 any account ceasing to be current or any settlement
of account or fluctuation in the amount for the time
being owing by the Borrower to the Security Agent and
the Secured Creditors or the existence of any credit
balance at any time;
5.2.2 the liquidation (whether voluntary or otherwise)
or judicial management of the Borrower;
5.2.3 any change by amalgamation, consolidation or
otherwise which may be made in the constitution of
the company by which the business of the Borrower may
for the time being be carried on; or
5.2.4 the determination or any variation of or increase in
the Facilities or any part thereof granted by the
Lenders to the Borrower or waiver or modification of
the terms on which such facilities were granted.
5.3 Any settlement or discharge between the Agents and the Secured
Creditors and the Borrower shall be conditional upon no security or
payment to the Agents and the Secured Creditors by the Borrower, or any
other person on behalf of the Borrower, being avoided or set aside or
ordered to be refunded or reduced by virtue of any laws relating to
bankruptcy, insolvency or liquidation or similar laws of general
application and, if any such security or payment is so avoided or
reduced, the Agents and the Secured Creditors shall be entitled to
recover from the Borrower the value or amount of such security or
payment from the Borrower as if such settlement or discharge had not
occurred.
5.4 The Shareholders shall continue to have liabilities under this
Undertaking notwithstanding any transfer of shares in the Borrower
unless permitted by the Lenders on terms as required by the Lenders.
9
<PAGE> 12
6. CURRENCY INDEMNITY
Any payment or payments made to or for the account of the Security Agent or a
Secured Creditor, as the case may be, being hereinafter in this Clause 6
referred to as the "Creditor" in a currency (the currency in which the relevant
payment is made being hereinafter referred to as the "Relevant Currency") other
than the currency in which such payment or payments are expressed to be payable
hereunder (the currency in which the relevant payment is expressed to be payable
being hereinafter referred to as the "Currency of Account") (whether as a result
of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up of the Shareholder or otherwise) shall only
constitute a discharge to the Shareholder to the extent of the Currency of
Account which the Creditor is able, in accordance with its usual practice, to
purchase with the amount so received or recovered in the Relevant Currency on
the date of that receipt or recovery (or, if it is not practicable to make that
purchase on that date, on the first date on which it is practicable to do so).
If the amount of the Currency of Account is less than the amount expressed to be
due to the Creditor hereunder, the Shareholder shall indemnify it against any
loss sustained by it as a result. In any event, the Shareholder shall indemnify
the Creditor against the cost of making any such purchase. For the purpose of
this Clause 6, it shall be sufficient for the Security Agent or Secured
Creditor, as the case may be, to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
7. EXPENSES
Each of the Shareholders shall pay on demand all costs and expenses (including
stamp, and other legal expenses) reasonably incurred by the Security Agent and
the Secured Creditors in protecting or enforcing any rights against it under
this Undertaking.
8. CONFIRMATION
Each of the Shareholders confirm with the Borrower that insofar as the Project
Documents require the parties thereto to preserve confidentiality, such
requirement is waived in respect of the provision by the Borrower of information
to the Security Agent and the Secured Creditors and to their potential assignees
and transferees and as required by law or regulations.
9. ASSIGNMENT/TRANSFER
9.1 This Undertaking shall be binding upon and enure to the benefit of the
Security Agent, the Secured Creditors, the Borrower and the
Shareholders.
9.2 The Shareholders may not assign or transfer any of its rights or
obligations under this Undertaking.
10
<PAGE> 13
9.3 The Security Agent may assign or transfer all or any part of its rights
or obligations under this Undertaking to any person which is to replace
the Security Agent under the Facility Agreement.
9.4 Any change in the constitution of the Security Agent or any Secured
Creditor or its absorption into, or amalgamation with, any other person
or the acquisition of all or any part of its undertaking by any other
person shall not in any way prejudice or affect its rights under this
Undertaking.
10. WAIVERS
No failure on the part of the Secured Creditors or any of them to exercise, and
no delay on its part in exercising, any right or remedy under this Undertaking
will operate as a waiver thereof, nor will any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy. The rights and remedies provided in this
Undertaking are cumulative and not exclusive of any other rights or remedies
(whether provided by law or otherwise).
11. COMMUNICATIONS
11.1 ADDRESSES: Each communication under this Undertaking shall be made by
fax, telex or otherwise in writing. Each communication or document to
be delivered to any party under this Undertaking shall be sent to that
party at the fax number or address, and marked for the attention of the
person (if any), from time to time designated by that party to the
other parties hereto (or, in the case of each of the Secured Creditors,
by it to each other party) for the purpose of this Undertaking. The
initial fax number, address and person (if any) so designated by the
Shareholders and the Borrower are set out against their names at the
end of this Undertaking, and the initial fax number, address and person
(if any) so designated by the Security Agent are set out below:
Address : 300 Tampines Avenue 5 #07-00
Tampines Junction
Singapore 529653
Fax : 426 8056
Attention : Ms Kumari Bala-Mohan
11.2 DEEMED DELIVERY: Any communication under this Undertaking shall be
deemed to have been received (if sent by fax) on the day of despatch or
(in any other case) when left at the address required by Clause 11.1 or
within two days after being sent by prepaid post addressed to it at
that address.
11
<PAGE> 14
12. PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any provision of this
Undertaking under the law of any jurisdiction shall not affect its legality,
validity or enforceability under the law of any other jurisdiction nor the
legality, validity or enforceability of any other provision.
13. GOVERNING LAW
This Undertaking shall be governed by and construed in accordance with Singapore
law and the parties hereto irrevocably submit to the non-exclusive jurisdiction
of the Singapore courts.
12
<PAGE> 15
IN WITNESS WHEREOF the Borrower and the Shareholders have executed this
Undertaking.
The Borrower
The Common Seal of SILICON )
MANUFACTURING PARTNERS PTE )
LTD was hereunto affixed in the )
presence of:- )
/s/ JEFF MOWLA Director
- -----------------------------------
Jeff Mowla
/s/ BARRY WAITE Director
- -----------------------------------
Barry Waite
Address: 60, Woodlands Industrial Park D Street 2
Singapore 738406
Fax Number: 362 2909
Attention: Director of Finance
The Shareholders
The Common Seal of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD. )
was hereunto affixed in the )
presence of:- )
/s/ BARRY WAITE Director
- -----------------------------------
Barry Waite
/s/ CHUA SU LI Secretary
- -----------------------------------
Chua Su Li
13
<PAGE> 16
Address: 60, Woodlands Industrial Park D, Street 2
Singapore 738406
Fax Number: 362 2909
Attention: Legal Department
The Common Seal of )
LUCENT TECHNOLOGIES )
MICROELECTRONICS PTE. LTD. )
was hereunto affixed in the )
presence of:- )
/s/ JEFF MOWLA Director
- -------------------------------------
Jeff Mowla
/s/ NIAM CHONG LOONG Director
- -------------------------------------
Niam Chong Loong
Address: 3, Kallang Sector, Kolam Ayer Industrial Park
Singapore 349278
Fax Number: 840 2560
Attention: Managing Director
14
<PAGE> 1
EXHIBIT 10.28
FORM 19
THE LAND TITLES ACT
(CHAPTER 157)
L E A S E
(WITH RESERVATION OF EASEMENT)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Reference to
Land Register
---------------------- Town Mukim Lot Description of Land (whether
DESCRIPTION OF LAND Volume Folio Subdivision whole or in part)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
336 162 - 3 2164 1) Whole
2) 2 Science Park Drive
Singapore 0511
- -----------------------------------------------------------------------------------------------------------------------
T H E L E S S O R
--------------------------------------------------------------------------------------------------------------
LESSOR TECHNOLOGY PARKS PRIVATE LIMITED, a body corporate
OFFICE USE ONLY incorporated under the Companies Act and having its OFFICE
registered office at 16 SCIENCE PARK DRIVE, #02-01, THE PASTEUR, USE ONLY
SINGAPORE SCIENCE PARK, SINGAPORE 0511
-------------------------------------------------------------------------------------------------------------
(the registered proprietor) HEREBY LEASES the registered estate or
interest in the land above described to
T H E L E S S E E
-------------------------------------------------------------------------------------------------------------
LESSEE CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD (COMPANY
REGISTRATION NO. 198703584K) a company incorporated in Singapore and OFFICE
having its registered office at 2 SCIENCE PARK DRIVE, SINGAPORE 0511 USE ONLY
-------------------------------------------------------------------------------------------------------------
</TABLE>
TERM OF LEASE as tenant for the term of THIRTY (30) YEARS commencing
from the 1ST DAY OF OCTOBER 1987, YIELDING and PAYING
therefor the yearly rent of DOLLARS ONE HUNDRED AND
EIGHTY-ONE THOUSAND THREE HUNDRED AND FORTY-TWO AND CENTS
EIGHTY ONLY ($181,342.80CTS) to be paid by equal quarterly
installments on the 1st day of each of the months of
January, April, July and October in every year of the said
term without any deductions and in advance without demand at
the office of the Lessor or at such other office as the
Lessor may designate calculated at the rate of $11.60CTS per
square metre per annum of the demised premises having an
area of 15,633 square metres from the 1ST DAY OF
<PAGE> 2
- 2-
OCTOBER 1987 (hereinafter referred to as "the Initial Rent")
which rate was last revised on the 1ST DAY OF OCTOBER 1993
to the rate of $16.73 per square metre per annum. The yearly
rent so revised on the 1st day of October 1993 shall be
subject to revision on the 1ST DAY OF OCTOBER 1994 and on
the 1ST DAY OF OCTOBER of every year thereafter at the rate
based on the market rent on the respective dates determined
in the manner following but so that the increase shall not
exceed 7.6% of the annual rent for each immediately
preceding year. The market rent in this context shall mean
the rent per square metre per annum of the demised premises
excluding the buildings and other structures erected thereon
and shall be determined by the Lessor on or about the dates
mentioned and the decision of the Lessor shall be final.
COMMON TOGETHER with the right (in common with the Lessor
RIGHTS its successors in title and assigns and all others to
whom the Lessor may grant or has already granted the same or
similar rights and all others entitled to the like right) at
all times and for all purposes connected with the demised
premises but not for any other purpose to:
(a) pass and repass to and from the demised premises over
and along the common roads or ways constructed by the
Lessor within the Singapore Science Park (hereinafter
referred to as "the Park") of which the demised
premises forms part;
(b) enjoy such common grounds gardens and such other common
facilities within the Park as maybe determined by the
Lessor
subject to such rules and regulations and terms and
conditions as may be determined by the Lessor from time to
time. The said roads, ways grounds gardens and such other
common facilities shall hereinafter be referred to as "the
common areas".
AND RESERVING to the Lessor as APPURTENANT TO
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Reference to
Land Register
--------------------- Town Mukim Lot Description of Land (whether
DESCRIPTION OF LAND Volume Folio Subdivision whole or in part)
(Dominant Tenement) -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-- -- 3 2039 Whole
-- -- 3 2039 Whole
-----------------------------------------------------------------------------------------------
</TABLE>
a RIGHT OF PASSAGE AND RUNNING of water soil electric power gas telephone
communication and other similar amenities from the adjoining and
neighbouring premise thereon through sewers drains pipes channels cables a
ducts upon or under the land hereinafter described a to make connections
with such sewers drains pipe channels cables and ducts or any of them for
the purpose, of exercising the said right of passage and of running the
aforesaid amenities over the land hereinafter described.
<PAGE> 3
- 3 -
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Reference to
Land Register
---------------------- Town Mukim Lot Description of Land (whether
DESCRIPTION OF LAND Volume Folio Subdivision whole or in part)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
reservation of righ 336 162 -- 3 2164 1) Whole
of passage and 2) 2 Science Park Drive
running of amenities Singapore 0511
over land hereby
transferred ------------------------------------------------------------------------------------------------
</TABLE>
SUBJECT TO:
PRIOR PRIOR ENCUMBRANCE
ENCUMBRANCES
<PAGE> 4
- 4-
AND the following:
COVENANTS AND CONDITIONS
(a) the covenants, conditions and powers implied by law in instruments of
lease (or to such of them as are not hereinafter expressly negative
or modified);
(b) the covenants and conditions set forth hereinafter contained.
SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants with the Lessor as follows:
(i) To pay the yearly rent hereinbefore reserved on the days and in the
manner aforesaid.
(ii) To pay unto the Lessor on demand by way of additional rent a sum
equal to all such sums as the Lessor may from time to time pay for
insuring and keeping insured the demised premises against loss or
damage by fire in case the Lessee shall make default in insuring and
keeping insured the demised premises pursuant to the covenant in that
behalf hereinafter contained PROVIDED ALWAYS THAT nothing herein
shall render it obligatory on the part of the Lessor to insure and
keep insured the demised premises or any part thereof.
(iii) To pay all rates taxes assessments and outgoings whatsoever which now
are or which at any time hereafter during the said term may be
imposed or charged upon or in respect of the demised premises or any
part thereof.
(iv) To repair and keep in tenantable repair the demised premises and
every part thereof throughout the said term.
(v) To pay a reasonable proportion of the expense of constructing
repairing rebuilding and cleansing all sewers drains pipes
water-courses and other things (including but not limited to party
walls, fences, if any as approved by the Lessor) the use of which is
common to the demised premises and the occupiers of any adjoining or
neighbouring premises and such proportion in the case of a dispute
shall be conclusively determined by the Lessor's surveyor for the
time being.
(vi) To permit the Lessor and his surveyors or agents with or without
workmen or others during the said term at reasonable times in the
day-time to enter upon the demised premises and every part thereof to
examine the state and condition of the same and of defects decays and
wants of reparations and of all breaches of covenant there found and
the Lessor may thereupon serve on the Lessee notice in writing by
leaving the same at or on the demised premises to or for the Lessee
to make good the same within such reasonable time as specified in
such notice.
<PAGE> 5
- 5-
(vii) To perform and observe all the obligations which the Lessor of the
demised premises may be liable to perform or observe during the term
hereby created by any direction or requirement of any governmental
or statutory authority and if the Lessee shall fail to observe or
perform this covenants the Lessor may in its absolute discretion
perform the same and all expenses and costs incurred thereby shall
be recoverable from the Lessee as a debt PROVIDED ALWAYS that the
Lessor shall not be liable to the Lessee for any loss damage or
inconvenience caused thereby.
(viii) Not to make or cause to be made any addition or alteration affecting
the elevation external structure or stability of the demised
premises or any thereof without the prior written consent of the
Lessor and the relevant governmental and statutory authorities
PROVIDED THAT on the granting of such consent and without prejudice
to other terms and conditions which may be imposed the Lessee shall
give to the Lessor security that the proposed addition alteration or
rebuilding will in fact be carried out within a reasonable time.
(ix) Forthwith to insure and keep insured the demised premises against
loss or damage by fire to the full value thereof with a well
established insurance company approved by the Lessor and to make all
payments necessary for that purpose within seven days after the same
shall become payable and upon reasonable notice to produce to the
Lessor the policy or policies of such insurance and the receipts for
all such payments.
(x) As often as any buildings on the demised premises or any part
thereof shall be destroyed or damaged as aforesaid forthwith to give
to the Lessor written notice of such destruction or damage and
forthwith to cause all monies received by virtue of such insurance
to be laid out in rebuilding and reinstating the same to the
satisfaction of the Lessor and in accordance with the plans and
specifications approved by the Lessor and in accordance with the
bye-laws regulations and planning schemes of any public or local
authority, prevailing at the time, and in case the monies so
received shall be insufficient for that purpose then to make up the
deficiency out of his own monies, PROVIDED THAT the rebuilding and
reinstatement shall in any event commence and be completed within
the period specified by the Lessor.
(xi) Not to demise assign mortgage let sublet or underlet or grant a
licence or part with or share the possession or occupation of the
demised premises in whole or in part without first obtaining the
consent of the Lessor in writing. The restrictions contained in
Section 17 of the Conveyancing and Law of Property Act (Chapter 61)
shall not apply.
(xii) Within six months of the devolution of the interest of the Lessee
not perfected by an assent to give notice thereof in writing with
particulars thereof to the Lessor and produce to the Lessor such
documentary evidence as may be required by the Lessor.
<PAGE> 6
- 6 -
(xiii) Not to use the demised premises or any part thereof for any
illegal or immoral purpose and not to do or permit or suffer to
be done upon the demised premises anything which in the opinion
of the Lessor may be or become a nuisance annoyance or cause
damage or inconvenience to the Lessor or his Lessees or the
occupiers of any adjoining or neighbouring premises or whereby
any insurance for the time being affected on the demised premises
may be rendered void or voidable or be in any way affected.
(xiv) Not without the prior consent in writing of the Lessor to affix
or exhibit or erect or paint or permit or suffer to be affixed or
exhibited or erected or painted on or upon any part of the
exterior of the demised premises or of the external rails or
fences thereof any nameplate signboard placard poster or other
advertisement or hoarding other than a signboard bearing the
Lessee's name his address, telephone number and the nature of his
trade or business.
(xv) To make reasonable provision against and be responsible for all
loss injury or damage to any person or property including that of
the Lessor for which the Lessee may be held liable arising out of
or in connection with the occupation and use of the demised
premises and to indemnify the Lessor against all proceedings
claims costs and expenses which he may incur or for which he may
be held liable as a result of any act neglect of default of the
Lessee his servants contractors sub-contractors or agents.
(xvi) To pay interest at the rate of 8.5% per annum or such higher rate
as may be determined from time to time by the Lessor in respect
of any arrears of rent or other outstanding sums due and payable
under this Lease from the due dates thereof until payment in full
is received by the Lessor.
(xvii) At the termination of the said term or at the earlier
determination thereof to yield up to the Lessor the land hereby,
demised together with all buildings structures and fixtures
therein in tenantable repair in accordance with the Lessee's
covenants herein contained.
(xviii) To make good and sufficient provision for the safe and efficient
disposal of all waste including but not limited to pollutants to
the requirements and satisfaction of the Lessor PROVIDED THAT in
the event of default by the Lessee under this covenant the Lessor
may carry out such remedial measures as he thinks necessary and
all costs and expenses incurred thereby shall forthwith be
recoverable from the Lessee as a debt.
(xix) Not to do or omit or suffer to be done or omitted any act matter
or thing in or on the demised premises in respect of the
operations business, trade or industry carried out or conducted
therein which shall contravene the provisions of any laws,
bye-laws, orders, rules or regulations now or hereafter affecting
the same but at his own cost and expense to comply with all such
provisions and at all times hereafter to indemnify and keep
indemnified the Lessor against all actions, proceedings, costs,
expenses, claims, fines, losses, penalties and
<PAGE> 7
- 7 -
demands in respect of any act matter of thing done or omitted to
be done in contravention of the said provisions.
(xx) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection
with the preparation stamping and issue of this Lease and any
prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Lease.
(xxi) To pay all costs and fees legal or otherwise including costs as
between solicitor and client in connection with the enforcement
of the covenants and conditions herein.
(xxii) To pay to the Lessor all survey fees and other charges including
those payable to and claimed by the relevant Government Planning
Authorities and other relevant governmental and statutory
authorities for the survey of the demised premises for the
purpose of sub-division of the land of which the demised premises
forms part and issue of this Lease and Certificate of Title
PROVIDED THAT the Lessor shall have the right to employ his own
surveyor to carry out the said survey in which event the Lessee
shall bear all costs thereby incurred.
(xxiii) At his own costs to take such steps and execute such works upon
the demised premises as may be necessary for the protection of
shores and embankments if any and for the prevention of earthslip
erosion of soil and failure of slopes expeditiously in
workmanlike manner and to the satisfaction of the Lessor.
(xxiv) To construct an internal drainage system within the demised
premises to the satisfaction of the Lessor to ensure that all
surface water collected thereon is discharged into the public
drains.
(xxv) Subject always to clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from the
date of each change.
(xxvi) To perform and observe the covenants on the Lessor's part
contained in the Head Lease issued by the President of the
Republic of Singapore in respect of the demised premises so far
as they are not varied herein and to keep the Lessor indemnified
against all claims damages costs and expenses in any way relating
thereto.
(xxvii) To maintain the demised premises and every part thereof in a neat
and tidy condition, and forthwith to comply with the Lessor's
direction to remove and clear any materials, goods or articles of
whatever nature and description from the demised premises or such
part thereof as may be stipulated in writing by the Lessor.
(xxviii) At his own cost to plant and maintain trees and landscape the
demised premises in accordance with all the requirements of the
Parks and Recreation Department,
<PAGE> 8
- 8 -
Ministry of National Development and other relevant governmental
and statutory authorities.
(xxix) Not to install and/or use any electrical installation, machine or
apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or any
electrical or mechanical interference or disturbance whatsoever
which may prevent or prevents in any way the service or use of
any communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of other
Lessees in connection therewith, to allow the Lessor or any
authorised person to inspect at all reasonable times, such
installation, machine or apparatus in the demised premises to
determine the source of the interference or disturbance and
thereupon, to take suitable measures, at the Lessee's own
expense, to eliminate or reduce such interference or disturbance
to the Lessor's satisfaction, if it is found by the Lessor or
such authorised person that the Lessee's electrical installation,
machine or apparatus is causing or contributing to the said
interference or disturbance.
(xxx) To indemnify the Lessor against each and every claim, proceedings
action, loss, penalty, damage, expense, cost and demand which may
arise in connection with clauses (xxix) and (xxxvi) herein.
(xxxi) At the Lessee's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and satisfaction
of the Lessor and other relevant governmental and statutory
authorities.
(xxxii) Not to keep or permit to be used or stored in the demised
premises or any part thereof any materials of a dangerous or
explosive nature without the prior consent in writing of the
Lessor and to keep the Lessor indemnified against all damages
claims and action caused by the use of storage of such materials
whether or not the same is done with the consent of the Lessor.
(xxxiii) To pay in addition to the yearly rent during the said term from
such date as shall be specified in the Lessor's written notice to
the Lessee such sum per year as shall be determined by the Lessor
on the same dates and in the same manner as for the said rent as
charges for the maintenance (hereinafter referred to as "the
service charge") by the Lessor of the common areas such sum being
calculated based on an area of 15,633 square metres and at the
rate to be determined by the Lessor whose decision shall be final
PROVIDED THAT if the cost of services shall increase the Lessor
may revise the service charge and on serving a notice in writing
to the Lessee to this effect such revised service charge shall be
payable from the date specified in the notice.
(xxxiv) Not to use or permit or suffer the demised premises or any part
thereof to be used otherwise than for design of VLSI Integrated
Circuits and fabrications of CMOS VLSI Integrated Circuits only
except with the prior consent in writing of the Lessor.
<PAGE> 9
- 9 -
(xxxv) Without prejudice to Clause l(viii) to ensure that the gross
plot ratio shall not be less than 0.5 with a maximum site
coverage of 35% and a minimum green coverage of 35%.
(xxxvi) Without prejudice to Clause 1(xxxiv) hereof, not to carry on or
allow to be carried on in or upon the demised premises or any
part thereof any experiment, operation or activity which is
objectionable or undesirable by reason of the emission of dust,
odours, noise or vibration.
(xxxvii) Not to store or permit to be stored toxic materials in open
yards or carry out or permit to be carried out processes with
inherent risk of spillage of toxic materials within the demised
premises or any part thereof.
(xxxviii) Not to discharge any form of waste into surface drains or
watercourses.
(xxxix) Not to erect or suffer to be erected any fences hedges or
screens whatsoever on the boundary or open areas of the demised
premises or any part thereof.
(xl) At his own cost to install water pumps on the demised premises
if the water pressure in the Park is not sufficient to meet the
specific requirements of the Lessee.
(xli) Not to keep or allow to be kept livestock or other animals at
the demised premises or any part thereof.
(xlii) Without prejudice to the generality of Clauses l(ii-i) and
l(vi-i) herein, the rent and other sums payable by the Lessee
under or in connection with this lease shall be exclusive of the
goods and services tax (hereinafter called "tax") chargeable by
any governmental, statutory or tax authority calculated by
reference to the amount of rent and any other sums received or
receivable by the Lessor from the Lessee and which tax is payable
by the Lessee. The Lessee shall pay the tax and the Lessor acting
as the collecting agent for the governmental, statutory or tax
authority shall collect the tax from the Lessee in the manner and
within the period prescribed in accordance with the applicable
laws and regulations.
2. The Lessor hereby covenants with the Lessee that the Lessee paying the rent
hereinbefore reserved and performing and observing the covenants conditions and
agreements on the part of the Lessee hereinbefore contained shall peaceably hold
and enjoy the demised premises during the term hereby granted without any
interruption of or by the Lessor or any person lawfully claiming through under
or in trust for him.
3. PROVIDED ALWAYS and it is hereby agreed between the parties as follows:
(a) That no estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be included
in the demise hereinbefore contained.
<PAGE> 10
- 10 -
(b) That the Lessee shall not be entitled to any right of access of light
or air to the demised premises or any part thereof, which would
restrict or interfere with the user of any adjoining or neighbouring
land for building or any other purpose.
(c) That if the said rent hereby reserved or any part thereof shall be
unpaid for fourteen days after payable (whether the same shall been
formally demanded or not or if any of the covenants or obligations on
the part of the Lessee herein contained shall not be performed or
observed or if any charging order made in respect of the demised
premises shall be enforced by sale or by entry into possession without
the written consent of the Lessor having first been obtained (the
restriction contained in Section 17 of the Conveyancing and Law of
Property Act shall also not apply in such event) by the Lessee or by
the person in whose favour the charging order shall have been made,
then and in any such case it shall be lawful for the Lessor or any
person or persons authorised by him in that behalf at any time
thereafter to re-enter upon the demised premises or any part thereof
in the name of the whole and thereupon the term hereby created shall
absolutely determine but without prejudice to any right of action or
remedy of the Lessor in respect of any breach of any of the covenants
or conditions by the Lessee herein contained PROVIDED THAT if the
demised premises have been assigned by way of mortgage the provisions
of this clause shall not take effect until the Lessor has served upon
the mortgagee a notice in writing that such breach has occurred and
the mortgagee has failed to remedy such breach.
(d) That the Lessor shall not be liable in whatever manner including
making good or paying damages to the Lessee in case of:
(i) any interruption in the services provided by the Lessor for the
maintenance of the common areas by reason of repairs or
maintenance of any installations or apparatus or damage thereto
or by reason of mechanical or other defect or breakdown not
excluding breakdown in electricity and water supply;
(ii) any act, omission, default, misconductor negligence of any
servant or employee of the Lessor in or about the performance or
purported performance of any duty relating to the provision of
the said services.
(e) That the Lessor shall be under no liability either to the Lessee or to
others who may be permitted to enter the Park or any part thereof for
accidents happening or injuries sustained or for loss of or damage to
property in the Park or any part thereof whether arising from the
negligence of the Lessor or that of any servant or agent of the Lessor
or otherwise.
<PAGE> 11
- 11 -
4. In this Lease where the context so requires or permits, words importing the
singular number or the masculine gender include the plural number or the
feminine gender and words importing persons include corporation and vice versa,
the expression "the Lessor" shall include its successors-in-title and assigns,
the expression "the Lessee" shall include its successors-in-title and permitted
assigns (if any), where there are two or more persons included in the expression
"the Lessee" covenants expressed to be made by "the Lessee" shall be deemed to
be made by such persons jointly and severally, and except where otherwise
provided the expression "the demised premises" shall mean the land hereby
demised and all buildings, structures, fixtures and fittings therein.
2A The Lessor further covenants with the Lessee that he shall grant to the
Lessee a lease of the demised premises for a further term of thirty (30) years
(hereinafter referred to as "the further term") from the expiry of the said term
upon the same terms and conditions and containing like covenants as are
contained in this lease with the EXCEPTION of the present covenant for renewal
PROVIDED THAT:
(i) at the expiry of the said term there be no existing breach(s) or
non-observance(s) of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or performed; and
(ii) the rental payable for the further term shall be as set out hereunder;
(a) the yearly rent for the further term shall be at the rate based
on the market rent at the commencement of the further term
(hereinafter referred to as "the Second Initial Rent") which rate
shall however be subject to a revision on the 1st day of October
2018 to a rate based on the market rent on the date of such
revision determined in the manner following but so that the
increase shall not exceed 7.6% of the Second Initial Rent.
(b) the yearly rent so revised on the 1st day of October 2018 shall
be subject to revision on the 1st day of October of every year
thereafter at the rate based on the market rent on the respective
dates determined in the manner following but so that the increase
shall not exceed 7.6% of the annual rent for each immediately
preceding year.
(c) the yearly rent for the further term shall be payable by equal
quarterly installments without any deductions and in advance
without demand on the 1st day of each of the months of January,
April, July and October in every year of the further term at the
office of the Lessor or at such other office as the Lessor may
designate the 1st of such payments to be made on or before the
commencement of the further term.
(d) for the purposes of (a) and (b) above, the market rent shall mean
the rent per square metre per annum of the demised premises
excluding the buildings and other structures erected thereon and
shall be determined
<PAGE> 12
- 12 -
by the Lessor on or about the dates mentioned and the decision of
the Lessor shall be final.
<PAGE> 13
- 13 -
DATE OF LEASE 18th January, 1995
EXECUTION OF LESSOR )
)
THE COMMON SEAL OF )
)
TECHNOLOGY PARKS PRIVATE LIMITED )
)
was hereunto affixed )
)
in the presence of: )
[Signature Illegible]
------------------------------
DIRECTOR
[Signature Illegible]
------------------------------
SECRETARY
EXECUTION OF LESSOR )
)
THE COMMON SEAL OF )
)
CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD )
)
was hereunto affixed )
)
in the presence of: )
/s/ LIM MING SEONG
------------------------------
Mr. Lim Ming Seong
EXECUTIVE CHAIRMAN
/s/ CHUA SU LI
------------------------------
Chua Su Li (Mrs.)
SECRETARY
<PAGE> 14
- 14 -
CERTIFICATE OF CORRECTNESS
I, Cheang Kok Kheong, a duly authorised officer of the Technology Parks
Private Limited for and on behalf of the Lessor hereby certify, pursuant to
Section 54 of the Land Titles Act (Chapter 157) that this instrument is
correct for the purposes of the said Act.
/s/ Cheang Kok Kheong
I, Chia Choon Yang, the Solicitor for the Lessee hereby certify
pursuant to Section 54 of the Land Titles Act (Chapter 157) that this
instrument is correct for the purposes of the said Act.
/s/ Chia Choon Yang
I, Chia Choon Yang, the solicitor for the Lessee hereby
certify that the place of incorporation and registration number allocated
by the Registry of Companies to the Lessee as abovementioned specified in
the within instrument have been verified from the Certificate of
Incorporation produced and shown to me, and are found to be correct.
Dated this 5th day of January 1995.
/s/ Chia Choon Yang
I, Chia Choon Yang, the solicitor for the Lessee hereby certify that
according to the information supplied to me by the Chief Planner within the
last 8 weeks (i.e. 8 weeks immediately preceding the date of instrument on
which the certificate is endorsed or to which the certificate is attached),
the within land is zoned as Science Park and the within property is for
research and development use and the specific use approved is research and
development.
Dated this 5th day of January 1995.
/s/ Chia Choon Yang
I, Chia Choon Yang, the solicitor for the Lessee' hereby certify
that I have compared this duplicate instrument with the original and that
this is the true copy thereof.
Dated this 5th day of January 1995.
/s/ Chia Choon Yang
<PAGE> 1
EXHIBIT 10.29
JTC(L)3729/1220 Pt 1(2583)/THC/ZMY
BUILDING AGREEMENT RELATING TO PRIVATE LOT A12787
MUKIM NO. 13 SEMBAWANG AREA: 52,525 SQUARE METRES
B E T W E E N
JURONG TOWN CORPORATION
AND
SINGAPORE TECHNOLOGIES PTE LTD
<PAGE> 2
BUILDING-AGREEMENT FOR LAND
AT PRIVATE LOT A12787 IN WOODLANDS INDUSTRIAL PARK D
(INLAND)
THIS AGREEMENT is made the 11th day of April 1995 BETWEEN
JURONG TOWN CORPORATION a body corporate incorporated under the Jurong Town
Corporation Act and having its Head Office at Jurong Town Hall, Jurong Town Hall
Road, Singapore (hereinafter called "the Owner" which expression shall include
its successors-in-title and assigns) of the one part AND SINGAPORE TECHNOLOGIES
PTE LTD a company incorporated in Singapore and having its registered office at
83 SCIENCE PARK DRIVE, #01-01/02 THE CURIE,
SINGAPORE SCIENCE PARK, SINGAPORE 0511
(hereinafter called "the Licensee" which expression shall include its
successors-in-title) of the other part.
WHEREBY IT IS AGREED as follows
1. For the period of three (3) years from 16th of February 1994
(hereinafter referred to as "the date hereof") or for such further period as may
be extended by the Owner the Licensee have the Licence and authority to enter
upon all that piece land known as PRIVATE LOT A12787 FORMING PART OF GOVERNMENT
SURVEY LOTS 937 AND 1949 AND PART OF MARSILING ROAD (OLD), MUKIM NO. 13,
SEMBAWANG and situated in the Republic of Singapore shown on the plan annexed
hereto and estimated to contain an area of 52,525 square metres more or less
subject to survey (hereinafter called "the said land") the construction of
factory buildings and other installation of equipment fixtures and fittings
thereat for the purpose of WAFER FABRICATION PLANT
<PAGE> 3
OPERATIONS ONLY in accordance with the stipulations hereinafter contained and
for no other purpose whatsoever.
2. The Licensee hereby agrees to perform and observe the following
stipulations:-
(i) To hold the said land until the same shall be comprised in a
lease to be granted as hereinafter provided as licensee upon
the same terms relating to the lease referred to in clause
2(ii) herein at the same rent and subject to the same
covenants and stipulations so far as applicable as if a
lease thereto has been actually granted and so that the
Owner shall have all the remedies by whatsoever means for
rent in arrears that are incidental to the relationship of
landlord and tenant but so that nothing herein contained
shall be construed as creating a legal demise or any greater
interest in the licence than a tenancy at will.
(ii) To pay in advance as from the date hereof a licence fee,
calculated at the same rate and on the dates specified as
for the rent reserved in the lease of the said land set out
in the First Schedule hereto as if such lease has actually
been granted.
(iii) To pay on the Owner's behalf to the Comptroller of Property
Tax an amount equivalent to the sum payable by the Owner as
property tax in respect of the said land improvements and
structures thereon during the said period or of such
extended period (if any) permitted under clause 3(c) hereof
by way of additional
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<PAGE> 4
licence fee or for the period prior to the issue of the
lease to be granted under clause 4 herein.
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Owner in
respect of any outstanding amount payable by the Licensee
under this Agreement from the date such amount becomes due
until payment in full is received by the owner.
(v) To pay to the Owner all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities for the survey of the said
land f or the purpose of sub-division of the land of which
the said land forms part and the preparation and issue of a
Certificate of Title PROVIDED THAT the Owner shall have the
right to employ his own surveyor to carry out the said
survey in which event the Licensee shall bear all costs
incurred.
(vi) At his own cost and expense -
(a) to engage a professional engineer to carry out
soil investigations to advise on the soil
conditions and to design structurally sound
buildings proposed to be erected taking into
consideration the condition of the said land; and
(b) to execute such work as may be required to be done
in respect of the state and condition of the said
land (especially its ground levels, topography
-3-
<PAGE> 5
and soil conditions) which state and condition the
Licensee shall be deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the date hereof firstly to the Owner
for his approval and then to the relevant Government
Planning and Building Authorities full and complete plans
elevations and specifications of the buildings proposed to
be erected on the said land in accordance in every way with
the requirements under the Planning Act and the Local
Government Integration Act PROVIDED THAT the Owner may give
or refuse his approval at his absolute discretion.
(viii) At his own cost to commence erection on the said land either
within six (6) months from the date hereof or within one (1)
month from the date of approval of the plans by the relevant
Government Building Authorities, whichever is the earlier,
and in a substantial and workman-like manner with the best
materials of their available kinds and in conformity in
every respect with the plans, elevations, sections and
specifications approved by the Owner and the relevant
Government Building Authorities to finish the factory
buildings, structures and other appurtenances including the
installations of all equipment, fixtures and fittings so as
to be completely fit for immediate occupation and operation
within the said period of three (3) years from the date
hereof PROVIDED ALWAYS THAT in the planning, erection,
construction and completion of the said buildings, to
develop to a gross plot ratio of not less than 0.6 but not
more than 1.4 AND PROVIDED FURTHER THAT the Licensee shall
not install or use
-4-
<PAGE> 6
any electrical installation, machine or apparatus that may
cause or causes heavy power surge, high frequency voltage
and current, air borne noise, vibration or any electrical or
mechanical interference or disturbance whatsoever which may
prevent or prevents in any way the service or use of any
communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of
other Licensees.
(ix) At his own cost to take such steps and execute such works
upon the said land as may be necessary for the protection of
shores and embankments if any and for the prevention of
earth-slip erosion of soil and failure of slopes
expeditiously in a workman-like manner and to the
satisfaction of the Owner and other relevant governmental
and statutory authorities.
(x) If the Licensee shall fail to complete the said buildings
works and installations and to commence operations within
the period specified in clause 2 (viii) or within any
extended period under clause 3(c) hereof the Licensee shall
pay to the owner a sum calculated at the rate of $50.00 per
day as liquidated damages for the period during which the
said buildings shall so remain or have remained incomplete.
(xi) To remove and replace any materials brought on the said land
or used in any of the said buildings works or installations
which the Owner shall require to be removed as being
inferior or unfit and to make good any workmanship which he
shall consider imperfect and if the Licensee fails to remedy
such defects the
-5-
<PAGE> 7
Owner may enter upon the said land and remedy such defects
at the expense of the Licensee after expiry of fourteen (14)
days' notice being given to the Licensee to do so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than
those conforming with the plans elevations sections and
specifications approved by the owner and the relevant
Government Building Authorities nor to make any alterations
in the external elevation of any of the said buildings when
erected without the prior consent in writing of the Owner.
(xiii) In the erection and completion of the said buildings,
structures and installations to do all acts and things
required by and to perform the works in conformity with all
respects with the provisions of any laws or regulations made
thereunder and to pay and keep the Owner indemnified against
all claims and other payments whatsoever which during the
progress of the works may become payable in respect of the
said works or of anything done under the authority herein
contained and from time to time to discharge and pay all
claims, assessments and outgoings now or at any time
hereafter be chargeable against the owner under any law or
otherwise in regard to the said land, the said buildings or
any structures or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the said
land or any part thereof anything which in the opinion of
the Owner may be or become a
-6-
<PAGE> 8
nuisance or annoyance or cause damage or inconvenience to
the Owner or to the Licensees or occupiers of any adjoining
or neighbouring premises or whereby any insurance for the
time being effected on the premises under sub-clause (xix)
herein may be rendered void or voidable or be in any way
affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand
from the said land or permit or suffer any of the same to be
removed except so far as shall be necessary for the
execution of the said works PROVIDED nevertheless that the
Licensee may use for the purpose of the said works any of
the approved materials if so required.
(xvi) Not without the prior consent in writing of the owner to
remove or permit or suffer to be removed until after
completion of the said buildings in accordance with the
provisions herein contained any building materials (other
than inferior or unfit materials removed for the purpose of
being replaced by proper materials) or plant which shall be
brought upon the said land for the purpose of the said
works.
(xvii) Not without the prior consent in writing of the Owner to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon any
part of the exterior of the said land or of the external
walls or rails or fences thereof any nameplate, signboard,
placard, poster or other advertisement or hoarding.
-7-
<PAGE> 9
(xviii) Not at any time to deposit or make up or manufacture or
permit or suffer to be deposited made up or manufactured
upon the said land any building or other materials except
such as shall be actually required for the buildings to be
erected on the said land in accordance with this Agreement
and as soon as the buildings hereinbefore agreed to be
erected shall be completed at his own expense to remove from
the road or footpath adjoining the said land or the ground
intended to be used for such road or footpath all building
and other materials and waste whatsoever.
(xix) As soon as any of the said buildings shall have reached a
height of five (5) feet above ground level to insure the
same to the full value thereof in the joint names of the
Owner and the Licensee against loss or damage by fire in
some insurance office approved by the owner and shall
increase such insurance proportionately as the said
buildings approach completion and to keep the same so
insured until a lease shall be granted as hereinafter
provided and to pay all premiums thereof at least seven (7)
days before the expiry date of such insurance policy and to
produce to the Owner or his agent without demand the policy
or policies of such insurance and the receipt for each such
payment and in the event the said buildings or any part
thereof are destroyed or damaged by fire then to forthwith
give to the Owner written notice of such destruction or
damage and to forthwith cause all monies received by virtue
of any such insurance to be forthwith laid out in rebuilding
and reinstating the buildings to the satisfaction of the
Owner and to make up any deficiency thereof out of his own
monies, but the rebuilding and reinstatement shall in any
event commence and be completed within the period specified
by the Owner PROVIDED ALWAYS THAT
-8-
<PAGE> 10
if the Licensee shall at any time fail to keep the premises
insured as aforesaid the Owner may without being under any
obligation to do so do all things necessary to effect or
maintain such insurance and any monies expended by him for
that purpose shall be repayable by the Licensee on demand
and be recovered forthwith from the Licensee as a debt
PROVIDED FURTHER THAT notwithstanding the covenant contained
in this clause 2 (xix) , the Licensee may exercise the
option not to rebuild or reinstate the buildings subject to
the following conditions:
(a) without prejudice to Clause 3(b), the Licensee
shall give the Owner three (3) months' prior
notice in writing to prematurely terminate this
Agreement; and
(b) forthwith pay or cause to be paid to the Owner
(whom the Licensee acknowledges to be entitled to)
all monies received by virtue of such insurance.
(xx) Not to assign create a trust, charge, grant a licence or
part with or share his interest under this Agreement, or the
possession or occupation of the said land, or any part
thereof EXCEPT THAT, subject to the Owner's prior written
consent, which consent shall not be unreasonably withheld,
the Licensee may mortgage his interest under this Agreement
by way of assignment to secure the repayment of such sum or
sums as the Licensee may require for the purpose of erecting
or completing the building or other structure to be built on
the said land in accordance with the provisions of this
Agreement PROVIDED THAT the Licensee shall thereafter
continue to be liable for the observance and
-9-
<PAGE> 11
performance of the several stipulations herein contained
until the grant of the lease as hereinafter provided.
(xxi) Not to permit or suffer any person to occupy reside or make
use of any building erected on the said land before a final
or a temporary Certificate of Fitness for Occupation has
been issued by or except with the permission of the relevant
Governmental and Statutory authority.
(xxii) To make reasonable provision against and be responsible for
all loss, injury and damage to any person (including loss of
life) or property including that of the Owner for which the
Licensee may be held liable arising out of or in connection
with the occupation and use of the said land and the
structures erected thereon and to indemnify the Owner
against all proceedings, claims, costs and expenses which he
may incur or for which he may be held liable as a result of
any act, neglect or default of the Licensee his servants,
contractors, sub-contractors, or agents or their respective
servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the said land to the requirements
and satisfaction of the Owner and other relevant
Governmental and Statutory authorities PROVIDED THAT in the
event of any default by the Licensee under this covenant the
Owner may carry out such remedial measures as he thinks
necessary and all costs and expenses incurred thereby shall
be recoverable forthwith from the Licensee as a debt.
-10-
<PAGE> 12
(xxiv) Subject to Clause 2(xx) hereinbefore appearing, to give to
the Owner written notice of every change of name within one
month from the date of each change PROVIDED THAT where there
has been, is or will also be any change in the shareholders
of the Licensee or the number of shares held by each and
every shareholder, the prior written consent in writing of
the Owner shall be obtained and which consent if granted
shall be subject to such terms and conditions as the Owner
may require.
(xxv) To construct an internal drainage system to the satisfaction
of the Owner to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxvi) To construct and complete a permanent culvert within nine
(9) months from the date hereof or any extension thereof as
may be approved by the Owner and in connection thereof to
submit plans to and to obtain the prior approval in writing
of the Owner for the construction of a temporary crossing.
(xxvii) Within one (1) month of the completion of the permanent
culvert mentioned in sub-clause (xxvi) above to remove the
temporary crossing and to reinstate any roads, roadside
kerbs, drains, turfing or the like damaged by the Licensee,
his servants, contractors, sub-contractors, or agents or
their respective servants to the satisfaction of the Owner
and the relevant Governmental and Statutory authorities.
-11-
<PAGE> 13
(xxviii) Within one (1) month of the completion of the construction
of the said buildings and related civil works to reinstate
any damage caused to the roads, roadside kerbs, drains,
turfing and the said permanent culvert by the Licensee his
servants contractors or agents or their respective agents to
the satisfaction of the Owner and the relevant Governmental
and Statutory authorities.
(xxix) To place with the Owner a deposit of $5,000.00 which shall
be forfeited in the event of any breach of any of the
provisions in sub-clauses (xxvi), (xxvii) and (xxviii)
herein without prejudice to the rights and remedies of the
Owner contained in this Agreement and the Lease.
(xxx) At his own cost to plant and maintain trees and landscape
the said land in accordance with all the requirements of the
Parks and Recreation Department, Ministry of National
Development and other relevant Governmental and Statutory
authorities.
(xxxi) At his own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and
the like (if any) to the requirements and satisfaction of
the Owner and other relevant Governmental and Statutory
authorities.
(xxxii) If the Licensee shall at any time be found to have
encroached upon any area beyond the allocated boundaries of
the said land, the Licensee shall at his own cost and
expense, but without prejudice to any other right or remedy
the Owner may have against him, immediately or within the
time specified (if any) by the
-12-
<PAGE> 14
Owner rectify and remove the encroachment to the
satisfaction of the Owner and pay to the Owner such
compensation as may be specified by the Owner. If, however,
the Owner in his absolute discretion permits the Licensee to
regularise and retain the encroached area or any part
thereof upon such terms and conditions as may be stipulated
by the Owner and any other relevant Governmental and
Statutory authorities, the Licensee shall pay licence fee on
the encroached area with retrospective effect from the date
hereof, and the Licensee shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and
client costs and expense), and all other costs and charges
relating thereto.
(xxxiii) If any damage of whatsoever nature or description shall at
any time occur or be caused to the said land or any building
or structure or installation thereon, or any part thereof,
to forthwith give to the Owner written notice of the damage
and to remedy the damage to the satisfaction of the owner
within such tine as the Owner may specify, all at the cost
of the Licensee.
(xxxiv) The Licensee accepts the said land in its existing state and
condition and further accepts and confirms that the Owner
has made no representation nor given any assurance as to the
present or future suitability of the said land or its
surrounding or adjacent lands in relation to the Licensee's
use, operations or occupation at the said land.
-13-
<PAGE> 15
(xxxv) Subject to clauses 2(vii) and 2(viii) herein before
appearing to construct aesthetically-designed high quality
buildings, with extensive landscaping to the satisfaction of
the Owner. The building facade shall front Bukit Timah
Expressway and the external walls shall be either
aluminum-clad or tile or of equivalent standard materials.
(xxxvi) Not to openly store or permit open storage of and material,
equipment or goods at the said land fronting Bukit Timah
Expressway or any part thereof.
(xxxvii) Subject to clause 2(xii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by the Licensee shall not
exceed two (2) metres PROVIDED THAT boundary walls or fences
(if any) shall be erected behind baphia or other hedges
planted on the said land.
(xxxviii) At all times to comply with and observe any height
restrictions on buildings and structures at the said land
which may be imposed by any governmental or statutory
authority and to ensure that any height restriction plan
which may be furnished to the Licensee shall at all times be
held in strict confidence and shall not be shown, revealed
or copied to or by any person, contractor, subcontractor,
watchman, employee, agent, representative or any other
person except with the prior written consent of the Owner.
(xxxix) Not to keep or allow to be kept any livestock or other
animals at the said land or any part thereof.
-14-
<PAGE> 16
(xl) Access to the said land shall only be confined to Woodlands
Industrial Park D Street 2 and Woodlands Road. The latter
shall be on a left-in-left out arrangement only.
(xli) The licence fees and other taxable sums payable by the
Licensee under or in connection with the Licence herein
shall be exclusive of the goods and services tax
(hereinafter called "tax") chargeable by any government,
statutory or tax authority calculated by reference to the
amount of the licence fees and any other taxable sums
received or receivable by the owner from the Licensee and
which tax is payable by the Licensee. The Licensee shall pay
the tax and the Owner acting as the collecting agent for the
government, statutory or tax authority shall collect the tax
from the Licensee together with the licence fees
hereinbefore reserved without any deduction and in advance
without demand on the 1st day of each of the months of
January, April, July and October, and in the manner and
within the period prescribed in accordance with the
applicable laws and regulations.
(xlii) Chain-link fencing fronting Bukit Timah Expressway shall not
be permitted.
(xliii) Without prejudice to Clauses 2 (xii) and 2 (xiii)
hereinbefore appearing, the Licensee shall not place,
construct or erect or permit the placing, construction or
erection of any building, structure or equipment whatsoever
on the 15 metre-wide green buffer situated within the
boundary of the said land as shown on the plan annexed
hereto.
-15-
<PAGE> 17
3. It is hereby mutually agreed that until the Licensee has performed all
his obligations herein contained the Owner shall possess the rights and powers
following:-
(a) The right for himself and his agents with or without workmen
or others at all reasonable times to enter upon the said
land to view the state and progress of the said buildings
and works and to inspect and test the materials and
workmanship in connection therewith and for any other
reasonable purpose including the construction and
installation of sewers drains pipes and cables on or leading
from any adjoining or neighbouring land of the Owner as may
be required by the Owner.
(b) Full right and liberty in case any of the said buildings and
other structures or installations hereby agreed to be
erected be not completed and fit for immediate occupation
within the period hereinbefore' limited (time in this
respect shall be of the essence of the contract) and in
accordance in every way with the stipulations hereinbefore
contained or in case the Licensee shall in any other way
fail to perform and observe any of the stipulations on his
part herein contained or if any charging order writ of
seizure and sale or its equivalent made in respect of the
said land or any structure thereon shall be enforced without
the written consent of the owner having first been obtained
by the Licensee or by the person in whose favour the
charging order writ of seizure and sale or its equivalent
shall have been made, to re-enter upon and take possession
of the said land and all buildings structures fixtures plant
material and effects whatsoever thereon with power to hold
and dispose thereof as if this Agreement had not been
entered into and
-16-
<PAGE> 18
without making to the Licensee any compensation or allowance
for the same and this Agreement shall thereupon determine
but without prejudice to any right of action or other remedy
of the Owner for the recovery of any licence fee or monies
due to him from the Licensee or in respect of any breach of
this Agreement PROVIDED ALWAYS THAT the Owner shall, in
addition, also be entitled to claim and to recover from the
Licensee as a debt, firstly liquidated damages calculated at
and in accordance with the same rates as that stipulated for
liquidated damages in clause 3(e) in the Lease set out in
the First Schedule hereto as if the respective year of the
term of the lease therein referred to the respective year of
the said period of three (3) years or any extended period in
which the Owner exercised its aforesaid right of re-entry
under this Agreement and secondly any sum which the Owner
may incurr in connection with the demolition and removal of
any building, structure, fitting, fixture or thing which the
owner may consider necessary to demolish and remove AND
PROVIDED THAT if the said land has been assigned by way of
mortgage the provisions of this clause shall not take effect
until the Owner has served upon the mortgagee notice in
writing specifying the breach and the mortgagee has failed
to remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such default
as aforesaid in completing the said buildings and works the
Owner may in his discretion give notice in writing to the
Licensee of his intention not to enforce the stipulations
herein contained and may fix any extended period for the
completion of the said works in substitution for the said
period of three (3) years hereby fixed for such
-17-
<PAGE> 19
completion and thereupon the obligations hereunder of the
Licensee to complete the said works and to accept a lease
hereinafter mentioned shall be taken to refer to such
substituted period.
(d) Without prejudice to the generality of clause 3(b) hereof
full right and liberty in the event that the Licensee has
failed to either :
(1) develop the said land to the gross plot ratio
specified in clause 2(viii), or
(2) fulfil the investment criterion as stipulated in
Clause 4 with full and absolute discretion to the
owner to either :
(i) re-enter upon and take possession of the
said land or any part thereof and all
buildings, structures, fixtures, plant,
material and effects whatsoever thereon
with power to hold and dispose thereof
as if this Agreement had not been
entered into and without making to the
Licensee any compensation or allowance
for the same and this Agreement shall
thereupon determine but without
prejudice to any right of action or
other remedy of the Owner or recovery of
any licence fee or monies due to him
from the Licensee or in respect of any
breach of this Agreement, or
(ii) reduce the term of lease proportionately
as the actual amount invested bears with
the required fixed investment on the
said land as stipulated in clause 4 in
which event the Licensee shall execute
such documents as the Owner shall deem
necessary and in connection therewith,
pay all
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<PAGE> 20
costs disbursements fees and charges
legal or otherwise as provided in clause
5.
PROVIDED ALWAYS that if the said land has been
assigned by way of mortgage, the provisions of
this sub-clause (d) shall not take effect until
the Owner had served upon the Mortgagee notice in
writing specifying the breach and the Mortgagee
has failed to remedy such breach.
4. If the said buildings and works shall have been completely finished to
the satisfaction of the owner and the relevant Government Building Authorities
(to be evidenced by their certificates in writing to that effect) within the
said period of three (3) years or of such extended period (if any) as aforesaid
and if the Licensee shall have performed and observed all the stipulations
herein on his part contained other than such as may have been waived as
aforesaid and if there shall have been a minimum investment by the Licensee of
$900/- per square metre of the gross floor area of the building(s) on buildings
and civil works, of which $300,000/- or 1.5% of the actual cost of the building
and civil works (whichever is the lesser) shall be on landscaping and a minimum
investment of $300/- per square metre of the said land on plant and machinery,
within the said period of three (3) years from 16TH day of FEBRUARY 1994 (due
proof thereof to be produced by the Licensee to the satisfaction of the owner on
or before the 15TH day of AUGUST 1997), then the Owner shall grant and the
Licensee shall accept and executed counter-part of one good and sufficient lease
or sub-lease of the said land and premises together with the buildings so
erected thereon with their appurtenances for the term of thirty(30) years from
the 16TH day of FEBRUARY 1994 at the rent and in the form containing the
reservation exceptions covenants conditions and provisions set forth in the
FIRST SCHEDULE hereto with such modifications as
-19-
<PAGE> 21
circumstances may render necessary and such other covenants conditions or
stipulations to be performed by the Licensee governing or regulating the use of
the said land as the Owner thinks fit with a view to preserving the value
thereof or protecting the interests of the licensees or occupiers of land or
premises adjacent to the said land from any dangerous or obnoxious or otherwise
harmful activities which may be carried out by the Licensee whether or not such
activities are incidental to the Licensee's trade PROVIDED THAT until such lease
is executed the Licensee shall be deemed to be the Lessee of the said land as
though a lease has been executed at the same rent and subject to the covenants
and conditions contained in the First Schedule hereto so far as the same are
applicable.
5. The Licensee shall pay all costs disbursements fees and charges legal
or otherwise including stamp and registration fees in connection with the
preparation stamping and issue of this Agreement and the Lease herein agreed to
be granted and any prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Agreement and the lease.
6. The Licensee shall pay all costs and fees legal or otherwise,
including the Owner's costs as between solicitor and client, in connection with
the enforcement of the covenants and conditions of this Agreement and the lease.
7. The Licensee may, at any time during the said period of three (3)
years and any extensions thereof granted under clause 3 (c) terminate this
Agreement or surrender part of the said land by giving to the Owner three (3)
months' prior notice in writing, PROVIDED ALWAYS THAT such termination or
surrender shall be without prejudice to any right or remedy
-20-
<PAGE> 22
which may have or will accrue to the Owner prior to the expiry of the three (3)
months' notice AND PROVIDED FURTHER THAT the Licensee shall in addition to the
licence fee (which at- the discretion of the Owner may be apportioned for the
period commencing from the date hereof up to the date of delivery of vacant
possession of the said land or part thereof to the Owner) survey fees, property
tax and other charges specified herein forthwith pay to the owner as liquidated
damages in accordance with and calculated at the same rates as that stipulated
for liquidated damages in clause 3(e)of the Lease set out in the First Schedule
hereto PROVIDED THAT before the delivery of vacant possession as aforesaid if
the owner shall so desire the Licensee shall at the cost and expense of the
Licensee properly demolish and remove such building, structure, fixture, fitting
or thing as may be stipulated in writing by the Owner as well as properly render
the said land or part thereof as the case may be to its original state and
condition and licence fee and property tax shall continue to be payable until
the same has been completed to the satisfaction of the Owner.
-21-
<PAGE> 23
IN WITNESS WHEREOF the parties hereto have hereunto set their
respective hands or seals the day and year first above written.
SIGNED on behalf of
THE JURONG TOWN CORPORATION
By: SWEE KEE SIONG /s/ SWEE KEE SIONG
Deputy Chief Executive Officer ------------------------
in the presence of:
/s/ TAY HSIU CHIEH
-----------------------------
Tay Hsiu Chieh
The Common Seal of
SINGAPORE TECHNOLOGIES PTE LTD
was hereunto affixed
in the presence of:
Signature: /s/ HO CHING
-----------------------------
Name in full: Ho Ching (Ms)
Designation: Managing Director
Signature: /s/ CHUA SU LI
-----------------------------
Name in full: Chua Su Li (Mrs)
Designation: Managing Director
-22-
<PAGE> 24
I, CHIA CHOON YANG, Advocate and solicitor of the Supreme Court of
Singapore hereby certify that on the 11th day of April 1995 the Common Seal
of SINGAPORE TECHNOLOGIES PTE LTD was duly affixed to the within written
instrument at Singapore in my presence in accordance with the regulations of the
said Company which regulations have been produced and shown to me.
Witness my hand this 11th day of April 1995
/s/ CHIA CHOON YANG
-------------------------
Chia Choon Yang
Advocate & Solicitor
Singapore
-23-
<PAGE> 25
THE FIRST SCHEDULE ABOVE REFERRED TO
FORM 19
THE LAND TITLES ACT
(CHAPTER 157)
L E A S E
(WITH RESERVATION OF EASEMENT)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Reference to
Land Register Town Mukim Lot Description of Land (whether
DESCRIPTION Volume Folio Subdivision whole or in part)
OF LAND
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
13 (PRIVATE LOT A12787)
- --------------------------------------------------------------------------------------------------
</TABLE>
THE LESS0R
<TABLE>
<S> <C>
----------------------------------------------------------------------
LESSOR JURONG TOWN CORPORATION, a body corporate OFFICE USE
incorporated under the Jurong Town Corporation Act ONLY
and having its office at Jurong Town Hall, Jurong
Town Hall Road, Singapore 2260.
----------------------------------------------------------------------
</TABLE>
(the registered proprietor) HEREBY LEASES the registered
estate or interest in the land above described
THE LESSEE
<TABLE>
<S> <C>
----------------------------------------------------------------------
LESSEE SINGAPORE TECHNOLOGIES PTE LTD OFFICE USE
ONLY
----------------------------------------------------------------------
</TABLE>
-1-
<PAGE> 26
TERM OF as tenant for the term of THIRTY (30) YEARS commencing from
LEASE the 16TH DAY OF FEBRUARY 1994, in consideration of the
minimum investment by the Lessee of $900/- per square metre
of the gross building floor area on building and civil works
(including 1.5% of the actual cost of the building and civil
works or a maximum of $300,000/- on landscaping) and $300/-
per square metre of the demised premises on plant and
machinery, (hereinafter referred to as "the fixed investment
criteria") and YIELDING and PAYING therefor from the 16TH
DAY OF FEBRUARY 1994 the yearly rent of DOLLARS NINE HUNDRED
AND FORTY-FIVE THOUSAND FOUR HUNDRED AND FIFTY ONLY
($945,450/-) to be paid by equal quarterly installments on
the 1st day of each of the months of January, April, July
and October in every year of the said term without any
deduction and in advance without demand at the office of the
Lessor or at such other office as the Lessor may designate
calculated at the rate of $18/- per square metre per annum
(hereinafter referred to as "the Initial Rent") of the
demised premises having an area of 52,525 square metres
(hereinafter referred to as "the preliminary survey area",
which may at any time be adjusted on completion of final
survey, if any, and in which event if the area adjusted
exceeds five square metres more, or less, than the
preliminary survey area the rental paid or payable by the
Lessee shall accordingly also be adjusted and be paid and
payable or refunded as the case may be in respect of the
full difference between the preliminary survey area and the
final survey area, with retrospective effect from the
commencement of the said term of the Lease herein), which
rate shall be increased by 9% per annum (compounded
annually) on the 16TH DAY OF FEBRUARY 1995 and on the 16TH
DAY OF FEBRUARY of every year thereafter.
AND RESERVING to the Lessor as APPURTENANT TO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Reference to
Land Register Town Mukim Lot Description of Land (whether
DESCRIPTION Volume Folio Subdivision whole or in part)
OF LAND
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Dominant Tenement) 13
- --------------------------------------------------------------------------------------------------
</TABLE>
a RIGHT OF PASSAGE AND RUNNING of water soil electricity
power gas telephone communication and other similar
amenities from the adjoining and neighbouring premise
thereon through sewers drains pipes channels cables and
ducts upon or under the land hereinafter described and to
make connections with such sewers drains pipes channel
cables and ducts or any of them for the purpose
-2-
<PAGE> 27
of exercising the said right of passage and of running the
aforesaid amenities over the land hereinafter described.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Reference to
Land Register Town Mukim Lot Description of Land (whether
DESCRIPTION Volume Folio Subdivision whole or in part)
OF LAND
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Reservation of 13 (PRIVATE LOT A12787)
right of passage
and running of
amenities over
land hereby
transferred)
- --------------------------------------------------------------------------------------------------
</TABLE>
SUBJECT TO:
PRIOR PRIOR ENCUMBRANCE
ENCUMBRANCES
NIL
-3-
<PAGE> 28
AND the following
COVENANTS AND CONDITIONS
(a) the covenants, conditions and powers implied by law in
instruments of lease (or to such of them as are not
hereinafter expressly negatived or modified);
(b) the covenants and conditions set forth in the Memorandum of
Lease filed in the Registry of Titles and numbered as ML
I/30809F with the exception of covenants i(x), i(xi),
1(xvii) and i(xxv) of ML I/30809F.
SPECIAL COVENANTS AND CONDITIONS
1 (x) As often as any building or structure on the demised
premises or any part thereof shall be destroyed or damaged
as aforesaid forthwith to give to the Lessor written notice
of such destruction or damage and forthwith to cause all
monies received by virtue of such insurance to be laid out
in rebuilding and reinstating the same to the satisfaction
of the Lessor and in accordance with the plans and
specifications approved by the Lessor and in accordance with
the laws, by-laws regulations and planning schemes of every
relevant governmental and statutory authority prevailing at
the time, and in case the monies so received shall be
insufficient for that purpose then to make up the deficiency
out of his own monies PROVIDED THAT the rebuilding and
reinstatement shall in any event commence and be completed
within the period specified by the Lessor PROVIDED FURTHER
THAT notwithstanding the covenant contained in this Clause 1
(x) , the Lessee may exercise the option not to rebuild or
reinstate the buildings subject to the following conditions:
(a) the Lessee shall give the Lessor three (3) months'
prior notice in writing to prematurely terminate
the term of lease herein created but without
prejudice to clause 3(e) and any right or remedy
which may have or will accrue to the Lessor prior
to the expiry of the three (3) months' notice
under the terms and conditions of the Lease
herein; and
(b) forthwith pay or cause to be paid to the Lessor
(whom the Lessee acknowledges to be entitled to)
all monies received by virtue of such insurance.
(xi) Not to demise assign mortgage charge create a trust let
sublet or underlet or grant a licence or part with or share
the possession or occupation of the demised premises in
whole or in part without first obtaining the consent of the
Lessor in writing. The restrictions contained in Section 17
of the Conveyancing and Law of Property Act (Chapter 61)
shall not apply. In addition, the Lessor may in its absolute
discretion in giving the consent
-4-
<PAGE> 29
require, inter alia, that the fixed investment criteria be
met and due proof thereof be shown within such period of
time as the Lessor may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to
exercise its rights under Clause 3 (c) herein.
(xvii) At the termination, by notice by the Lessee, or reentry by
the Lessor or by expiry or otherwise, of the term hereby
created, to yield up the demised premises to the Lessor in
tenantable repair in accordance with the Lessee's covenants
herein contained PROVIDED THAT, if so required by the Lessor
and upon notice thereof, the Lessee shall at his own cost
and expense properly demolish and remove such buildings,
structures, fixtures and fittings, or any part thereof, as
may be specified by the Lessor and reinstate the demised
premises to the satisfaction of the Lessor and if the Lessee
shall fail to observe or perform this covenant the Lessor
may (but shall not be under any obligation to do so) execute
such works and recover the costs thereof from the Lessee as
a debt.
(xxv) Subject always to Clause i(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change PROVIDED THAT where there has been,
is or will also be a change in the shareholders of the
Lessee or the number of shares held by each and every
shareholder, the prior written consent in writing of the
Lessor shall be obtained and which consent if granted shall
be subject to such terms and conditions as the Lessor may
require.
(xxxvi) Not to use or permit or suffer the demised premises or any
part thereof to be used otherwise than for WAFER FABRICATION
PLANT OPERATIONS ONLY except with the prior consent in
writing of the Lessor. In granting its consent to any change
or extension of use, the Lessor may in its absolute
discretion require, inter alia, the Lessee to meet the fixed
investment criteria and to show due proof within such period
of time as the Lessor may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to
exercise its rights under clause 3(c) of ML I/30809F. For
the avoidance of any doubt, the words "meet" in this clause
and "met" in clause (xi) shall include the maintenance of
the fixed investment criteria and if it has not been
maintained then that it be met.
(xxxvii) Without prejudice to clause 1(viii) of ML I/30809F to ensure
that the gross plot ratio shall not be less than 0.6 but not
more than 1.4.
(xxxviii) Without prejudice to the generality of clause I(iv) of ML
I/30809F and at the Lessee's own cost, to properly upkeep
the aesthetically-designed high quality buildings at the
demised premises, with extensive landscaping, to the
satisfaction of the Lessor. The building facade shall front
Bukit Timah
-5-
<PAGE> 30
Expressway and the external walls shall be either
aluminium-clad or tiled or of equivalent standard materials.
(xxxix) At all times to comply with and observe any height
restrictions on buildings and structures at the demised
premises which may be imposed by any governmental or
statutory authority and to ensure that any height
restriction plan which may be furnished to the Lessee shall
at all times be held in strict confidence and shall not be
shown, revealed, released or copied to or by any person,
contractor, sub-contractor, workman, employee, agent,
representative or any other person except with the prior
written consent of the Lessor.
(xl) The Lessee accepts the demised premises in its existing
state and condition and further accepts and confirms that
the Lessor has made no representation nor given any
assurance as to the present or future suitability of the
demised premises or its surrounding or adjacent lands in
relation to the Lessee's use, operations or occupation at
the demised premises.
(xli) Not to openly store or to permit any open storage of any
material, equipment or goods at the demised premises
fronting Bukit Timah Expressway or any part thereof.
(xlii) Subject to Clause 2(viii) of ML I/30809F, to ensure that the
maximum height of any boundary wall or fence (including the
anti-climb) erected by the Lessee at the demised premises
shall not exceed two (2) metres PROVIDED THAT boundary walls
or fences (if any) shall be erected behind the baphia or
other hedges planted on the demised premises.
(xliii) Not to keep or allow to be kept any livestock or other
animals at the demised premises or any part thereof.
(xliv) At the Lessee's own cost and expense and subject to the
Lessor's prior written approval, to execute such works as
may be deemed necessary by the Lessee in respect of the
state and condition of the demised premises (especially its
ground levels, topography and soil condition) which state
and condition the Lessee shall be deemed to have full
knowledge.
(xlv) Chain-link fencing fronting Bukit Timah Expressway shall not
be permitted.
(xlvi) Access to the demised premises shall only be confined to
Woodlands Industrial Park D Street 2 and Woodlands Road. The
latter shall be on a left-in-left-out arrangement only.
(xlvii) Without prejudice to the generality of Clause 1(vii) of ML
I/30809F, the Lessee shall not place, construct or erect or
permit the placing, construction or erection of any
building, structure or equipment whatsoever on the 15
-6-
<PAGE> 31
metre-wide green buffer situated within the boundary of the
demised premises shown on the plan annexed hereto.
2A The Lessor further covenants with the Lessee that he shall grant to
the Lessee a lease of the demised premises for a further term of THIRTY (30)
YEARS (hereinafter referred to as "the further term") from the expiry of the
said term upon the same terms and conditions and containing like covenants as
are contained in this lease with the EXCEPTION of clause 3(e) hereinafter
appearing and the present covenant for renewal PROVIDED THAT:
(i) there shall be a minimum investment by the Lessee of
$1,000/- per square metre of the gross building floor area
on buildings and civil works (of which $300,000/- or 1.5% of
the actual cost of the building and civil works, whichever
is the lesser, shall be on landscaping) and $500/- per
square metre of the demised premises on plant and machinery,
(also referred to as "the fixed investment criteria") within
three (3) years from the 16th day of FEBRUARY 1994 and due
proof of such investment is produced to the satisfaction of
the Lessor on or before the 15TH DAY OF AUGUST 1997;
(ii) Subject to clause 1(viii) of ML I/30809F, there shall be a
gross plot ratio of not less than 0.75 but not more than
1.4;
(iii) at the time due proof of such investment is produced and at
the expiry of the said term, there be no existing breach or
non-observance of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or
performed;
(iv) if required by the Lessor, the Lessee shall within four (4)
months from the commencement of the further term and at his
own cost and expense, carry out and complete such
improvements to the landscaping at the demised premises as
may be stipulated in writing by the Lessor;
(v) the Lessee shall six (6) months before the expiry of the
said term submit, for the approval of the Lessor and the
relevant governmental and statutory authorities, plans for
the upgrading of the exterior of buildings on the demised
premises to the same highest quality of new buildings which
the Lessor will be building at that time, and the Lessee
shall expeditiously do all acts and things necessary to
obtain the approval, all at the cost and expense of the
Lessee; and
(vi) the Lessee shall at his own cost and expense complete,
within eighteen (18) months from the commencement of the
further term, the upgrading of the buildings in accordance
with the plans approved by the Lessor and the relevant
governmental and statutory authorities and to the
satisfaction of the Lessor.
-7-
<PAGE> 32
3 (d) The Lessee may at any time prematurely terminate the term of
lease herein created by giving to the Lessor three (3)
months' prior notice in writing, but without prejudice to
any right or remedy which may have or will accrue to the
Lessor prior to the expiry of the three (3) months' notice
under the terms and conditions of the Lease herein created
or in respect of the termination.
(e) Subject to clause 3(f) hereinafter appearing in the event
that premature termination shall occur at any time within
eight (8) years from the commencement of the said term of
lease herein created or if the Lessor shall at any time
within the said eight (8) years exercise its right of
re-entry under clause 3(c) of ML I/30809F then in addition
to rent, interest, property tax and other sums payable by
the Lessee to the date of premature termination or re-entry
as the case may be, liquidated damages for the sum of $17.7
million (`the said sum') shall be payable and paid by the
Lessee to the Lessor and it is acknowledged and agreed by
the Lessee that the said sum shall constitute liquidated
damages and shall not be considered under any circumstances
as a penalty. It is hereby agreed that the said sum shall be
reduced to $10.3 million in the event that the Lessee does
not exercise the option of Private Lots A12787(a) and
A12787(b) (hereinafter referred to as "the said option
sites") by 15th February 1998 pursuant to the Lessor's
letter of offer for the said option sites dated 17th
December 1993.
(f) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver of the liquidated damages provided in
clause 3(e) of the Special Covenants and conditions
hereinbefore appearing in the event of any transfer or
assignment of the lease in accordance with clause 1(xi)
hereinbefore appearing PROVIDED THAT:
(i) the transfer or assignment is approved in writing
by the Lessor and all other relevant governmental
and statutory authorities and
(ii) the Lessor reserves the right to revise the land
rent to the prevailing market rate at the time of
the transfer or assignment.
-8-
<PAGE> 33
DATE OF LEASE ______________________________________________
EXECUTION THE COMMON SEAL OF )
BY LESSOR JURONG TOWN CORPORATION )
)
was hereunto affixed in )
)
in the presence of )
-----------------------
Chief Executive Officer
-----------------------
Secretary
EXECUTION THE COMMON SEAL OF )
BY LESSEE SINGAPORE TECHNOLOGIES PTE LTD )
)
was hereunto affixed in )
)
in the presence of )
/s/ HO CHING
-----------------------------------
Ho Ching (Ms), Managing Director
/s/ CHUA SU LI
-----------------------------------
Chua Su Li (Mrs), Company Secretary
I,
a duly authorised officer of the Jurong
Town Corporation, under Section 31 of
the Jurong Town Corporation Act (Cap
150) for and on behalf of the Lessor
hereby certify that this instrument is
correct for the purposes of the said
Act.
I,
the Solicitor of the Lessee hereby
certify that this instrument is correct
for the purposes of the said Act.
-9-
<PAGE> 34
BELOW THIS LINE FOR OFFICE USE ONLY\
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
Special Remarks Endorsing Instruction
First Schedule:
Second Schedule:
- ---------------------------------------------------------------------------------------------
EXAMINED REGISTERED ON
-------------------
Initials of
Signing
Date: officer REGISTRAR OF TITLES
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 35
OFFICE USE ONLY
THE LAND TITLES ACT ---------------
(CHAPTER 157) $
---------------
M E M O R A N D U M
To the Registrar of Titles
On behalf of THE JURONG TOWN CORPORATION, a body corporate incorporated under
the Jurong Town Corporation Act and having its office at Jurong Town Hall,
Jurong Town Hall Road, Singapore, the Registered proprietor.
I, GLORIA ONG SIEW CHOO, certify that this memorandum (comprising seven pages),
contains the provisions which are deemed to be incorporated in any instrument in
which the abovementioned corporation is named as a lessor and such instrument
has reference to this memorandum.
Signature
Authorised Officer
- ----------------------------------------
LODGED BY Filed in the REGISTRY OF TITLES
ON 26TH JUNE, 1990
Jurong Town Corporation
Jurong Town Hall
Jurong Town Hall Road
Singapore 2260 REGISTRAR OF TITLES
- ----------------------------------------
7373c
<PAGE> 36
SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants with the Lessor as follows
(i) To pay the yearly rent hereinbefore reserved on the days and
in the manner appearing in the reddendum.
(ii) To pay unto the Lessor on demand by way of additional rent a
sum equal to all such sums as the Lessor may from time to
time pay for insuring and keeping insured the demised
premises against loss or damage by fire in case the Lessee
shall make default in insuring and keeping insured the
demised premises pursuant to the covenant in that behalf
hereinafter contained PROVIDED ALWAYS THAT nothing herein
shall render it obligatory on the part of the Lessor to
insure and keep insured the demised premises or any part
thereof.
(iii) To pay all rates taxes assessments and outgoings whatsoever
which now are or which at any time hereafter during the said
term may be imposed or charged upon or in respect of the
demised premises or any part thereof.
(iv) To repair and keep in tenantable repair the demised premises
and every part thereof throughout the said term.
(v) To pay a reasonable proportion of the expense of
constructing repairing rebuilding and cleansing all party
walls fences sewers drains pipes water-courses and other
things the use of which is common to the demised premises
and the occupiers of any adjoining or neighbouring premises
and such proportion in the case of a dispute shall be
conclusively determined by the Lessor's surveyor for the
time being.
(vi) To permit the Lessor and his surveyors or agents with or
without workmen or others during the said term at reasonable
times in the day-time to enter upon the demised premises and
every part thereof to examine the state and condition of the
same and of defects decays and wants of reparations and of
all breaches of covenant there found and the Lessor may
thereupon serve on the Lessee notice in writing by leaving
the same at or on the demised premises to or for the Lessee
to make good the same within such reasonable time as
specified in such notice.
(vii) To perform and observe all the obligations which the Lessor
of the demised premises may be liable to perform or observe
during the term hereby created by any direction or
requirement of any governmental or statutory authority and
if the Lessee shall fail to observe or perform this covenant
the Lessor may in its absolute discretion perform the same
and all expenses and costs incurred thereby shall be
recoverable from the Lessee as a debt PROVIDED ALWAYS THAT
the Lessor shall not be liable to the Lessee for any loss
damage or inconvenience caused thereby.
(viii) Not to make or cause to be made any addition or alteration
affecting the elevation external structure or stability of
the demised premises or any part thereof without the prior
written consent of the Lessor and the relevant governmental
and statutory authorities PROVIDED THAT on the granting of
such consent and without prejudice to other terms and
conditions which may be imposed the Lessee shall give to the
Lessor security that the proposed addition alteration or
rebuilding will in fact be carried out within a reasonable
time.
(ix) Forthwith to insure and keep insured the demised premises
against loss or damage by fire to the full value thereof
with a well established insurance company approved by the
Lessor and
-1-
<PAGE> 37
to make all payments necessary for that purpose within seven
days after the same shall become payable and upon reasonable
notice to produce to the Lessor the policy or policies of
such insurance and the receipts for all such payments.
(x) As often as the demised premises or any part thereof shall
be destroyed or damaged as aforesaid forthwith to cause all
monies received by virtue of such insurance to be laid out
in rebuilding and reinstating the same in accordance with
the plans and specifications approved by the Lessor and in
accordance with the existing laws, bye-laws, regulations and
planning schemes of every relevant governmental and
statutory authority prevailing at the time, and in case the
monies so received shall be insufficient for that purpose
then to make up the deficiency out of his own monies
PROVIDED THAT the rebuilding and reinstatement shall in any
event commence and be completed within the period specified
by the Lessor.
(xi) Not to demise assign mortgage let sublet or underlet or
grant a licence or part with or share the possession or
occupation of the demised premises in whole or in part
without first obtaining the consent of the Lessor in
writing. The restrictions contained in Section 17 of the
Conveyancing and Law of Property Act (Chapter 61) shall not
apply. In addition, the Lessor may in its absolute
discretion in giving the consent require, inter alia, that
the fixed investment criteria be met and due proof thereof
be shown within such period of time as the Lessor may
stipulate, and in the event of the non-observance thereof,
the Lessor shall be entitled to exercise its rights under
Clause 3(c) herein.
(xii) Within six months of the devolution of the interest of the
Lessee not perfected by an assent to give notice thereof in
writing with particulars thereof to the Lessor and produce
to the Lessor such documentary evidence as may be required
by the Lessor.
(xiii) Not to use the demised premises or any part thereof for any
illegal or immoral purpose and not to do or permit or suffer
to be done upon the demised premises anything which in the
opinion of the Lessor may be or become a nuisance annoyance
or causing damage or inconvenience to the Lessor or his
lessees or the occupiers of any adjoining or neighbouring
premises or whereby any insurance for the time being
effected on the demised premises may be rendered void or
voidable or be in any way affected.
(xiv) Not without the prior consent in writing of the Lessor to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon any
part of the exterior of the demised premises or of the
external rails or fences thereof any nameplate signboard
placard poster or other advertisement or hoarding.
(xv) To make reasonable provision against and be responsible for
all loss injury or damage to any person or property
including that of the Lessor for which the Lessee may be
held liable arising out of or in connection with the
occupation and use of the demised premises and to indemnify
the Lessor against all proceedings claims costs and expenses
which he may incur or for which he may be held liable as a
result of any act neglect or default of the Lessee his
servants contractors sub-contractors or agents.
(xvi) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Lessor in
respect of any arrears of rent or other outstanding sums due
and payable under this Lease from the due dates thereof
until payment in full is received by the Lessor.
(xvii) At the termination, by expiry or otherwise, of the term
hereby created, to yield up the demised premises to the
Lessor in tenantable repair in accordance with the Lessee's
covenants herein contained PROVIDED THAT, if so required by
the Lessor and upon notice thereof, the Lessee shall remove
the fixtures and fittings, or any part thereof, as may be
specified by
-2-
<PAGE> 38
the Lessor and reinstate the demised premises to the
satisfaction of the Lessor and if the Lessee shall fail to
observe or perform this covenant the Lessor shall execute
such works and recover the costs thereof from the Lessee as
a debt.
(xviii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants to the requirements and satisfaction of the
Lessor PROVIDED THAT in the event of default by the Lessee
under this covenant the Lessor may carry out such remedial
measures as he thinks necessary and all costs and expenses
incurred thereby shall forthwith be recoverable from the
Lessee as a debt.
(xix) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the demised premises in respect of
the operations business, trade or industry carried out or
conducted therein which shall contravene the provisions of
any laws, by-laws, orders, rules or regulations now or
hereafter affecting the same but at his own Cost and expense
to comply with all such provisions and at all times
hereafter to indemnify and keep indemnified the Lessor
against all actions, proceedings, costs, expenses, claims,
fines, losses, penalties and demands in respect of any act
matter or thing done or omitted to be done in contravention
of the said provisions.
(xx) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in
connection with the preparation stamping and issue of this
Lease and any prior accompanying or future documents or
deeds supplementary collateral or in any way relating to
this Lease.
(xxi) To pay all costs and fees legal or otherwise including costs
as between solicitor and client in connection with the
enforcement of the covenants and conditions herein.
(xxii) To pay to the Lessor all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities and other relevant
governmental and statutory authorities for the survey of the
demised premises for the purpose of sub-division of the land
of which the demised premises forms part and issue of this
Lease and a Certificate of Title PROVIDED THAT the Lessor
shall have the right to employ his own surveyor to carry out
the said survey in which event the Lessee shall bear all
costs thereby incurred.
(xxiii) At his own cost to take such steps and execute such works
upon the demised premises as may be necessary for the
protection of shores and embankments if any and for the
prevention of earthslip erosion of soil and failure of
slopes expeditiously in a workmanlike manner and to the
satisfaction of the Lessor.
(xxiv) To construct an internal drainage system within the demised
premises to the satisfaction of the Lessor to ensure that
all surface water collected thereon is discharged into the
public drains.
(xxv) Not to effect a change of name except with the prior consent
in writing of the Lessor PROVIDED THAT on every change of
name the Lessee shall pay to the Lessor a fee to be
specified by the Lessor in relation to such consent.
(xxvi) To perform and observe the covenants on the Lessor's part
contained in the Head Lease made between the President of
the Republic of Singapore and the Lessor so far as they are
not varied herein and to keep the Lessor indemnified against
all claims damages costs and expenses in any way relating
thereto.
(xxvii) To maintain the demised premises and every part thereof in a
neat and tidy condition, and forthwith to comply with the
Lessor's direction to remove and clear any materials, goods
or
-3-
<PAGE> 39
articles of whatever nature and description from the demised
premises or such part thereof as may be stipulated in
writing by the Lessor.
(xxviii) At his own cost to plant and maintain trees and landscape
the demised premises in accordance with all the requirements
of the Parks and Recreation Department, Ministry of National
Development and other relevant governmental and statutory
authorities.
(xxix) Not to install or use any electrical installation, machine
or apparatus that may cause or causes heavy power surge,
high frequency voltage and current, air borne noise,
vibration or any electrical or mechanical interference or
disturbance whatsoever which may prevent or prevents in any
way the service or use of any communication system or
affects the operation of other equipment, installations,
machinery, apparatus or plants of other Lessees in
connection therewith, to allow the Lessor or any authorised
person to inspect at all reasonable times, such
installation, machine or apparatus in the demised premises
to determine the source of the interference or disturbance
and thereupon, to take suitable measures, at the Lessee's
own expense, to eliminate or reduce such interference or
disturbance to the Lessor's satisfaction, if it is found by
the Lessor or such authorised person that the Lessee's
electrical installation, machine or apparatus is causing or
contributing to the said interference or disturbance.
(xxx) To indemnify the Lessor against each and every claim,
proceeding, action, loss, penalty, damage, expense, cost and
demand which may arise in connection with clause (xxix)
above.
(xxxi) At the Lessee's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and
satisfaction of the Lessor and other relevant governmental
and statutory authorities.
(xxxii) Subject to that clause in the Special Covenants and
Conditions of this Lease which stipulates the specific use
the Lessor permits for the demised premises, the Lessee
shall use and shall ensure that at least sixty per centum
(60%) of the total floor area of the demised premises shall
be used for purely industrial activities, and may use the
remaining floor area for ancillary stores and offices,
neutral areas, communal facilities and such other uses as
may be approved in writing by the Lessor and the relevant
governmental and statutory authorities PROVIDED THAT the
said ancillary offices shall not exceed twenty-five per
centum (25%) of the total floor area AND PROVIDED FURTHER
THAT the Lessee shall not use and occupy the demised
premises for the purpose of commercial office and storage
unrelated to the Lessee's approved industrial activity.
(xxxiii) If the Lessee shall at any time be found to have encroached
upon any area beyond the boundaries of the demised premises,
the Lessee shall at his own cost and expenses, but without
prejudice to any other right or remedy the Lessor may have
against him, immediately or within the time specified (if
any) by the Lessor rectify and remove the encroachment to
the satisfaction of the Lessor and pay to the Lessor such
compensation as may be specified by the Lessor. If, however,
the Lessor in his absolute discretion permits the Lessee to
regularise and retain the encroached area or any part
thereof upon such terms and conditions as may be stipulated
by the Lessor and any other relevant governmental and
statutory authorities, the Lessee shall pay land rent on the
encroached area with retrospective effect from the date of
commencement of the term hereby created, and the Lessee
shall also pay all survey fees, amalgamation fees, legal
fees (including solicitor and client costs and expense), and
all other costs and charges relating thereto.
(xxxiv) If any damage of whatsoever nature or description shall at
any time occur or be caused to the demised premises or any
part thereof, to forthwith give to the Lessor written notice
of the
-4-
<PAGE> 40
damage and to remedy the damage to the satisfaction of the
Lessor within such time as the Lessor may specify, all at
the cost of the Lessee.
(xxxv) Not to keep or permit to be used or stored in the demised
premises or any part thereof any materials of a dangerous or
explosive nature without the prior consent in writing of the
Lessor and to keep the Lessor indemnified against all
damages claims and action caused by the use of storage of
such materials whether or not the same is done with the
consent of the Lessor.
2. The Lessor hereby covenants with the Lessee that the Lessee paying the
rent hereinbefore reserved and performing and observing the covenants conditions
and agreements on the part of the Lessee hereinbefore contained shall peaceably
hold and enjoy the demised premises during the term-hereby granted without any
interruption of or by the Lessor or any person lawfully claiming through under
or in trust for him.
3 PROVIDED ALWAYS and it is hereby agreed between the parties as
follows:
(a) That no estate or interest in the soil of the road and
footpath adjacent to the demised premises is or shall be
deemed to be included in the demise hereinbefore contained.
(b) That the Lessee shall not be entitled to any right of access
of light or air to the demised premises or any part thereof,
which would restrict or interfere with the user of any
adjoining or neighbouring land for building or any other
purpose.
(c) That if the said rent hereby reserved or any part thereof
shall be unpaid for fourteen days after becoming payable
(whether the same shall have been formally demanded or not)
or if any of the covenants or obligations on the part of the
Lessee herein contained shall not be performed or observed
or if any charging order made in respect of the demised
premises shall be enforced by sale or by entry into
possession without the written consent of the Lessor having
first been obtained (Section 17 of the Conveyancing and Law
of Property Act shall also not apply in such event) by the
Lessee or by the person in whose favour the charging order
shall have been made, then and in any such case it shall be
lawful for the Lessor or any person or persons authorised by
him in that behalf at any time thereafter to re-enter upon
the demised premises or any part thereof in the name of the
whole and thereupon the term hereby created shall absolutely
determine but without prejudice to any right of action or
remedy of the Lessor in respect of any breach of any of the
covenants or conditions by the Lessee herein contained
PROVIDED THAT if the demised premises have been assigned by
way of mortgage the provisions of this clause shall not take
effect until the Lessor has served upon the mortgagee a
notice in writing that such breach has occurred and the
mortgagee has failed to remedy such breach.
4 In this Lease where the context so requires or permits, words
importing the singular number or the masculine gender include the plural number
or the feminine gender and words importing persons include corporation and vice
versa, the expression "the Lessor" shall include its successors-in-title and
assigns, the expression "the Lessee" shall include its successors-in-title and
permitted assigns (if any), where there are two or more persons included in the
expression "the Lessee" covenants expressed to be made by "the Lessee" shall be
deemed to be made by such persons jointly and severally, and except where
otherwise provided the expression "the demised premises" shall mean the land
hereby demised and all buildings, structures, fixtures and fittings therein.
-5-
<PAGE> 1
EXHIBIT 10.30
DATED 30TH THIS DAY OF SEPTEMBER 1997
Between
SINGAPORE TECHNOLOGIES PTE LTD
.. of the one part
And
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
.. of the other part
**********************************************************
AGREEMENT FOR SUB-LICENCE AND SUB-LEASE
**********************************************************
File Ref: MS/VN/yy/8241/951
ALLEN & GLEDHILL
ADVOCATES & SOLICITORS
SINGAPORE
<PAGE> 2
THIS AGREEMENT is made the 30th day of September 1997 between:-
(1) SINGAPORE TECHNOLOGIES PTE LTD, a company incorporated in Singapore
and having its registered office at 83 Science Park Drive #01-01/02
The Curie, Singapore Science Park, Singapore 118258 (hereinafter
called "ST" which expression shall include its successors-in-title);
and
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore and having its registered office at 60 Woodlands Industrial
Park D Street 2, Singapore 738406 (hereinafter called "CSM" which
expression shall include its successors-in-title and permitted
assigns).
WHEREAS:-
(A) ST has entered into a Building Agreement (hereinafter called "the
Building Agreement" which expression shall include all variations
thereof and supplements thereto) dated the 11th day of April 1995 with
Jurong Town Corporation (hereinafter called "JTC" which expression
shall include its successors-in-title and assigns) in respect of the
land more particularly described in the First Schedule hereto
(hereinafter called "the Property") for the construction of factory
buildings and other structures therein and for the installation of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and
conditions contained in the Building Agreement.
(B) Under the terms of the Building Agreement, JTC has agreed to:-
(a) grant a licence to ST to enter upon the Property for a period of
three (3) years commencing from the 16th day of February 1994;
and
(b) lease the Property to ST for a term of thirty (30) years
(hereinafter called "the Head Lease") commencing from the 16th
day of February 1994 upon compliance with the conditions set out
in Clause 4 of the Building Agreement,
on the terms and conditions set out therein.
(C) With the consent of JTC, ST has agreed:-
(a) to grant a sub-licence to CSM for a period of three (3) years
(less one (1) day) commencing from the Commencement Date; and
(b) that upon the completion of the Development and subject to
compliance with the conditions set out in this Agreement, ST
shall grant to CSM a sub-lease of the Property for a term of
thirty (30) years less one (1) day commencing from the 16th day
of February 1994,
on the terms and conditions hereinafter set out.
NOW IT IS HEREBY AGREED as follows:-
1. In this Agreement, the following expressions shall have the following
meanings:-
<PAGE> 3
- 2 -
"Commencement Date" means the 16th day of February 1994;
"Development" means the construction on the Property of factory
buildings and other structures therein and the installation thereon of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and
conditions contained in the Building Agreement;
"Sub-Licence Period" means the period of three (3) years less one (1)
day commencing from and including the Commencement Date.
2. For the Sub-Licence Period or for such further period as may be
extended by ST, CSM shall have the licence and authority to enter upon
the Property for the carrying-out of the works relating to the
Development in accordance with the stipulations hereinafter contained
and as contained in the Building Agreement and for no other purpose.
3. CSM hereby agrees to perform and observe the following stipulations:-
(i) To hold the Property until the same shall be comprised in a
sub-lease to be granted as hereinafter provided as licensee
upon the same terms relating to the sub-lease referred to in
Clause 3(ii) herein at the same rent and subject to the same
covenants and stipulations so far as applicable as if a
sub-lease thereto has been actually granted and so that ST
shall have all the remedies by whatsoever means for rent in
arrears that are incidental to the relationship of landlord
and tenant but so that nothing herein contained shall be
construed as creating a legal demise or any greater interest
in the licence than a tenancy at will;
(ii) To pay in advance as from the Commencement Date a licence
fee, calculated at the same rate and on the dates specified
as for the rent reserved in the sub-lease of the Property in
the Second Schedule hereto as if such sub-lease has actually
been granted;
(iii) To pay on JTC's behalf to the Comptroller of Property Tax an
amount equivalent to the sum payable by JTC as property tax
in respect of the Property improvements and structures
thereon during the Sub-Licence Period or of such extended
period (if any) permitted under Clause 4(c) hereof by way of
additional licence fee or for the period prior to the issue
of the sub-lease to be granted under Clause 6 herein;
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by ST in respect
of any outstanding amount payable by CSM under this
Agreement from the date such amount becomes due until
payment in full is received by ST.
(v) To pay to ST all survey fees and other charges including
those payable to and claimed by the relevant Government
Planning Authorities for the survey of the Property for the
purpose of sub-division of the land of which the Property
forms part and the preparation and issue of a Certificate of
Title PROVIDED THAT JTC shall have the right to employ its
own surveyor to carry out the said survey in which event CSM
shall bear all costs incurred.
<PAGE> 4
- 3 -
(vi) At the cost and expense of CSM:-
(a) to engage a professional engineer to carry out
soil investigations to advise on the soil
conditions and to design structurally sound
buildings proposed to be erected taking into
consideration the condition of the Property; and
(b) to execute such work as may be required to be done
in respect of the state and condition of the
Property (especially its ground levels, topography
and soil conditions) which state and condition CSM
shall be deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the Commencement Date to ST for its
and JTC's approval and then to the relevant Government
Planning and Building Authorities full and complete plans
elevations and specifications of the buildings proposed to
be erected on the Property in accordance in every way with
the requirements under the Planning Act and the Local
Government Integration Act PROVIDED THAT ST or JTC may give
or refuse their approval at their absolute discretion.
(viii) At its own cost to commence erection on the Property either
within six (6) months from the Commencement Date or within
one (1) month from the date of approval of the plans by the
relevant Government Building Authorities, whichever is the
earlier, and in a substantial and workman-like manner with
the best materials of their available kinds and in
conformity in every respect with the plans, elevations,
sections and specifications approved by ST and JTC and the
relevant Government Building Authorities to finish the
Development so as to be completely fit for immediate
occupation and operation within the Sub-Licence Period
PROVIDED ALWAYS THAT in the planning, erection, construction
and completion of the said buildings to be comprised in the
Development, to develop to a gross plot ratio of not less
than 0.6 but not more than 1.4 AND PROVIDED FURTHER THAT CSM
shall not install or use any electrical installation,
machine or apparatus that may cause or causes heavy power
surge, high frequency voltage and current, air borne noise,
vibration or any electrical or mechanical interference or
disturbance whatsoever which may prevent or prevents in any
way the service or use of any communication system or
affects the operation of other equipment, installations,
machinery, apparatus or plants of other licensees.
(ix) At its own cost to take such steps and execute such works
upon the Property as may be necessary for the protection of
shores and embankments if any and for the prevention of
earth-slip erosion of soil and failure of slopes
expeditiously in a workman-like manner and to the
satisfaction of ST and JTC and other relevant governmental
and statutory authorities.
(x) If CSM shall fail to complete the Development and to
commence operations within the period specified in Clause
3(viii) or within any extended period under Clause 4(c)
hereof CSM shall pay to ST a sum calculated at the rate of
$50.00 per day as liquidated damages for the period during
which the said buildings to be comprised in the Development
shall so remain or have remained incomplete.
(xi) To remove and replace any materials brought on the Property
or used for the Development or any part thereof which ST or
JTC shall require to be removed as being
<PAGE> 5
- 4 -
inferior or unfit and to make good any workmanship which ST
or JTC shall consider imperfect and if CSM fails to remedy
such defects ST or JTC may enter upon the Property and
remedy such defects at the expense of CSM after expiry of
fourteen (14) days' notice being given to CSM to do so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than
those conforming with the plans elevations sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities nor to make any alterations
in the external elevation of any of the said buildings to be
comprised in the Development when erected without the prior
consent in writing of ST and JTC.
(xiii) In the erection and completion of the Development to do all
acts and things required by and to perform the works in
conformity in all respects with the provisions of any laws
or regulations made thereunder and to pay and keep ST and
JTC indemnified against all claims and other payments
whatsoever which during the progress of the works may become
payable in respect of the said works or of anything done
under the authority herein contained and from time to time
to discharge and pay all claims, assessments and outgoings
now or at any tine hereafter be chargeable against JTC or ST
under any law or otherwise in regard to the Property, the
said buildings or any structures or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the
Property or any part thereof anything which in the opinion
of ST or JTC may be or become a nuisance or annoyance or
cause damage or inconvenience to ST or to JTC or to the
licensees or occupiers of any adjoining or neighbouring
premises or whereby any insurance for the time being
effected on the Property under sub-clause (xix) herein may
be rendered void or voidable or be in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand
from the Property or permit or suffer any of the same to be
removed except so far as shall be necessary for the
execution of the said works PROVIDED nevertheless that CSM
may use for the purpose of the said works any of the
approved materials if so required.
(xvi) Not without the prior consent in writing of ST and JTC to
remove or permit or suffer to be removed until after
completion of the buildings comprised in the Development in
accordance with the provisions herein contained any building
materials (other than inferior or unfit materials removed
for the purpose of being replaced by proper materials) or
plant which shall be brought upon the Property for the
purpose of the Development.
(xvii) Not without the prior consent in writing of ST and JTC to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon any
part of the exterior of the Property or of the external
walls or rails or fences thereof any nameplate, signboard,
placard, poster or other advertisement or hoarding.
(xviii) Not at any time to deposit or make up or manufacture or
permit or suffer to be deposited made up or manufactured
upon the Property any building or other materials except
such as shall be actually required for the buildings to be
erected on the Property in accordance with this Agreement
and the Building Agreement and as soon as the
<PAGE> 6
- 5 -
buildings hereinbefore agreed to be erected shall be
completed at its own expense to remove from the road or
footpath adjoining the Property or the ground intended to be
used for such road or footpath all building and other
materials and waste whatsoever.
(xix) As soon as any of the said buildings comprised in the
Development shall have reached a height of five (5) feet
above ground level to insure the same to the full value
thereof in the joint names of ST, JTC and CSM against loss
or damage by fire in some insurance office approved by JTC
and ST and shall increase such insurance proportionately as
the said buildings approach completion and to keep the same
so insured until a sub-lease shall be granted as hereinafter
provided and to pay all premiums thereof at least seven (7)
days before the expiry date of such insurance policy and to
produce to ST or JTC (if so directed by ST) or their
respective agents without demand the policy or policies of
such insurance and the receipt for each such payment and in
the event the said buildings or any part thereof are
destroyed or damaged by fire then to forthwith give to ST
and JTC written notice of such destruction or damage and to
forthwith cause all monies received by virtue of any such
insurance to be forthwith laid out in rebuilding and
reinstating the buildings to the satisfaction of ST and JTC
and to make up any deficiency thereof out of its own monies,
but the rebuilding and reinstatement shall in any event
commence and be completed within the period specified by ST
and JTC PROVIDED ALWAYS THAT if CSM shall at any time fail
to keep the Property insured as aforesaid ST or JTC may
without being under any obligation to do so do all things
necessary to effect or maintain such insurance and any
monies expended by either ST or JTC for that purpose shall
be repayable by CSM on demand and be recovered forthwith
from CSM as a debt PROVIDED FURTHER THAT notwithstanding the
covenant contained in this Clause 3(xix), CSM may exercise
the option not to rebuild or reinstate the buildings subject
to the following conditions:-
(a) without prejudice to Clause 4(b), CSM shall give
ST four (4) months' prior notice in writing to
prematurely terminate this Agreement; and
(b) forthwith pay or cause to be paid to ST or if ST
so directs to JTC all monies received by virtue of
such insurance.
(xx) Not to sell, assign, create a trust, charge, grant a licence
or part with or share or in any way dispose of its interest
under this Agreement, or the possession or occupation of the
Property, or any part thereof or otherwise in any way
dispose of the Property or any part thereof EXCEPT THAT,
subject to ST's and JTC's prior written consent, which
consent may be given on such terms and conditions as ST or
JTC may require, CSM may mortgage its interest under this
Agreement by way of assignment to secure the repayment of
such sum or sums as CSM may require for the purpose of
erecting or completing the building or other structure to be
built on the Property in accordance with the provisions of
this Agreement and the Building Agreement PROVIDED THAT CSM
shall thereafter continue to be liable for the observance
and performance of the several stipulations herein contained
until the grant of the sub-lease as hereinafter provided.
(xxi) Not to permit or suffer any person to occupy reside or make
use of any building erected on the Property before a final
or a temporary Certificate of Fitness for
<PAGE> 7
- 6 -
Occupation has been issued by or except with the permission
of the relevant Governmental and Statutory authority.
(xxii) To make reasonable provision against and be responsible for
all loss, injury and damage to any person (including loss of
life) or property including that of ST and JTC for which CSM
be held liable arising out of or in connection with the
occupation and use of the Property and the structures
erected thereon and to indemnify ST and JTC against all
proceedings, claims, costs and expenses which ST or JTC may
incur or for which ST or JTC may be held liable as a result
of any act, neglect or default of CSM its servants,
contractors, sub-contractors, or agents or their respective
servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the Property to the requirements and
satisfaction of ST and JTC and other relevant Governmental
and Statutory authorities PROVIDED THAT in the event of any
default by CSM under this covenant ST or JTC may carry out
such remedial measures as they think necessary and all costs
and expenses incurred thereby shall be recoverable forthwith
from CSM as a debt.
(xxiv) To construct an internal drainage system to the satisfaction
of ST and JTC to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxv) To construct and complete a permanent culvert within nine
(9) months from the Commencement Date or any extension
thereof as may be approved by ST and JTC and in connection
thereof to submit plans to and to obtain the prior approval
in writing of ST and JTC for the construction of a temporary
crossing.
(xxvi) Within one (1) month of the completion of the permanent
culvert mentioned in sub-clause (xxv) above to remove the
temporary crossing and to reinstate any roads, roadside
kerbs, drains, turfing or the like damaged by CSM, its
servants, contractors, sub-contractors, or agents or their
respective servants to the satisfaction of ST and JTC and
the relevant Governmental and Statutory authorities.
(xxvii) Within one (1) month of the completion of the construction
of the said buildings and related civil works to reinstate
any damage caused to the roads, roadside kerbs, drains,
turfing and the said permanent culvert by CSM its servants
contractors or agents or their respective agents to the
satisfaction of ST and JTC and the relevant Governmental and
Statutory authorities.
(xxviii) To place with ST a deposit of $5,000.00 which shall be
forfeited in the event of any breach of any of the
provisions in sub-clauses (xxv), (xxvi) and (xxvii) herein
without prejudice to the rights and remedies of ST and JTC
contained in this Agreement, the Building Agreement, the
Head Lease and the sub-lease.
(xxix) At its own cost to plant and maintain trees and landscape
the Property in accordance with all the requirements of the
Parks and Recreation Department, Ministry of National
Development and other relevant Governmental and Statutory
authorities.
<PAGE> 8
- 7 -
(xxx) At its own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and
the like (if any) to the requirements and satisfaction of ST
and JTC and other relevant Governmental and Statutory
authorities.
(xxxi) If CSM shall at any time be found to have encroached upon
any area beyond the allocated boundaries of the Property,
CSM shall at its own cost and expense, but without prejudice
to any other right or remedy ST or JTC may have against CSM,
immediately or within the time specified (if any) by ST or
JTC rectify and remove the encroachment to the satisfaction
of ST and JTC and pay to ST or JTC (if so directed by ST)
such compensation as may be specified by ST or JTC. If,
however, ST or JTC in their absolute discretion permit CSM
to regularise and retain the encroached area or any part
thereof upon such terms and conditions as may be stipulated
by ST or JTC and any other relevant Governmental and
Statutory authorities, CSM shall pay licence fee on the
encroached area with retrospective effect from the date
specified by ST, and CSM shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and
client costs and expense), and all other costs and charges
relating thereto.
(xxxii) If any damage of whatsoever nature or description shall at
any time occur or be caused to the Property or any building
or structure or installation thereon, or any part thereof,
to forthwith give to ST and JTC written notice of the damage
and to remedy the damage to the satisfaction of ST and JTC
within such time as ST or JTC may specify, all at the cost
of CSM.
(xxxiii) CSM accepts the Property in its existing state and condition
and further accepts and confirms that ST has made no
representation nor given any assurance as to the present or
future suitability of the Property or its surrounding or
adjacent lands in relation to CSM's use, operations or
occupation at the Property.
(xxxiv) Subject to Clauses 3(vii) and 3(viii) hereinbefore appearing
to construct aesthetically-designed high quality buildings,
with extensive landscaping to the satisfaction of ST and
JTC. The building facade shall front Bukit Timah Expressway
and the external walls shall be either aluminium-clad or
tile or of equivalent standard materials.
(xxxv) Not to openly store or permit open storage of any material,
equipment or goods at the Property fronting Bukit Timah
Expressway or any part thereof.
(xxxvi) Subject to Clause 3(xii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by CSM shall not exceed
two (2) metres PROVIDED THAT boundary walls or fences (if
any) shall be erected behind baphia or other hedges planted
on the Property.
(xxxvii) At all times to comply with and observe any height
restrictions on buildings and structures at the Property
which may be imposed by any governmental or statutory
authority and to ensure that any height restriction plan
which may be furnished to CSM shall at all times be held in
strict confidence and shall not be shown, revealed or copied
to or by any person, contractor, sub-contractor, watchman,
employee, agent, representative or any other person except
with the prior written consent of ST and JTC.
(xxxviii) Not to keep or allow to be kept any livestock or other
animals at the Property or any part thereof.
<PAGE> 9
- 8 -
(xxxix) Access to the Property shall only be confined to Woodlands
Industrial Park D Street 2 and Woodlands Road. The latter
shall be on a left-in-left-out arrangement only.
(xl) The licence fees and other taxable sums payable by CSM under
or in connection with the sublicence herein shall be
exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any government, statutory or tax
authority calculated by reference to the amount of the
licence fees and any other taxable sums received or
receivable by ST from CSM and which tax is payable by CSM.
CSM shall pay the tax and ST acting as the collecting agent
for the government, statutory or tax authority shall collect
the tax from CSM together with the licence fees hereinbefore
reserved without any deduction and in advance without demand
on the first day of each of the months of January, April,
July and October, and in the manner and within the period
prescribed in accordance with the applicable laws and
regulations.
(xli) Chain-link fencing fronting Bukit Timah Expressway shall not
be permitted.
(xlii) Without prejudice to Clauses 3(xii) and 3(xiii) hereinbefore
appearing, CSM shall not place, construct or erect or permit
the placing, construction or erection of any building,
structure or equipment whatsoever on the 15 metre-wide green
buffer situated within the boundary of the Property as shown
on the plan annexed to the Building Agreement.
(xliii) (a) CSM shall observe and be bound by the provisions
in the Building Agreement and the Head Lease and
perform all the covenants and conditions on the
part of the lessee contained in the Head Lease
insofar as they relate to the Development and/or
the Property;
(b) CSM shall not do omit suffer or permit in relation
to the Development and/or the Property any act or
thing which would or might cause ST to be in
breach of the Building Agreement and the Head
Lease or which if done omitted or suffered or
permitted by ST would or might constitute a breach
of the covenants on the part of the lessee and the
conditions contained in the Building Agreement and
the Head Lease;
(c) CSM shall keep ST indemnified against any actions,
proceedings, claims, damages, costs, expenses,
losses or liability incurred by ST arising from
any breach, non-observance, or non-performance by
CSM of the aforesaid provisions, covenants and
conditions in the Building Agreement and the Head
Lease.
(xliv) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in
connection with the preparation stamping and issue of this
Agreement and the sub-lease herein agreed to be granted and
any prior accompanying or future documents or deeds
supplementary collateral or in any way relating to this
Agreement and the sub-lease.
(xlv) To pay all costs and fees legal or otherwise, including ST's
costs as between solicitor and client, in connection with
the enforcement of the covenants and conditions of this
Agreement and the sub-lease as well as JTC's costs if any
action or omission of CSM
<PAGE> 10
- 9 -
under this Agreement causes JTC to take action to enforce
the covenants and conditions of the Building Agreement and
the lease to be granted pursuant thereto.
4. It is hereby mutually agreed that until CSM has performed all its
obligations herein contained ST and JTC shall possess the rights and
powers following:-
(a) The right for ST and JTC and their respective agents with or
without workmen or others at all reasonable times to enter
upon the Property to view the state and progress of the said
buildings and works and the Development and to inspect and
test the materials and workmanship in connection therewith
and for any other reasonable purpose including the
construction and installation of sewers drains pipes and
cables on or leading from any adjoining or neighbouring land
of JTC as may be required by ST or JTC.
(b) Full right and liberty in case any part of the Development
hereby agreed to be erected be not completed and fit for
immediate occupation within the period hereinbefore limited
(time in this respect shall be of the essence of the
contract) and in accordance in every way with the
stipulations hereinbefore contained or in case CSM shall in
any other way fail to perform and observe any of the
stipulations on its part herein contained or if any charging
order writ of seizure and sale or its equivalent made in
respect of the Property or any structure thereon shall be
enforced without the written consent of ST and JTC having
first been obtained by CSM or by the person in whose favour
the charging order writ of seizure and sale or its
equivalent shall have been made, ST shall have the right to
re-enter upon and take possession of the Property and all
buildings structures fixtures plant material and effects
whatsoever thereon with power to hold and dispose thereof as
if this Agreement had not been entered into and without
making to CSM any compensation or allowance for the same and
this Agreement shall thereupon determine but without
prejudice to any right of action or other remedy of ST for
the recovery of any licence fee or monies due to it from CSM
or in respect of any breach of this Agreement PROVIDED
ALWAYS THAT ST shall, in addition, also be entitled to claim
and to recover from CSM as a debt, firstly liquidated
damages calculated at and in accordance with the same rates
as that stipulated for liquidated damages in Clause 4(f) of
the sub-lease set out in the Second Schedule hereto as if
the respective year of the term of the lease therein
referred to the respective year of the Sub-Licence Period or
any extended period in which ST exercised its aforesaid
right of re-entry under this Agreement and secondly any sum
which ST may incur in connection with the demolition and
removal of any building, structure, fitting, fixture or
thing which ST or JTC may consider necessary to demolish and
remove AND PROVIDED THAT if the Property has been assigned
by way of mortgage with the consent of ST and JTC the
provisions of this clause shall not take effect until ST or
JTC has served upon the mortgagee notice in writing
specifying the breach and the mortgagee has failed to remedy
such breach.
(c) PROVIDED nevertheless that notwithstanding any such default
as aforesaid in completing the said buildings and works ST
may in its discretion give notice in writing to CSM of its
intention not to enforce the stipulations herein contained
and may fix any extended period for the completion of the
Development in substitution for the said period of three (3)
years less one (1) day hereby fixed for such completion and
thereupon the obligations hereunder of CSM to complete the
said works and to accept a lease hereinafter mentioned shall
be taken to refer to such substituted period.
<PAGE> 11
- 10 -
(d) Without prejudice to the generality of Clause 4(b) hereof
full right and liberty of ST in the event that CSM has
failed to either:-
(1) develop the Property to the gross plot ratio
specified in Clause 3(viii), or
(2) fulfil the investment criterion as stipulated in
Clause 6,
with full and absolute discretion to ST to either:-
(i) re-enter upon and take possession of the Property
or any part thereof and all buildings, structures,
fixtures, plant, material and effects whatsoever
thereon with power to hold and dispose thereof as
if this Agreement had not been entered into and
without making to CSM any compensation or
allowance for the same and this Agreement shall
thereupon determine but without prejudice to any
right of action or other remedy of ST or recovery
of any licence fee or monies due to ST from CSM or
in respect of any breach of this Agreement, or
(ii) reduce the term of sub-lease to such a lesser term
that JTC may grant to ST pursuant to the terms of
the Building Agreement (less one (1) day) in which
event CSM shall execute such documents as ST shall
deem necessary and in connection therewith, pay
all costs disbursements fees and charges legal or
otherwise as provided in Clause 3(xlv).
PROVIDED ALWAYS that if the Property has been assigned by
way of mortgage with the consent of ST and JTC, the
provisions of this sub-clause (d) shall not take effect
until ST or JTC had served upon the mortgagee notice in
writing specifying the breach and the mortgagee has failed
to remedy such breach.
5. CSM hereby agrees that if any failure on its part to observe or
perform any of its covenants contained in this Agreement results in
the failure of ST to comply with its obligations under the Building
Agreement and such failure entitles JTC to re-enter upon and take
possession of the Property and JTC exercises such right, then this
Agreement shall forthwith terminate without ST making to CSM any
compensation or allowance for the same and without prejudice to any
right of action or other remedy of ST for the recovery of any licence
fee or monies due to it from CSM or in respect of any breach of this
Agreement.
6. If the Development shall have been completed to the satisfaction of ST
and JTC and the relevant Government Building Authorities (to be
evidenced by their certificates in writing to that effect) within the
Sub-Licence Period or of such extended period (if any) as aforesaid
and if CSM shall have performed and observed all the stipulations
herein on its part contained other than such as any have been waived
as aforesaid and if there shall have been a minimum investment by CSM
of $900.00 per square metre of the gross floor area of the buildings
erected on the Property on buildings and civil works, of which
$300,000.00 or 1.5% of the actual cost of the building and civil works
(whichever is the lesser) shall be on landscaping and a minimum
investment of $300.00 per square metre of the Property on plant and
machinery, within the Sub-Licence Period (due proof thereof to be
produced by CSM to the satisfaction of ST and JTC on or before the
date falling three (3) years less one (1) day after the Commencement
Date) and if JTC has granted to ST a lease of the Property and
premises together with the Development for the term of thirty (30)
years from the 16th day of February 1994 then ST shall grant and CSM
shall accept and execute a counter part of one good and sufficient
sub-lease of the Property and premises to CSM for the
<PAGE> 12
- 11 -
term of thirty (30) years from the 16th day of February 1994 less one
(1) day at the rent and in the form containing the reservation
exceptions covenants conditions and provisions set forth in the Second
Schedule hereto with such modifications as circumstances may render
necessary and such other covenants conditions or stipulations to be
performed by CSM governing or regulating the use of the Property as ST
and JTC thinks fit with a view to preserving, the value thereof or
protecting the interests of the licensees or occupiers of land or
premises adjacent to the Property from any dangerous or obnoxious or
otherwise harmful activities which may be carried out by CSM whether
or not such activities are incidental to CSM's trade PROVIDED THAT
until such sub-lease is executed CSM shall be deemed to be the
sub-lessee of the Property as though a sub-lease has been executed at
the same rent and subject to the covenants and conditions contained in
the Second Schedule hereto so far as the same are applicable. In the
event that ST grants to CSM the said term for thirty (30) years less
one (1) day as aforesaid, CSM shall be permitted to remain on the
Property on the day following the expiry of the Sub-Licence Period as
a licensee, free of payment.
7. CSM may, at any time during the Sub-Licence Period and any extensions
thereof granted under Clause 4(c) terminate this Agreement or
surrender part of the Property by giving to ST four (4) months' prior
notice in writing, PROVIDED ALWAYS THAT such termination or surrender
shall be without prejudice to any right or remedy which may have or
will accrue to ST prior to the expiry of the four (4) months' notice
AND PROVIDED FURTHER THAT CSM shall in addition to the licence fee
(which at the discretion of ST may be apportioned for the period
commencing from the Commencement Date up to the date of delivery of
vacant possession of the Property or part thereof to ST) survey fees,
property tax and other charges specified herein forthwith pay to ST as
liquidated damages in accordance with and calculated at the same rates
as that stipulated for liquidated damages in Clause 4(f) of the
sub-lease set out in the Second Schedule hereto PROVIDED THAT before
the delivery of vacant possession as aforesaid if ST shall so desire
CSM shall at the cost and expense of CSM properly demolish and remove
such building, structure, fixture, fitting or thing as may be
stipulated in writing by ST or JTC as well as properly render the
Property or part thereof as the case may be to its original state and
condition as at the Commencement Date and licence fee and property tax
shall continue to be payable until the same has been completed to the
satisfaction of ST and JTC.
8. ST hereby covenants that:-
(i) it has obtained the written consent of JTC to the
sub-licence and sub-lease herein;
(ii) ST shall pay the rent and all other monies and shall perform
the lessee's covenants and conditions contained in the Head
Lease (save for such covenants as shall be performed by CSM
pursuant to the provisions of Clause 3(xliv) hereof);
(iii) ST shall take all reasonable steps to obtain the consent of
JTC whenever CSM makes any request in connection with the
Property that requires the approval of JTC under this
Agreement or the Building Agreement;
(iv) Upon notice from CSM, ST will take all reasonable steps to
enforce promptly the obligations undertaken by JTC in the
Head Lease.
9. (a) 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 post (by
air-mail
<PAGE> 13
- 12 -
if to or from an address outside Singapore) with recorded
delivery or facsimile addressed to the intended recipient
thereof at its address set out below or at its last known
address or at its facsimile number set out below (or to such
other address or facsimile number as any party may from time
to time duly notify in writing to the other) and marked to
the attention of the person named below in respect of the
intended recipient. Any such notice, demand or communication
shall be deemed to have been duly served (if given or made
by facsimile) immediately or (if given or made by letter) 24
hours after posting or (if made or given to or from an
address outside Singapore) 72 hours after posting and in
proving the same it shall be sufficient to show that the
envelope containing the same was duly addressed, stamped and
posted. The initial addresses and facsimile numbers of the
parties for the purposes of this Agreement are:-
ST: SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02 The Curie
Singapore Science Park
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 775 3233
CSM: CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 362 2901
10. The illegality, invalidity or unenforceability of any provision of
this Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
11. (a) This Agreement shall be construed and governed by the laws
of Singapore.
(b) Any dispute arising out of or in connection with this
Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved by arbitration in Singapore in accordance with the
Arbitration Rules of the Singapore International Arbitration
Centre ("SIAC Rules") for the time being in force which
rules are deemed to be incorporated by reference into this
clause. The law of the arbitration shall be the
International Arbitration Act Cap. 143A. The tribunal shall
consist of one (1) arbitrator to be appointed by the
Chairman of Singapore International Arbitration Centre and
the language of the arbitration shall be English.
(c) Nothing shall affect the right to serve process in any
manner permitted by law.
THE FIRST SCHEDULE ABOVE REFERRED TO
<PAGE> 14
- 13 -
All that piece of land known as Private Lot A12787 forming
part of the Government Survey Lots 937 and 1949 and part of
Marsiling Road (old), Mukim No 13, Sembawang and situated in
the Republic of Singapore as shown on the plan annexed to
the Building Agreement and estimated to contain an area of
52,525 square metres more or less subject to survey.
<PAGE> 15
- 14 -
THE SECOND SCHEDULE ABOVE REFERRED TO
-----------------------
L 1 Ver 1
-----------------------
THE LAND TITLES ACT
-----------------------
-----------------------
(For Official use only)
SUB-LEASE
(A) DESCRIPTION OF LAND
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
CT/SSCT/SCT Mukim Town Lot No. Property Address
Subdivision Whole or part (if part lot, to
state appd new lot/strata lot)
----------------------
Volume Folio
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(the "demised premises")
----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------
(B) LESSOR:
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 199004768N
----------------------------------------------------------------------------------------------
NAME: SINGAPORE TECHNOLOGIES PTE LTD (the "Lessor")
----------------------------------------------------------------------------------------------
ADDRESS: 83 Science Park Drive #01-01/02
(within Singapore for The Curie, Singapore Science Park
service of Notice) Singapore 118258
----------------------------------------------------------------------------------------------
</TABLE>
(the registered proprietor of a leasehold estate for the term of
thirty (30) years commencing from the 16th day of February 1994)
HEREBY LEASES the registered estate or interest of the Lessor in the
land above described to:-
- --------------------------------------------
(C) LESSEE:
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 198703584K
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 16
- 15 -
<TABLE>
<S> <C>
NAME: CHARTERED SEMICONDUCTOR MANUFACTURING LTD (the "Lessee")
----------------------------------------------------------------------------------------------
PLACE OF INCORPORATION Singapore
----------------------------------------------------------------------------------------------
ADDRESS: 60 Woodlands Industrial Park D Street 2
(within Singapore for Singapore 738406
service of Notice)
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 17
- 16 -
as tenant for the term of thirty 30 years less one (1) day commencing
from the 16th day of February 1994, in consideration of the minimum
investment by the Lessee of $900/- per square metre of the gross
building floor area on building and civil works (including 1.5% of the
actual cost of the building and civil works or a maximum of $300,000/-
on landscaping) and $300/- per square metre of the demised premises on
plant and machinery, (hereinafter referred to as "the fixed investment
criteria") and YIELDING and PAYING therefor from the 16th day of
February 1994 the yearly rent of Dollars Nine Hundred and Forty-Five
Thousand Four Hundred and Fifty ($945,450/-) to be paid by equal
quarterly instalments on the lst day of each of the months of January,
April, July and October (each a "Rental Payment Date") in every year
of the said term without any deduction and in advance without demand
at the office of the Lessor or at such other office as the Lessor may
designate calculated at the rate of $18/- per square metre per annum
(hereinafter referred to as "the Initial Rent") of the demised
premises estimated to have an area of 52,525 square metres
(hereinafter referred to as "the preliminary survey area", which may
at any time be adjusted on completion of final survey by Jurong Town
Corporation (the "JTC"), if any, and in which event if the area
adjusted exceeds five square metres more, or less, than the
preliminary survey area the rental paid or payable by the Lessee shall
accordingly also be adjusted and be paid and payable or refunded as
the case may be in respect of the full difference between the
preliminary survey area and the final survey area, with retrospective
effect from the commencement of the said term of the Sub-Lease
herein), which rate shall be increased by 9% (compounded annually) on
the 16th day of February 1995 and on the 16th day of February of every
year thereafter. Provided Always That:-
(a) If at any time from (and including) the 16th day of February
2006 and from time to time thereafter during the term hereby
created, in the reasonable opinion of the Lessor the rate of
rent payable by the Lessee differs substantially from the
then prevailing market rate paid by lessees of comparable
properties leased by such lessees for purposes of the
semi-conductor industry in Singapore (the "prevailing market
rate"), then the Lessor may give notice in writing (the
"Lessor's written notice") to the Lessee setting out:-
(i) the revised rate of rent (the "Lessor's proposed
rate") which the Lessor proposes to charge having
regard to the prevailing market rate; and
(ii) the period for which such revised rate is to apply
(the "specified period"), which shall not be
retrospective.
(b) Unless the Lessor's proposed rate is disputed by the Lessee
within twenty-one (21) days of its receipt of the Lessor's
written notice, the rate of rent payable in respect of the
specified period shall be the Lessor's proposed rate.
(c) In the event that the Lessee gives the Lessor notice in
writing within twenty-one (21) days of its receipt of the
Lessor's written notice that it disputes the Lessor's
proposed rate, the Lessor and the Lessee shall negotiate in
good faith on the applicable rate of rent payable. In the
event that the Lessor and the Lessee fail to reach agreement
within thirty (30) days after the date of the Lessee's
notice that it disputes the Lessor's proposed rate, the rate
of rent payable by the Lessee for the specified period shall
be the rate determined by a licensed valuer acting as an
expert and not as an arbitrator, appointed jointly by the
Lessor and the Lessee or, failing such joint appointment, on
the application of either party, by the President of the
Singapore Institute of Surveyors and Valuers. The costs and
expenses of any such licensed valuer shall be borne by the
Lessor and the Lessee equally.
<PAGE> 18
- 17 -
(d) The rate of rent determined in accordance with sub-clause
(b) or (c) above (the "determined rate") shall be the rate
of rent payable for the specified period. The first payment
shall be made on the first Rental Payment Date (the "First
Revised Rental Payment Date") that follows:-
(i) in the case where the Lessor's proposed rate is
the determined rate, the expiry of the twenty-one
(21) day period referred to in sub-clause (b)
above; or
(ii) in the case where the licensed valuer determines
the determined rate as provided in sub-clause (c)
above, the date of such determination,
and such payment shall be made for:-
(aa) the period commencing from (and including) the
date of commencement of the specified period to
the day preceding the First Revised Rental Payment
Date; and
(bb) the quarter year commencing from the First Revised
Rental Payment Date,
and thereafter the determined rent shall be paid in advance
on every succeeding Rental Payment Date.
(e) The determined rate shall continue to be the rate of rent
payable by the Lessee under this Sub-Lease until the rent is
again adjusted in accordance with this clause and when so
adjusted, the adjusted rate shall for the purposes of this
Proviso be the determined rate.
(f) In the case where the Lessee has previously paid the Lessor
rent for any part of the specified period at the rate of
rent applicable immediately prior to the commencement of the
specified period, the Lessor or the Lessee (as the case may
be) shall on the First Revised Rental Payment Date pay to
the other the difference between (i) rent previously paid
and (ii) the rent calculated at the determined rate, in
respect of such period.
(g) For the avoidance of doubt (if any) until the Lessor gives
the Lessor's written notice to the Lessee, the rent payable
by the Lessee under this Sub-Lease shall be the same as the
rent payable by the Lessor to JTC under the Head Lease (as
hereinafter defined).
(h) The Lessor shall obtain JTC's prior written consent each
time it reviews the rent under this Clause if such consent
is required to be obtained by JTC. In the event that such
consent is required to be obtained and if, in granting such
consent, JTC imposes conditions for its consent (including
without limitation, a condition that the rent payable under
the Head Lease be revised), then the Lessee hereby agrees
that the Lessor shall be entitled to adjust the rate of rent
payable by the Lessee hereunder and to impose such further
or other terms and conditions on the Lessee having regard to
the conditions imposed by JTC.
<PAGE> 19
- 18 -
TOGETHER WITH the benefit of the rights granted to the Lessor and
SUBJECT TO the rights reserved to JTC mentioned in the Lease dated the
[ ] day of [ ] made between JTC and the Lessor (the "Head Lease" which
expression shall include the provisions of the Memorandum of Lease
filed in the Registry of Titles as No. ML I/30809F with the exception
of covenants 1(x), 1(xi), 1 (xvii) and 1 (xxv) of ML I/30809F as well
as all variations thereof and supplementals thereto).
- --------------------------------------------
SUBJECT TO:-
(D) PRIOR ENCUMBRANCES (TO STATE 'NIL' IF THERE ARE NONE):
- --------------------------------------------------------------------------------
Nil
- --------------------------------------------------------------------------------
- --------------------------------------------
<PAGE> 20
- 19 -
AND the following:-
(E) COVENANTS AND CONDITIONS
The Lessee hereby covenants to perform and observe the covenants,
conditions and powers implied by law in instruments of lease (or to
such of them as are not hereinafter expressly negatived or modified);
(F) SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants as follows:-
(a) (i) To observe and be bound by the provisions in the Head
Lease and perform all the covenants and conditions on the
part of the tenant contained in the Head Lease insofar as
they relate to the Property;
(ii) Not to do omit suffer or permit in relation to the
Property any act or thing which would or might
cause the Lessor to be in breach of the Head Lease
or which if done omitted or suffered or permitted
by the Lessor would or might constitute a breach
of the covenants on the part of the tenant and the
conditions contained in the Head Lease; and
(iii) To keep the Lessor indemnified against any
actions, proceedings, claims, damages, costs,
expenses, losses or liability incurred by the
Lessor arising from any breach, non-observance, or
non-performance by the Lessee 2 of the aforesaid
covenants and conditions in the Head Lease.
(b) To pay the rents hereinbefore reserved on the days and in
the manner set out above, without any deductions, set-off or
counterclaim.
(c) As often as any building or structure on the demised
premises or any part thereof shall be destroyed or damaged
as aforesaid forthwith to give to the Lessor written notice
of such destruction or damage and forthwith to cause all
monies received by virtue of such insurance to be laid out
in rebuilding and reinstating the same to the satisfaction
of the Lessor and JTC and in accordance with the plans and
specifications approved by the Lessor and JTC and in
accordance with the laws, bye-laws regulations and planning
schemes of every relevant governmental and statutory
authority prevailing at the time, and in case the monies so
received shall be insufficient for that purpose then to make
up the deficiency out of its own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence and
be completed within the period specified by the Lessor and
JTC PROVIDED FURTHER THAT notwithstanding the covenant
contained in this clause, the Lessee may exercise the option
not to rebuild or reinstate the buildings subject to the
following conditions:
(i) the Lessee shall give to the Lessor four (4)
months' notice in writing to prematurely terminate
the term of the Sub-Lease herein created but
without prejudice to Clause 4(f) and any right or
remedy which may have or will accrue to the Lessor
prior to the expiry of the four (4) months' notice
under the terms and conditions of the Sub-Lease
herein; and
<PAGE> 21
- 20 -
(ii) forthwith pay or cause to be paid to the Lessor or
to JTC if so directed by the Lessor, all monies
received by virtue of such insurance.
(d) The rent and other taxable sums payable by the Lessee under
or in connection with the lease herein shall be exclusive of
the goods and services tax (hereinafter called "tax")
chargeable by any government, statutory or tax authority
calculated by reference to the amount of the rent and any
other taxable sums received or receivable by the Lessor from
the Lessee and which tax is payable by the Lessee. The
Lessee shall pay the tax and the Lessor acting as the
collecting agent for the government, statutory or tax
authority shall collect the tax from the Lessee together
with the rent hereinbefore reserved without any deduction
and in advance without demand on the first day of each of
the months of January, April, July and October, and in the
manner and within the period prescribed in accordance with
the applicable laws and regulations.
(e) Not to demise assign mortgage charge create a trust let
sublet or underlet or grant a licence or part with or share
the possession or occupation of the demised premises in
whole or in part or otherwise in any way dispose of the
demised premises whether in whole or in part without first
obtaining the consent of the Lessor and JTC in writing. The
restrictions contained in Section 17 of the Conveyancing and
Law of Property Act (Chapter 61) shall not apply. In
addition, the Lessor or JTC may in their absolute discretion
in giving the consent require, inter alia, that the fixed
investment criteria be met and due proof thereof be shown
within such period of time as the Lessor or JTC may
stipulate, and in the event of the non-observance thereof,
the Lessor shall be entitled to exercise its rights under
Clause 4(c) herein.
(f) At the termination, by notice by the Lessee, or re-entry by
JTC under the Head Lease or re-entry by the Lessor or by
expiry or otherwise, of the term hereby created, to yield up
the demised premises to the Lessor in tenantable repair in
accordance with the Lessee's covenants herein contained
PROVIDED THAT, if so required by the Lessor and upon notice
thereof, the Lessee shall at its own cost and expense
properly demolish and remove such buildings, structures,
fixtures and fittings, or any part thereof, as may be
specified by the Lessor and JTC and reinstate the demised
premises to the satisfaction of the Lessor and JTC and if
the Lessee shall fail to observe or perform this covenant
the Lessor or JTC may (but shall not be under any obligation
to do so) execute such works and recover the costs thereof
from the Lessee as a debt.
(g) Not to use or permit or suffer the demised premises or any
part thereof to be used otherwise than for wafer fabrication
plant operations only except with the prior consent in
writing of the Lessor and JTC. In granting its consent to
any change or extension of use, JTC and the Lessor may in
their absolute discretion require, inter alia, the Lessee to
meet the fixed investment criteria and to show due proof
within such period of time as the Lessor or JTC may
stipulate, and in the event of the non-observance thereof,
the Lessor shall be entitled to exercise its rights under
Clause 4(c) hereof. For the avoidance of any doubt, the
words "meet" in this clause and "met" in Clause 1(f) shall
include the maintenance of the fixed investment criteria and
if it has not been maintained then that it be met.
(h) Without prejudice to Clause 1(viii) of ML I/30809F, to
ensure that the gross plot ratio shall not be less than 0.6
but not more than 1.4.
<PAGE> 22
- 21 -
(i) The Lessee accepts the demised premises in its existing
state and condition and further accepts and confirms that
neither JTC nor the Lessor has made representation or given
any assurance as to the present or future suitability of the
demised premises or its surrounding or adjacent lands in
relation to the Lessee's use, operations or occupation at
the demised premises.
(j) At the Lessee's own cost and expense and subject to the
Lessor's prior written approval, to execute such works as
may be deemed necessary by the Lessee in respect of the
state and condition of the demised premises (especially its
ground levels, topography and soil condition) which state
and condition the Lessee shall be deemed to have full
knowledge.
(k) To pay all legal fees (including the Lessor's solicitors'
charges on a solicitor and client basis) stamp duty and all
other disbursements and out of pocket expenses incurred in
the preparation and completion of this Sub-Lease and in
connection with any assignment sub-letting surrender or
other termination thereof otherwise than by effluxion of
time or with any claim or legal proceedings which may be
brought by the Lessor against the Lessee in the event of a
breach by the Lessee in connection with this Sub-Lease.
2. The Lessor hereby covenants as follows:-
(a) That the Lessee paying the rents hereby reserved and
performing and observing the several covenants herein
contained and on the Lessee's part to be performed and
observed shall peaceably hold and enjoy the demised premises
without any interruption from the Lessor or any person
rightfully claiming under or in trust for it.
(b) The Lessor shall pay the rent and all other monies and shall
perform the lessee's covenants and conditions contained in
the Head Lease (save for such covenants as shall be
performed by the Lessee pursuant to the provisions of Clause
1(a) hereof);
(c) The Lessor shall take all reasonable steps to obtain the
consent of JTC whenever the Lessee makes any request in
connection with the demised premises that requires the
approval of JTC under this Sub-Lease or the Head Lease;
(d) Upon notice from the Lessee, the Lessor will take all
reasonable steps to enforce promptly the obligations
undertaken by JTC in the Head Lease.
3(1). The Lessor hereby further covenants with the Lessee that the Lessor
shall grant to the Lessee a lease of the demised premises for a
further term of thirty (30) years less one (1) day (hereinafter
referred to as "the further term") commencing from the second day
following the date of expiry of the term hereby created PROVIDED
THAT:-
(i) there shall be a minimum investment by the Lessee of
$1,000/- per square metre of the gross building floor area
on buildings and civil works (of which $300,000/- or 1.5% of
the actual cost of the building and civil works, whichever
is the lesser, shall be on landscaping) and $500/- per
square metre of the demised premises on plant and machinery,
(also referred to as "the fixed investment criteria") within
three (3) years from the 16th day of February 1994 and due
proof of such investment is produced to the satisfaction of
the Lessor on or before the 15th day of August 1997;
<PAGE> 23
- 22 -
(ii) subject to Clause 1(viii) of ML I/30809F, there shall be a
gross plot ratio of not less than 0.75 but not more than
1.4;
(iii) at the time due proof of such investment is produced and at
the expiry of the said term, there be no existing breach or
non-observance of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or
performed;
(iv) if required by the Lessor, the Lessee shall within four (4)
months from the commencement of the further term and at its
own cost and expense, carry out and complete such
improvements to the landscaping at the demised premises as
may be stipulated in writing by the Lessor or JTC;
(v) the Lessee shall six (6) months before the expiry of the
said term submit, for the approval of the Lessor, JTC and
the relevant governmental and statutory authorities, plans
for the upgrading of the exterior of buildings on the
demised premises to the same highest quality of new
buildings which JTC will be building at that time, and the
Lessee shall expeditiously do all acts and things necessary
to obtain the approval, all at the cost and expense of the
Lessee;
(vi) the Lessee shall at its own cost and expense complete,
within eighteen (18) months from the commencement of the
further term, the upgrading of the buildings in accordance
with the plans approved by the Lessor and JTC and the
relevant governmental and statutory authorities and to the
satisfaction of the Lessor and JTC;
(vii) the Head Lease shall have been renewed by JTC in accordance
with the terms and conditions contained therein; and
(viii) the other terms and conditions that shall apply to the
renewed Sub-Lease shall be substantially similar to the
terms and conditions that shall apply to the renewed Head
Lease save that Clause 4(f) hereinafter appearing and the
present covenant for renewal shall not apply.
(2) If the further term is granted in accordance with clause 3(1) above,
the Lessee shall be permitted to remain on the premises on the day
following the expiry of the term created by this Sub-Lease as a
licensee, free of payment.
4. PROVIDED ALWAYS and it is hereby agreed between the parties as
follows:-
(a) No estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be
included in the demise hereinbefore contained.
(b) The Lessee shall not be entitled to any right of access of
light or air to the demised premises or any part thereof,
which would restrict or interfere with the user of any
adjoining or neighbouring land for building or any other
purpose.
(c) If the said rent hereby reserved or any part thereof shall
be unpaid for fourteen days after becoming payable (whether
the same shall have been formally demanded or not) or if any
of the covenants or obligations on the part of the Lessee
herein contained shall not be performed or observed or if
any charging order made in respect of the demised premises
shall be enforced by sale or by entry into possession
without the written consent of the
<PAGE> 24
- 23 -
Lessor having first been obtained (Section 17 of the
Conveyancing and Law of Property Act shall also not apply in
such event) by the Lessee or by the person in whose favour
the charging order shall have been made, then and in any
such case it shall be lawful for the Lessor or any person or
persons authorised by it in that behalf at any part
thereafter to re-enter upon the demised premises or any part
thereof in the name of the whole and thereupon the term
hereby created shall absolutely determine but without
prejudice to any right of action or remedy of the Lessor in
respect of any breach of any of the covenants or conditions
by the Lessee herein contained PROVIDED THAT if the demised
premises have been assigned by way of mortgage the
provisions of this clause shall not take effect until the
Lessor has served upon the mortgagee a notice in writing
that such breach has occurred and the mortgagee has failed
to remedy such breach.
(d) If any failure on the Lessee's part to observe or perform
any of its covenants contained in this Sub-Lease results in
the Lessor failing to comply with its obligations under the
Head Lease and such failure entitles JTC to re-enter upon
and take possession of the demised premises and JTC
exercises such right, then this Sub-Lease shall forthwith
terminate without the Lessor making to the Lessee any
compensation or allowance for the same and without prejudice
to any right of action or other remedy of the Lessor for the
recovery of any rents or other monies due to it from the
Lessee or in respect of any breach of this Sub-Lease.
(e) The Lessee may at any time prematurely terminate the term of
lease herein created by giving to the Lessor four (4)
months' prior notice in writing, but without prejudice to
any right or remedy which may have or will accrue to the
Lessor prior to the expiry of the four (4) months' notice
under the terms and conditions of the sub-lease herein
created or in respect of the termination.
(f) Subject to Clause 4(g) hereof in the event that premature
termination shall occur at any time within eight (8) years
from the commencement of the said term of the sub-lease
herein created or if JTC shall at any time within the said
eight (8) years exercise its right of re-entry under the
Head Lease as a result of the failure by the Lessor to
observe or perform its obligations under the Head Lease
which was due to a failure by the Lessee to observe or
perform any covenant or condition imposed on the Lessee
under this Sub-Lease or if the Lessor shall at any time
within the said eight (8) years exercise its right of
re-entry under Clause 4(c) hereof, then in addition to rent,
interest, property tax and other sums payable by the Lessee
to the date of premature termination or re-entry as the case
may be, liquidated damages for the sum of $17.7 million
('the said sum') shall be payable and paid by the Lessee to
the Lessor and it is acknowledged and agreed by the Lessee
that the said sum shall constitute liquidated damages and
shall not be considered under any circumstances as a
penalty.
(g) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver of the liquidated damages provided in
Clause 4(f) hereof in the event of any transfer or
assignment of the lease in accordance with Clause 1(e)
hereinbefore appearing PROVIDED THAT:-
(i) the transfer or assignment is approved in writing
by the Lessor and all other relevant governmental
and statutory authorities and
<PAGE> 25
- 24 -
(ii) the Lessor reserves the right to revise the land
rent to the prevailing market rate at the time of
the transfer or assignment.
5. (a) 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 post (by
air-mail if to or from an address outside Singapore) with
recorded delivery or facsimile addressed to the intended
recipient thereof at its address set out below or at its
last known address or at its facsimile number set out below
(or to such other address or facsimile number as any party
may from time to time duly notify in writing to the other)
and marked to the attention of the person named below in
respect of the intended recipient. Any such notice, demand
or communication shall be deemed to have been duly served
(if given or made by facsimile) immediately or (if given or
made by letter) 24 hours after posting or (if made or given
to or from an address outside Singapore) 72 hours after
posting and in proving the same it shall be sufficient to
show that the envelope containing the same was duly
addressed, stamped and posted. The initial addresses and
facsimile numbers of the parties for the purposes of this
Sub-Lease are:-
Lessor: SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02
The Curie, Singapore Science Park,
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 775 3233
Lessee: CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 362 2901
6. The illegality, invalidity or unenforceability of any provision of
this Sub-Lease under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7. (a) This Sub-Lease shall be construed and governed by the laws
of Singapore.
(b) Any dispute arising out of or in connection with this
Sub-Lease, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved by
<PAGE> 26
- 25 -
arbitration in Singapore in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre
("SIAC Rules") for the time being in force which rules are
deemed to be incorporated by reference into this clause. The
law of the arbitration shall be the International
Arbitration Act Cap. 143A. The tribunal shall consist of one
(1) arbitrator to be appointed by the Chairman of Singapore
International Arbitration Centre and the language of the
arbitration shall be English.
(c) Nothing shall affect the right to serve process in any
manner permitted by law.
8. In this Sub-Lease where the context so requires or permits, words
importing the singular number or the masculine gender include the
plural number or the feminine gender and words importing persons
include corporation and vice versa, the expression "the Lessor" shall
include its successors-in-title and permitted assigns (if any), where
there are two or more persons included in the expression "the Lessee"
covenants expressed to be made by "the Lessee" shall be deemed to be
made by such persons jointly and severally, and except where otherwise
provided the expression "the demised premises" shall mean the land
hereby demised and all buildings, structures, fixtures and fittings
therein.
(G) DATE OF LEASE: ____________________
- --------------------------------------------
(H) EXECUTION BY LESSOR
The Common Seal of SINGAPORE )
TECHNOLOGIES PTE LTD was hereunto )
affixed in the presence of:- )
Director
Director/Secretary
<PAGE> 27
- 26 -
(I) EXECUTION BY LESSEE
The Common Seal of CHARTERED )
SEMICONDUCTOR MANUFACTURING )
LTD was hereunto affixed in the presence of:- )
Director
Director/Secretary
(J) CERTIFICATE PURSUANT TO THE RESIDENTIAL PROPERTY ACT AND THE LAND
TITLES RULES AND PRACTICE CIRCULARS:
I, the solicitor for the Lessee hereby certify that the
Citizenship/place of Incorporation and registration number allocated
by the Registry of Companies to the Lessee as abovementioned specified
in the within instrument have been verified from the National
Registration Identity Card/the Certificate of Incorporation produced
and shown to me, and are found to be correct.
Dated this day of 19
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
I, the Solicitor for the Lessee hereby certify that the within land is a
non-residential property as declared in the Residential Property Notification
1988. The land is zoned as
and the approved specific use of the property is for use.
<PAGE> 28
- 27 -
Dated this day of 1995.
-----------------------------------------
NAME AND SIGNATURE OF SOLICITOR
FOR THE LESSEE
- --------------------------------------------
<PAGE> 29
- 28 -
(K) SIMILAR INTEREST CONFIRMATION (IF ANY)
I, the solicitor for the Lessee hereby confirms
that the interest of the Lessee is similar to that in Caveat CV/
------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
- --------------------------------------------
(L) CERTIFICATE OF CORRECTNESS:
I,the Solicitor for the Lessor hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSOR
I,the Solicitor for the Lessee hereby certify that this instrument is correct
for the purposes of the Land Titles Act.
------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
<PAGE> 30
- 29 -
We, JURONG TOWN CORPORATION, hereby consent to the within Sub-Lease.
The Common Seal of JURONG TOWN )
CORPORATION was hereunto affixed )
in the presence of:- )
-------------------------------------
General Manager
-------------------------------------
Secretary
<PAGE> 31
FOR OFFICE USE ONLY
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
EXAMINED REGISTERED ON
Initials of
Date Signing Officer: Registrar
of Titles
- ----------------------------------------------------------------------------------------------
</TABLE>
ALLEN & GLEDHILL
Advocates & Solicitors
36 Robinson Road
#18-01 City House
Singapore 068877
File Reference : MS/VN/yy/8241/951
<PAGE> 32
- 31 -
IN WITNESS WHEREOF the parties hereto have hereunto SET their
respective hands or seals the day and year first above written.
SIGNED on behalf of SINGAPORE )
TECHNOLOGIES PTE LTD by )
)
in the presence of:- )
/s/ Chua Su Li (Mrs.) /s/ Ho Ching
- ------------------------- --------------------------------
Chua Su Li Ms. Ho Ching
Company Secretary President & CEO
Singapore Technologies Pte. Ltd.
SIGNED on behalf of CHARTERED )
SEMICONDUCTOR MANUFACTURING )
LIMITED by )
in the presence of:- )
/s/ Angela Hon /s/ Tan Bock Seng
- ------------------------ ------------------------------------
Angela Hon Tan Bock Seng
Senior Manager, Legal President & CEO
Chartered Semiconductor Manufacturer
MISC (1) - AGR-CSM3 (WP)
<PAGE> 1
EXHIBIT 10.31
DUPLICATE
LEGAL DEPARTMENT
JTC(LG)3729/1220 Pt 1/SY/ZMY
BUILDING AGREEMENT
BETWEEN
JURONG TOWN CORPORATION
AND
SINGAPORE TECHNOLOGIES PTE LTD
RELATING TO
PRIVATE LOT AL2787(a)
WOODLANDS INDUSTRIAL PARK D,
MUKIM NO. 13 SEMBAWANG
AREA: 29,824 SQUARE METRES
<PAGE> 2
BUILDING AGREEMENT
FOR LAND AT PRIVATE LOT A12787(a)
IN WOODLANDS INDUSTRIAL PARK D
(AMALGAMATION/INDEPENDENT)
THIS AGREEMENT is made the 17th day of February 1998 BETWEEN THE JURONG
TOWN CORPORATION a body corporate incorporated under the Jurong Town Corporation
Act and having its Head Office at Jurong Town Hall, Jurong Town Hall Road,
Singapore (hereinafter called "the Owner") of the one part AND SINGAPORE
TECHNOLOGIES PTE LTD a company incorporated in Singapore and having its
registered office at
83 Science Park Drive, #01-01/02 The Curie,
Singapore Science Park, Singapore 118258
(hereinafter called "the Licensee") of the other part.
WHEREAS:-
(A) By a Building Agreement dated the 11TH day of APRIL 1995
(hereinafter called "the First Building Agreement") made, between the owner of
the one part and the Licensee of the other part the Owner granted to the
Licensee the licence and authority to enter upon all that piece of land known as
Private Lot A127875 as more particularly described in the First Schedule thereto
and shown edged on the plan annexed hereto (hereinafter called "Private Lot
A12787") for a period of THREE (3) YEARS from the 16TH day of FEBRUARY 1994 or
for such further period as may be extended by the owner for the construction of
factory buildings and other structures thereat and for the installation of
equipment fixtures and fittings thereat for the purpose therein mentioned and in
accordance with the stipulations therein contained, and the owner agreed that
upon satisfactory completion of the said construction and installation and
compliance of the terms and stipulations therein contained the Owner would grant
to the Licensee a lease of Private Lot A12787 for the term of THIRTY (30) years
from the 16th day of FEBRUARY 1994.
(B) By letters dated the 15TH day of NOVEMBER 1995 and 18TH day of
DECEMBER 1995, the Owner agreed to grant to the Licensee a licence to enter upon
the adjoining piece of land known as Private Lot A12787(A) FORMING PART OF
GOVERNMENT SURVEY LOT 3065V, MUKIM NO. 13 SEMBAWANG situated in the Republic of
Singapore as shown edged on the plan annexed hereto and estimated to contain an
area of 29,824 square metres more or less subject to survey (hereinafter called
"the said land") for the construction of factory buildings and other structures
therein and for the installation of equipment fixtures and fittings thereat for
the purpose therein specified and upon, inter alia, satisfactory completion
thereof, a lease or sub-lease of the said land to merge and run concurrently
with the lease or sub-lease of Private Lot A12787 and the Licensee has accepted
the same.
-2-
<PAGE> 3
(C) Pending the amalgamation of the said land with Private Lot A12787
(hereinafter together called "the amalgamated premises") the Licensee has agreed
to enter into a Building Agreement in respect of the said land in the manner
hereinafter appearing.
IT IS HEREBY AGREED as follows:-
1 For the period of THREE (3) YEARS from the 16TH day of NOVEMBER 1995
(hereinafter referred to as "the date hereof") or for such further period as may
be extended by the Owner the Licensee shall have the Licence and authority to
enter upon the said land for the construction of factory buildings and other
structures therein and for the installation of equipment fixtures and fittings
thereat for the purpose of WAFER FABRICATION ONLY in accordance with the
stipulations hereinafter contained and for no other purpose whatsoever.
2 The Licensee hereby agrees to perform and observe the following
stipulations:-
(i) To hold the said land until the same shall be comprised in a
lease to be granted as hereinafter provided as licensee upon
the same terms relating to the lease referred to in clause
2(ii) herein at the same rent and subject to the same
covenants and stipulations so far as applicable as if a lease
thereto has been actually granted and so that the owner shall
have all the remedies by whatsoever means for rent in arrears
that are incidental to the relationship of landlord and tenant
but so that nothing herein contained shall be construed as
creating a legal demise or any greater interest in the licence
than a tenancy at will.
(ii) To pay in advance as from the date hereof a licence fee in
respect of the said land calculated at the same rate and on
the dates specified as for the rent reserved in the lease of
the said land set out in the First Schedule hereto as if such
lease has actually been granted.
(iii) To pay on the owner's behalf to the Comptroller of Property
Tax an amount equivalent to the sum payable by the Owner as
property tax in respect of the said land, improvements and
structures thereon during the said period or of such extended
period (if any) permitted under clause 3(c) hereof by way of
additional licence fee or for the period prior to the issue of
the lease to be granted under clause 4 herein.
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Owner in
respect of any outstanding amount payable by the Licensee
under this Agreement from the date such amount becomes due
until payment in full is received by the Owner.
(v) To pay to the Owner all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities for the survey of the said
land for the purpose of sub-division of the land of which the
said land forms part and amalgamation of the said land with
Private Lot A12787 and for
-3-
<PAGE> 4
the preparation and issue of a Certificate of Title PROVIDED
THAT the Owner shall have the right to employ his own surveyor
to carry out the said survey in which event the Licensee shall
bear all costs incurred.
(vi) At his own cost and expense -
(a) to engage a professional engineer to carry out soil
investigations to advise on the soil conditions and to
design structurally sound buildings proposed to be erected
taking into consideration the condition of the said land;
and
(b) to execute such work as may be required to be done in
respect of the state and condition of the said land
(especially its ground levels, topography and soil
conditions) which state and condition the Licensee shall
be deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the date hereof firstly to the Owner for
his approval and then to the relevant Government Planning and
Building Authorities full and complete plans elevations and
specifications of the buildings proposed to be erected on the
said land in accordance in every way with the requirements
under the Planning Act and the Local Government Integration
Act PROVIDED THAT the owner may give or refuse his approval at
his absolute discretion.
(viii) At his own cost to commence erection on the said land (and on
Private Lot A12787 if the erection on the said land shall
straddle across or in any way affect or be connected with that
on Private Lot A12787) either within six (6) months from the
date hereof or within one (1) month from the date of approval
of the plans by the relevant Government Building Authorities,
whichever is the earlier, and in a substantial and
workman-like manner with the best materials of their available
kinds and in conformity in every respect with the plans,
elevations, sections and specifications approved by the owner
and the relevant Government Building Authorities to finish the
factory buildings, structures and other appurtenances
including the installations of all equipment fixtures and
fittings so as to be completely fit for immediate occupation
and operation within the said period of THREE (3) YEARS from
the date hereof PROVIDED THAT the Licensee shall not install
or use any electrical installation, machine or apparatus that
may cause or causes heavy power surge, high frequency voltage
and current, air borne noise, vibration or any electrical or
mechanical interference or disturbance whatsoever which may
prevent or prevents in any way the service or use of any
communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of
other Licensees.
(ix) In the planning, erection, construction and completion of the
said buildings on the said land TOGETHER WITH PRIVATE LOTS
A12787, A12787(b), A12787(d) AND
-4-
<PAGE> 5
ANY OTHER LAND OCCUPIED BY THE LICENSEE WITHIN WOODLANDS
INDUSTRIAL PARK D, to develop to an average gross plot ratio
of not less than 0.6 and not more than the existing permitted
maximum average gross plot of 1.4 except with the prior
written approval of the Owner and the relevant governmental
aid statutory authorities PROVIDED ALWAYS THAT the Licensee
shall pay all development charges/differential premium which
may be imposed on or charged to the Owner by the relevant
governmental and statutory authorities, and any other charges
which may be imposed in connection with any increase in the
said average gross plot ratio beyond 1.4.
(x) At his own cost to take such steps and execute such works upon
the said land as may be necessary for the protection of shores
and embankments if any and for the prevention of earth-slip
erosion of soil and failure of slopes expeditiously in a
workman-like manner and to the satisfaction of the Owner and
other relevant governmental and statutory authorities.
(xi) If the Licensee shall fail to complete the said buildings
works and installations and to commence operations within the
period specified in clause 2(viii) or within any extended
period under clause 3(c) hereof the Licensee shall pay to the
Owner a sum calculated at the rate of $200.00 per day as
liquidated damages for the period during which the said
buildings shall so remain or have remained incomplete.
(xii) To remove and replace any materials brought on the said land
or used in any of the said buildings works or installations
which the Owner shall require to be removed as being inferior
or unfit and to make good any workmanship which he shall
consider imperfect and if the Licensee fails to remedy such
defects the Owner may enter upon the said land and remedy such
defects at the expense of the Licensee after expiry of
fourteen (14) days, notice being given to the Licensee to do
so.
(xiii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than those
conforming with the plans elevations sections and
specifications approved by the Owner and the relevant
Government Building Authorities nor to make any alterations in
the external elevation of any of the said buildings when
erected without the prior consent in writing of the owner.
(xiv) In the erection and completion of the said buildings,
structures and installations to do all acts "and things
required by and to perform the works in conformity in all
respects with the provisions of any laws or regulations made
thereunder and to pay and keep the Owner indemnified against
all claims and other payments whatsoever which during the
progress of the works may become payable in respect of the
said works or of anything done under the authority herein
contained and from time to time to discharge and pay all
claims assessments
-5-
<PAGE> 6
and outgoings now or at any time hereafter be chargeable
against the owner under any law or otherwise in regard to the
said land, the said buildings or any structures or
installations thereon.
(xv) Not to do or permit or suffer to be done in or upon the said
land or any part thereof anything which in the opinion of the
owner may be or become a nuisance or annoyance or cause damage
or inconvenience to the Owner or to the Licensees or occupiers
of any adjoining or neighbouring premises or whereby any
insurance for the time being effected on the premises under
sub-clause (xx) herein may be rendered void or voidable or be
in any way affected.
(xvi) Not to sell or dispose of any earth, clay, gravel or sand from
the said land or permit or suffer any of the same to be
removed except so far as shall be necessary for the execution
of the said works PROVIDED nevertheless that the Licensee may
use for the purpose of the said works any of the approved
materials if so required.
(xvii) Not without the prior consent in writing of the Owner to
remove or permit or suffer to be removed until after
completion of the said buildings in accordance with the
provisions herein contained any building materials (other than
inferior or unfit materials removed for the purpose of being
replaced by proper materials) or plant which shall be brought
upon the said land or Private Lot A12787 for the purpose of
the said works.
(xviii) Not without the prior consent in writing of the Owner to affix
or exhibit or erect or paint or permit or suffer to be affixed
or exhibited or erected or painted on or upon any part of the
exterior of the said land or of the external walls or rails or
fences thereof any nameplate, signboard, placard, poster, or
other advertisement or hoarding.
(xix) Not at any time to deposit or make up or manufacture or permit
or suffer to be deposited made up or manufactured upon the
said land or Private Lot A12787 any building or other
materials except such as shall be actually required for the
buildings to be erected on the said land (and on Private Lot
A12787 as the case may be) in accordance with this Agreement
and the First Building Agreement and as soon as the buildings
hereinbefore agreed to be erected shall be completed at his
own expense to remove from the road or footpath adjoining the
said land and Private Lot A12787 or the ground intended to be
used for such road or footpath all building and other
materials and waste whatsoever.
(xx) As soon as any of the said buildings shall have reached a
height of five (5) feet above ground level to insure the same
to the full value thereof in the joint names of the Owner and
the Licensee against loss or damage by fire in some insurance
office approved by the owner and shall increase such insurance
proportionately as the said buildings approach completion and
to keep the same
-6-
<PAGE> 7
so insured until a lease shall be granted as hereinafter
provided and to pay all premiums thereof at least seven (7)
days before the expiry date of such insurance policy and to
produce to the owner or his agent without demand the policy or
policies of such insurance and the receipt for each such
payment and in the event the said buildings or any part
thereof are destroyed or damaged by fire then to forthwith
give to the Owner written notice of such destruction or damage
and to forthwith cause all monies received by virtue of any
such insurance to be forthwith laid out in rebuilding and
reinstating the buildings to the satisfaction of the Owner and
to make up any deficiency thereof out of his own monies, but
the rebuilding and reinstatement shall in any event commence
and be completed within the period specified by the Owner
PROVIDED ALWAYS that if the Licensee shall at any time fail to
keep the premises insured as aforesaid the Owner may without
being under any obligation to do so do all things necessary to
effect or maintain such insurance and any monies expended by
him for that purpose shall be repayable by the Licensee on
demand and be recovered forthwith from the Licensee as a debt
PROVIDED FURTHER THAT NOTWITHSTANDING THE COVENANT CONTAINED
IN THIS CLAUSE 2(XX), THE LICENSEE MAY EXERCISE THE OPTION NOT
TO REBUILD OR REINSTATE THE BUILDINGS SUBJECT TO THE FOLLOWING
CONDITIONS:-
(a) WITHOUT PREJUDICE TO CLAUSE 3(B), THE LICENSEE SHALL GIVE
THE OWNER THREE (3) MONTHS' PRIOR NOTICE IN WRITING TO
PREMATURELY TERMINATE THIS AGREEMENT; AND
(b) THE LICENSEE SHALL FORTHWITH PAY OR CAUSE TO BE PAID TO
THE OWNER (WHOM THE LICENSEE ACKNOWLEDGES TO BE ENTITLED
TO) ALL MONIES RECEIVED BY VIRTUE OF SUCH INSURANCE.
(xxi) Not to assign charge create a trust or agency let sublet or
underlet or grant a licence or part with or share his interest
under this Agreement, or the possession or occupation of the
said land, or any part thereof EXCEPT THAT, subject to the
Owner's prior written consent, which consent shall not be
unreasonably withheld, the Licensee may mortgage or charge his
interest under this Agreement by way of assignment or
debenture (as the case may be) to secure the repayment of such
sum or sums as the Licensee may require for the purpose only
of erecting or completing the building or other structure to
be built on the said land in accordance with the provisions of
this Agreement PROVIDED THAT the Licensee shall thereafter
continue to be liable for the observance and performance of
the several stipulations herein contained until the grant of
the lease as hereinafter provided.
(xxii) Not to permit or suffer any person to occupy reside or make
use of any building erected on the said land before a final or
a temporary Certificate of Fitness for Occupation has been
issued by or except with the permission of the relevant
governmental and statutory authorities.
-7-
<PAGE> 8
(xxiii) To make reasonable provision against and be responsible for
all loss injury and damage to any person (including loss of
life) or property including that of the owner for which the
Licensee may be held liable arising out of or in connection
with the occupation and use of the said land and the
structures erected thereon and to indemnify the owner against
all proceedings claims costs and expenses which he may incur
or for which he may be held liable as a result of any act
neglect or default of the Licensee his servants contractors
sub-contractors or agents or their respective servants.
(xxiv) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the said land to the requirements and
satisfaction of the owner and other relevant governmental and
statutory authorities PROVIDED THAT in the event of any
default by the Licensee under this covenant the owner may
carry out such remedial measures as he thinks necessary and
all costs and expenses incurred thereby shall be recoverable
forthwith from the Licensee as a debt.
(xxv) Subject to Clause 2 (xxi) hereinbefore appearing, to give to
the Owner written notice of every change of name within one
month from the date of each change PROVIDED THAT WHERE THERE
HAS BEEN, IS OR WILL ALSO BE ANY CHANGE IN THE SHAREHOLDERS OF
THE LICENSEE OR THE NUMBER OF SHARES HELD BY EACH AND EVERY
SHAREHOLDER OF THE LICENSEE, THE PRIOR WRITTEN CONSENT IN
WRITING OF THE OWNER SHALL BE OBTAINED WHICH CONSENT IF
GRANTED SHALL BE SUBJECT TO SUCH TERMS AND CONDITIONS AS THE
OWNER MAY REQUIRE.
(xxvi) To construct an internal drainage system to the satisfaction
of the Owner to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxvii) Upon his compliance with all the terms, conditions and
obligations of this Agreement, to proceed immediately to have
the said land amalgamated with Private Lot A12787 with the
approval of the competent authorities under the Planning Act
and to pay for all legal, survey, registration and any other
fees arising from the same.
(xxviii) In the event that the Owner becomes entitled to and does
exercise his right of re-entry upon Private Lot A12787, or
upon the said land under Clauses 3(b) or 3(d) herein, or the
Licensee terminates this Agreement or his licence under the
First Building Agreement or surrenders part of the said land
or part of Private Lot A12787 as mentioned in Clause 7 herein
or in the First Building Agreement (hereinafter called "the
determination"), to immediately do any or all of the following
as may be and to the extent required in writing by the Owner
at the cost and expense of the Licensee and without claiming
any compensation, allowance or payment from the Owner
whatsoever:-
-8-
<PAGE> 9
(a) if the Licensee has failed to commence erection of the
buildings proposed to be erected on the said land in
accordance with this Agreement or if any partially or
fully completed building or structure straddles across,
abuts or is very near the common boundary of the said land
and Private Lot A12787, then the Licensee shall, if the
determination is in respect of the said land, demolish and
remove all partially completed buildings and structures on
the said land and all buildings and structures on the said
land or Private Lot A12787 which straddle across, abut or
are very near the common boundary of the said land and
Private Lot A12787, or which would otherwise not comply
with building laws or regulations, but if the
determination is in respect of Private Lot A12787, then
the Licensee shall in addition surrender and give
possession of the said land and all other buildings,
structures and fixtures thereon, if any; or
(b) during the period from the time a Certificate of Fitness
for Occupation is issued by the relevant Governmental
authority in respect of any building on the said land and
the time the Licensee executes one good lease for the said
land and Private Lot A12787 by virtue of Clause 4 (b)
herein, the Licensee shall, if the determination is in
respect of either the said land or Private Lot A12787,
immediately surrender and give possession of Private Lot
A12787 or the said land respectively, and all buildings,
structures and fixtures thereon; and
(c) reinstate the said land to its original state and
condition;
PROVIDED ALWAYS THAT if the Licensee shall fail to observe or
perform this covenant or any part thereof, the Owner may at
his absolute discretion (but shall not be under obligation so
to do) perform the same or any part thereof and all costs and
expenses thereby incurred shall be recoverable from the
Licensee as a debt AND PROVIDED FURTHER THAT the owner shall
not be liable to the Licensee for any loss (including loss of
life), damage or inconvenience caused thereby. The Owner's
rights under this covenant shall be in addition to the owner's
rights under and shall not prejudice the generality of Clauses
3(b) and 3(d) herein.
(xxix) At the cost and expense of the Licensee, to simultaneously or
immediately upon the execution of this Agreement, execute a
document of Indorsement in respect of Private Lot A12787 to
incorporate into the First Building Agreement Clause 2(xxviii)
above and all other provisions consequential upon this
Agreement.
(xxx) At his own cost to plant and maintain trees and landscape the
said land in accordance with all the requirements of the Parks
and Recreation Department, Ministry of National Development
and other relevant governmental and statutory authorities.
-9-
<PAGE> 10
(xxxi) At his own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and the
like (if any) to the requirements and satisfaction of the
Owner and other relevant Government authorities.
(xxxii) (a) To construct and complete a permanent culvert within nine
(9) months from the date hereof or any extension thereof
as may be approved by the owner and in connection thereof
to submit plans to and to obtain the prior approval in
writing of the Owner for the construction of a temporary
crossing.
(b) Within one (1) month of the completion of the permanent
culvert mentioned in sub-clause (xxxii) (a) above to
remove the temporary crossing and to reinstate any roads,
roadside kerbs, drains, turfing or the like damaged by the
Licensee, his servants, contractors, subcontractors, or
agents or their respective servants to the satisfaction of
the Owner and the relevant Governmental and Statutory
authorities.
(c) Within one (1) month of the completion of the construction
of the said buildings and related civil works to reinstate
any damage caused to the roads, roadside kerbs, drains,
turfing and the said permanent culvert by the Licensee his
servants contractors or agents or their respective agents
to the satisfaction of the owner and the relevant
Governmental and Statutory authorities.
(xxxiii) To place with the Owner a deposit of $5,000.00 which shall be
forfeited in the event of any breach of any of the provisions
in sub-clause (xxxii) herein without prejudice to the rights
and remedies of the Owner contained in this Agreement and the
Lease.
(xxxiv) If the Licensee shall at any time be found to have encroached
upon any area beyond the allocated boundaries of the said
land, the Licensee shall at his own cost and expenses, but
without prejudice to any other right or remedy the Owner may
have against him, immediately or within the time specified (if
any) by the Owner rectify and remove the encroachment to the
satisfaction of the Owner and pay to the owner such
compensation as may be specified by the Owner. If, however,
the Owner in his absolute discretion permits the Licensee to
regularise and retain the encroached area or any part thereof
upon such terms and conditions as may be stipulated by the
owner and any other relevant government and statutory
authorities, the Licensee shall pay licence fees on the
encroached area with retrospective effect from the date
hereof, and the Licensee shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and client
costs and expense), and all other costs and charges relating
thereto.
(xxxv) Not to keep or allow to be kept livestock or other animals on
the said land or any part thereof.
-10-
<PAGE> 11
(xxxvi) The licence fees and other taxable sums payable by the
Licensee under or in connection with the licence herein shall
be exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any governmental, statutory or tax
authority calculated by reference to the amount of the licence
fees and any other taxable sums received or receivable by the
owner from the Licensee and which tax is payable by the
Licensee. The Licensee shall pay the tax and the Owner acting
as the collecting agent for the governmental, statutory or tax
authority shall collect the tax from the Licensee together
with the licence fees hereinbefore reserved without any
deduction and in advance without demand on the 1st day of each
of the months of January, April, July and October, and in the
manner and within the period prescribed in accordance with the
applicable laws and regulations.
(xxxvii) If any damage of whatsoever nature or description shall at any
time occur or be caused to the said land or any building or
structure or installation thereon, or any part thereof, to
forthwith give to the Owner written notice of the damage and
to remedy the damage to the satisfaction of the Owner within
such time as the owner may specify, all at the cost of the
Licensee.
(xxxviii) Subject to clause 2 (xiii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by the Licensee shall not
exceed two (2) metres PROVIDED THAT boundary walls or fences
(if any) shall be erected behind baphia or other hedges
planted on the said land.
(xxxix) At the Licensee's own cost, at all times, to comply with and
observe the maximum height restriction of 61.0 metres above
Mean Sea Level and any other height restriction(s) on
buildings and structures at the said land as imposed by any
governmental or statutory authority and to ensure that any
height restriction plan(s) which may be furnished to the
Licensee shall at all times be held in strict confidence and
shall not be shown, revealed or copied to or by any person,
contractor, sub-contractor, watchman, employee, agent,
representative or any other person except with the prior
written consent of the Owner.
(xl) Without prejudice to the generality of Clauses 2(xiii) and 2
(xiv) herein, the Licensee shall not place, construct or erect
or permit the placing, construction or erection of any
building, structure or equipment whatsoever on the 7.6-METRE
AND 15.0-METRE WIDE BUFFERS within the boundary of the said
land as shown on the plan annexed hereto and shall comply with
the requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority and
the Building Control Division of the Ministry of National
Development.
-11-
<PAGE> 12
(xli) The Licensee accepts the said land in its existing state and
condition and further accepts and confirms that the owner has
made no representation nor given any assurance as to the
present or future suitability of the said land or its
surrounding or adjacent lands in relation to the Licensee's
use, operations or occupation at the said land.
(xlii) Subject always to Clauses 2(viii) and 2(ix) herein, to develop
the said land for low rise and low density industrial
development limited to 100 persons per hectare.
3 It is hereby mutually agreed that until the Licensee has performed all
his obligations herein contained the Owner shall possess the rights and powers
following :-
(a) The right for himself and his agents with or without
workmen or others at all reasonable times to enter upon
the said land to view the state and progress of the said
buildings and works and to inspect and test the materials
and workmanship in connection therewith and for any other
reasonable purpose including the construction and
installation of sewers drains pipes and cables on or
leading from any adjoining or neighbouring land of the
Owner as may be required by the owner.
(b) Fullright and liberty in case any of the said buildings
and other structures or installations hereby agreed to be
erected be not completed and fit for immediate occupation
within the period hereinbefore limited (time in this
respect shall be of the essence of the contract) and in
accordance in every way with the stipulations hereinbefore
contained or in case the Licensee shall in any other way
fail to perform and observe any of the stipulations on his
part herein contained or if any charging order writ of
seizure and sale or its equivalent made in respect of the
said land or any structure thereon shall be enforced
without the written consent of the owner having first been
obtained by the Licensee or by the person in whose favour
the charging order writ of seizure and sale or its
equivalent shall have been made, to re-enter upon and take
possession of the said land and all buildings, structures,
fixtures, plant material and effects whatsoever thereon
with power to hold and dispose thereof as if this
Agreement had not been entered into and without making to
the Licensee any compensation or allowance for the same
and this Agreement shall thereupon determine but without
prejudice to any right of action or other remedy of the
Owner for the recovery of any licence fee or monies due to
him from the Licensee or in respect of any breach of this
Agreement PROVIDED ALWAYS THAT the Owner shall, in
addition, also be entitled to claim and to recover from
the Licensee as a debt, firstly liquidated damages
calculated at and in accordance with the same rates as
that stipulated for liquidated damages in clause 3 (e) in
the Lease set out in the First Schedule hereto as if the
respective year of the term of the lease therein referred
to the respective year of the said period of THREE (3)
-12-
<PAGE> 13
YEARS or any extended period in which the owner exercised
its aforesaid right of reentry under this Agreement and
secondly any sum which the Owner may incur in connection
with the demolition and removal of any building,
structure, fitting, fixture or thing which the Owner may
consider necessary to demolish and remove AND PROVIDED
THAT if the said land has been assigned by way of mortgage
the provisions of this clause shall not take effect until
the owner has served upon the mortgagee notice in writing
specifying the breach and the mortgagee has failed to
remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such
default as aforesaid in completing the said buildings and
works the owner may in his discretion give notice in
writing to the Licensee of his intention not to enforce
the stipulations herein contained and may fix any extended
period for the completion of the said works in
substitution for the said period of THREE (3) YEARS hereby
fixed for such completion and thereupon the obligations
hereunder of the Licensee to complete the said works and
to accept a lease hereinafter mentioned shall be taken to
refer to such substituted period.
(d) Without prejudice to the generality of Clause 3(b) herein
full right and liberty in the event that the Licensee has
failed to either:-
(i) develop the said land to the gross plot ratio
specified in Clause 2(ix) herein; or
(ii) fulfill the investment criterion as stipulated in
Clause 4 herein or in the First Building Agreement
with full and absolute discretion to the Owner to either :-
(i) re-enter upon and take possession of the said land or
any part thereof and all buildings, structures,
fixtures, plant material and effects whatsoever
thereon with power to hold and dispose thereof as if
this Agreement had not been entered into and without
making to the Licensee any compensation or allowance
for the same and this Agreement shall thereupon
determine but without prejudice to any right of
action or other remedy of the Owner or recovery of
any licence fee or monies due to him from the
Licensee or in respect of any breach of this
Agreement, or
(ii) reduce the term of lease in respect of the said land
and Private Lot A12787 proportionately as the actual
amount invested bears with the required fixed
investment on the said land and Private Lot A12787 as
stipulated in Clause 4 herein in which event the
Licensee shall execute such documents as the owner
shall deem
-13-
<PAGE> 14
necessary and in connection therewith, pay all costs
disbursements fees and charges legal or otherwise as
provided in Clause 5 herein.
PROVIDED ALWAYS that if the said land or Private Lot A12787
has been assigned by way of mortgage, the provisions of this
sub-clause (d) shall not take effect until the owner had
served upon the Mortgagee notice in writing specifying the
breach and the Mortgagee has failed to remedy such breach.
4 (a) If the said buildings and works shall have been completely finished
to the satisfaction of the Owner and the relevant Government Building
Authorities (to be evidenced by their certificates in writing to that effect)
within the said period of THREE (3) YEARS or of such extended period (if any) as
aforesaid and if the Licensee shall have performed and observed all the
stipulations herein on his part contained other than such as may have been
waived as aforesaid and IF THE LICENSEE'S AVERAGE MINIMUM INVESTMENT FOR THE
SAID LAND AND PRIVATE LOTS A12787 AND A12787(b) SHALL HAVE BEEN THE SUM OF
$1000/- PER SQUARE METRE OF THE GROSS FLOOR AREA OF THE BUILDING(S) ON BUILDING
AND CIVIL AND $500/- PER SQUARE METRE ON PLANT AND MACHINERY WITHIN THREE (3)
YEARS FROM THE 16TH DAY OF NOVEMBER 1995 (DUE PROOF OF SUCH INVESTMENT TO BE
PRODUCED TO THE SATISFACTION OF THE OWNER ON OR BEFORE 15TH DAY OF MAY 1999)
then the Owner shall grant and the Licensee shall accept and execute a
counter-part of one good and sufficient lease or sub-lease of the said land and
premises together with the buildings so erected thereon with their appurtenances
for the term of thirty (30) years from the 16th day of February 1994 at the rent
and in the form containing the reservation exceptions covenants conditions and
provisions set forth in the First Schedule hereto with such modifications as
circumstances may render necessary and such other covenants conditions or
stipulations to be performed by the Licensee governing or regulating the use of
the said land as the owner thinks fit with a view to preserving the value
thereof or protecting the interests of the licensees or occupiers of land or
premises adjacent to the said land from any dangerous or obnoxious or otherwise
harmful activities which may be carried out by the Licensee whether or not such
activities are incidental to the Licensee's trade PROVIDED THAT, and subject to
clause 2 (xxviii) hereinbefore appearing, until such lease is executed the
Licensee shall be deemed to be the Lessee of the said land as though a lease has
been executed at the same rent and subject to the covenants and conditions
contained in the First Schedule hereto so far as the same are applicable.
(b) Upon obtaining the competent authorities' approval for the
amalgamation referred to in Clause 2 (xxvii) above and the Certificate of Title
for the amalgamated premises, the owner shall, subject to the Licensee's
satisfaction of the conditions specified in subclause (a) of this clause and
instead of granting separate leases for the said Private Lot A12787 and for the
said land as stipulated in subclause (a) of this clause, grant and the Licensee
shall accept and execute one good and sufficient lease or sublease for the
amalgamated premises together with the buildings erected thereon with their
appurtenances for the term of thirty (30) years from the 16th day of February
1994. The said lease or sub-lease shall, subject to such modifications as may be
agreed between the owner and the Licensee or as circumstances may render
necessary, be on the same terms, covenants and stipulations as contained in the
First Schedule of this Agreement.
-14-
<PAGE> 15
5 The Licensee shall pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection with the
preparation stamping and issue of this Agreement and the lease herein agreed to
be granted and any prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Agreement and the lease.
6 The Licensee shall pay all costs and fees legal or otherwise including
the Owner's costs as between solicitor and client in connection with the
enforcement of the covenants and conditions of this Agreement and the lease.
7 The Licensee, may at any time during the said period of THREE (3) YEARS
and any extensions thereof granted under Clause 3 (c) herein, terminate this
Agreement or surrender part of the said land or his licence in respect of
Private Lot A12787 or part of both by giving to the Owner three (3) months,
prior notice in writing subject to the consent and the conditions of the consent
in writing of the Owner in relation to the said land or Private Lot A12787 or
both (including the right of the Owner to require the Licensee to terminate the
First Building Agreement) PROVIDED ALWAYS THAT such termination or surrender
shall be without prejudice to any right or remedy which may have or will accrue
to the owner prior to the expiry of the three (3) months' notice AND PROVIDED
FURTHER THAT the Licensee shall in addition to the licence fees (which at the
discretion of the Owner may be apportioned for the period commencing from the
date hereof up to the date of delivery of vacant possession of the said land or
part thereof to the owner) survey fees, property tax and other charges specified
in this Agreement pay to the Owner as liquidated damages in accordance with and
calculated at the same rates as that stipulated for liquidated damages in Clause
3 (e) of the Lease set out in the First Schedule hereto PROVIDED THAT before the
delivery of vacant possession as aforesaid the Licensee shall at the cost and
expense of the Licensee comply with the requirements of the owner under Clause
2(xxviii) of this Agreement and licence fee and property tax shall continue to
be payable until the same has been completed to the stipulation of the Owner
PROVIDED ALSO THAT THE LICENSEE SHALL, WITHOUT PREJUDICE TO CLAUSES 2(VIII) AND
2(XL), ENSURE THAT THE SAID LAND AND ANY OTHER REMAINING LAND OCCUPIED BY THE
LICENSEE WITHIN WOODLANDS INDUSTRIAL PARK D COMPLY WITH THE SETBACK REQUIREMENTS
AND OTHER PLANNING REQUIREMENTS AND DO NOT EXCEED THE AVERAGE MAXIMUM GROSS PLOT
RATIO OF 1.4 AFTER THE TERMINATION OR SURRENDER AND PROVIDED FURTHER THAT if the
Licensee shall on his own accord terminate the First Building Agreement or
surrender part of Private Lot A12787 in accordance with the terms therein and
the Owner consequently requires the Licensee to also terminate this Agreement or
to surrender part of the said land then the provisions of this clause shall also
apply to the Licensee as if the Licensee had himself terminated this Agreement.
8 The Licensee hereby agrees that as from the date hereof and as between
the Licensee and the owner the First Building Agreement shall be deemed to have
been accordingly amended by the stipulations contained in this Agreement.
-15-
<PAGE> 16
IN WITNESS WHEREOF the parties hereto have hereunto set their respective
hands or seals the day and year first above written.
SIGNED on behalf of )
)
JURONG TOWN CORPORATION )
)
By : HAN CHIAW JUAN ) /s/ HAN CHIAW JUAN
Director )----------------------
Specialised Parks )
Development Group )
in the presence of :- )
/s/ KANNAN MALINI
-----------------------------------------
KANNAN MALINI
The common Seal of )
)
SINGAPORE TECHNOLOGIES )
PTE LTD )
)
was hereunto affixed )
)
in the presence of : - )
Signature: /s/ HO CHING
-----------------------------
Name in full: Ho Ching
Designation: Director
Signature: /s/ CHUA SU LI
-----------------------------
Name in full: Chua Su Li
Designation: Company Secretary
-16-
<PAGE> 17
I,___________________________________________________________________, an
, an Advocate and solicitor of the Supreme Court of Singapore hereby certify
that on the _______ day of 19___ the Common Seal of SINGAPORE TECHNOLOGIES PTE
LTD was duly affixed to the within written instrument at Singapore in my
presence in accordance with the regulations of the said Company which
regulations have been produced and shown to me.
Witness my hand this ______________ day of _________________ 19 _____
-----------------------------
Advocate and Solicitor
Singapore
-17-
<PAGE> 18
THE FIRST SCHEDULE ABOVE REFERRED TO
--------- ------ -------
L 1 Ver 1
--------- ------ -------
THE LAND TITLES ACT
------------------------
------------------------
(For official use only)
LEASE
DESCRIPTION OF LAND
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------- ------ ------ ------- -------------------------------------
CT Property Address
- ----------------------------
MK TS Lot Whole or part (if part
No. lot, to state appd new
Vol Fol lot/strata lot)
- --------------- ------------ ------ ------ ------- -------------------------------------
13 Whole
(Private Lot A12787(a))
- --------------- ------------ ------ ------ ------- -------------------------------------
</TABLE>
LESSOR
<TABLE>
<S> <C>
- -------------------------------- -------------------------------------------------------
Name: JURONG TOWN CORPORATION
- -------------------------------- -------------------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and having its
office at Jurong Town Hall, 301 Jurong Town
Hall Road, Singapore 609431.
</TABLE>
(the registered proprietor) HEREBY LEASES the registered estate or interest in
the land to:-
LESSEE
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------
Co Regn no: 199004768N
- -------------------------------------------------------------------------------------
Name: SINGAPORE TECHNOLOGIES PTE LTD
- -------------------------------------------------------------------------------------
Address: 83 Science Park Drive, #01-01/02,
The Curie, Singapore Science Park,
Singapore 118258
- -------------------------------------------------------------------------------------
</TABLE>
-1-
<PAGE> 19
FOR TERM OF LEASE
<TABLE>
<S> <C>
Term of Lease: THIRTY (30) YEARS
Commencement Date: 16TH DAY OF FEBRUARY 1994 (hereinafter referred
to as "the Commencement Date")
Consideration: The average minimum investment by the Lessee on
building and civil works of $1,000/- per square
metre of the gross floor area and on plant and
machinery of $500/per square metre of Private Lots
A12787, A12787(a) and A12787(c) (hereinafter
referred to as "the fixed investment criteria")
and the average gross plot ratio of not less than
0.6.
Annual Rent: As stipulated in Clause 1(i) of the Special
Covenants and Conditions hereinafter appearing.
Easement: As provided in the Memorandum of Lease I/30809F and
the First Variation of Memorandum of Lease
VML I/076384J hereinafter referred to.
</TABLE>
SUBJECT TO:
PRIOR ENCUMBRANCES:
- --------------------------------------------------------------------------------
N I L
- --------------------------------------------------------------------------------
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<PAGE> 20
AND the following
COVENANTS AND CONDITIONS
(a) the covenants, conditions and powers implied by law in instruments of
lease (or to such of them as are not hereinafter expressly negatived or
modified);
(b) the covenants and conditions set forth in the Memorandum of Lease and
the First Variation of Memorandum of Lease filed in the Registry of
Titles and numbered as ML I/30809F and VML 1/076384J respectively with
the exception of covenants 1(i), 1(xi) and 1(xvii) of ML I/30809F and
covenants 1(x) and 1(xxv) of VML I/076384J.
SPECIAL COVENANTS AND CONDITIONS
1 (i) To _ _ from the 16TH day of NOVEMBER 1995 the yearly rent of
DOLLARS FIVE HUNDRED AND EIGHTY-FIVE THOUSAND ONE HUNDRED AND
FORTY-SIX AND CENTS EIGHTY EIGHT ONLY ($585,146.88CTS) to be
paid by equal quarterly installments on the 1st day of each of
the months of January, April, July and October in every year
of the said term without any deduction and in advance without
demand at the office oil the Lessor or at such other office as
the Lessor may designate calculated at the rate of $19.62CTS
per square metre per annum (hereinafter referred to as "the
Initial Rent") of the demised premises having an area of
29,824 square metres (hereinafter referred to as "the
preliminary survey are all, which may at any time be adjusted
on completion of final survey, if any, and in which event if
the area adjusted exceeds five square metres more, or less,
than the preliminary survey area the rental paid or payable by
the Lessee shall accordingly also be adjusted and be paid and
payable or refunded as the case may be in respect of the full
difference between the preliminary survey area and the final
survey area, with retrospective effect from the commencement
of the said term of the Lease herein), which rate was last
increased on the 16TH day of FEBRUARY 1996 to the rate of
$21.39CTS per square metre per annum. The yearly rent so
increased on the 16th day of FEBRUARY 1996 shall be increased
by 9% per annum (compounded annually) on the 16TH day of
FEBRUARY 1997 and on the 16TH day of FEBRUARY of every year
thereafter.
(x) As often as any building or structure on the demised premises
or any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies
received by virtue of such insurance to be laid out in
rebuilding and reinstating the same to the satisfaction of the
Lessor and in accordance with the plans and specifications
approved by the Lessor and in accordance with the laws,
bye-laws regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time,
and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of his own
monies PROVIDED
-3-
<PAGE> 21
THAT the rebuilding and reinstatement shall in any event
commence and be completed within the period specified by the
Lessor PROVIDED FURTHER THAT notwithstanding the covenant
contained in this Clause 1 (x) , the Lessee may exercise the
option not to rebuild or reinstate the buildings subject to
the following conditions:
(a) the Lessee shall give the Lessor three (3) months' prior
notice in writing to prematurely terminate the term of
lease herein created but without prejudice to Clause 3 (e)
herein and any right or remedy which may have or will
accrue to the Lessor prior to the expiry of the three (3)
months' notice under the terms and conditions of the Lease
herein; and
(b) the Lessee shall forthwith pay or cause to be paid to the
Lessor (whom the Lessee acknowledges to be entitled to)
all monies received by virtue of such insurance.
(xi) Not to demise assign create a trust or agency mortgage charge
let sublet or underlet or grant a licence or part with or
share the possession or occupation of the demised premises in
whole or in part at anytime within the period of FIVE (5)
YEARS from the 16TH day of NOVEMBER 1995 (hereinafter referred
to as "the restrictive period") EXCEPT THAT and subject to the
Lessor's prior written consent, the Lessee may mortgage or
charge by way of a Debenture his interest in the demised
premises for the purposes of obtaining financing for the
Lessee's operations at the demised premises. After the
restrictive period the Lessee shall not demise assign create a
trust or agency mortgage charge let sublet or underlet or
grant a licence or part with or share the possession or
occupation of the demised premises in whole or in part at
anytime without first obtaining the consent of the Lessor in
writing PROVIDED ALWAYS THAT IN THE EVENT THAT ANY CONSENT TO
ASSIGN IS GIVEN, SUCH CONSENT SHALL, WITHOUT PREJUDICE TO
CLAUSES 1(XLII) AND I(XLIII), AT ALL TIMES BE SUBJECT TO THE
COMPANY (HEREINAFTER DEFINED IN CLAUSE 1(XLII)) AND THE
ASSIGNEE, WHERE APPLICABLE, COMPLYING WITH THE SETBACK
REQUIREMENTS AND ANY OTHER PLANNING REQUIREMENTS AND NOT
EXCEEDING THE AVERAGE MAXIMUM GROSS PLOT RATIO OF 1.4 IN
RESPECT OF THE DEMISED PREMISES AND ANY OTHER REMAINING LAND
OCCUPIED BY THE COMPANY WITHIN WOODLANDS INDUSTRIAL PARK D
AFTER THE ASSIGNMENT. The restrictions contained in Section 17
of the Conveyancing and Law of Property Act (Chapter 61) shall
not apply. In addition, the Lessor may in its absolute
discretion in giving the consent require, inter alia, that the
fixed investment criteria be met and due proof thereof be
shown within such period of time as the Lessor may stipulate,
and in the event of the non-observance thereof, the Lessor
shall, without prejudice to any other right or remedy the
Lessor may have, be entitled to exercise its rights under
Clause 3(c) of VML I/076384J.
(xvii) At the termination, by notice by the Lessee, or reentry by the
Lessor or by expiry or otherwise, of the term hereby created,
to yield up the demised premises to the
-4-
<PAGE> 22
Lessor in tenantable repair in accordance with the Lessee's
covenants herein contained PROVIDED THAT, if so required by
the Lessor and upon notice thereof, the Lessee shall at his
own cost and expense properly demolish and remove such
buildings, structures, fixtures and fittings, or any part
thereof, as may be specified by the Lessor and reinstate the
demised premises to the satisfaction of the Lessor and if the
Lessee shall fail to observe or perform this covenant the
Lessor may (but shall not be under any obligation to do so)
execute such works and recover the costs thereof from the
Lessee as a debt.
(xxv) Subject always to Clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change PROVIDED THAT where there has been, is
or will also be a change in the shareholders of the Lessee or
the number of shares held by each and every shareholder of the
Lessee, the prior written consent in writing of the Lessor
shall be obtained which consent if granted shall be subject to
such terms and conditions as the Lessor may require.
(xli) Not to use or permit or suffer the demised premises
or any part thereof to be used otherwise than for
WAFER FABRICATION only except with the prior consent
in writing of the Lessor. In giving its consent, the
Lessor may in its absolute discretion require, inter
alia, the Lessee to meet the fixed investment
criteria and to show due proof thereof within such
period of time as the Lessor may stipulate, and in
the event of the non-observance thereof, the Lessor
shall be entitled to exercise its rights under Clause
3(c) of VML I/076384J. For the avoidance of any
doubt, the words "meet" in this clause and "met" in
Clause 1(xi) herein shall include the maintenance of
the fixed investment criteria and if it has not been
maintained, then that it be met.
(xlii) (a) To ensure that the gross plot ratio shall not be
less than 0.6 but shall not exceed the existing
maximum gross plot ratio of 1.4 permitted for the
demised premises except with the prior written
approval of the Lessor and the relevant governmental
and statutory authorities PROVIDED ALWAYS THAT and
without prejudice to clause 1(viii) of ML I/30809F,
the Lessee shall pay all development
charges/differential premium which may be imposed on
or charged to the Lessor by the relevant governmental
and statutory authorities, and any other charges
which may be imposed in connection with any increase
in the gross plot ratio beyond 1.4.
(b) Notwithstanding Clause 1 (xlii) (a) herein, if
the Lessee is Singapore Technologies Pte Ltd
(hereinafter referred to as "the Company"), the
Company shall ensure that the average gross plot
ratio for PRIVATE LOTS A12787, A12787(a), A12787(b),
A127879(d) AND ANY OTHER LAND OCCUPIED BY THE COMPANY
WITHIN WOODLANDS INDUSTRIAL PARK D shall not be less
than 0.6 but shall not exceed the existing
-5-
<PAGE> 23
permitted maximum average gross plot ratio of 1.4
except with the prior written approval of the Lessor
and the relevant governmental and statutory
authorities PROVIDED ALWAYS THAT and without
prejudice to clause 1(viii) of ML I/30809F, the
Lessee shall pay all development charges/differential
premium which may be imposed on or charged to the
Lessor by the relevant governmental and statutory
authorities, and any other charges which may be
imposed in connection with any increase in the said
average gross plot ratio beyond 1.4. For the
avoidance of doubt, Clause 1(xlii)(a) herein must be
strictly complied with in the event that the Company
ceases to be the Lessee.
(xliii) Not to place, construct or erect or permit the
placing, construction or erection of any building,
structure or equipment whatsoever on the 7.6-METRE
AND 15.0-METRE WIDE BUFFERS within the boundary of
the demised premises and to comply with the
requirements of the relevant governmental and
statutory authorities including the Urban
Redevelopment Authority and the Building Control
Division of the Ministry of National Development.
(xliv) The Lessee shall not at any time hold the Lessor
liable for any claim, demand, action, proceeding,
inconvenience, loss, damages, costs or expenses of
whatsoever kind or description which the Lessee or
any other person may suffer in connection with or
arising from the Easement referred to in VML
I/076384J or any works carried out in relation
thereto.
(xlv) At all times throughout the term of lease hereby
created to keep in full operation and continue
operations at the whole of the demised premises in
accordance with the use permitted in Clause 1(xli)
herein.
(xlvi) If the Registrar of Titles issues in favour of the
Lessee a Certificate of Title for the leasehold
estate comprised in the lease hereby created, the
Lessee must, within one (1) month of receipt of the
said Certificate of Title submit a copy of it to the
Lessor.
(xlvii) If the term of lease hereby created shall at any time
be determined by expiry or otherwise, the Lessee must
at his own cost and expense immediately surrender or
cause to be surrendered the said Certificate of Title
for the leasehold estate (and any duplicate
instrument) to the Registrar of Titles for custody
and cancellation by the Registrar and the Lessee
shall simultaneously give to the Lessor written
notice of such surrender.
(xlviii) The Lessee accepts the demised premises in its
existing state and condition and further accepts and
confirms that the Lessor has made no representation
nor given any assurance as to the present or future
-6-
<PAGE> 24
suitability of the demised premises or its
surrounding or adjacent lands in relation to the
Lessee's use, operations or occupation at the demised
premises.
(xlix) Subject always to Clause 1(xlii) herein, to develop
the demised premises for low rise and low density
industrial development limited to 100 persons per
hectare.
(1) At the Lessee's own cost and at all times, to comply
with and observe the maximum height restriction of
61.0 metres above Mean Sea Level and any other height
restriction(s) on buildings and structures at the
demised premises as imposed by any governmental or
statutory authority and to ensure that any height
restriction plan(s) which may be furnished to the
Lessee shall at all times be held in strict
confidence and shall not be shown, revealed or copied
to or by any person, contractor, sub-contractor,
watchman, employee, agent, representative or any
other person except with the prior written consent of
the Lessor.
(li) Subject to Clause 1 (vii) of ML I/30809F, to ensure
that the maximum height of any chain-link fence
(including the anti-climb) or boundary wall erected
by the Lessee at the demised premises shall not
exceed two (2) metres PROVIDED THAT the chain-link
fence or boundary wall shall be erected behind any
hedge that may be planted at the boundary of the
demised premises.
2A The Lessor further covenants with the Lessee that he shall grant to the
Lessee a lease of the demised premises for a further term of THIRTY (30) YEARS
(hereinafter referred to as "the further term") from the expiry of the said term
upon the same terms and conditions and containing like covenants as are
contained in this lease with the EXCEPTION of the present covenant for renewal
PROVIDED THAT:
(i) at the expiry of the said term, there be no existing breach or
non-observance of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or
performed;
(ii) if required by the Lessor, the Lessee shall within four (4)
months from the commencement of the further term and at his
own cost and expense, carry out and complete such improvements
to the landscaping at the demised premises as may be
stipulated in writing by the Lessor;
(iii) the Lessee shall six (6) months before the expiry of the said
term submit, for the approval of the Lessor and the relevant
governmental and statutory authorities, plans for the
upgrading of the exterior of buildings on the demised premises
to the same highest quality of new buildings which the Lessor
will be building at that time, and the Lessee shall
expeditiously do all acts and things necessary to obtain the
approval, all at the cost and expense of the Lessee; and
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<PAGE> 25
(iv) the Lessee shall at his own cost and expense complete, within
eighteen (18) months from the commencement of the further
term, the upgrading of the buildings in accordance with the
plans approved by the Lessor and the relevant governmental and
statutory authorities and to the satisfaction of the Lessor.
3 (d) The Lessee may at any time prematurely terminate the term
of lease herein created by giving to the Lessor three (3)
months' prior notice in writing, but without prejudice to any
right or remedy which may have or will accrue to the Lessor
prior to the expiry of the three (3) months' notice under the
terms and conditions of the Lease herein created or in respect
of the termination.
(e) Subject to Clause 3(f) hereinafter appearing in the event that
premature termination shall occur at any time within EIGHT (8)
YEARS from the commencement of the said term of lease herein
created or if the Lessor shall at any time within the said
eight (8) years exercise its right of re-entry under Clause
3(c) of ML I/30809F then in addition to rent, interest,
property tax and other sums payable by the Lessee to the date
of premature termination or re-entry as the case may be,
liquidated damages for the sum of $17.7 MILLION ("the said
sum") shall be payable and paid by the Lessee to the Lessor
and it is acknowledged and agreed by the Lessee that the said
sum shall constitute liquidated damages and shall not be
considered under any circumstances as a penalty.
(f) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver, of the liquidated damages provided in
Clause 3(e) of the Special Covenants and Conditions
hereinbefore appearing in the event of any transfer or
assignment of the lease in accordance with clause 1(xi)
hereinbefore appearing PROVIDED THAT:
(i) the transfer or assignment is approved in writing by the
Lessor and all other relevant governmental and statutory
authorities and
(ii) the Lessor reserves the right to revise the land rent to
the prevailing market rate at the time of the transfer or
assignment.
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<PAGE> 26
EXECUTION OF LESSOR
THE COMMON SEAL OF )
)
JURONG TOWN CORPORATION )
)
was hereunto affixed )
)
in the presence of :- )
-----------------------------------------
CHIEF EXECUTIVE OFFICER
-----------------------------------------
SECRETARY
EXECUTION OF LESSEE )
)
The common Seal of )
)
)
)
was hereunto affixed )
)
in the presence of : - )
Signature:
-----------------------------
Name:
Designation:
-9-
<PAGE> 27
Signature:
-----------------------------
Name:
Designation:
-10-
<PAGE> 28
CERTIFICATE OF CORRECTNESS
I,
------------------------------------------------------------------------------
a duly authorised officer of the Jurong Town Corporation, under Section 31 of
the Jurong Town Corporation Act (Cap 150) for and on behalf of the Lessor hereby
certify that this instrument is correct for the purposes of the Land Titles Act.
--------------------------------------------
Signature of Authorised Officer
I,
------------------------------------------------------------------------------
the Solicitor for the Lessee hereby certify that this instrument is correct for
the purposes of the Land Titles Act.
--------------------------------------------
Signature of Solicitor
-11-
<PAGE> 29
ML I/30809F
OFFICE USE ONLY
----- -------------- ---
THE LAND TITLES ACT
(CHAPTER 157)
----- -------------- ---
$
-------------------- ---
M E M O R A N D U M
To the Registrar of Titles
on behalf of THE JURONG TOWN CORPORATION, a body corporate incorporated under
the Jurong Town Corporation Act and having its office at Jurong Town Hall,
Jurong Town Hall Road, Singapore, the Registered proprietor.
I, GLORIA ONG SIEW CEOO, certify that this memorandum (comprising seven pages),
contains the provisions which are deemed to be incorporated in any instrument in
which the abovementioned corporation is named as a lessor and such instrument
has reference to this memorandum.
<TABLE>
<S> <C>
Signature
Authorised Officer
- ---------------------------------------------
Filed in the REGISTRY OF TITLES
LODGED BY :
ON 26TH JUNE, 1990
JURONG TOWN CORPORATION
JURONG TOWN HALL
JURONG TOWN HALL ROAD
SINGAPORE 2260 REGISTRAR OF TITLES
- ---------------------------------------------
</TABLE>
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<PAGE> 30
SPECIAL COVENANTS AND CONDITIONS
1 The Lessee hereby covenants with the Lessor as follows:-
(i) To pay the yearly rent hereinbefore reserved on the days and
in the manner appearing in the addendum.
(ii) To pay unto the Lessor on demand by way of additional rent a
sum equal to all such sums as the Lessor may from time to time
pay for insuring and keeping insured the demised premises
against loss or damage by fire in case the Lessee shall make
default in insuring and keeping insured the demised premises
pursuant to the covenant in that behalf hereinafter contained
PROVIDED ALWAYS THAT nothing herein shall render it obligatory
on the part of the Lessor to insure and keep insured the
demised premises or any part thereof.
(iii) To pay all rates, taxes, assessments and outgoings whatsoever
which now are or which at any time hereafter during the said
term may be imposed or charged upon or in respect of the
demised premises or any part thereof.
(iv) To repair and keep in tenantable repair the demised premises
and every part thereof throughout the said term.
(v) To pay a reasonable proportion of the expense of constructing
repairing rebuilding and cleansing all party walls fences
sewers drains pipes water-courses and other things the use of
which is common to the demised premises and the occupiers of
any adjoining or neighbouring premises and such proportion in
the case of a dispute shall be conclusively determined by the
Lessor's surveyor for the time being.
(vi) To permit the Lessor and his surveyors or agents with or
without workmen or others during the said term at reasonable
times in the day-time to enter upon the demised premises and
every part thereof to examine the state and condition of the
same and of defects decays and wants of reparations and of all
breaches of covenant there found and the Lessor may thereupon
serve on the Lessee notice in writing by leaving the same at
or on the demised premises to or for the Lessee to make good
the same within such reasonable time as specified in such
notice.
(vii) To perform and observe all the obligations which the Lessor of
the demised premises may be liable to perform or observe
during the term hereby created by any direction or requirement
of any governmental or statutory authority and if the Lessee
shall fail to observe or perform this covenant the Lessor may
in its absolute discretion perform the same and all expenses
and costs incurred thereby shall be recoverable from the
-1-
<PAGE> 31
Lessee as a debt PROVIDED ALWAYS THAT the Lessor shall not be
liable to the Lessee for any loss damage or inconvenience
caused thereby.
(viii) Not to make or cause to be made any addition or alteration
affecting the elevation external structure or stability of the
demised premises or any part thereof without the prior written
consent of the Lessor and the relevant governmental and
statutory authorities PROVIDED THAT on the granting of such
consent and without prejudice to other terms and conditions
which may be imposed the Lessee shall give to the Lessor
security that the proposed addition alteration or rebuilding
will in fact be carried out within a reasonable time.
(ix) Forthwith to insure and keep insured the demised premises
against loss or damage by fire to the full value thereof with
a well established insurance company approved by the Lessor
and to make all payments necessary for that purpose within
seven days after the same shall become payable and upon
reasonable notice to produce to the Lessor the policy or
policies of such insurance and the receipts for all such
payments.
(x) As often as the demised premises or any part thereof shall be
destroyed or damaged as aforesaid forthwith to cause all
monies received by virtue of such insurance to be laid out in
rebuilding and reinstating the same in accordance with the
plans and specifications approved by the Lessor and in
accordance with the existing laws, bye-laws, regulations and
planning schemes of every relevant governmental and statutory
authority prevailing at the time, and in case the monies so
received shall be insufficient for that purpose then to make
up the deficiency out of his own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence and
be completed within the period specified by the Lessor.
(xi) Not to demise assign mortgage let sublet or underlet or grant
a licence or part with or share the possession or occupation
of the demised premises in whole or in part without first
obtaining the consent of the Lessor in writing. The
restrictions contained in Section 17 of the Conveyancing and
Law of Property Act (Chapter 61) shall not apply. In addition,
the Lessor may in its absolute discretion in giving the
consent require, inter alia, that the fixed investment
criteria be met and due proof thereof be shown within such
period of time as the Lessor may stipulate, and in the event
of the non-observance thereof, the Lessor shall be entitled to
exercise its rights under Clause 3(c) herein.
(xii) Within six months of the devolution of the interest of the
Lessee not perfected by an assent to, give notice thereof in
writing with particulars
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<PAGE> 32
thereof to the Lessor and produce to the Lessor such
documentary evidence as may be required by the Lessor.
(xiii) Not to use the demised premises or any part thereof for any
illegal or immoral purpose and not to do or permit or suffer
to be done upon the demised premises anything which in the
opinion of the Lessor may be or become a nuisance annoyance or
cause damage or inconvenience to the Lessor or his lessees or
the occupiers of any adjoining or neighbouring premises or
whereby any insurance for the time being effected on the
demised premises may be rendered void or voidable or be in any
way affected.
(xiv) Not without the prior consent in writing of the Lessor to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon any part
of the exterior of the demised premises or of the external
rails or fences thereof any nameplate signboard placard poster
or other advertisement or hoarding.
(xv) To make reasonable provision against and be responsible for
all loss injury or damage to any person or property including
that of the Lessor for which the Lessee may be held liable
arising out of or in connection with the occupation and use of
the demised premises and to indemnify the Lessor against all
proceedings claims costs and expenses which he may incur or
for which he may be held liable as a result of any act neglect
or default of the Lessee his servants contractors
subcontractors or agents.
(xvi) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Lessor in
respect of any arrears of rent or other outstanding sums due
and payable under this Lease from the due dates thereof until
payment in full is received by the Lessor.
(xvii) At the termination, by expiry or otherwise, of the term hereby
created, to yield up the demised premises to the Lessor in
tenantable repair in accordance with the Lessee's covenants
herein contained PROVIDED THAT, if so required by the Lessor
and upon notice thereof, the Lessee shall remove the fixtures
and fittings, or any part thereof, as may be specified by the
Lessor and reinstate the demised premises to the satisfaction
of the Lessor and if the Lessee shall fail to observe or
perform this covenant the Lessor shall execute such works and
recover the costs thereof from the Lessee as a debt.
(xviii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants to the requirements and satisfaction of the Lessor
PROVIDED THAT in the event of default by the Lessee under this
covenant the Lessor may carry out such
-3-
<PAGE> 33
remedial measures as he thinks necessary and all costs and
expenses incurred thereby shall forthwith be recoverable from
the Lessee as a debt.
(xix) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the demised premises in respect of
the operations business, trade or industry carried out or
conducted therein which shall contravene the provisions of any
laws, bye-laws, orders, rules or regulations now or hereafter
affecting the same but at his own cost and expense to comply
with all such provisions and at all times hereafter to
indemnify and keep indemnified the Lessor against all actions,
proceedings, costs, expenses, claims, fines, losses, penalties
and demands in respect of any act matter or thing done or
omitted to be done in contravention of the said provisions.
(xx) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection
with the preparation stamping and issue of this Lease and any
prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Lease.
(xxi) To pay all costs and fees legal or otherwise including costs
as between solicitor and client in connection with the
enforcement of the covenants and conditions herein.
(xxii) To pay to the Lessor all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities and other relevant
governmental and statutory authorities for the survey of the
demised premises for the purpose of sub-division of the land
of which the demised premises forms part and issue of this
Lease and a Certificate of Title PROVIDED THAT the Lessor
shall have the right to employ his own surveyor to carry out
the said survey in which event the Lessee shall bear all costs
thereby incurred.
(xxiii) At his own cost to take such steps and execute such works upon
the demised premises as may be necessary for the protection of
shores and embankments if any and for the prevention of
earthslip erosion of soil and failure of slopes expeditiously
in a workmanlike manner and to the satisfaction of the Lessor.
(xxiv) To construct an internal drainage system within the demised
premises to the satisfaction of the Lessor to ensure that all
surface water collected thereon is discharged into the public
drains.
(xxv) Not to effect a change of name except with the prior consent
in writing of the Lessor PROVIDED THAT on every change of name
the Lessee
-4-
<PAGE> 34
shall pay to the Lessor a fee to be specified by the Lessor in
relation to such consent.
(xxvi) To perform and observe the covenants on the Lessor's part
contained in the Head Lease made between the President of the
Republic of Singapore and the Lessor so far as they are not
varied herein and to keep the Lessor indemnified against all
claims damages costs and expenses in any way relating thereto.
(xxvii) To maintain the demised premises and every part thereof in a
neat and tidy condition, and forthwith to comply with the
Lessor's direction to remove and clear any materials, goods or
articles of whatever nature and description from the demised
premises or such part thereof as may be stipulated in writing
by the Lessor.
(xxviii) At his own cost to plant and maintain trees and landscape the
demised premises in accordance with all the requirements of
the Parks and Recreation Department, Ministry of National
Development and other relevant governmental and statutory
authorities.
(xxix) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the
service or use of any communication system or affects the
operation of other equipment, installations, machinery,
apparatus or plants of other Lessees in connection therewith,
to allow the Lessor or any authorised person to inspect at all
reasonable times, such installation, machine or apparatus in
the demised premises to determine the source of the
interference or disturbance and thereupon, to take suitable
measures, at the Lessee's own expense, to eliminate or reduce
such interference or disturbance to the Lessor's satisfaction,
if it is found by the Lessor or such authorised person that
the Lessee's electrical installation, machine or apparatus is
causing or contributing to the said interference or
disturbance.
(xxx) To indemnify the Lessor against each and every claim,
proceeding, action, loss, penalty, damage, expense, cost and
demand which may arise in connection with clause (xxix) above.
(xxxi) At the Lessee's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and
satisfaction of the Lessor and other relevant governmental and
statutory authorities.
-5-
<PAGE> 35
(xxxii) Subject to that clause in the Special Covenants and Conditions
of this Lease which stipulates the specific use the Lessor
permits for the demised premises, the Lessee shall use and
shall ensure that at least sixty per centum (60%) of the total
floor area of the demised premises shall be used for purely
industrial activities, and may use the remaining floor area
for ancillary stores and offices, neutral areas, communal
facilities and such other uses as may be approved in writing
by the Lessor and the relevant governmental and statutory
authorities PROVIDED THAT the said ancillary offices shall not
exceed twenty-five per centum (25%) of the total floor area
AND PROVIDED FURTHER THAT the Lessee shall not use and occupy
the demised premises for the purpose of commercial office and
storage unrelated to the Lessee's approved industrial
activity.
(xxxiii) If the Lessee shall at any time be found to have encroached
upon any area beyond the boundaries of the demised premises,
the Lessee shall at his own cost and expenses, but without
prejudice to any other right or remedy the Lessor may have
against him, immediately or within the time specified (if any)
by the Lessor rectify and remove the encroachment to the
satisfaction of the Lessor and pay to the Lessor such
compensation as may be specified by the Lessor. If, however,
the Lessor in his absolute discretion permits the Lessee to
regularise and retain the encroached area or any part thereof
upon such terms and conditions as may be stipulated by the
Lessor and any other relevant governmental and statutory
authorities, the Lessee shall pay land rent on the encroached
area with retrospective effect from the date of commencement
of the term hereby created, and the Lessee shall also pay all
survey fees, amalgamation fees, legal fees (including
solicitor and client costs and expense), and all other costs
and charges relating thereto.
(xxxiv) If any damage of whatsoever nature or description shall at any
time occur or be caused to the demised premises or any part
thereof, to forthwith give to the Lessor written notice of the
damage and to remedy the damage to the satisfaction of the
Lessor within such time as the Lessor may specify, all at the
cost of the Lessee.
(xxxv) Not to keep or permit to be used or stored in the demised
premises or any part thereof any materials of a dangerous or
explosive nature without the prior consent in writing of the
Lessor and to keep the Lessor indemnified against all damages
claims and action caused by the use of storage of such
materials whether or not the same is done with the consent of
the Lessor.
2 The Lessor hereby covenants with the Lessee that the Lessee paying the
rent hereinbefore reserved and performing and observing the covenants conditions
and agreements on the part of
-6-
<PAGE> 36
the Lessee hereinbefore contained shall peaceably hold and enjoy the demised
premises during the term hereby granted without any interruption of or by the
Lessor or any person lawfully claiming through under or in trust for him.
3 PROVIDED ALWAYS and it is hereby agreed between the parties as follows:-
(a) That no estate or interest in the soil of the road and
footpath adjacent to the demised premises is or shall be
deemed to be included in the demise hereinbefore contained.
(b) That the Lessee shall not be entitled to any right of access
of light or air to the demised premises or any part thereof,
which would restrict or interfere with the user of any
adjoining or neighbouring land for building or any other
purpose.
(c) That if the said rent hereby reserved or any part thereof
shall be unpaid for fourteen days after becoming payable
(whether the same shall have been formally demanded or not) or
if any of the covenants or obligations on the part of the
Lessee herein contained shall not be performed or observed or
if any charging order made in respect of the demised premises
shall be enforced by sale or by entry into possession without
the written consent of the Lessor having first been obtained
(Section 17 of the Conveyancing and Law of Property Act shall
also not apply in such event) by the Lessee or by the person
in whose favour the charging order shall have been made, then
and in any such case it shall be lawful for the Lessor or any
person or persons authorised by him in that behalf at any time
thereafter to re-enter upon the demised premises or any part
thereof in the name of the whole and thereupon the term hereby
created shall absolutely determine but without prejudice to
any right of action or remedy of the Lessor in respect of any
breach of any of the covenants or conditions by the Lessee
herein contained PROVIDED THAT if the demised premises have
been assigned by way of mortgage the provisions of this clause
shall not take effect until the Lessor has served upon the
mortgagee a notice in writing that such breach has occurred
and the mortgagee has failed to remedy such breach.
4 In this Lease where the context so requires or permits, words importing
the singular number or the masculine gender include the plural number or the
feminine gender and words importing persons include corporation and vice versa,
the expression "the Lessor" shall include its successors-in-title and assigns,
the expression "the Lessee" shall include its successors-in-title and permitted
assigns (if any), where there are two or more persons included in the
expression "the Lessee" covenants expressed to be made by "the Lessee" shall be
deemed to be made by such persons jointly and severally, and except where
otherwise provided the expression "the demised premises" shall mean the land
hereby demised and all buildings, structures, fixtures and fittings therein.
-7-
<PAGE> 37
BELOW THIS LINE FOR OFFICE USE ONLY
<TABLE>
<S> <C>
- --------------------------------------- ----------------------------------------
Special Remarks Endorsing Instruction
First Schedule:
Second Schedule:
- --------------------------------------- ----------------------------------------
EXAMINED REGISTERED ON
------------------
Initials of
Signing
Officer
Date: REGISTRAR OF TITLES
- --------------------------------------- ----------------------------------------
</TABLE>
-1-
<PAGE> 38
--------- ------ -------
VML 1 Ver 1
--------- ------ -------
THE LAND TITLES ACT
------------------------
------------------------
(For official use only)
FIRST VARIATION OF MEMORANDUM OF LEASE
LESSOR
<TABLE>
<S> <C>
- -------------------------------- -----------------------------------------------
Name: JURONG TOWN CORPORATION
- -------------------------------- -----------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and having its
office at Jurong Town Hall, 301 Jurong Town
Hall Road, Singapore 2260.
- -------------------------------- -----------------------------------------------
</TABLE>
AUTHORISED OFFICER OF LESSOR
<TABLE>
<S> <C>
- -------------------------------- -----------------------------------------------
Name: GLORIA ONG SIEW CHOO
- -------------------------------- -----------------------------------------------
</TABLE>
I, the abovementioned authorised officer of the Lessor, certifies that in any
instrument of the Lessor's in which both the Memorandum of Lease filed in the
Land Titles Registry as No 1/30809F (hereinafter referred to as "ML I/30809F")
and the variation of Memorandum of Lease have reference:
(a) the following Easement provisions set out in Schedule herein shall be
inserted in addition to the clause incorporated in ML I/30809F;
(b) the following sub-clause(s) as set out in SCHEDULE II shall be in
substitution of the sub-clauses incorporated 1 clause 1 and clause 3
contained in ML 1/30809F and more particularly set out in SCHEDULE III; and
(c) the following sub-clauses as set out in Schedule IV shall be inserted in
addition to the sub-clauses in clause contained in ML 1/30809F.
<PAGE> 39
SCHEDULE I - Easement
EASEMENT: RESERVING TO THE LESSOR, and all others to whom the Lessor has granted
or may grant, as appurtenant to each and every premises adjoining and
neighbouring the demised premises which are capable of so enjoying, a
free and uninterrupted RIGHT OF PASSAGE AND RUNNING of water soil
electricity power gas telephone communication and other services from
the adjoining and neighbouring premises thereon through or by means of
sewers drains pipes channels wires cables and ducts upon over or under
the demised premises and to make connections with such sewers drains
pipes channels wires cables and ducts or any of them for the purpose
of exercising the said right of passage and of running the aforesaid
services upon over or under the demised premises herein AND all other
easements, ancillary rights and obligations as are or may be implied
by the Land Titles Act (Cap 157).
SCHEDULE II - Replacement sub-clauses
1 (x) As often as any building or structure on the demised premises
or any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies
received by virtue of such insurance to be laid out in
rebuilding and reinstating the same to the satisfaction of the
Lessor and in accordance with the plans and specifications
approved by the Lessor and in accordance with the laws,
bye-laws regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time,
and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of his own
monies PROVIDED THAT the rebuilding and reinstatement shall in
any event commence and be completed within the period
specified by the Lessor.
(xxv) Subject always to clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change.
3 (c) That if the said rent hereby reserved or any other sums due under this
Lease, or any part thereof shall be unpaid for fourteen days after
becoming payable (whether the same shall have been formally demanded or
not) or if any of the covenants or obligations an the part of the Lessee
herein contained shall not be performed or observed or if any charging
order writ of seizure and sale or its equivalent made in respect of the
demised premises shall be enforced by sale or by entry into possession
without the written consent of the Lessor having first been obtained
(Section 17 of the Conveyancing and Law of Property Act shall also not
apply in such event) by the Lessee or by the person in whose favour the
charging order writ of seizure and sale or its equivalent shall have
been made, then and in any such case it shall be lawful for the Lessor
or any person or persons authorised by him in that behalf at any time
thereafter to re-enter upon the
-2-
<PAGE> 40
demised premises or any part thereof in the name of the whole and
thereupon the term hereby created shall absolutely determine but without
prejudice to any right of action or remedy of the Lessor in respect of
any breach of any of the covenants or conditions by the Lessee herein
contained PROVIDED THAT if the demised premises have been assigned by
way of mortgage the provisions of this clause shall not take effect
until the Lessor has served upon the mortgagee a notice in writing that
such breach has occurred and the mortgagee has failed to remedy such
breach.
SCHEDULE III - Previous sub-clauses
1 (x) As often as the demised premises or any part thereof shall be destroyed
or damaged as aforesaid forthwith to cause all monies received by virtue
of such insurance to be laid out in rebuilding and reinstating the
same in accordance with the plans and specifications approved by the
Lessor and in accordance with the existing laws, bye-laws regulations
and planning schemes of every relevant governmental and statutory
authority prevailing at the time, and in case the monies so received
shall be insufficient for that purpose then to make up the deficiency
out of his own monies PROVIDED THAT the rebuilding and reinstatement
shall in any event commence and be completed within the period specified
by the Lessor.
(xxv) Not to effect a change of name except with the prior consent in writing
of the Lessor PROVIDED THAT on every change of name the Lessee shall pay
to the Lessor a fee to be specified by the Lessor in relation to such
consent.
3 (c) That if the said rent hereby reserved or any part thereof shall be
unpaid for fourteen days after becoming payable (whether the same shall
have been formally demanded or not) or if any of the covenants or
obligations on the part of the Lessee herein contained shall not be
performed or observed or if any charging order made in respect of the
demised premises shall be enforced by sale or by entry into possession
without the written consent of the Lessor having first been obtained
(Section 17 of the Conveyancing and Law of Property Act shall also not
apply in such event) by the Lessee or by the person in whose favour the
charging order shall have been made, then and in any such case it shall
be lawful for the Lessor or any person or persons authorised by him in
that behalf at any time thereafter to re-enter upon the demised premises
or any part thereof in the name of the whole and thereupon the term
hereby created shall absolutely determine but without prejudice to any
right of action or remedy of the Lessor in respect of any breach of any
of the covenants or conditions to the Lessee herein contained PROVIDED
THAT if the demised premises have been assigned by way of mortgage the
provisions of this clause shall not take effect until the Lessor has
served upon the mortgagee a notice in writing that such breach has
occurred and the mortgagee has failed to remedy such breach.
-3-
<PAGE> 41
SCHEDULE IV - Additional sub-clauses
1 (xxxvi) At the Lessee's own cost and expense and subject to the
Lessor's prior written approval, to execute such works as may
be deemed necessary by the Lessee in respect of the state and
condition of the demised premises (especially its ground
levels topography and soil condition) which state an,
condition the Lessee shall be deemed to have full knowledge.
(xxxviii) Not to keep or allow to be kept any livestock or other animals
at the demised premises or any part thereof.
(xxxviii) At the Lessee's own cost, to properly install and maintain
exit lightings and exit signs at staircases, exit passageways
and exits of the demised premises in accordance with all
requirements of the Building Control Division.
(xxxix) To forthwith install and at all times to properly maintain
sufficient emergency lighting in the product ion area of the
demised premises in accordance with all requirements of the
Fire Services Bureau and to liaise directly with the Fire
Services Bureau in relation thereto, and in the event that any
alteration or addition to the demised premises shall thereby
be necessary, then to obtain the prior written consent of the
Lessor and the relevant governmental and statutory authorities
in accordance with Clause l(viii) of ML I/30809F, all at the
cost of the Lessee.
(xl) without prejudice to the generality of Clauses 1(iii) and
1(vii) of ML I/30809F, the rent and other taxable sums payable
by the Lessee under or in connection with this lease shall be
exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any government, statutory or tax
authority calculated by reference to the amount of rent and
any other taxable sums received or receivable by the Lessor
from the Lessee and which tax is payable by the Lessee. The
Lessee shall pay the tax and the Lessor acting as the
collecting agent for the government, statutory or tax
authority shall collect the tax from the Lessee together with
the rent hereinbefore reserved without any deduction and in
advance without demand on the 1st day of each of the months of
January, April, July and October, and in the manner and within
the period prescribed in accordance with the applicable laws
and regulations.
DATE OF APPLICATION: 4th day of May 1995
-4-
<PAGE> 42
EXECUTION BY THE AUTHORISED OFFICER:
-----------------------------
GLORIA ONG SIEW CHOO
Witness:
-----------------------------
ANNIE NG KIN MUI nee AU
LODGED BY:
<TABLE>
<S> <C>
- ------------------------- ------------------------------------------------------
Name: JURONG TOWN CORPORATION
- ------------------------- ------------------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and having its
office at Jurong Town Hall, 301 Jurong Town
Hall Road, Singapore 2260.
- ------------------------- ------------------------------------------------------
</TABLE>
-5-
<PAGE> 1
EXHIBIT 10.32
Legal Department
JTC(LG)3729/1220 PT 1 Vol 5/SY/ZMY
FIRST SUPPLEMENTARY AGREEMENT
Between
JURONG TOWN CORPORATION
And
SINGAPORE TECHNOLOGIES PTE LTD
Relating to:
Private Lots A12787(a) Mukim 13
in Woodlands Industrial Park D
<PAGE> 2
FIRST SUPPLEMENTARY AGREEMENT
PRIVATE LOT A12787(a) IN WOODLANDS INDUSTRIAL PARK D
THIS AGREEMENT is made the 7th day of October 1998 BETWEEN the JURONG
TOWN CORPORATION a body corporate incorporated under the Jurong Town
Corporation Act and having its Head Office at Jurong Town Hall, Jurong Town Hall
Road, Singapore 609431 (hereinafter called "the Owner") of the one part and
SINGAPORE TECHNOLOGIES PTE LTD a company incorporated in Singapore and having
its registered office at
83 Science Park, $01-01/02 The Curie,
Singapore Science Park, Singapore 118258
(hereinafter called "the Licensee") of the other part.
WHEREAS:
(A) By a Building Agreement dated 17 February 1998 (hereinafter called
"the Principal Agreement") made between the same parties as the parties herein
and in the same order under which the Owner granted to the Licensee the
licence and authority to enter upon all that piece of land known as Private Lot
A12787(a) as shown edged on the plan annexed to the Principal Agreement
(hereinafter called "the property") for the purpose and upon the terms and
conditions set out therein.
(B) By its letters dated the 20th and 29th day of June 1998, the Owner has
agreed to revise the amount of liquidated damages payable upon premature
termination or re-entry of the property as contained in the Principal Agreement.
(C) This Agreement is supplemental to the Principal Agreement.
IT IS HEREBY AGREED to vary the Principal Agreement as follows:
1 That Clause 3(e) appearing at page 9 contained in the form of Lease in
the First Schedule of the Principal Agreement shall be deleted and is hereby
substituted therefor as follows:
<PAGE> 3
- 2 -
"3(e) Subject to clause 3(f) hereinafter appearing in the event that
premature termination shall occur at any time within eight (8) years
from the commencement of the said term of lease herein created or if
the Lessor shall at any time within the said eight (8) years exercise
its right of re-entry under clause 3(c) of ML I/30809F then in
addition to rent, interest, property tax and other sums payable by
the Lessee to the date of premature termination or re-entry as the
case may be, liquidated damages for a proportionate amount of the sum
of $17.7 million in the same proportion as the land area of the
portion of the demised premises subject to premature termination or
re-entry (as the case may be) bears in relation to the total land
area of Private Lots A12787, A12787(a) and A12787(b) together ("the
said sum") shall be payable and paid by the Lessee to the Lessor and
it is acknowledged and agreed by the Lessee that the said sum shall
constitute liquidated damages and shall not be considered under any
circumstances as a penalty."
SAVE as herein varied the Principal Agreement shall remain in full force
and effect in all respects.
<PAGE> 4
- 3 -
IN WITNESS WHEREOF the parties hereto have set their hands and/or seals
the day and year first above written.
SIGNED on behalf of )
)
JURONG TOWN CORPORATION )
)
By: ) /s/ GOH TIEN JIN
GOH TIEN JIN )
Director )
CUSTOMER SERVICES GROUP )
)
in the presence of: )
/s/ SARA YIK
----------------------------
SARA YIK
The Common Seal of )
)
SINGAPORE TECHNOLOGIES PTE LTD )
)
was hereunto affixed ) [SEAL]
)
in the presence of: )
)
Signature: /s/ HO CHING
------------------------------
Name: HO CHING (MS)
Designation: Director/President & CEO
Signature: /s/ CHUA SU LI
------------------------------
Name: CHUA SU LI (MRS)
Designation: Company Secretary
<PAGE> 5
-4-
I, CHIA CHOON YANG, an Advocate and Solicitor of the Supreme Court of
Singapore hereby certify that on the 7th day of October 1998 the Common seal of
SINGAPORE TECHNOLOGIES PTE LTD was duly affixed to the within written
instrument at Singapore in my presence in accordance with the regulations of
the said Company which regulations have been produced and shown to me.
WITNESS my hand this 7th day of October 1998:
/s/ CHIA CHOON YANG
---------------------------
Advocate and Solicitor
Singapore
Chia Choon Yang
<PAGE> 1
EXHIBIT 10.33
Legal Department
JTC(LG)3729/1220 Pt 1 /SY/ZMY
BUILDING AGREEMENT
Between
JURONG TOWN CORPORATION
AND
SINGAPORE TECHNOLOGIES PTE LTD
relating to:
Private Lot A12787(b)
Woodlands, Industrial Park D
Mukim No. 13 Sembawang
Area: 7,015 Square Metres
<PAGE> 2
BUILDING AGREEMENT FOR LAND
AT PRIVATE LOT A12787(b) IN WOODLANDS INDUSTRIAL PARK D
(INLAND)
THIS AGREEMENT is made the 17th, day of February 1998 BETWEEN JURONG
TOWN CORPORATION a body corporate incorporated under the Jurong Town Corporation
Act and having its Head Office at Jurong Town Hall, Jurong Town Hall Road,
Singapore (hereinafter called "the Owner" which expression shall include its
successors-in-title and assigns) of the one part AND SINGAPORE TECHNOLOGIES PTE
LTD a company incorporated in Singapore and having its registered office at
83 SCIENCE PARK DRIVE, #01-01/02 THE CURIE,
SINGAPORE SCIENCE PARK, SINGAPORE 118258
(hereinafter called "the Licensee" which expression shall include its
successors-in-title) of the other part.
WHEREBY IT IS AGREED as follows:-
1 For the period of three (3) years from the 16th day of November 1995
(hereinafter referred to as "the date hereof") or for such further period as may
be extended by the Owner the Licensee shall have the Licence and authority to
enter upon all that piece of land known as Private Lot A12787(b) forming part of
Government Survey Lot 3065V, Mukim No. 13 Sembawang and situated in the Republic
of Singapore as shown on the plan annexed hereto and estimated to contain an
area of 7,015 square metres more or less subject to survey (hereinafter called
"the said land") for the construction of factory buildings and other structures
therein and for the installation of equipment fixtures and fittings thereat for
the purpose of ancillary services such as car-parking lots, process water
treatment tank, electrical sub-station and pump house only in accordance with
the stipulations hereinafter contained and for no other purpose whatsoever.
2 The Licensee hereby agrees to perform and observe the following stipulations:-
(i) To hold the said land until the same shall be comprised in a
lease to be granted as hereinafter provided as licensee upon
the same terms relating to the lease referred to in clause
2(ii) herein at the same rent and subject to the same
covenants and stipulations so far as applicable as if a lease
thereto has been actually granted and so that the Owner shall
have all the remedies by whatsoever means for rent in arrears
that are incidental to the relationship of landlord and tenant
but so that nothing herein contained shall be construed as
creating a legal demise or any greater interest in the licence
than a tenancy at will.
(ii) To pay in advance as from the date hereof a licence fee
calculated at the same rate and on the dates specified as for
the rent reserved in the lease of the said land set out in the
First Schedule hereto as if such lease has actually been
granted.
1
<PAGE> 3
(iii) To pay on the Owner's behalf to the Comptroller of Property
Tax an amount equivalent to the sum payable by the Owner as
property tax in respect of the said land, improvements and
structures thereon during the said period or of such extended
period (if any) permitted under clause 3(c) hereof by way of
additional licence fee or for the period prior to the issue of
the lease to be granted under clause 4 herein.
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Owner in
respect of any outstanding amount payable by the Licensee
under this Agreement from the date such amount becomes due
until payment in full is received by the Owner.
(v) To pay to the Owner all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities for the survey of the said
land for the purpose of sub-division of the land of which the
said land forms part and the preparation and issue of a
Certificate of Title PROVIDED THAT the Owner shall have the
right to employ his own surveyor to carry out the said survey
in which event the Licensee shall bear all costs incurred.
(vi) At his own cost and expense -
(a) to engage a professional engineer to carry out soil
investigations to advise on the soil conditions and
to design structurally sound buildings proposed to be
erected taking into consideration the condition of
the said land; and
(b) to execute such work as may be required to be done in
respect of the state and condition of the said land
(especially its ground levels, topography and soil
conditions) which state and condition the Licensee
shall be deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the date hereof firstly to the Owner for
his approval and then to the relevant Government Planning and
Building Authorities full and complete plans elevations and
specifications of the buildings proposed to be erected on the
said land in accordance in every way with the requirements
under the Planning Act and the Local Government Integration
Act PROVIDED THAT the Owner may give or refuse his approval at
his absolute discretion.
(viii) At his own cost to commence erection on the said land either
within six (6) months from the date hereof or within one (1)
month from the date of approval of the plans by the relevant
Government Building Authorities, whichever is the earlier, and
in a substantial and workman-like manner with the best
materials of their available kinds and in conformity in every
respect with the plans, elevations, sections and
specifications approved by the Owner and the relevant
Government Building Authorities to finish the
-2-
<PAGE> 4
factory buildings, structures and other appurtenances
including the installations of all equipment, fixtures and
fittings so as to be completely fit for immediate occupation
and operation within the said period of three (3) years from
the date hereof PROVIDED ALWAYS THAT in the planning,
erection, construction and completion of the said buildings,
to develop to an average gross plot ratio on Private Lots
A12787, A12787(a), A12787(b), A12787(d) and any other land
occupied by the Licensee within Woodlands Industrial Park D
together of not less than 0.6 and not more than 1.4 and in the
event that the aforesaid average gross plot ratio exceeds 1.4
the Licensee shall at his own cost and expense be responsible
for all development charges/differential premium and any other
charges that may be payable in consequence thereof AND
PROVIDED FURTHER THAT the Licensee shall not install or use
any electrical installation, machine or apparatus that may
cause or causes heavy power surge, high frequency voltage and
current, air borne noise, vibration or any electrical or
mechanical interference or disturbance whatsoever which may
prevent or prevents in any way the service or use of any
communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of
other Licensees.
(ix) At his own cost to take such steps and execute such works upon
the said land as may be necessary for the protection of shores
and embankments if any and for the prevention of earth-slip
erosion of soil and failure of slopes expeditiously in a
workman-like manner and to the satisfaction of the Owner and
other relevant governmental and statutory authorities.
(x) If the Licensee shall fail to complete the said buildings
works and installations and to commence operations within the
period specified in clause 2(viii) or within any extended
period under clause 3(c) hereof the Licensee shall pay to the
Owner a sum calculated at the rate of $200.00 per day as
liquidated damages for the period during which the said
buildings shall so remain or have remained incomplete.
(xi) To remove and replace any materials brought on the said land
or used in any of the said buildings works or installations
which the Owner shall require to be removed as being inferior
or unfit and to make good any workmanship which he shall
consider imperfect and if the Licensee fails to remedy such
defects the Owner may enter upon the said land and remedy such
defects at the expense of the Licensee after expiry of
fourteen (14) days' notice being given to the Licensee to do
so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than those
conforming with the plans elevations sections and
specifications approved by the Owner and the relevant
Government Building Authorities nor to make any alterations in
the external elevation of any of the said buildings when
erected without the prior consent in writing of the Owner.
-3-
<PAGE> 5
(xiii) In the erection and completion of the said buildings,
structures and installations to do all acts and things
required by and to perform the works in conformity with all
respects with the provisions of any laws or regulations made
thereunder and to pay and keep the Owner indemnified against
all claims and other payments whatsoever which during the
progress of the works may become payable in respect of the
said works or of anything done under the authority herein
contained and from time to time to discharge and pay all
claims, assessments and outgoings now or at any time hereafter
be chargeable against the Owner under any law or otherwise in
regard to the said land, the said buildings or any structures
or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the said
land or any part thereof anything which in the opinion of the
Owner may be or become a nuisance or annoyance or cause damage
or inconvenience to the Owner or to the Licensees or occupiers
of any adjoining or neighbouring premises or whereby any
insurance for the time being effected on the premises under
sub-clause (xix) herein may be rendered void or voidable or be
in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand from
the said land or permit or suffer any of the same to be
removed except so far as shall be necessary for the execution
of the said works PROVIDED nevertheless that the Licensee may
use for the purpose of the said works any of the approved
materials if so required.
(xvi) Not without the prior consent in writing of the Owner to
remove or permit or suffer to be removed until after
completion of the said buildings in accordance with the
provisions herein contained any building materials (other than
inferior or unfit materials removed for the purpose of being
replaced by proper materials) or plant which shall be brought
upon the said land for the purpose of the said works.
(xvii) Not without the prior consent in writing of the Owner to affix
or exhibit or erect or paint or permit or suffer to be affixed
or exhibited or erected or painted on or upon any part of the
exterior of the said land or of the external walls or rails or
fences thereof any nameplate, signboard, placard, poster or
other advertisement or hoarding.
(xviii) Not at any time to deposit or make up or manufacture or permit
or suffer to be deposited made up or manufactured upon the
said land any building or other materials except such as shall
be actually required for the buildings to be erected on the
said land in accordance with this Agreement and as soon as the
buildings hereinbefore agreed to be erected shall be completed
at his own expense to remove from the road or footpath
adjoining the said land or the ground intended to be used for
such road or footpath all building and other materials and
waste whatsoever.
-4-
<PAGE> 6
(xix) As soon as any of the said buildings shall have reached a
height of five (5) feet above ground level to insure the same
to the full value thereof in the joint names of the Owner and
the Licensee against loss or damage by fire in some insurance
office approved by the Owner and shall increase such insurance
proportionately as the said buildings approach completion and
to keep the same so insured until a lease shall be granted as
hereinafter provided and to pay all premiums thereof at least
seven (7) days before the expiry date of such insurance policy
and to produce to the Owner or his agent without demand the
policy or policies of such insurance and the receipt for each
such payment and in the event the said buildings or any part
thereof are destroyed or damaged by fire then to forthwith
give to the Owner written notice of such destruction or damage
and to forthwith cause all monies received by virtue of any
such insurance to be forthwith laid out in rebuilding and
reinstating the buildings to the satisfaction of the Owner and
to make up any deficiency thereof out of his own monies, but
the rebuilding and reinstatement shall in any event commence
and be completed within the period specified by the Owner
PROVIDED ALWAYS THAT if the Licensee shall at any time fail to
keep the premises insured as aforesaid the Owner may without
being under any obligation to do so do all things necessary to
effect or maintain such insurance and any monies expended by
him for that purpose shall be repayable by the Licensee on
demand and be recovered forthwith from the Licensee as a debt
PROVIDED FURTHER THAT NOTWITHSTANDING THE COVENANT CONTAINED
IN THIS CLAUSE 2(XIX), THE LICENSEE MAY EXERCISE THE OPTION
NOT TO REBUILD OR REINSTATE THE BUILDINGS SUBJECT TO THE
FOLLOWING CONDITIONS:-
(c) WITHOUT PREJUDICE TO CLAUSE 3(B), THE LICENSEE SHALL
GIVE THE OWNER THREE (3) MONTHS' PRIOR NOTICE IN
WRITING TO PREMATURELY TERMINATE THIS AGREEMENT; AND
(d) THE LICENSEE SHALL FORTHWITH PAY OR CAUSE TO BE PAID
TO THE OWNER (WHOM THE LICENSEE ACKNOWLEDGES TO BE
ENTITLED TO) ALL MONIES RECEIVED BY VIRTUE OF SUCH
INSURANCE.
(xx) Not to assign charge create a trust or agency let sublet or
underlet or grant a licence or part with or share his interest
under this Agreement, or the possession or occupation of the
said land, or any part thereof EXCEPT THAT, subject to the
Owner's prior written consent, which consent shall not be
unreasonably withheld, the Licensee may mortgage or charge his
interest under this Agreement by way of assignment or
debenture (as the case may be) to secure the repayment of such
sum or sums as the Licensee may require for the purpose only
of erecting or completing the building or other structure to
be built on the said land in accordance with the provisions of
this Agreement PROVIDED THAT the Licensee shall thereafter
continue to be liable for the observance and performance of
the several stipulations herein contained until the grant of
the lease as hereinafter provided.
-5-
<PAGE> 7
(xxi) Not to permit or suffer any person to occupy reside or make
use of any building erected on the said land before a final or
a temporary Certificate of Fitness for Occupation has been
issued by or except with the permission of the relevant
Governmental and Statutory authority.
(xxii) To make reasonable provision against and be responsible for
all loss, injury and damage to any person (including loss of
life) or property including that of the Owner for which the
Licensee may be held liable arising out of or in connection
with the occupation and use of the said land and the
structures erected thereon and to indemnify the Owner against
all proceedings, claims, costs and expenses which he may incur
or for which he may be held liable as a result of any act,
neglect or default of the Licensee his servants, contractors,
sub-contractors, or agents or their respective servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the said land to the requirements and
satisfaction of the Owner and other relevant Governmental and
Statutory authorities PROVIDED THAT in the event of any
default by the Licensee under this covenant the Owner may
carry out such remedial measures as he thinks necessary and
all costs and expenses incurred thereby shall be recoverable
forthwith from the Licensee as a debt.
(xxiv) Subject to Clause 2(xx) hereinbefore appearing, to give to the
Owner written notice of every change of name within one month
from the date of each change PROVIDED THAT where there has
been, is or will also be any change in the shareholders of the
Licensee or the number of shares held by each and every
shareholder of the Licensee, the prior written consent in
writing of the Owner shall be obtained which consent if
granted shall be subject to such terms and conditions as the
Owner may require.
(xxv) To construct an internal drainage system to the satisfaction
of the Owner to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxvi) (a) To construct and complete a permanent culvert within
nine (9) months from the date hereof or any extension
thereof as may be approved by the Owner and in
connection thereof to submit plans to and to obtain
the prior approval in writing of the Owner for the
construction of a temporary crossing.
(b) Within one (1) month of the completion of the
permanent culvert mentioned in sub-clause (xxvi) (a)
above to remove the temporary crossing and to
reinstate any roads, roadside kerbs, drains, turfing
or the like damaged by the Licensee, his servants,
contractors, subcontractors, or agents or their
respective servants to the satisfaction of the Owner
and the relevant Governmental and Statutory
authorities.
-6-
<PAGE> 8
(c) Within one (1) month of the completion of the
construction of the said buildings and related civil
works to reinstate any damage caused to the roads,
roadside kerbs, drains, turfing and the said
permanent culvert by the Licensee his servants
contractors or agents or their respective agents to
the satisfaction of the Owner and the relevant
Governmental and Statutory authorities.
(xxvii) To place with the Owner a deposit of $5,000.00 which shall be
forfeited in the event of any breach of any of the provisions
in clause (xxvi) herein without prejudice to the rights and
remedies of the Owner contained in this Agreement and the
Lease.
(xxviii) At his own cost to plant and maintain trees and landscape the
said land in accordance with all the requirements of the Parks
and Recreation Department, Ministry of National Development
and other relevant Governmental and Statutory authorities.
(xxix) At his own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and the
like (if any) to the requirements and satisfaction of the
Owner and other relevant Governmental and Statutory
authorities.
(xxx) If the Licensee shall at any time be found to have encroached
upon any area beyond the allocated boundaries of the said
land, the Licensee shall at his own cost and expense, but
without prejudice to any other right or remedy the Owner may
have against him, immediately or within the time specified (if
any) by the Owner rectify and remove the encroachment to the
satisfaction of the Owner and pay to the Owner such
compensation as may be specified by the Owner. If, however,
the Owner in his absolute discretion permits the Licensee to
regularise and retain the encroached area or any part thereof
upon such terms and conditions as may be stipulated by the
Owner and any other relevant Governmental and Statutory
authorities, the Licensee shall pay licence fee on the
encroached area with retrospective effect from the date
hereof, and the Licensee shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and client
costs and expense), and all other costs and charges relating
thereto.
(xxxi) If any damage of whatsoever nature or description shall at any
time occur or be caused to the said land or any building or
structure or installation thereon, or any part thereof, to
forthwith give to the Owner written notice of the damage and
to remedy the damage to the satisfaction of the Owner within
such time as the Owner may specify, all at the cost of the
Licensee.
(xxxii) Not to keep or allow to be kept any livestock or other animals
on the said land or any part thereof.
-7-
<PAGE> 9
(xxxiii) The licence fees and other taxable sums payable by the
Licensee under or in connection with the licence herein shall
be exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any governmental, statutory or tax
authority calculated by reference to the amount of the licence
fees and any other taxable sums received or receivable by the
Owner from the Licensee and which tax is payable by the
Licensee. The Licensee shall pay the tax and the Owner acting
as the collecting agent for the governmental, statutory or tax
authority shall collect the tax from the Licensee together
with the licence fees hereinbefore reserved without any
deduction and in advance without demand on the 1st day of each
of the months of January, April, July and October, and in the
manner and within the period prescribed in accordance with the
applicable laws and regulations.
(xxxiv) Subject to clause 2(xii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by the Licensee shall not
exceed two (2) metres PROVIDED THAT boundary walls or fences
(if any) shall be erected behind baphia or other hedges
planted on the said land.
(xxxv) Without prejudice to the generality of Clauses 2(xii) and
2(xiii) herein before appearing, the Licensee shall not place,
construct or erect or permit the placing, construction or
erection of any building, structure or equipment whatsoever on
the buffer within the boundary of the said land as shown on
the plan annexed hereto and shall comply with the requirements
of the relevant governmental and statutory authorities
including the Urban Redevelopment Authority and the Building
Control Division of the Ministry of National Development.
(xxxvi) The Licensee accepts the said land in its existing state and
condition and further accepts and confirms that the Owner has
made no representation nor given any assurance as to the
present or future suitability of the said land or its
surrounding or adjacent lands in relation to the Licensee's
use, operations or occupation at the said land.
(xxxvii) Subject always to Clause 2(viii) hereof, to develop the said
land for low rise and low density industrial development
limited to 100 persons per hectare.
(xxxviii) At the Licensee's own cost, at all times, to comply with and
observe the maximum height restriction of 61.0 metres above
Mean Sea Level and any other height restriction(s) on
buildings and structures at the said land as imposed by any
governmental or statutory authority and to ensure that any
height restriction plan(s) which may be furnished to the
Licensee shall at all times be held in strict confidence and
shall not be shown, revealed or copied to or by any person,
contractor, subcontractor, watchman, employee, agent,
representative or any other person except with the prior
written consent of the Owner.
-8-
<PAGE> 10
3 It is hereby mutually agreed that until the Licensee has performed all his
obligations herein contained the Owner shall possess the rights and powers
following:-
(a) The right for himself and his agents with or without workmen
or others at all reasonable times to enter upon the said land
to view the state and progress of the said buildings and works
and to inspect and test the materials and workmanship in
connection therewith and for any other reasonable purpose
including the construction and installation of sewers drains
pipes and cables on or leading from any adjoining or
neighbouring land of the Owner as may be required by the
Owner.
(b) Full right and liberty in case any of the said buildings and
other structures or installations hereby agreed to be erected
be not completed and fit for immediate occupation within the
period hereinbefore limited (time in this respect shall be of
the essence of the contract) and in accordance in every way
with the stipulations hereinbefore contained or in case the
Licensee shall in any other way fail to perform and observe
any of the stipulations on his part herein contained or if any
charging order writ of seizure and sale or its equivalent made
in respect of the said land or any structure thereon shall be
enforced without the written consent of the Owner having first
been obtained by the Licensee or by the person in whose favour
the charging order writ of seizure and sale or its equivalent
shall have been made, to re-enter upon and take possession of
the said land and all buildings structures fixtures plant
material and effects whatsoever thereon with power to hold and
dispose thereof as if this Agreement had not been entered into
and without making to the Licensee any compensation or
allowance for the same and this Agreement shall thereupon
determine but without prejudice to any right of action or
other remedy of the Owner for the recovery of any licence fee
or monies due to him from the Licensee or in respect of any
breach of this Agreement PROVIDED ALWAYS THAT the Owner shall,
in addition, also be entitled to claim and to recover from the
Licensee as a debt, firstly liquidated damages calculated at
and in accordance with the same rates as that stipulated for
liquidated damages in clause 3(e) in the Lease set out in the
First Schedule hereto as if the respective year of the term of
the lease therein referred to the respective year of the said
period of three (3) years or any extended period in which the
Owner exercised its aforesaid right of re-entry under this
Agreement and secondly any sum which the Owner may incur in
connection with the demolition and removal of any building,
structure, fitting, fixture or thing which the Owner may
consider necessary to demolish and remove AND PROVIDED THAT if
the said land has been assigned by way of mortgage the
provisions of this clause shall not take effect until the
Owner has served upon the mortgagee notice in writing
specifying the breach and the mortgagee has failed to remedy
such breach.
(c) PROVIDED nevertheless that notwithstanding any such default as
aforesaid in completing the said buildings and works the Owner
may in his discretion give notice in writing to the Licensee
of his intention not to enforce the
-9-
<PAGE> 11
stipulations herein contained and may fix any extended period
for the completion of the said works in substitution for the
said period of three (3) years hereby fixed for such
completion and thereupon the obligations hereunder of the
Licensee to complete the said works and to accept a lease
hereinafter mentioned shall be taken to refer to such
substituted period.
(d) Without prejudice to the generality of clause 3(b) hereof full
right and liberty in the event that the Licensee has failed to
either:-
(1) develop the said land to the gross plot ratio
specified in clause 2(viii), or
(2) fulfill the investment criterion as stipulated in
Clause 4
with full and absolute discretion to the Owner to either:-
(ii) re-enter upon and take possession of the said land or
any part thereof and all buildings, structures,
fixtures, plant, material and effects whatsoever
thereon with power to hold and dispose thereof as if
this Agreement had not been entered into and without
making to the Licensee any compensation or allowance
for the same and this Agreement shall thereupon
determine but without prejudice to any right of
action or other remedy of the Owner or recovery of
any licence fee or monies due to him from the
Licensee or in respect of any breach of this
Agreement, or
(iii) reduce the term of lease proportionately as the
actual amount invested bears with the required fixed
investment on the said land as stipulated in clause 4
in which event the Licensee shall execute such
documents as the Owner shall deem necessary and in
connection therewith, pay all costs disbursements
fees and charges legal or otherwise as provided in
clause 5.
PROVIDED ALWAYS that if the said land has been assigned by way of
mortgage, the provisions of this sub-clause (d) shall not take effect
until the Owner had served upon the Mortgagee notice in writing
specifying the breach and the Mortgagee has failed to remedy such
breach.
4 If the said buildings and works shall have been completely finished to the
satisfaction of the Owner and the relevant Government Building Authorities (to
be evidenced by their certificates in writing to that effect) within the said
period of THREE (3) YEARS or of such extended period (if any) as aforesaid and
if the Licensee shall have performed and observed all the stipulations herein on
his part contained other than such as may have been waived AS AFORESAID AND IF
THE LICENSEE'S AVERAGE MINIMUM INVESTMENT FOR PRIVATE LOTS A12787, A12787(a) AND
A12787(b) SHALL HAVE BEEN THE SUM OF $1,000/- PER SQUARE METRE OF THE GROSS
FLOOR AREA OF THE BUILDING(S) ON BUILDING AND CIVIL WORKS AND THE SUM OF $500/-
PER SQUARE METRE ON PLANT AND MACHINERY WITHIN THREE (3) YEARS FROM THE 16TH DAY
OF NOVEMBER 1995 (DUE PROOF OF SUCH INVESTMENT TO BE PRODUCED TO THE
SATISFACTION OF OWNER ON OR BEFORE THE 15TH DAY OF MAY 1999) then the
-10-
<PAGE> 12
Owner shall grant and the Licensee shall accept and execute a counter-part of
one good and sufficient lease or sub-lease of the said land and premises
together with the buildings so erected thereon with their appurtenances for the
term of THIRTY (30) YEARS from the 16TH day of FEBRUARY 1994 at the rent and in
the form containing the reservation exceptions covenants conditions and
provisions set forth in the FIRST SCHEDULE hereto with such modifications as
circumstances may render necessary and such other covenants conditions or
stipulations to be performed by the Licensee governing or regulating the use of
the said land as the Owner thinks fit with a view to preserving the value
thereof or protecting the interests of the licensees or occupiers of land or
premises adjacent to the said land from any dangerous or obnoxious or otherwise
harmful activities which may be carried out by the Licensee whether or not such
activities are incidental to the Licensee's trade PROVIDED THAT until such lease
is executed the Licensee shall be deemed to be the Lessee of the said land as
though a lease has been executed at the same rent and subject to the covenants
and conditions contained in the First Schedule hereto so far as the same are
applicable.
5 The Licensee shall pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection with the
preparation stamping and issue of this Agreement and the Lease herein agreed to
be granted and any prior accompanying or future documents or deeds supplemental
collateral or in any way relating to this Agreement and the lease.
6 The Licensee shall pay all costs and fees legal or otherwise, including the
Owner's costs as between solicitor and client, in connection with the
enforcement of the covenants and conditions of this Agreement and the lease.
7 The Licensee may, at any time during the said period of THREE (3) YEARS and
any extensions thereof granted under clause 3(c) terminate this Agreement or
surrender part of the said land by giving to the Owner three (3) months prior
notice in writing, PROVIDED ALWAYS THAT such termination or surrender shall be
without prejudice to any right or remedy which may have or will accrue to the
Owner prior to the expiry of the three (3) months' notice AND PROVIDED FURTHER
THAT the Licensee shall in addition to the licence fee (which at the discretion
of the Owner may be apportioned for the period commencing from the date hereof
up to the date of delivery of vacant possession of the said land or part thereof
to the Owner) survey fees, property tax and other charges specified herein
forthwith pay to the Owner as liquidated damages in accordance with and
calculated at the same rates as that stipulated for liquidated damages in clause
3(e) of the Lease set out in the First Schedule hereto PROVIDED THAT before the
delivery of vacant possession as aforesaid if the Owner shall so desire the
Licensee shall at the cost and expense of the Licensee properly demolish and
remove such building, structure, fixture, fitting or thing as may be stipulated
in writing by the Owner as well as properly render the said land or part thereof
as the case may be to its original state and condition and licence fee and
property tax shall continue to be payable until the same has been completed to
the satisfaction of the Owner PROVIDED ALSO THAT THE LICENSEE SHALL, WITHOUT
PREJUDICE TO CLAUSES 2(VIII) AND 2(XXXV), ENSURE THAT THE SAID LAND AND ANY
OTHER REMAINING LAND OCCUPIED BY THE LICENSEE WITHIN WOODLANDS INDUSTRIAL PARK D
COMPLY WITH THE SETBACK REQUIREMENTS AND OTHER PLANNING REQUIREMENTS AND DO NOT
EXCEED THE AVERAGE MAXIMUM GROSS PLOT RATIO OF 1.4 AFTER THE TERMINATION OR
SURRENDER.
-11-
<PAGE> 13
IN WITNESS WHEREOF the parties hereto have hereunto set their
respective hands or seals the day and year first above written.
SIGNED on behalf of )
)
JURONG TOWN CORPORATION )
)
By : HAN CHIAW JUAN ) /s/ HAN CHIAW JUAN
Director ) -----------------------------
Specialised Parks )
Development Group )
)
in the presence of:- )
/s/ KANNAN MALINI
-----------------------------
KANNAN MALINI
The Common Seal of )
)
SINGAPORE TECHNOLOGIES PTE LTD )
)
was hereunto affixed )
)
in the presence of:- )
SIGNATURE: /s/ HO CHING
-----------------------------
NAME IN FULL: Ho Ching
DESIGNATION: Director
SIGNATURE: /s/ CHUA SU LI
-----------------------------
NAME IN FULL: Chua Su Li
DESIGNATION: Company Secretary
-12-
<PAGE> 14
I, _________________________________, an Advocate and solicitor of the
Supreme Court of Singapore hereby certify that on the day __________ of ________
19____ the Common Seal of SINGAPORE TECHNOLOGIES PTE LTD was duly affixed to the
within written instrument at Singapore in my presence in accordance with the
regulations of the said Company which regulations have been produced and shown
to me.
Witness my hand this ______________ day of __________ 19 __.
__________________________
Advocate and Solicitor
Singapore
-13-
<PAGE> 15
THE FIRST SCHEDULE ABOVE REFERRED TO
--------------------------------
L 1 Ver 1
--------------------------------
THE LAND TITLES ACT
-------------------------------
LEASE
-------------------------------
(FOR OFFICIAL USE ONLY)
DESCRIPTION OF LAND
- -------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CT/SSCT/SCT Property Address Whole or part
MK TS Lot No. (if part lot, to state appd
new lot/strata lot)
- ----------------------------------
Vol Fol
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
13 Whole
(Private Lot A12787(b))
- ----------------------------------------------------------------------------------------------------
LESSOR
- ------
- ----------------------------------------------------------------------------------------------------
Name: JURONG TOWN CORPORATION
- ----------------------------------------------------------------------------------------------------
Address: a body corporate incorporated under Jurong Town Corporation Act
and having its office at Jurong Town Hall, 301 Jurong Town Hall
Road, Singapore 609431.
- ----------------------------------------------------------------------------------------------------
(the registered proprietor) HEREBY LEASES the registered estate or interest in the land to:-
LESSEE:
- -------
- ----------------------------------------------------------------------------------------------------
Co Regn no: 199004768N
- ----------------------------------------------------------------------------------------------------
Name: SINGAPORE TECHNOLOGIES PTE LTD
- ----------------------------------------------------------------------------------------------------
Address: 83 SCIENCE PARK DRIVE, #01-01/02, THE CURIE, SINGAPORE SCIENCE
PARK, SINGAPORE 118258.
- ----------------------------------------------------------------------------------------------------
</TABLE>
FOR TERM OF LEASE
- -----------------
Term of Lease: Thirty (30) years
Commencement Date: 16th day of February 1994 (hereinafter referred to as "the
-1-
<PAGE> 16
Commencement Date")
Consideration: The average fixed investment by the Lessee on building and
civil works exceeding $1,000 per square metre of the gross
built-up area and on plant and machinery exceeding $500/- per
square metre of PRIVATE LOTS A12787, A12787(a) AND A12787(b),
(hereinafter referred to as "the fixed investment criteria")
and the average gross plot ratio of not less than 0.6.
Annual Rent: As stipulated in Clause 1(I) of the Special Covenants and
Conditions hereinafter appearing.
Easement: As provided in the Memorandum of Lease I/30809F and the First
Variation of Memorandum of Lease VML I/076384J hereinafter
referred to.
SUBJECT TO:
PRIOR ENCUMBRANCES:
------------------------------------------------------------------------------
N I L
------------------------------------------------------------------------------
AND the following:-
COVENANTS AND CONDITIONS
(a) the covenants, conditions and powers implied by law
in instruments of lease (or to such of them as are
not hereinafter expressly negatived or modified);
(b) the covenants and conditions set forth in the
Memorandum of Lease and the First Variation of
Memorandum of Lease filed in the Registry of Titles
and numbered as ML I/30809F and VML I/076384J with
the exception of covenants 1(i) , 1(xi) and 1(xvii)
of ML I/30809F and covenants 1(x) and 1(xxv) of VML
I/076384J.
SPECIAL COVENANTS AND CONDITIONS
1 (i) To pay from the 16TH day of NOVEMBER 1995 the yearly rent of
DOLLARS ONE HUNDRED AND THIRTY-SEVEN THOUSAND SIX HUNDRED AND
THIRTY-FOUR AND CENTS THIRTY ONLY ($137,634.30CTS) to be paid
by equal quarterly installments on the 1st day of each of the
months of January, April, July and October in every year of
the said term without any deductions and in advance without
demand at the office of the Lessor or at such other office as
the Lessor may designate calculated at the rate of $19.62CTS
per square metre per annum (hereinafter referred to as "the
Initial Rent") of the demised premises having an area of 7,015
square metres (hereinafter referred
-2-
<PAGE> 17
to as "the preliminary survey area", which may at any time be
adjusted on completion of final survey, if any, and in which
event if the area adjusted exceeds five square metres more, or
less, than the preliminary survey area the rental paid or
payable by the Lessee shall accordingly also be adjusted and
be paid and payable or refunded as the case may be in respect
of the full difference between the preliminary survey area and
the final survey area, with retrospective effect from the
commencement of the said term of the Lease herein),which rate
was last increased on the 16TH day of FEBRUARY 1996 to the
rate of $21.39CTS per square metre per annum. The yearly rent
so increased on the 16TH day of FEBRUARY 1996 shall be
increased by 9% per annum (compounded annually) on the 16TH
day of FEBRUARY 1997 and on the 16TH day of FEBRUARY of every
year thereafter.
(x) As often as any building or structure on the demised premises
or any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies
received by virtue of such insurance to be laid out in
rebuilding and reinstating the same to the satisfaction of the
Lessor and in accordance with the plans and specifications
approved by the Lessor and in accordance with the laws,
by-laws regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time,
and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of his own
monies PROVIDED THAT the rebuilding and reinstatement shall in
any event commence and be completed within the period
specified by the Lessor PROVIDED FURTHER THAT notwithstanding
the covenant contained in this Clause 1(x), the Lessee may
exercise the option not to rebuild or reinstate the buildings
subject to the following conditions:
(a) the Lessee shall give the Lessor three (3) months'
prior notice in writing to prematurely terminate the
term of lease herein created but without prejudice to
clause 3(e) and any right or remedy which may have or
will accrue to the Lessor prior to the expiry of the
three (3) months' notice under the terms and
conditions of the Lease herein; and
(b) the Lessee shall forthwith pay or cause to be paid to
the Lessor (whom the Lessee acknowledges to be
entitled to) all monies received by virtue of such
insurance.
(xi) Not to demise assign create a trust or agency mortgage charge
let sublet or underlet or grant a licence or part with or
share the possession or occupation of the demised premises in
whole or in part at anytime within the period of FIVE (5)
YEARS from the 16TH day of NOVEMBER 1995 (hereinafter referred
to as "the restrictive period") EXCEPT THAT and subject to the
Lessor's prior written consent, the Lessee may mortgage or
charge by way of a Debenture his interest in the demised
premises for the purposes of obtaining financing for the
Lessee's operations at the demised premises. After the
restrictive period the Lessee shall not demise assign create a
trust or agency mortgage charge let sublet or underlet or
grant a licence or part with or share the possession or
occupation of the demised premises in whole or in part at
anytime without first obtaining the consent of the Lessor in
writing PROVIDED
-3-
<PAGE> 18
ALWAYS THAT IN THE EVENT THAT ANY CONSENT TO ASSIGN IS GIVEN,
SUCH CONSENT SHALL, WITHOUT PREJUDICE TO CLAUSES 1(XLII) AND
1(XLIII), AT ALL TIMES BE SUBJECT TO THE COMPANY [HEREINAFTER
DEFINED IN CLAUSE 1(XLII)] AND THE ASSIGNEE, WHERE APPLICABLE,
COMPLYING WITH THE SETBACK REQUIREMENTS AND ANY OTHER PLANNING
REQUIREMENTS AND NOT EXCEEDING THE AVERAGE MAXIMUM GROSS PLOT
RATIO OF 1.4 IN RESPECT OF THE DEMISED PREMISES AND ANY OTHER
REMAINING LAND OCCUPIED BY THE COMPANY WITHIN WOODLANDS
INDUSTRIAL PARK D AFTER THE ASSIGNMENT. The restrictions
contained in Section 17 of the Conveyancing and Law of
Property Act (Chapter 61) shall not apply. In addition, the
Lessor may in its absolute discretion in giving the consent
require, inter alia, that the fixed investment criteria be met
and due proof thereof be shown within such period of time as
the Lessor may stipulate, and in the event of the
non-observance thereof, the Lessor shall, without prejudice to
any other right or remedy the Lessor may have, be entitled to
exercise its rights under Clause 3(c) of VML I/076384J.
(xvii) At the termination, by notice by the Lessee, or reentry by the
Lessor or by expiry or otherwise, of the term hereby created,
to yield up the demised premises to the Lessor in tenantable
repair in accordance with the Lessee's covenants herein
contained PROVIDED THAT, if so required by the Lessor and upon
notice thereof, the Lessee shall at his own cost and expense
properly demolish and remove such buildings, structures,
fixtures and fittings, or any part thereof, as may be
specified by the Lessor and reinstate the demised premises to
the satisfaction of the Lessor and if the Lessee shall fail to
observe or perform this covenant the Lessor may (but shall not
be under any obligation to do so) execute such works and
recover the costs thereof from the Lessee as a debt.
(xxv) Subject always to Clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change PROVIDED THAT where there has been, is
or will also be a change in the shareholders of the Lessee or
the number of shares held by each and every shareholder of the
Lessee, the prior written consent in writing of the Lessor
shall be obtained which consent if granted shall be subject to
such terms and conditions as the Lessor may require.
(xli) Not to use or permit or suffer the demised premises or any
part thereof to be used otherwise than for ANCILLARY SERVICES
SUCH AS CAR-PARKING LOTS, PROCESS WATER TREATMENT TANK,
ELECTRICAL SUB-STATION AND PUMP HOUSE ONLY except with the
prior consent in writing of the Lessor. In giving its consent,
the Lessor may in its absolute discretion require, inter alia,
the Lessee to meet the fixed investment criteria and to show
due proof thereof within such period of time as the Lessor may
stipulate, and in the event of the non-observance thereof, the
Lessor shall be entitled to exercise its rights under Clause
3(c) of VML I/076384J. For the avoidance of any doubt, the
words "meet" in this clause and "met" in Clause 1(xi) herein
shall include the maintenance of the fixed investment criteria
and if it has not been maintained, then that it be met.
(xlii) (a) To ensure that the gross plot ratio shall not be less
than 0.6 but shall not exceed the existing maximum
gross plot ratio of 1.4 permitted for the
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<PAGE> 19
demised premises except with the prior written
approval of the Lessor and the relevant governmental
and statutory authorities PROVIDED ALWAYS THAT and
without prejudice to clause 1(viii) of ML I/30809F,
the Lessee shall pay all development
charges/differential premium which may be imposed on
or charged to the Lessor by the relevant governmental
and statutory authorities, and any other charges
which may be imposed in connection with any increase
in the gross plot ratio beyond 1.4.
(b) Notwithstanding Clause 1(xlii)(a) herein, if the
Lessee is SINGAPORE TECHNOLOGIES PTE LTD (hereinafter
referred to as "the Company"), the Company shall
ensure that the average gross plot ratio for PRIVATE
LOTS A12787, A12787(a), A12787(b), A127879(d) AND ANY
OTHER LAND OCCUPIED BY THE COMPANY WITHIN WOODLANDS
INDUSTRIAL PARK D shall not be less than 0.6 but
shall not exceed the existing permitted maximum
average gross plot ratio of 1.4 except with the prior
written approval of the Lessor and the relevant
governmental and statutory authorities PROVIDED
ALWAYS THAT and without prejudice to clause 1(viii)
of ML I/30809F, the Lessee shall pay all development
charges/differential premium which may be imposed on
or charged to the Lessor by the relevant governmental
and statutory authorities, and any other charges
which may be imposed in connection with any increase
in the said average gross plot ratio beyond 1.4. For
the avoidance of doubt, Clause 1(xlii)(a) herein must
be strictly complied with in the event that the
Company ceases to be the Lessee.
(xliii) The Lessee shall not at any time hold the Lessor liable for
any claim, demand, action, proceeding, inconvenience, loss,
damages, costs or expenses of whatsoever kind or description
which the Lessee or any other person may suffer in connection
with or arising from the Easement referred to in VML I/076384J
or any works carried out in relation thereto.
(xliv) Not to place, construct or erect or permit the placing,
construction or erection of any building, structure or
equipment whatsoever on the buffers within the boundary of the
demised premises and to comply with the requirements of the
relevant governmental and statutory authorities including the
Urban Redevelopment Authority and the Building Control
Division of the Ministry of National Development.
(xlv) At all times throughout the term of lease hereby created to
keep in full operation and continue operations at the whole of
the demised premises in accordance with the use permitted in
Clause 1(xli) herein.
(xlvi) If the Registrar of Titles issues in favour of the Lessee a
Certificate of Title for the leasehold estate comprised in the
lease hereby created, the Lessee must, within one (1) month of
receipt of the said Certificate of Title submit a copy of it
to the Lessor.
(xlvii) If the term of lease hereby created shall at any time be
determined by expiry or otherwise, the Lessee must at his own
cost and expense immediately surrender or
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<PAGE> 20
cause to be surrendered the said Certificate of Title for the
leasehold estate (and any duplicate instrument) to the
Registrar of Titles for custody and cancellation by the
Registrar and the Lessee shall simultaneously give to the
Lessor written notice of such surrender.
(xlviii) The Lessee accepts the demised premises in its existing state
and condition and further accepts and confirms that the Lessor
has made no representation nor given any assurance as to the
present or future suitability of the demised premises or its
surrounding or adjacent lands in relation to the Lessee's use,
operations or occupation at the demised premises.
(xlix) At the Lessee's own cost and at all times, to comply with and
observe the maximum height restriction of 61.0 metres above
Mean Sea Level and any other height restriction(s) on
buildings and structures at the demised premises as imposed by
any governmental or statutory authority and to ensure that any
height restriction plan(s) which may be furnished to the
Lessee shall at all times be held in strict confidence and
shall not be shown, revealed or copied to or by any person,
contractor, sub-contractor, watchman, employee, agent,
representative or any other person except with the prior
written consent of the Lessor.
(l) Subject to Clause 1(vii) of ML I/30809F, to ensure that the
maximum height of any chain-link fence (including the
anti-climb) or boundary wall erected by the Lessee at the
demised premises shall not exceed two (2) metres PROVIDED THAT
the chain-link fence or boundary wall shall be erected behind
any hedge that may be planted at the boundary of the demised
premises.
(li) Subject always to Clause 1(xlii) herein, to develop the
demised premises for low rise and low density industrial
development limited to 100 persons per hectare.
2A The Lessor further covenants with the Lessee that he shall grant to the
Lessee a lease of the demised premises for a further term of THIRTY (30) YEARS
(hereinafter referred to as "the further term") from the expiry of the said term
upon the same terms and conditions and containing like covenants as are
contained in this lease with the EXCEPTION of the present covenant for renewal
PROVIDED THAT:
(i) at the expiry of the said term, there be no existing
breach or non-observance of any of the covenants and
conditions herein contained on the part of the Lessee
to be observed or performed;
(ii) if required by the Lessor, the Lessee shall within
four (4) months from the commencement of the further
term and at his own cost and expense, carry out and
complete such improvements to the landscaping at the
demised premises as may be stipulated in writing by
the Lessor;
(iii) the Lessee shall six (6) months before the expiry of
the said term submit, for the approval of the Lessor
and the relevant governmental and statutory
authorities, plans for the upgrading of the exterior
of buildings on the demised premises to the same
highest quality of new buildings which the
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<PAGE> 21
Lessor will be building at that time, and the Lessee
shall expeditiously do all acts and things necessary
to obtain the approval, all at the cost and expense
of the Lessee; and
(iv) the Lessee shall six (6) months before the expiry of
the said term submit, for the approval of the Lessor
and the relevant governmental and statutory
authorities, plans for the upgrading of the exterior
of buildings on the demised premises to the same
highest quality of new buildings which the Lessor
will be building at that time, and the Lessee shall
expeditiously do all acts and things necessary to
obtain the approval, all at the cost and expense of
the Lessee; and
(v) the Lessee shall at his own cost and expense
complete, within eighteen (18) months from the
commencement of the further term, the upgrading of
the buildings in accordance with the plans approved
by the Lessor and the relevant governmental and
statutory authorities and to the satisfaction of the
Lessor.
3 (d) The Lessee may at any time prematurely terminate the term of
lease herein created by giving to the Lessor three (3) months'
prior notice in writing, but without prejudice to any right or
remedy which may have or will accrue to the Lessor prior to
the expiry of the three (3) months' notice under the terms and
conditions of the Lease herein created or in respect of the
termination.
(e) Subject to clause 3(f) hereinafter appearing in the event that
premature termination shall occur at any time within EIGHT (8)
YEARS from the commencement of the said term of lease herein
created or if the Lessor shall at any time within the said
eight (8) years exercise its right of re-entry under clause
3(c) of ML I/30809F then in addition to rent, interest,
property tax and other sums payable by the Lessee to the date
of premature termination or reentry as the case may be,
liquidated damages for the sum of $17.7 MILLION ("the said
sum") shall be payable and paid by the Lessee to the Lessor
and it is acknowledged and agreed by the Lessee
that the said sum shall constitute liquidated damages and
shall not be considered under any circumstances as a penalty.
(f) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver of the liquidated damages provided in
clause 3(e) of the Special Covenants and Conditions
hereinbefore appearing in the event of any transfer or
assignment of the lease in accordance with clause 1(xi)
hereinbefore appearing PROVIDED THAT:
(i) the transfer or assignment is approved in writing by
the Lessor and all other relevant governmental and
statutory authorities and
(ii) the Lessor reserves the right to revise the land rent
to the prevailing market rate at the time of the
transfer or assignment.
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<PAGE> 22
EXECUTION OF LESSOR )
)
THE COMMON SEAL OF )
)
JURONG TOWN CORPORATION )
)
was hereunto affixed )
)
in the presence of: )
------------------------------
CHIEF EXECUTIVE OFFICER
------------------------------
SECRETARY
EXECUTION OF LESSOR )
)
)
)
THE COMMON SEAL OF )
)
)
was hereunto affixed )
)
in the presence of )
)
SIGNATURE:
-------------------------------
NAME IN FULL:
DESIGNATION:
SIGNATURE:
-------------------------------
NAME IN FULL:
DESIGNATION:
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<PAGE> 23
CERTIFICATE OF CORRECTNESS
- --------------------------
I,
--------------------------------------------------------------------- ,
a duly authorised officer of the Jurong Town Corporation, under Section
31 of the Jurong Town Corporation Act (Cap 150) for and on behalf of
the Lessor hereby certify that this instrument is correct for the
purposes of the Land Titles Act.
----------------------------------------
Signature of Authorised Officer
I,
-----------------------------------------------------------------------,
the Solicitor for the Lessee hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
----------------------------------------
Signature of Solicitor
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<PAGE> 24
ML I/30809F
OFFICE USE ONLY
---------------
[ ]
---------------
$ [ ]
---------------
THE LAND TITLES ACT
(CHAPTER 157)
M E M O R A N D U M
To the Registrar of Titles
On behalf of THE JURONG TOWN CORPORATION, a body corporate incorporated under
the Jurong Town Corporation Act and having its office at Jurong Town Hall,
Jurong Town Hall Road, Singapore, the Registered proprietor.
I, GLORIA ONG SIEW CHOO, certify that this memorandum (comprising seven pages),
contains the provisions which are deemed to be incorporated in any instrument in
which the abovementioned corporation is named as a lessor and such instrument
has reference to this memorandum.
Signature
Authorised Officer
- ---------------------------------
LODGED BY Filed in the REGISTRY OF TITLES
ON 26TH JUNE, 1990
Jurong Town Corporation
Jurong Town Hall
Jurong Town Hall Road
Singapore 2260 REGISTRAR OF TITLES
- ---------------------------------
7373c
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<PAGE> 25
SPECIAL COVENANTS AND CONDITIONS
1 The Lessee hereby covenants with the Lessor as follows:-
(i) To pay the yearly rent hereinbefore reserved on the days and
in the manner appearing in the reddendum.
(ii) To pay unto the Lessor on demand by way of additional rent a
sum equal to all such sums as the Lessor may from time to time
pay for insuring and keeping insured the demised premises
against loss or damage by fire in case the Lessee shall make
default in insuring and keeping insured the demised premises
pursuant to the covenant in that behalf hereinafter contained
PROVIDED ALWAYS THAT nothing herein shall render it obligatory
on the part of the Lessor to insure and keep insured the
demised premises or any part thereof.
(iii) To pay all rates taxes assessments and outgoings whatsoever
which now are or which at any time hereafter during the said
term may be imposed or charged upon or in respect of the
demised premises or any part thereof.
(iv) To repair and keep in tenantable repair the demised premises
and every part thereof throughout the said term.
(v) To pay a reasonable proportion of the expense of constructing
repairing rebuilding and cleansing all party walls fences
sewers drains pipes water-courses and other things the use of
which is common to the demised premises and the occupiers of
any adjoining or neighbouring premises and such proportion in
the case of a dispute shall be conclusively determined by the
Lessor's surveyor for the time being.
(vi) To permit the Lessor and his surveyors or agents with or
without workmen or others during the said term at reasonable
times in the day-time to enter upon the demised premises and
every part thereof to examine the state and condition of the
same and of defects decays and wants of reparations and of all
breaches of covenant there found and the Lessor may thereupon
serve on the Lessee notice in writing by leaving the same at
or on the demised premises to or for the Lessee to make good
the same within such reasonable time as specified in such
notice.
(vii) To perform and observe all the obligations which the Lessor of
the demised premises may be liable to perform or observe
during the term hereby created by any direction or requirement
of any governmental or statutory authority and if the Lessee
shall fail to observe or perform this covenant the Lessor may
in its absolute discretion perform the same and all expenses
and costs incurred thereby shall be recoverable from the
Lessee as a debt PROVIDED ALWAYS THAT the Lessor shall not be
liable to the Lessee for any loss damage or inconvenience
caused thereby.
2 (viii) Not to make or cause to be made any addition or alteration
affecting the elevation external structure or stability of the
demised premises or any part thereof without the prior written
consent of the Lessor and the relevant governmental and
statutory
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<PAGE> 26
authorities PROVIDED THAT on the granting of such consent and
without prejudice to other terms and conditions which may be
imposed the Lessee shall give to the Lessor security that the
proposed addition alteration or rebuilding will in fact be
carried out within a reasonable time.
(ix) Forthwith to insure and keep insured the demised premises
against loss or damage by fire to the full value thereof with
a well established insurance company approved by the Lessor
and to make all payments necessary for that purpose within
seven days after the same shall become payable and upon
reasonable notice to produce to the Lessor the policy or
policies of such insurance and the receipts for all such
payments.
(x) As often as the demised premises or any part thereof shall be
destroyed or damaged as aforesaid forthwith to cause all
monies received by virtue of such insurance to be laid out in
rebuilding and reinstating the same in accordance with the
plans and specifications approved by the Lessor and in
accordance with the existing laws, by-laws, regulations and
planning schemes of every relevant governmental and statutory
authority prevailing at the time, and in case the monies so
received shall be insufficient for that purpose then to make
up the deficiency out of his own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence and
be completed within the period specified by the Lessor.
(xi) Not to demise assign mortgage let sublet or underlet or grant
a licence or part with or share the possession or occupation
of the demised premises in whole or in part without first
obtaining the consent of the Lessor in writing. The
restrictions contained in Section 17 of the Conveyancing and
Law of Property Act (Chapter 61) shall not apply. In addition,
the Lessor may in its absolute discretion in giving the
consent require, inter alia, that the fixed investment
criteria be met and due proof thereof be shown within such
period of time as the Lessor may stipulate, and in the event
of the non-observance thereof, the Lessor shall be entitled to
exercise its rights under Clause 3(c) herein.
(xii) Within six months of the devolution of the interest of the
Lessee not perfected by an assent to give notice thereof in
writing with particulars thereof to the Lessor and produce to
the Lessor such documentary evidence as may be required by the
Lessor.
(xiii) Not to use the demised premises or any part thereof for any
illegal or immoral purpose and not to do or permit or suffer
to be done upon the demised premises anything which in the
opinion of the Lessor may be or become a nuisance annoyance or
cause damage or inconvenience to the Lessor or his lessees or
the occupiers of any adjoining or neighbouring premises or
whereby any insurance for the time being effected on the
demised premises may be rendered void or voidable or be in any
way affected.
(xiv) Not without the prior consent in writing of the Lessor to
affix or exhibit or erect or paint or permit or suffer to be
affixed or exhibited or erected or painted on or upon
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<PAGE> 27
any part of the exterior of the demised premises or of the
external rails or fences thereof any nameplate signboard
placard poster or other advertisement or hoarding.
(xv) To make reasonable provision against and be responsible for
all loss injury or damage to any person or property including
that of the Lessor for which the Lessee may be held liable
arising out of or in connection with the occupation and use of
the demised premises and to indemnify the Lessor against all
proceedings claims costs and expenses which he may incur or
for which he may be held liable as a result of any act neglect
or default of the Lessee his servants contractors
subcontractors or agents.
(xvi) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Lessor in
respect of any arrears of rent or other outstanding sums due
and payable under this Lease from the due dates thereof until
payment in full is received by the Lessor.
(xvii) At the termination, by expiry or otherwise, of the term hereby
created, to yield up the demised premises to the Lessor in
tenantable repair in accordance with the Lessee's covenants
herein contained PROVIDED THAT, if so required by the Lessor
and upon notice thereof, the Lessee shall remove the fixtures
and fittings, or any part thereof, as may be specified by the
Lessor and reinstate the demised premises to the satisfaction
of the Lessor and if the Lessee shall fail to observe or
perform this covenant the Lessor shall execute such works and
recover the costs thereof from the Lessee as a debt.
(xviii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants to the requirements and satisfaction of the Lessor
PROVIDED THAT in the event of default by the Lessee under this
covenant the Lessor may carry out such remedial measures as he
thinks necessary and all costs and expenses incurred thereby
shall forthwith be recoverable from the Lessee as a debt.
(xix) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the demised premises in respect of
the operations business, trade or industry carried out or
conducted therein which shall contravene the provisions of any
laws, by-laws, orders, rules or regulations now or hereafter
affecting the same but at his own cost and expense to comply
with all such provisions and at all times hereafter to
indemnify and keep indemnified the Lessor against all actions,
proceedings, costs, expenses, claims, fines, losses, penalties
and demands in respect of any act matter or thing done or
omitted to be done in contravention of the said provisions.
(xx) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees connection
with the preparation stamping and issue of this Lease and any
prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Lease.
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<PAGE> 28
(xxi) To pay all costs and fees legal or otherwise including costs
as between solicitor and client in connection with the
enforcement of the covenants and conditions herein.
(xxii) To pay to the Lessor all survey fees and other charges
including those payable to and claimed by the relevant
Government Planning Authorities and other relevant
governmental and statutory authorities for the survey of the
demised premises for the purpose of sub-division of the land
of which the demised premises forms part and issue of this
Lease and a Certificate of Title PROVIDED THAT the Lessor
shall have the right to employ his own surveyor to carry out
the said survey in which event the Lessee shall bear all costs
thereby incurred.
(xxiii) At his own cost to take such steps and execute such works upon
the demised premises as may be necessary for the protection of
shores and embankments if any and for the prevention of
earthslip erosion of soil and failure of slopes expeditiously
in a workmanlike manner and to the satisfaction of the Lessor.
(xxiv) To construct an internal drainage system within the demised
premises to the satisfaction of the Lessor to ensure that all
surface water collected thereon is discharged into the public
drains.
(xxv) Not to effect a change of name except with the prior consent
in writing of the Lessor PROVIDED THAT on every change of name
the Lessee shall pay to the Lessor a fee to be specified by
the Lessor in relation to such consent.
(xxvi) To perform and observe the covenants on the Lessor's part
contained in the Head Lease made between the President of the
Republic of Singapore and the Lessor so far as they are not
varied herein and to keep the Lessor indemnified against all
claims damages costs and expenses in any way relating thereto.
(xxvii) To maintain the demised premises and every part thereof in a
neat and tidy condition, and forthwith to comply with the
Lessor's direction to remove and clear any materials, goods or
articles of whatever nature and description from the demised
premises or such part thereof as may be stipulated in writing
by the Lessor.
(xxviii) At his own cost to plant and maintain trees and landscape the
demised premises in accordance with all the requirements of
the Parks and Recreation Department, Ministry of National
Development and other relevant governmental and statutory
authorities.
(xxix) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the
service or use of any communication system or affects the
operation of other equipment, installations, machinery,
apparatus or plants of other Lessees in connection therewith,
to allow the Lessor or any authorised person to inspect at all
reasonable times, such installation, machine or apparatus in
the demised premises to determine the source of the
interference or disturbance and thereupon, to take suitable
measures, at the Lessee's own expense,
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<PAGE> 29
to eliminate or reduce such interference or disturbance to the
Lessor's satisfaction, if it is found by the Lessor or such
authorised person that the Lessee's electrical installation,
machine or apparatus is causing or contributing to the said
interference or disturbance.
(xxx) To indemnify the Lessor against each and every claim,
proceeding, action, loss, penalty, damage, expense, cast and
demand which may arise in connection with clause (xxix) above.
(xxxi) At the Lessee's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and
satisfaction of the Lessor and other relevant governmental and
statutory authorities.
(xxxii) Subject to that clause in the Special Covenants and Conditions
of this Lease which stipulates the specific use the Lessor
permits for the demised premises, the Lessee shall use and
shall ensure that at least sixty per centum (60%) of the total
floor area of the demised premises shall be used for purely
industrial activities, and may use the remaining floor area
for ancillary stores and offices, neutral areas, communal
facilities and such other uses as may be approved in writing
by the Lessor and the relevant governmental and statutory
authorities PROVIDED THAT the said ancillary offices shall not
exceed twenty-five per centum (25%) of the total floor area
AND PROVIDED FURTHER THAT the Lessee shall not use and occupy
the demised premises for the purpose of commercial office and
storage unrelated to the Lessee's approved industrial
activity.
(xxxiii) If the Lessee shall at any time be found to have encroached
upon any area beyond the boundaries of the demised premises,
the Lessee shall at his own cost and expenses, but without
prejudice to any other right or remedy the Lessor may have
against him, immediately or within the time specified (if any)
by the Lessor rectify and remove the encroachment to the
satisfaction of the Lessor and pay to the Lessor such
compensation as may be specified by the Lessor. If, however,
the Lessor in his absolute discretion permits the Lessee to
regularise and retain the encroached area or any part thereof
upon such terms and conditions as may be stipulated by the
Lessor and any other relevant governmental and statutory
authorities, the Lessee shall pay land rent on the encroached
area with retrospective effect from the date of commencement
of the term hereby created, and the Lessee shall also pay all
survey fees, amalgamation fees, legal fees (including
solicitor and client costs and expense), and all other costs
and charges relating thereto.
(xxxiv) If any damage of whatsoever nature or description shall at any
time occur or be caused to the demised premises or any part
thereof, to forthwith give to the Lessor written notice of the
damage and to remedy the damage to the satisfaction of the
Lessor within such time as the Lessor may specify, all at the
cost of the Lessee.
(xxxv) Not to keep or permit to be used or stored in the demised
premises or any part thereof any materials of a dangerous or
explosive nature without the prior consent in
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<PAGE> 30
writing of the Lessor and to keep the Lessor indemnified
against all damages claims and action caused by the use of
storage of such materials whether or not the same is done with
the consent of the Lessor.
2 The Lessor hereby covenants with the Lessee that the Lessee paying the rent
hereinbefore reserved and performing and observing the covenants conditions and
agreements on the part of the Lessee hereinbefore contained shall peaceably hold
and enjoy the demised premises during the term hereby granted without any
interruption of or by the Lessor or any person lawfully claiming through under
or in trust for him.
3 PROVIDED ALWAYS and it is hereby agreed between the parties as follows:-
(a) That no estate or interest in the soil of the road and
footpath adjacent to the demised premises is or shall be
deemed to be included in the demise hereinbefore contained.
(b) That the Lessee shall not be entitled to any right of access
of light or air to the demised premises or any part thereof,
which would restrict or interfere with the user of any
adjoining or neighbouring land for building or any other
purpose.
(c) That if the said rent hereby reserved or any part thereof
shall be unpaid for fourteen days after becoming payable
(whether the same shall have been formally demanded or not) or
if any of the covenants or obligations an the part of the
Lessee herein contained shall not be performed or observed or
if any charging order made in respect of the demised premises
shall be enforced by sale or by entry into possession without
the written consent of the Lessor having first been obtained
(Section 17 of the Conveyancing and Law of Property Act shall
also not apply in such event) by the Lessee or by the person
in whose favour the charging order shall have been made, then
and in any such case it shall be lawful for the Lessor or any
person or persons authorised by him in that behalf at any time
thereafter to re-enter upon the demised premises or any part
thereof in the name of the whole and thereupon the term hereby
created shall absolutely determine but without prejudice to
any right of action or remedy of the Lessor in respect of any
breach of any of the covenants or conditions by the Lessee
herein contained PROVIDED THAT if the demised premises have
been assigned by way of mortgage the provisions of this clause
shall not take effect until the Lessor has served upon the
mortgagee a notice in writing that such breach has occurred
and the mortgagee has failed to remedy such breach.
4 In this Lease where the context so requires or permits, words importing the
singular number or the masculine gender include the plural number or the
feminine gender and words importing persons include corporation and vice versa,
the expression "the Lessor" shall include its successors-in-title and assigns,
the expression "the Lessee" shall include its successors-in-title and permitted
assigns (if any), where there are two or more persons included in the expression
"the Lessee" covenants expressed to be made by "the Lessee" shall be deemed to
be made by such persons jointly and severally, and except where otherwise
provided the expression "the demised premises" shall mean the land hereby
demised and all buildings, structures, fixtures and fittings therein.
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<PAGE> 31
BELOW THIS LINE FOR OFFICE USE ONLY
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Special Remarks Endorsing Instruction
First Schedule:
Second Schedule:
- --------------------------------------------------------------------------------
EXAMINED
REGISTERED ON
Date:
------------------------------------
Initials of
Signing REGISTRAR OF TITLES
officer
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VML 1 VER 1
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THE LAND TITLES ACT
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---------------------------------
(For official use only)
FIRST VARIATION OF MEMORANDUM OF LEASE
LESSOR
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Name: JURONG TOWN CORPORATION
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Address: a body corporate incorporated under Jurong Town Corporation Act
and having its office at Jurong Town Hall, 301 Jurong Town Hall
Road, Singapore 2260.
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AUTHORISED OFFICER OF LESSOR
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Name: GLORIA ONG SIEW CHOO
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I,_______________________________________________________________________, the
abovementioned authorised officer of the Lessor, certificate that in any
instrument of the Lessor's in which both the Memorandum of Lease filed in the
Land Titles Registry as No: I/30809F (hereinafter referred to as "ML I/30809F")
and this Variation of Memorandum of Lease have reference:
(a) the following Easement provisions set out in SCHEDULE I herein
shall be inserted in addition to the clause incorporated in ML
I/30809F;
(b) the following sub-clause(s) as set out in SCHEDULE II shall be
in substitution of the sub-clauses incorporated in clause 1
and clause 3 contained in ML I/30809F and more particularly
set out in SCHEDULE III; and
(c) the following sub-clauses as set out in SCHEDULE IV shall be
inserted in addition to the sub-clauses in clause contained in
ML I/30809F.
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SCHEDULE I - Easement
EASEMENT: RESERVING TO THE LESSOR, and all others to whom the Lessor has granted
or may grant, as appurtenant to each and every premises adjoining and
neighbouring the demised premises which are capable of so enjoying, a
free and uninterrupted RIGHT OF PASSAGE AND RUNNING of water soil
electricity power gas telephone communication and other services from
the adjoining and neighbouring premises thereon through or by means of
sewers drains pipes channels wires cables and ducts upon over or under
the demised premises and to make connections with such sewers drains
pipes channels wires cables and ducts or any of them for the purpose of
exercising the said right of passage and of running the aforesaid
services upon over or under the demised premises herein AND all other
easements, ancillary rights and obligations as are or may be implied by
the Land Titles Act (Cap 157).
SCHEDULE II - Replacement sub-clauses
1 (x) As often as any building or structure on the demised premises
or any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies
received by virtue of such insurance to be laid out in
rebuilding and reinstating the same to the satisfaction of the
Lessor and in accordance with the plans and specifications
approved by the Lessor and in accordance with the laws,
bye-laws regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time,
and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of his own
monies PROVIDED THAT the rebuilding and reinstatement shall in
any event commence and be completed within the period
specified by the Lessor.
(xxv) Subject always to clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change.
3 (c) That if the said rent hereby reserved or any other sums due
under this Lease, or any part thereof shall be unpaid for
fourteen days after becoming payable (whether the same shall
have been formally demanded or not) or if any of the covenants
or obligations on the part of the Lessee herein contained
shall not be performed or observed or if any charging order
writ of seizure and sale or its equivalent made in respect of
the demised premises shall be enforced by sale or by entry
into possession without the written consent of the Lessor
having first been obtained (Section 17 of the Conveyancing and
Law of Property Act shall also not apply in such event) by the
Lessee or by the person in whose favour the charging order
writ of seizure and sale or its equivalent shall have been
made, then and in any such case it shall be lawful for the
Lessor or any person or persons authorised by him in that
behalf at any time thereafter to re-enter upon the demised
premises or any part thereof in the name of the whole and
thereupon the term hereby created shall absolutely determine
but without prejudice to any right of action or remedy of the
Lessor in respect of any breach of any of the
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covenants or conditions by the Lessee herein contained
PROVIDED THAT if the demised premises have been assigned by
way of mortgage the provisions of this clause shall not take
effect until the Lessor has served upon the mortgagee a notice
in writing that such breach has occurred and the mortgagee has
failed to remedy such breach.
SCHEDULE III - Previous sub-clauses
1 (x) As often as the demised premises or any part thereof shall be
destroyed or damaged as aforesaid forthwith to cause all
monies received by virtue of such insurance to be laid out in
rebuilding and reinstating the same in accordance with the
plans and specifications approved by the Lessor and in
accordance with the existing laws, bye-laws, regulations and
planning schemes of every relevant governmental and statutory
authority prevailing at the time, and in case the monies so
received shall be insufficient for that purpose then to make
up the deficiency out of his own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence and
be completed within the period specified by the Lessor.
(xxv) Not to effect a change of name except with the prior consent
in writing of the Lessor PROVIDED THAT on every change of name
the Lessee shall pay to the Lessor a fee to be specified by
the Lessor in relation to such consent.
3 (c) That if the said rent hereby reserved or any part thereof
shall be unpaid for fourteen days after becoming payable
(whether the same shall have been formally demanded or not) or
if any of the covenants or obligations on the part of the
Lessee herein contained shall not be performed or observed or
if any charging order made in respect of the demised premises
shall be enforced by sale or by entry into possession without
the written consent of the Lessor having first been obtained
(Section 17 of the Conveyancing and Law of Property Act shall
also not apply in such event) by the Lessee or by the person
in whose favour the charging order shall have been made, then
and in any such case it shall be lawful for the Lessor or any
person or persons authorised by him in that behalf at any time
thereafter to re-enter upon the demised premises or any part
thereof in the name of the whole and thereupon the term hereby
created shall absolutely determine but without prejudice to
any right of action or remedy of the Lessor in respect of any
breach of any of the covenants or conditions by the Lessee
herein contained PROVIDED THAT if the demised premises have
been assigned by way of mortgage the provisions of this clause
shall not take effect until the Lessor has served upon the
mortgagee a notice in writing that such breach has occurred
and the mortgagee has failed to remedy such breach.
SCHEDULE IV - Additional sub-clauses
1 (xxxvi) At the Lessee's own cost and expense and subject to the
Lessor's prior written approval, to execute such works as may
be deemed necessary by the Lessee in respect of the state and
condition of the demised premises (especially its ground
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<PAGE> 35
levels, topography and soil condition) which state and
condition the Lessee shall be deemed to have full knowledge.
(xxxvii) Not to keep or allow to be kept any livestock or other animals
at the demised premises or any part thereof.
(xxxviii) At the Lessee's own cost, to properly install and maintain
exit lightings and exit signs at staircases, exit passageways
and exits of the demised premises in accordance with all
requirements of the Building Control Division.
(xxxix) To forthwith install and at all times to properly maintain
sufficient emergency lighting in the production area of the
demised premises in accordance with all requirements of the
Fire Services Bureau and to lease directly with the Fire
Services Bureau in relation thereto, and in the event that any
alteration or addition to the demised premises shall thereby
be necessary, then to obtain the prior written consent of the
Lessor and the relevant governmental and statutory authorities
in accordance with Clause 1(viii) of ML I/30809F, all at the
cost of the Lessee.
(xl) Without prejudice to the generality of Clauses 1(iii) and
1(vii) of ML 1/30809F, the rent and other taxable sums payable
by the Lessee under or in connection with this lease shall be
exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any government, statutory or tax
authority calculated by reference to the amount of rent and
any other taxable sums received or receivable by the Lessor
from the Lessee and which tax is payable by the Lessee. The
Lessee shall pay the tax and the Lessor acting as the
collecting agent for the government, statutory or tax
authority shall collect the tax from the Lessee together with
the rent hereinbefore reserved without any deduction and in
advance without demand on the 1st day of each of the months of
January, April, July and October, and in the manner and within
the period prescribed in accordance with the applicable laws
and regulations.
DATE OF APPLICATION: 4TH DAY OF MAY 1995
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EXECUTION BY THE AUTHORISED OFFICER:
-------------------------------------
GLORIA ONG SIEW CHOO
Witness:
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ANNIE NG KIN MUI nee AU
LODGED BY:
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Name: JURONG TOWN CORPORATION
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Address: a body corporate incorporated under Jurong Town Corporation Act
and having its office at Jurong Town Hall, 301 Jurong Town Hall
Road, Singapore 2260.
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FOR OFFICE USE ONLY
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EXAMINED REGISTERED ON
Date: Initials of Registrar of Titles
Signing Officer
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<PAGE> 1
EXHIBIT 10.34
LEGAL DEPARTMENT
JTC(LG)3729/1220 PT 1 VOL 5/SY/ZMY
FIRST SUPPLEMENTARY AGREEMENT
BETWEEN
JURONG TOWN CORPORATION
AND
SINGAPORE TECHNOLOGIES PTE LTD
RELATING TO:
PRIVATE LOTS A12787(b) MUKIM 13
IN WOODLANDS INDUSTRIAL PARK D
<PAGE> 2
FIRST SUPPLEMENTARY AGREEMENT
PRIVATE LOT A12787(b) IN WOODLANDS INDUSTRIAL PARK D
THIS AGREEMENT is made the 7th day of October 1998 BETWEEN the JURONG TOWN
CORPORATION a body corporate incorporated under the Jurong Town Corporation Act
and having its Head Office at Jurong Town Hall, Jurong Town Hall Road, Singapore
609431 (hereinafter called "the Owner") of the one part and SINGAPORE
TECHNOLOGIES PTE LTD a company incorporated in Singapore and having its
registered office at
83 Science Park, #01-01/02 The Curie,
Singapore Science Park, Singapore 118258
(hereinafter called "the Licensee") of the other part.
WHEREAS :
(A) By a Building Agreement dated 17 February 1998 (hereinafter called "the
Principal Agreement") made between the same parties as the parties herein and in
the same order under which the Owner granted to the Licensee the licence and
authority to enter upon all that piece of land known as Private Lot A12787(b) as
shown edged on the plan annexed to the Principal Agreement (hereinafter called
"the property") for the purpose and upon the terms and conditions set out
therein.
(B) By its letters dated the 20th and 29th day of June 1998, the Owner has
agreed to revise the amount of liquidated damages payable upon premature
termination or re-entry of the property as contained in the Principal Agreement.
(C) This Agreement is supplemental to the Principal Agreement.
IT IS HEREBY AGREED to vary the Principal Agreement as follows:
1 That Clause 3(a) appearing at page 9 contained in the form of Lease in the
First Schedule of the Principal Agreement shall be deleted and is hereby
substituted therefor as follows:-
<PAGE> 3
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"3(e) Subject to clause 3(f) hereinafter appearing in the event that
premature termination shall occur at any time within eight (8) years
from the commencement of the said term of lease herein created or if
the Lessor shall at any time within the said eight (8) years exercise
its right of re-entry under clause 3(c) of ML I/30809F then in
addition to rent, interest, property tax and other sums payable by
the Lessee to the date of premature termination or re-entry as the
case may be, liquidated damages for a proportionate amount of the sum
of $17.7 million in the same proportion as the land area of the
portion of the demised premises subject to premature termination or
re-entry (as the case may be) bears in relation to the total land
area of Private Lots A12787, A12787(a) and A12787(b) together ("the
said sum") shall be payable and paid by the Lessee to the Lessor and
it is acknowledged and agreed by the Lessee that the said sum shall
constitute liquidated damages and shall not be considered under any
circumstances as a penalty."
SAVE as herein varied the Principal Agreement shall remain in full force
and effect in all respects.
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IN WITNESS WHEREOF the parties hereto have set their hands and/or seals
the day and year first above written.
SIGNED on behalf of )
)
JURONG TOWN CORPORATION )
)
By: ) /s/ GOH TIEN JIN
GOH TIEN JIN )
Director )
CUSTOMER SERVICES GROUP )
)
in the presence of: )
/s/ SARA YIK
----------------------------
SARA YIK
The Common Seal of )
)
SINGAPORE TECHNOLOGIES PTE LTD )
)
was hereunto affixed ) [SEAL]
)
in the presence of: )
)
Signature: /s/ HO CHING
------------------------------
Name: HO CHING (MS)
Designation: Director/President & CEO
Signature: /s/ CHUA SU LI
------------------------------
Name: CHUA SU LI (MRS)
Designation: Company Secretary
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I, CHIA CHOON YANG, an Advocate and Solicitor of the Supreme Court of
Singapore hereby certify that on the 7th day of October 1998 the Common seal of
SINGAPORE TECHNOLOGIES PTE LTD was duly affixed to the within written
instrument at Singapore in my presence in accordance with the regulations of
the said Company which regulations have been produced and shown to me.
WITNESS my hand this 7th day of October 1998:
/s/ CHIA CHOON YANG
--------------------------------
Advocate and Solicitor
Singapore
Chia Choon Yang
<PAGE> 1
EXHIBIT 10.35
PRIVATE LOT A12787(a)
DATED THIS 17TH DAY OF FEBRUARY 1998
BETWEEN
SINGAPORE TECHNOLOGIES PTE LTD
.. OF THE ONE PART
AND
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
.. OF THE OTHER PART
**********************************************************
AGREEMENT FOR SUB-LICENCE AND SUB-LEASE
(PRIVATE LOT A12787(a))
**********************************************************
File Ref: GHC/JNVC/sll/12859/978
ALLEN & GLEDHILL
ADVOCATES & SOLICITORS
SINGAPORE
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THIS AGREEMENT is made the 17th day of February 1998 between:-
(1) SINGAPORE TECHNOLOGIES PTE LTD, a company incorporated in Singapore and
having its registered office at 83 Science Park Drive #01-01/02 The
Curie, Singapore Science Park, Singapore 118258 (hereinafter called
"ST" which expression shall include its successors-in-title); and
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore and having its registered office at 60 Woodlands Industrial
Park D Street 2, Singapore 738406 (hereinafter called "CSM" which
expression shall include its successors-in-title and permitted
assigns).
WHEREAS:-
(A) ST has entered into a Building Agreement (hereinafter called "the
Building Agreement" which expression shall include all variations
thereof and supplements thereto) dated the 17th day of February 1998
with Jurong Town Corporation (hereinafter called "JTC" which expression
shall include its successors-in-title and assigns) in respect of the
land more particularly described in the First Schedule hereto
(hereinafter called "the Property") for the construction of factory
buildings and other structures therein and for the installation of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and
conditions contained in the Building Agreement.
(B) Under the terms of the Building Agreement, JTC has agreed to:-
(a) grant a licence to ST to enter upon the Property for a period of
three (3) years commencing from the 16th day of November 1995;
and
(b) lease the Property to ST for a term of thirty (30) years
(hereinafter called "the Head Lease") commencing from the 16th
day of February 1994 upon compliance with the conditions set out
in Clause 4 of the Building Agreement,
on the terms and conditions set out therein.
(C) With the consent of JTC, ST has agreed:-
(a) to grant a sub-licence to CSM for a period of three (3) years
(less one (1) day) commencing from the Commencement Date; and
(b) that upon the completion of the Development and subject to
compliance with the conditions set out in this Agreement, ST
shall grant to CSM a sub-lease of the Property for a term of
thirty (30) years less one (1) day commencing from the 16th day
of February 1994,
on the terms and conditions hereinafter set out.
NOW IT IS HEREBY AGREED as follows:-
1. In this Agreement, the following expressions shall have the following
meanings:-
<PAGE> 3
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"Commencement Date" means the 16th day of November 1995;
"Development" means the construction on the Property of factory
buildings and other structures therein and the installation thereon of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and
conditions contained in the Building Agreement;
"First Sublease Agreement" means the Agreement for Sub-licence and
Sub-lease dated 30 September 1997 made between ST and CSM with respect
to the Sub-licence and Sub-lease of Private Lot A12787.
"Private Lot A12787" means all that piece of land known as Private Lot
A12787 forming part of the Government Survey Lots 937 and 1949 and part
of Marsiling Road (old), Mukim No. 13, Sembawang and situated in the
Republic of Singapore as shown on the plan annexed to the building
agreement relating thereto made between JTC and ST and estimated to
contain an area of 52,525 square metres more or less subject to survey.
"Private Lot A12878(b)" means all that piece of land known as Private
Lot A12787(b) forming part of the Government Survey Lot 3065V, Mukim
No. 13, Sembawang and situated in the Republic of Singapore as shown on
the plan annexed to the building agreement relating thereto made
between JTC and ST and estimated to contain an area of 7,015 square
metres more or less subject to survey.
"Private Lot A12878(d)" means all that piece of land known as Private
Lot A12787(d) forming part of the Government Survey Lots 230L and
1179D, Mukim No. 13, Sembawang and situated in the Republic of
Singapore as shown on the plan annexed to the building agreement
relating thereto made between JTC and ST and estimated to contain an
area of 47,640 square metres more or less subject to survey.
"Sub-Licence Period" means the period of three (3) years less one (1)
day commencing from and including the Commencement Date.
2. For the Sub-Licence Period or for such further period as may be
extended by ST, CSM shall have the licence and authority to enter upon
the Property for the carrying-out of the works relating to the
Development in accordance with the stipulations hereinafter contained
and as contained in the Building Agreement and for no other purpose.
3. CSM hereby agrees to perform and observe the following stipulations:-
(i) To hold the Property until the same shall be comprised in a
sub-lease to be granted as hereinafter provided as licensee
upon the same terms as the form of the sub-lease set forth
in the Second Schedule hereto at the same rent and subject
to the same covenants and stipulations so far as applicable
as if a sub-lease thereto has been actually granted and so
that ST shall have all the remedies by whatsoever means for
rent in arrears that are incidental to the relationship of
landlord and tenant but so that nothing herein contained
shall be construed as creating a legal demise or any
greater interest in the licence than a tenancy at will;
<PAGE> 4
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(ii) To pay in advance as from the Commencement Date a licence
fee, calculated at the same rate and on the dates specified
as for the rent reserved in the sub-lease of the Property
in the Second Schedule hereto as if such sub-lease has
actually been granted;
(iii) To pay on JTC's behalf to the Comptroller of Property Tax
an amount equivalent to the sum payable by JTC as property
tax in respect of the Property improvements and structures
thereon during the Sub-Licence Period or of such extended
period (if any) permitted under Clause 4(c) hereof by way
of additional licence fee or for the period prior to the
issue of the sub-lease to be granted under Clause 6 herein;
(iv) To pay interest at the rate of 8.5% per annum or such
higher rate as may be determined from time to time by ST in
respect of any outstanding amount payable by CSM under this
Agreement from the date such amount becomes due until
payment in full is received by ST.
(v) To pay to ST all survey fees and other charges including
those payable to and claimed by the relevant Government
Planning Authorities for the survey of the Property for the
purpose of sub-division of the land of which the Property
forms part and amalgamation of the Property with Private
Lot A12787 and for the preparation and issue of a
Certificate of Title PROVIDED THAT JTC shall have the right
to employ its own surveyor to carry out the said survey in
which event CSM shall bear all costs incurred.
(vi) At the cost and expense of CSM:-
(a) to engage a professional engineer to carry out soil
investigations to advise on the soil conditions and
to design structurally sound buildings proposed to be
erected taking into consideration the condition of
the Property; and
(b) to execute such work as may be required to be done in
respect of the state and condition of the Property
(especially its ground levels, topography and soil
conditions) which state and condition CSM shall be
deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the Commencement Date to ST for its
and JTC's approval and then to the relevant Government
Planning and Building Authorities full and complete plans
elevations and specifications of the buildings proposed to
be erected on the Property in accordance in every way with
the requirements under the Planning Act and the Local
Government Integration Act PROVIDED THAT ST or JTC may give
or refuse their approval at their absolute discretion.
(viii) At its own cost to commence erection on the Property either
within six (6) months from the Commencement Date or within
one (1) month from the date of approval of the plans by the
relevant Government Building Authorities, whichever is the
earlier, and in a substantial and workman-like manner with
the best materials of their available kinds and in
conformity in every respect with the plans, elevations,
sections and specifications approved by ST and JTC and the
relevant Government Building Authorities to finish the
Development so as to be completely fit for immediate
occupation and operation within the Sub-Licence Period
PROVIDED ALWAYS THAT in the planning, erection,
construction and completion of the said buildings to
<PAGE> 5
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be comprised on the Property, Private Lot A12787, Private
Lot A12787(b), Private Lot A12787(d) and any other land
occupied by ST within Woodlands Industrial Park D, to
develop to an average gross plot ratio of not less than 0.6
but not more than 1.4 and in the event that the gross plot
ratio exceeds 1.4 CSM shall be responsible for such
proportion (as may be mutually agreed upon between ST and
CSM) of the development charges/differential land premium
and other charges payable in consequence thereof AND
PROVIDED FURTHER THAT CSM shall not install or use any
electrical installation, machine or apparatus that may
cause or causes heavy power surge, high frequency voltage
and current, air borne noise, vibration or any electrical
or mechanical interference or disturbance whatsoever which
may prevent or prevents in any way the service or use of
any communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of
other licensees.
(ix) At its own cost to take such steps and execute such works
upon the Property as may be necessary for the protection of
shores and embankments if any and for the prevention of
earth-slip erosion of soil and failure of slopes
expeditiously in a workman-like manner and to the
satisfaction of ST and JTC and other relevant governmental
and statutory authorities.
(x) If CSM shall fail to complete the Development and to
commence operations within the period specified in Clause
3(viii) or within any extended period under Clause 4(c)
hereof CSM shall pay to ST a sum calculated at the rate of
$200.00 per day as liquidated damages for the period during
which the said buildings to be comprised in the Development
shall so remain or have remained incomplete.
(xi) To remove and replace any materials brought on the Property
or used for the Development or any part thereof which ST or
JTC shall require to be removed as being inferior or unfit
and to make good any workmanship which ST or JTC shall
consider imperfect and if CSM fails to remedy such defects
ST or JTC may enter upon the Property and remedy such
defects at the expense of CSM after expiry of fourteen (14)
days' notice being given to CSM to do so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than
those conforming with the plans elevations sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities nor to make any alterations
in the external elevation of any of the said buildings to
be comprised in the Development when erected without the
prior consent in writing of ST and JTC.
(xiii) In the erection and completion of the Development to do all
acts and things required by and to perform the works in
conformity in all respects with the provisions of any laws
or regulations made thereunder and to pay and keep ST and
JTC indemnified against all claims and other payments
whatsoever which during the progress of the works may
become payable in respect of the said works or of anything
done under the authority herein contained and from time to
time to discharge and pay all claims, assessments and
outgoings now or at any tine hereafter be chargeable
against JTC or ST under any law or otherwise in regard to
the Property, the said buildings or any structures or
installations thereon.
<PAGE> 6
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(xiv) Not to do or permit or suffer to be done in or upon the
Property or any part thereof anything which in the opinion
of ST or JTC may be or become a nuisance or annoyance or
cause damage or inconvenience to ST or to JTC or to the
licensees or occupiers of any adjoining or neighbouring
premises or whereby any insurance for the time being
effected on the Property under sub-clause (xix) herein may
be rendered void or voidable or be in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand
from the Property or permit or suffer any of the same to be
removed except so far as shall be necessary for the
execution of the said works PROVIDED nevertheless that CSM
may use for the purpose of the said works any of the
approved materials if so required.
(xvi) Not without the prior consent in writing of ST and JTC to
remove or permit or suffer to be removed until after
completion of the buildings comprised in the Development in
accordance with the provisions herein contained any
building materials (other than inferior or unfit materials
removed for the purpose of being replaced by proper
materials) or plant which shall be brought upon the
Property or Private Lot A12787 for the purpose of the
Development.
(xvii) Not without the prior consent in writing of ST and JTC to
affix or exhibit or erect or paint or permit or suffer to
be affixed or exhibited or erected or painted on or upon
any part of the exterior of the Property or of the external
walls or rails or fences thereof any nameplate, signboard,
placard, poster or other advertisement or hoarding.
(xviii) Not at any time to deposit or make up or manufacture or
permit or suffer to be deposited made up or manufactured
upon the Property or Private Lot A12787 any building or
other materials except such as shall be actually required
for the buildings to be erected on the Property (and on
Private Lot A12787 as the case may be) in accordance with
this Agreement and the Building Agreement and as soon as
the buildings hereinbefore agreed to be erected shall be
completed at its own expense to remove from the road or
footpath adjoining the Property and Private Lot A12787 or
the ground intended to be used for such road or footpath
all building and other materials and waste whatsoever.
(xix) As soon as any of the said buildings comprised in the
Development shall have reached a height of five (5) feet
above ground level to insure the same to the full value
thereof in the joint names of ST, JTC and CSM against loss
or damage by fire in some insurance office approved by JTC
and ST and shall increase such insurance proportionately as
the said buildings approach completion and to keep the same
so insured until a sub-lease shall be granted as
hereinafter provided and to pay all premiums thereof at
least seven (7) days before the expiry date of such
insurance policy and to produce to ST or JTC (if so
directed by ST) or their respective agents without demand
the policy or policies of such insurance and the receipt
for each such payment and in the event the said buildings
or any part thereof are destroyed or damaged by fire then
to forthwith give to ST and JTC written notice of such
destruction or damage and to forthwith cause all monies
received by virtue of any such insurance to be forthwith
laid out in rebuilding and reinstating the buildings to the
satisfaction of ST and JTC and to make up any deficiency
thereof out of its own monies, but the rebuilding and
reinstatement shall in any event commence and be
<PAGE> 7
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completed within the period specified by ST and JTC
PROVIDED ALWAYS THAT if CSM shall at any time fail to keep
the Property insured as aforesaid ST or JTC may without
being under any obligation to do so do all things necessary
to effect or maintain such insurance and any monies
expended by either ST or JTC for that purpose shall be
repayable by CSM on demand and be recovered forthwith from
CSM as a debt PROVIDED FURTHER THAT notwithstanding the
covenant contained in this Clause 3(xix), CSM may exercise
the option not to rebuild or reinstate the buildings
subject to the following conditions:-
(a) without prejudice to Clause 4(b), CSM shall give ST
four (4) months' prior notice in writing to
prematurely terminate this Agreement; and
(b) CSM shall forthwith pay or cause to be paid to ST or
if ST so directs to JTC all monies received by virtue
of such insurance.
(xx) Not to sell, assign, create a trust or agency, let, subset
or underlet, charge, grant a licence or part with or share
or in any way dispose of its interest under this Agreement,
or the possession or occupation of the Property, or any
part thereof or otherwise in any way dispose of the
Property or any part thereof EXCEPT THAT, subject to ST's
and JTC's prior written consent (the consent of ST not to
be unreasonably withheld), CSM may mortgage or charge its
interest under this Agreement by way of assignment or
debenture (as the case may be) to secure the repayment of
such sum or sums as CSM may require for the purpose of
erecting or completing the building or other structure to
be built on the Property in accordance with the provisions
of this Agreement and the Building Agreement PROVIDED THAT
CSM shall thereafter continue to be liable for the
observance and performance of the several stipulations
herein contained until the grant of the sub-lease as
hereinafter provided. Notwithstanding the foregoing, CSM
may sublet the property or part thereof to Silicon
Manufacturing Partners Pte Ltd.
(xxi) Not to permit or suffer any person to occupy reside or make
use of any building erected on the Property before a final
or a temporary Certificate of Fitness for Occupation has
been issued by or except with the permission of the
relevant Governmental and Statutory authorities.
(xxii) To make reasonable provision against and be responsible for
all loss, injury and damage to any person (including loss
of life) or property including that of ST and JTC for which
CSM may be held liable arising out of or in connection with
the occupation and use of the Property and the structures
erected thereon and to indemnify ST and JTC against all
proceedings, claims, costs and expenses which ST or JTC may
incur or for which ST or JTC may be held liable as a result
of any act, neglect or default of CSM its servants,
contractors, sub-contractors, or agents or their respective
servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited
to pollutants generated at the Property to the requirements
and satisfaction of ST and JTC and other relevant
governmental and statutory authorities PROVIDED THAT in the
event of any default by CSM under this covenant ST or JTC
may carry out such remedial measures as they think
necessary and all costs and expenses incurred thereby shall
be recoverable forthwith from CSM as a debt.
<PAGE> 8
-7-
(xxiv) To construct an internal drainage system to the
satisfaction of ST and JTC to ensure that all surface water
collected is discharged into the public drains and will not
flow into adjoining properties.
(xxv) To construct and complete a permanent culvert within nine
(9) months from the Commencement Date or any extension
thereof as may be approved by ST and JTC and in connection
thereof to submit plans to and to obtain the prior approval
in writing of ST and JTC for the construction of a
temporary crossing.
(xxvi) Within one (1) month of the completion of the permanent
culvert mentioned in sub-clause (xxv) above to remove the
temporary crossing and to reinstate any roads, roadside
kerbs, drains, turfing or the like damaged by CSM, its
servants, contractors, sub-contractors, or agents or their
respective servants to the satisfaction of ST and JTC and
the relevant Governmental and Statutory authorities.
(xxvii) Within one (1) month of the completion of the construction
of the said buildings and related civil works to reinstate
any damage caused to the roads, roadside kerbs, drains,
turfing and the said permanent culvert by CSM its servants
contractors or agents or their respective agents to the
satisfaction of ST and JTC and the relevant Governmental
and Statutory authorities.
(xxviii) To place with ST or JTC (if directed by ST) a deposit of
$5,000.00 which shall be forfeited in the event of any
breach of any of the provisions in sub-clauses (xxv),
(xxvi) and (xxvii) herein without prejudice to the rights
and remedies of ST and JTC contained in this Agreement, the
Building Agreement, the Head Lease and the sub-lease.
(xxix) At its own cost to plant and maintain trees and landscape
the Property in accordance with all the requirements of the
Parks and Recreation Department, Ministry of National
Development and other relevant Governmental and Statutory
authorities.
(xxx) At its own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and
the like (if any) to the requirements and satisfaction of
ST and JTC and other relevant Governmental and Statutory
authorities.
(xxxi) If CSM shall at any time be found to have encroached upon
any area beyond the allocated boundaries of the Property,
CSM shall at its own cost and expense, but without
prejudice to any other right or remedy ST or JTC may have
against CSM, immediately or within the time specified (if
any) by ST or JTC rectify and remove the encroachment to
the satisfaction of ST and JTC and pay to ST or JTC (if so
directed by ST) such compensation as may be specified by ST
or JTC. If, however, ST or JTC in their absolute discretion
permit CSM to regularise and retain the encroached area or
any part thereof upon such terms and conditions as may be
stipulated by ST or JTC and any other relevant Governmental
and Statutory authorities, CSM shall pay licence fee on the
encroached area with retrospective effect from the date
specified by ST, and CSM shall also pay all survey fees,
amalgamation fees, legal fees (including solicitor and
client costs and expense), and all other costs and charges
relating thereto.
<PAGE> 9
-8-
(xxxii) If any damage of whatsoever nature or description shall at
any time occur or be caused to the Property or any building
or structure or installation thereon, or any part thereof,
to forthwith give to ST and JTC written notice of the
damage and to remedy the damage to the satisfaction of ST
and JTC within such time as ST or JTC may specify, all at
the cost of CSM.
(xxxiii) CSM accepts the Property in its existing state and
condition and further accepts and confirms that ST has made
no representation nor given any assurance as to the present
or future suitability of the Property or its surrounding or
adjacent lands in relation to CSM's use, operations or
occupation at the Property.
(xxxiv) Subject always to Clause 3(viii) herein, to develop the
Property for low rise and low density industrial
development limited to 100 persons per hectare.
(xxxv) Upon CSM's compliance with all the terms, conditions and
obligations of this Agreement, to proceed immediately to
have the Property amalgamated with Private Lot A12787 with
the approval of the competent authorities under the
Planning Act and to pay for all legal, survey, registration
and any other fees arising from the same.
(xxxvi) Subject to Clause 3(xii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by CSM shall not exceed
two (2) metres PROVIDED THAT boundary walls or fences (if
any) shall be erected behind baphia or other hedges planted
on the Property.
(xxxvii) At CSM's own cost, at all times, to comply with and observe
the maximum height restriction of 61.0 metres above Mean
Sea Level and any other height restriction(s) on buildings
and structures at the said land as imposed by any
governmental or statutory authority and to ensure that any
height restriction plan(s) which may be furnished to CSM
shall at all times be held in strict confidence and shall
not be shown, revealed or copied to or by any person,
contractor, sub-contractor, watchman, employee, agent,
representative or any other person except with the prior
written consent of ST and JTC.
(xxxviii) Not to keep or allow to be kept any livestock or other
animals at the Property or any part thereof.
(xxxix) In the event that ST or JTC becomes entitled to and does
exercise his right of re-entry upon Private Lot A12787, or
upon the Property under Clauses 4(b) or 4(d) herein, or CSM
terminates this Agreement or his sub-licence under the
First Sublease Agreement or surrenders part of the Property
or part of Private Lot A12787 as mentioned in Clause 7
herein or in the First Sublease Agreement (hereinafter
called "the determination"), to immediately do any or all
of the following as may be and to the extent required in
writing by ST and JTC at the cost and expense of CSM and
without claiming any compensation, allowance or payment
from the ST whatsoever:-
(a) if CSM has failed to commence erection of the
buildings proposed to be erected on the Property in
accordance with this Agreement or if any partially or
fully completed building or structure straddles
across, abuts or is very near the common boundary of
the Property and Private Lot A12787, then CSM shall,
if
<PAGE> 10
-9-
the determination is in respect of the Property,
demolish and remove all partially completed buildings
and structures on the said land and all buildings and
structures on the Property or Private Lot A12787
which straddle across, abut or are very near the
common boundary of the Property and Private Lot
A12787, or which would otherwise not comply with
building laws or regulations, but if the
determination is in respect of Private Lot A12787,
then CSM shall in addition surrender and give
possession of the Property and all other buildings,
structures and fixtures thereon, if any; or
(b) during the period from the time a Certificate of
Fitness for Occupation is issued by the relevant
Governmental authority in respect of any building on
the Property and the time CSM executes one good
sub-lease for the Property and Private Lot A12787 by
virtue of Clause 6(b) herein, CSM shall, if the
determination is in respect of either the Property or
Private Lot A12787, immediately surrender and give
possession of Private Lot A12787 or the Property
respectively, and all buildings, structures and
fixtures thereon; and
(c) reinstate the Property to its original state and
condition;
PROVIDED ALWAYS THAT if CSM shall fail to observe or
perform this covenant or any part thereof, ST or JTC may at
his absolute discretion (but shall not be under obligation
so to do perform the same or any part thereof and all costs
and expenses thereby incurred shall be recoverable from CSM
as a debt AND PROVIDED FURTHER THAT ST or JTC shall not be
liable to CSM for any loss (including loss of life), damage
or inconvenience caused thereby in respect of CSM's failure
to observe or perform this covenant or any part therefore
and CSM shall fully indemnify ST against all loss and
damage suffered by ST. ST's or JTC's rights under this
covenant shall be in addition to ST's or JTC's rights under
and shall not prejudice the generality of Clauses 4(b) and
4(d) herein.
(xl) The licence fees and other taxable sums payable by CSM
under or in connection with the sublicence herein shall be
exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any government, statutory or tax
authority calculated by reference to the amount of the
licence fees and any other taxable sums received or
receivable by ST from CSM and which tax is payable by CSM.
CSM shall pay the tax and ST acting as the collecting agent
for the government, statutory or tax authority shall
collect the tax from CSM together with the licence fees
hereinbefore reserved without any deduction and in advance
without demand on the first day of each of the months of
January, April, July and October, and in the manner and
within the period prescribed in accordance with the
applicable laws and regulations.
(xli) Without prejudice to Clauses 3(xii) and 3(xiii)
hereinbefore appearing, CSM shall not place, construct or
erect or permit the placing, construction or erection of
any building, structure or equipment whatsoever on the 7.6
metre and 15 metre-wide green buffers situated within the
boundary of the Property as shown on the plan annexed to
the Building Agreement and shall comply with the
requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority and
the Building Control Division of the Ministry of National
Development.
<PAGE> 11
-10-
(xlii) (a) CSM shall observe and be bound by the provisions
in the Building Agreement and the Head Lease and
perform all the covenants and conditions on the part
of the lessee contained in the Head Lease insofar as
they relate to the Development and/or the Property;
(b) CSM shall not do omit suffer or permit in relation to
the Development and/or the Property any act or thing
which would or might cause ST to be in breach of the
Building Agreement and the Head Lease or which if
done omitted or suffered or permitted by ST would or
might constitute a breach of the covenants on the
part of the lessee and the conditions contained in
the Building Agreement and the Head Lease;
(c) CSM shall keep ST indemnified against any actions,
proceedings, claims, damages, costs, expenses, losses
or liability incurred by ST arising from any breach,
non-observance, or non-performance by CSM of the
aforesaid provisions, covenants and conditions in the
Building Agreement and the Head Lease.
(xliii) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in
connection with the preparation stamping and issue of this
Agreement and the sub-lease herein agreed to be granted and
any prior accompanying or future documents or deeds
supplementary collateral or in any way relating to this
Agreement and the sub-lease.
(xliv) To pay all costs and fees legal or otherwise, including
ST's costs as between solicitor and client, in connection
with the enforcement of the covenants and conditions of
this Agreement and the sub-lease as well as JTC's costs if
any action or omission of CSM under this Agreement causes
JTC to take action to enforce the covenants and conditions
of the Building Agreement and the lease to be granted
pursuant thereto.
4. It is hereby mutually agreed that until CSM has performed all its
obligations herein contained ST and JTC shall possess the rights and
powers following:-
(a) The right for ST and JTC and their respective agents with or
without workmen or others at all reasonable times to enter upon
the Property to view the state and progress of the said
buildings and works and the Development and to inspect and test
the materials and workmanship in connection therewith and for
any other reasonable purpose including the construction and
installation of sewers drains pipes and cables on or leading
from any adjoining or neighbouring land of JTC as may be
required by ST or JTC.
(b) Full right and liberty in case any part of the Development
hereby agreed to be erected be not completed and fit for
immediate occupation within the period hereinbefore limited
(time in this respect shall be of the essence of the contract)
and in accordance in every way with the stipulations
hereinbefore contained or in case CSM shall in any other way
fail to perform and observe any of the stipulations on its part
herein contained or if any charging order writ of seizure and
sale or its equivalent made in respect of the Property or any
structure thereon shall be enforced without the written consent
of ST and JTC having first been obtained by CSM or by the person
in whose favour the charging order writ of seizure and sale or
its equivalent shall have been made, ST shall have the right to
re-enter upon
<PAGE> 12
-11-
and take possession of the Property and all buildings structures
fixtures plant material and effects whatsoever thereon with
power to hold and dispose thereof as if this Agreement had not
been entered into and without making to CSM any compensation or
allowance for the same and this Agreement shall thereupon
determine but without prejudice to any right of action or other
remedy of ST for the recovery of any licence fee or monies due
to it from CSM or in respect of any breach of this Agreement
PROVIDED ALWAYS THAT ST shall, in addition, also be entitled to
claim and to recover from CSM as a debt, firstly liquidated
damages calculated at and in accordance with the same rates as
that stipulated for liquidated damages in Clause 4(f) of the
sub-lease set out in the Second Schedule hereto as if the
respective year of the term of the lease therein referred to the
respective year of the Sub-Licence Period or any extended period
in which ST exercised its aforesaid right of re-entry under this
Agreement and secondly any sum which ST or JTC may incur in
connection with the demolition and removal of any building,
structure, fitting, fixture or thing which ST or JTC may
consider necessary to demolish and remove AND PROVIDED THAT if
the Property has been assigned by way of mortgage with the
consent of ST and JTC the provisions of this clause shall not
take effect until ST or JTC has served upon the mortgagee notice
in writing specifying the breach and the mortgagee has failed to
remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such default as
aforesaid in completing the said buildings and works ST may in
its discretion give notice in writing to CSM of its intention
not to enforce the stipulations herein contained and may fix any
extended period for the completion of the Development in
substitution for the said period of three (3) years less one (1)
day hereby fixed for such completion and thereupon the
obligations hereunder of CSM to complete the said works and to
accept a sub-lease hereinafter mentioned shall be taken to refer
to such substituted period.
(d) Without prejudice to the generality of Clause 4(b) hereof full
right and liberty of ST in the event that CSM has failed to
either:-
(1) develop the Property to the gross plot ratio specified in
Clause 3(viii), or
(2) fulfil the investment criterion as stipulated in Clause 6
hereof or in the First Sublease Agreement,
with full and absolute discretion to ST to either:-
(i) re-enter upon and take possession of the Property or any
part thereof and all buildings, structures, fixtures,
plant, material and effects whatsoever thereon with power
to hold and dispose thereof as if this Agreement had not
been entered into and without making to CSM any
compensation or allowance for the same and this Agreement
shall thereupon determine but without prejudice to any
right of action or other remedy of ST or recovery of any
licence fee or monies due to ST from CSM or in respect of
any breach of this Agreement, or
(ii) reduce the term of sub-lease in respect of the Property and
Private Lot A12787 to such a lesser term that JTC may grant
to ST pursuant to the terms of the Building Agreement (less
one (1) day) in which event CSM shall execute such
documents as ST
<PAGE> 13
-12-
shall deem necessary and in connection therewith, pay all
costs disbursements fees and charges legal or otherwise as
provided in Clause 3(xliv).
PROVIDED ALWAYS that if the Property or Private Lot A12787 has
been assigned by way of mortgage with the consent of ST and JTC,
the provisions of this sub-clause (d) shall not take effect
until ST or JTC had served upon the mortgagee notice in writing
specifying the breach and the mortgagee has failed to remedy
such breach.
5. CSM hereby agrees that if any failure on its part to observe or perform
any of its covenants contained in this Agreement results in the failure
of ST to comply with its obligations under the Building Agreement and
such failure entitles JTC to re-enter upon and take possession of the
Property and JTC exercises such right, then this Agreement shall
forthwith terminate without ST making to CSM any compensation or
allowance for the same and without prejudice to any right of action or
other remedy of ST for the recovery of any licence fee or monies due to
it from CSM or in respect of any breach of this Agreement.
6. (a) If the Development shall have been completed to the
satisfaction of ST and JTC and the relevant Government Building
Authorities (to be evidenced by their certificates in writing to
that effect) within the Sub-Licence Period or of such extended
period (if any) as aforesaid and if CSM shall have performed and
observed all the stipulations herein on its part contained other
than such as any have been waived as aforesaid and if there
shall have been an average minimum investment for the Property
and Private Lot A12787 and A12787(b) by CSM of $1,000.00 per
square metre of the gross floor area of the buildings on
buildings and civil works, and a minimum investment of $500.00
per square metre on plant and machinery, within the Sub-Licence
Period (due proof thereof to be produced by CSM to the
satisfaction of ST and JTC on or before 14th May 1999 and if JTC
has granted to ST a lease of the Property and premises together
with the Development for the term of thirty (30) years from the
16th day of February 1994 then ST shall grant and CSM shall
accept and execute a counter part of one good and sufficient
sub-lease of the Property and premises to CSM for the term of
thirty (30) years from the 16th day of February 1994 less one
(1) day at the rent and in the form containing the reservation
exceptions covenants conditions and provisions set forth in the
Second Schedule hereto with such modifications as circumstances
may render necessary and such other covenants conditions or
stipulations to be performed by CSM governing or regulating the
use of the Property as ST and JTC thinks fit with a view to
preserving, the value thereof or protecting the interests of the
licensees or occupiers of land or premises adjacent to the
Property from any dangerous or obnoxious or otherwise harmful
activities which may be carried out by CSM whether or not such
activities are incidental to CSM's trade PROVIDED THAT until
such sub-lease is executed CSM shall be deemed to be the
sub-lessee of the Property as though a sub-lease has been
executed at the same rent and subject to the covenants and
conditions contained in the Second Schedule hereto so far as the
same are applicable.
(b) Upon obtaining the competent authorities' approval for the
amalgamation referred to in Clause 3(xxxv) above and the
Certificate of Title for the amalgamated premises, and if JTC
has granted to ST a Lease of the amalgamated premises ST shall,
subject to the CSM's satisfaction of the conditions specified in
subclause (a) of this clause and if instead of
<PAGE> 14
-13-
granting separate leases for the said Private Lot A12787 and for
the Property as stipulated in subclause (a) of this clause, JTC
grants one good and sufficient lease or sublease for the
amalgamated premises together with the buildings erected thereon
with their appurtenances for the term of thirty (30) years from
the 16th day of February 1994. CSM shall accept and execute a
counterpart of such good and sufficient sub-lease of the
amalgamated premises together with the buildings erected thereon
with their appurtenance for the term fo thirty (30) years from
the 16th day of February 1994 less one (1) day. The said
sub-lease shall, subject to such modifications as may be agreed
between the JTC and/or ST and CSM or as circumstances may render
necessary, be on the same terms, covenants and stipulations as
contained in the Second Schedule of this Agreement.
7. CSM may, at any time during the Sub-Licence Period and any extensions
thereof granted under Clause 4(c) terminate this Agreement or surrender
part of the Property or his licence in respect of Private Lot A12787 or
part of both by giving to ST four (4) months' prior notice in writing
SUBJECT to the consent and the conditions of the consent in writing of
ST and JTC in relation to the Property or Private Lot A12787 or both
(including the right of JTC and ST to require CSM to terminate the
Sub-lease in respect of Private Lot A12787), PROVIDED ALWAYS THAT such
termination or surrender shall be without prejudice to any right or
remedy which may have or will accrue to ST prior to the expiry of the
four (4) months' notice AND PROVIDED FURTHER THAT CSM shall in addition
to the licence fee (which at the discretion of ST may be apportioned
for the period commencing from the Commencement Date up to the date of
delivery of vacant possession of the Property or part thereof to ST)
survey fees, property tax and other charges specified herein forthwith
pay to ST as liquidated damages in accordance with and calculated at
the same rates as that stipulated for liquidated damages in Clause 4(f)
of the sub-lease set out in the Second Schedule hereto PROVIDED THAT
before the delivery of vacant possession as aforesaid if ST shall so
desire CSM shall at the cost and expense of CSM comply with the
requirements of JTC and ST under Clause 3(xxxix) of this Agreement and
licence fee and property tax shall continue to be payable until the
same has been completed to the satisfaction of JTC and ST PROVIDED ALSO
THAT CSM shall, without prejudice to Clause 3(viii) and 3(xli), ensure
that the Property and any other remaining land occupied by ST within
Woodlands Industrial Park D comply with the setback requirements and
other planning requirements and do not exceed the average maximum gross
plot ratio of 1.4 after the termination or surrender AND PROVIDED
FURTHER THAT if CSM shall on his own accord terminate the First
Sublease Agreement or surrender part of Private Lot A12787 in
accordance with the terms therein and JTC or ST consequently requires
CSM to also terminate this Agreement or to surrender part of the said
land then the provisions of this clause shall also apply to CSM as if
CSM had itself terminated this Agreement.
8. ST hereby covenants that:-
(i) it has obtained the written consent of JTC to the sub-licence
and sub-lease herein;
(ii) ST shall pay the rent and all other monies and shall perform the
lessee's covenants and conditions contained in the Head Lease
(save for such covenants as shall be performed by CSM pursuant
to the provisions of Clause 3(xliii) hereof);
(iii) ST shall take all reasonable steps to obtain the consent of JTC
whenever CSM makes any request in connection with the Property
that requires the approval of JTC under this Agreement or the
Building Agreement;
<PAGE> 15
-14-
(iv) Upon notice from CSM, ST will take all reasonable steps to
enforce promptly the obligations undertaken by JTC in the Head
Lease.
9. (a) 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 post (by air-mail if to
or from an address outside Singapore) with recorded delivery or
facsimile addressed to the intended recipient thereof at its
address set out below or at its last known address or at its
facsimile number set out below (or to such other address or
facsimile number as any party may from time to time duly notify
in writing to the other) and marked to the attention of the
person named below in respect of the intended recipient. Any
such notice, demand or communication shall be deemed to have
been duly served (if given or made by facsimile) immediately or
(if given or made by letter) 24 hours after posting or (if made
or given to or from an address outside Singapore) 72 hours after
posting and in proving the same it shall be sufficient to show
that the envelope containing the same was duly addressed,
stamped and posted. The initial addresses and facsimile numbers
of the parties for the purposes of this Agreement are:-
ST : SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02 The Curie
Singapore Science Park
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 773 4106
CSM : CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 360 3812
10. The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
11. (a) This Agreement shall be construed and governed by the laws of
Singapore.
(b) Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre ("SIAC
Rules") for the time being in force which rules are deemed to be
incorporated by reference into this clause. The tribunal shall
consist of one (1) arbitrator to be appointed by the Chairman of
Singapore International Arbitration Centre and the language of
the arbitration shall be English.
<PAGE> 16
-15-
(c) Nothing shall affect the right to serve process in any manner
permitted by law.
THE FIRST SCHEDULE ABOVE REFERRED TO
All that piece of land known as Private Lot A12787(a) forming part of
the Government Survey Lot 3065V, Mukim No 13, Sembawang and situated in
the Republic of Singapore as shown on the plan annexed to the Building
Agreement and estimated to contain an area of 29,824 square metres more
or less subject to survey.
<PAGE> 17
-16-
THE SECOND SCHEDULE ABOVE REFERRED TO
----- ------- ---------
L 1 Ver 1
----- ------- ---------
THE LAND TITLES ACT
-----------------------
-----------------------
(For Official use only)
SUB-LEASE
(A) DESCRIPTION OF LAND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CT/SSCT/SCT Mukim Town Lot No. Property Address
Subdivision Whole or part (if part lot, to
state appd new lot/strata lot)
- --------------------------
Volume Folio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
13 Whole
(Private Lot A12787(a)
(the "demised premises")
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(B) LESSOR:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 199004768N
- -------------------------------------------------------------------------------------------------------------------
NAME: SINGAPORE TECHNOLOGIES PTE LTD (the "Lessor")
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
ADDRESS: 83 Science Park Drive #01-01/02
(within Singapore for
service of Notice) The Curie, Singapore Science Park
Singapore 118258
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(the registered proprietor of a leasehold estate for the term of thirty (30)
years commencing from the 16th day of February 1994) HEREBY LEASES the
registered estate or interest of the Lessor in the land above described to:-
<PAGE> 18
-17-
(C) LESSEE:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 198703584K
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME: CHARTERED SEMICONDUCTOR MANUFACTURING LTD (the "Lessee")
- -------------------------------------------------------------------------------------------------------------------
PLACE OF INCORPORATION Singapore
- -------------------------------------------------------------------------------------------------------------------
ADDRESS: 60 Woodlands Industrial Park D Street 2
(within Singapore for
service of Notice) Singapore 738406
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 19
-18-
FOR TERM OF LEASE
Term of Lease: Thirty (30) years less one (1) day
Commencement Date: 16th day of February 1994 (hereinafter referred to as
"the Commencement Date")
Consideration: The average minimum investment by the Lessee on building
and civil works of $1,000/- per square metre of the
gross floor area and on plant and machinery of $500/-
per square metre of Private Lots A12787, A12787(a) and
A12787(b) (hereinafter referred to as "the fixed
investment criteria") and the average gross plot ratio
of not less than 0.6.
Annual Rent: As stipulated in Clause 1(a) of the Special Covenants
and Conditions hereinafter appearing.
Easement & Reservation: TOGETHER WITH the benefit of the rights
granted to the Lessor and SUBJECT TO the rights reserved
to Jurong Town Corporation ("JTC") mentioned in the
Lease dated the [ ] day of [ ] made between JTC and the
Lessor (the "Head Lease" which expression shall include
the provisions of the Memorandum of Lease filed in the
Registry of Titles as No. ML I/30809F and the First
Variation of Memorandum of Lease VML I/076384J as well
as all variations thereof and supplementals thereto).
SUBJECT TO:-
(D) PRIOR ENCUMBRANCES (TO STATE 'NIL' IF THERE ARE NONE):
------------------------------------------------------------------------
Nil
------------------------------------------------------------------------
AND the following:-
(E) COVENANTS AND CONDITIONS
The Lessee hereby covenants to perform and observe the covenants,
conditions and powers implied by law in instruments of lease (or to
such of them as are not hereinafter expressly negative or modified);
(F) SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants as follows:-
(a) To pay from the 16th day of November 1995 the yearly
rent of Dollars Five Hundred and Eighty-Five Thousand
One Hundred and Forty-Six and Cents Eighty-Eight only
($585,146.88) to be paid by equal quarterly instalments
on the 1st day of each of the months of January, April,
July and October in every year of the said term without
any deduction and in advance without demand at the
office of the Lessor or at such other office
<PAGE> 20
-19-
as the Lessor may designate calculated at the rate of $19.62 per
square metre per annum (hereinafter referred to as "the Initial
Rent") of the demised premises having an area of 29,824 square
metres (hereinafter referred to as "the preliminary survey
area", which may at any time be adjusted on completion of final
survey if any, and in which event if the area adjusted exceeds
five square metres more, or less, than the preliminary survey
area the rental paid or payable by the Lessee shall accordingly
also be adjusted and be paid and payable or refunded as the case
may be in respect of the full difference between the preliminary
survey area and the final survey area, with retrospective effect
from the commencement of the said term of the Sub-Lease herein),
which rate was last increased on the 16th day of February 1996
to the rate of $21.39 per square metre per annum. The yearly
rent so increased on the 16th day of February 1996 shall be
increased by 9% per annum (compounded annually) on the 16th day
February 1997 and on the 16th day of February of every year
thereafter.
(b) (i) To observe and be bound by the provisions in the Head
Lease and perform all the covenants and conditions on
the part of the tenant contained in the Head Lease
insofar as they relate to the Property;
(ii) Not to do omit suffer or permit in relation to the
Property any act or thing which would or might cause the
Lessor to be in breach of the Head Lease or which if
done omitted or suffered or permitted by the Lessor
would or might constitute a breach of the covenants on
the part of the tenant and the conditions contained in
the Head Lease; and
(iii) To keep the Lessor indemnified against any actions,
proceedings, claims, damages, costs, expenses, losses or
liability incurred by the Lessor arising from any
breach, non-observance, or non-performance by the Lessee
of the aforesaid covenants and conditions in the Head
Lease.
(c) To pay the rents hereinbefore reserved on the days and in the
manner set out above, without any deductions, set-off or
counterclaim.
(d) As often as any building or structure on the demised premises or
any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies received
by virtue of such insurance to be laid out in rebuilding and
reinstating the same to the satisfaction of the Lessor and JTC
and in accordance with the plans and specifications approved by
the Lessor and JTC and in accordance with the laws, bye-laws
regulations and planning schemes of every relevant governmental
and statutory authority prevailing at the time, and in case the
monies so received shall be insufficient for that purpose then
to make up the deficiency out of its own monies PROVIDED THAT
the rebuilding and reinstatement shall in any event commence and
be completed within the period specified by the Lessor and JTC
PROVIDED FURTHER THAT notwithstanding the covenant contained in
this clause, the Lessee may exercise the option not to rebuild
or reinstate the buildings subject to the following conditions:
(i) the Lessee shall give to the Lessor four (4) months'
notice in writing to prematurely terminate the term of
the Sub-Lease herein created but without prejudice to
Clause 4(f) and any right or remedy which may have or
will accrue to the Lessor prior to
<PAGE> 21
-20-
the expiry of the four (4) months' notice under the
terms and conditions of the Sub-Lease herein; and
(ii) the Lessee shall forthwith pay or cause to be paid to
the Lessor or to JTC if so directed by the Lessor, all
monies received by virtue of such insurance.
(e) The rent and other taxable sums payable by the Lessee under or
in connection with the lease herein shall be exclusive of the
goods and services tax (hereinafter called "tax") chargeable by
any government, statutory or tax authority calculated by
reference to the amount of the rent and any other taxable sums
received or receivable by the Lessor from the Lessee and which
tax is payable by the Lessee. The Lessee shall pay the tax and
the Lessor acting as the collecting agent for the government,
statutory or tax authority shall collect the tax from the Lessee
together with the rent hereinbefore reserved without any
deduction and in advance without demand on the first day of each
of the months of January, April, July and October, and in the
manner and within the period prescribed in accordance with the
applicable laws and regulations.
(f) Not to demise assign mortgage charge create a trust or agency
let sublet or underlet or grant a licence or part with or share
the possession or occupation of the demised premises in whole or
in part at anytime within the period of five (5) years from the
16th November 1995 (hereinafter referred to as "the restrictive
period") EXCEPT THAT and subject to the Lessor's and JTC's prior
written consent, the Lessee may mortgage or charge by way of a
Debenture its interest in the demised premises for the purposes
of obtaining financing for the Lessee's operations at the
demised premises. After the restrictive period the Lessee shall
not demise assign create a trust or agency, mortgage, charge,
let, sublet, or underlet or grant a licence or part with or
share the possession or occupation of the demised premises in
whole or in part at anytime without first obtaining the consent
of the Lessor in writing or otherwise in any way dispose of the
demised premises whether in whole or in part without first
obtaining the consent of the Lessor and JTC in writing. PROVIDED
ALWAYS THAT in the event that any consent to assign is given,
such consent shall, without prejudice to Clauses 1(i) and 1(k),
at all times be subject to the Lessee and the assignee, where
applicable, complying with the setback requirements and any
other planning requirements and not exceeding the average
maximum gross plot ratio of 1.4 in respect of the demised
premises and any other remaining land occupied by the Lessor
within Woodlands Industrial Park D after the assignment. The
restrictions contained in Section 17 of the Conveyancing and Law
of Property Act (Chapter 61) shall not apply. In addition, the
Lessor or JTC may in their absolute discretion in giving the
consent require, inter alia, that the fixed investment criteria
be met and due proof thereof be shown within such period of time
as the Lessor or JTC may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to exercise
its rights under Clause 4(c) herein. Notwithstanding the
foregoing, the Lessee may sublet the demised premises or part
thereof to Silicon Manufacturing Partners Pte Ltd.
(g) At the termination, by notice by the Lessee, or re-entry by JTC
under the Head Lease or re-entry by the Lessor or by expiry or
otherwise, of the term hereby created, to yield up the demised
premises to the Lessor in tenantable repair in accordance with
the Lessee's covenants herein contained PROVIDED THAT, if so
required by the Lessor and upon notice thereof, the Lessee shall
at its own cost and expense properly demolish and remove such
buildings, structures, fixtures and fittings, or any part
thereof, as may be specified by
<PAGE> 22
-21-
the Lessor and JTC and reinstate the demised premises to the
satisfaction of the Lessor and JTC and if the Lessee shall fail
to observe or perform this covenant the Lessor or JTC may (but
shall not be under any obligation to do so) execute such works
and recover the costs thereof from the Lessee as a debt.
(h) Not to use or permit or suffer the demised premises or any part
thereof to be used otherwise than for wafer fabrication only
except with the prior consent in writing of the Lessor and JTC.
In granting its consent to any change or extension of use, JTC
and the Lessor may in their absolute discretion require, inter
alia, the Lessee to meet the fixed investment criteria and to
show due proof within such period of time as the Lessor or JTC
may stipulate, and in the event of the non-observance thereof,
the Lessor shall be entitled to exercise its rights under Clause
4(c) hereof. For the avoidance of any doubt, the words "meet" in
this clause and "met" in Clause 2(e) shall include the
maintenance of the fixed investment criteria and if it has not
been maintained then that it be met.
(i) Without prejudice to Clause 1(viii) of ML I/30809F, to ensure
that the gross plot ratio of A12787(a) shall not be less than
0.6 but not more than 1.4 and in the event the gross plot ratio
exceeds 1.4 the Lessee shall at its own cost and expense be
responsible for such proportions (as may be mutually agreed upon
between the Lessor and the Lessee) of the development charges,
differential premium and all other charges that may be payable
in consequence thereof. Notwithstanding the foregoing provision
the Lessee shall ensure that the average gross plot ratio for
Private Lots A12787, A12787(a), A12787(b), A12787(d) and any
other land occupied by the Lessor within Woodlands Industrial
Park D shall not be less than 0.6 but shall not exceed the
existing permitted maximum average gross plot ratio of 1.4
except with the prior written approval of the Lessor, JTC and
the relevant governmental and statutory authorities PROVIDED
ALWAYS THAT and without prejudice to clause 1(viii) of ML
I/30809F, the Lessee shall bear such proportion (as may be
mutually agreed upon between the Lessor and the Lessee) of the
development charges/differential premium which may be imposed on
or charged to the Lessor and/or JTC by the relevant governmental
and statutory authorities, and any other charges which may be
imposed in connection with any increase in the said average
gross plot ratio beyond 1.4
(j) The Lessee accepts the demised premises in its existing state
and condition and further accepts and confirms that neither JTC
nor the Lessor has made representation or given any assurance as
to the present or future suitability of the demised premises or
its surrounding or adjacent lands in relation to the Lessee's
use, operations or occupation at the demised premises.
(k) Not to place, construct or erect or permit the placing,
construction or erection of any building, structure or equipment
whatsoever on the 7.6 metre and 15.0 metre wide buffers within
the boundary of the demised premises and to comply with the
requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority and the
Building Control Division of the Ministry of National
Development.
(l) CSM shall not at any time hold the Lessor and/or JTC liable for
any claim, demand, action, proceeding, inconvenience, loss,
damages, costs or expenses of whatsoever kind or description
which the Lessee or any other person may suffer in connection
with or
<PAGE> 23
-22-
arising from the Easement referred to in VML I/076384J or any
works carried out in relation thereto.
(m) At all times throughout the term of lease hereby created to keep
in full operation and continue operations at the whole of the
demised premises in accordance with the use permitted in Clause
1(h) herein.
(n) If the Registrar of Titles issues in favour of the Lessee a
Certificate of Title for the leasehold estate comprised in the
Sub-Lease hereby created, the Lessee must, within 2 weeks of
receipt of the said Certificate of Title submit a copy of it to
the Lessor.
(o) If the term of Sub-Lease hereby created shall at any time be
determined by expiry or otherwise, the Lessee must at his own
cost and expense immediately surrender or cause to be
surrendered the said Certificate of Title for the leasehold
estate (and any duplicate instrument) to the Registrar of Titles
for custody and cancellation by the Registrar and the Lessee
shall simultaneously give to the Lessor written notice of such
surrender.
(p) Subject always to Clause 1(i) herein, to develop the demised
premises for low rise and low density industrial development
limited to 100 persons per hectare.
(q) To pay all legal fees (including the Lessor's solicitors'
charges on a solicitor and client basis) stamp duty and all
other disbursements and out of pocket expenses incurred in the
preparation and completion of this Sub-Lease and in connection
with any assignment sub-letting surrender or other termination
thereof otherwise than by effluxion of time or with any claim or
legal proceedings which may be brought by the Lessor against the
Lessee in the event of a breach by the Lessee in connection with
this Sub-Lease.
(r) At the Lessee's own cost and at all times, to comply with and
observe the maximum height restriction of 61.0 metres above Mean
Sea Level and any other height restriction(s) on buildings and
structures at the demised premises as imposed by any
governmental or statutory authorities and to ensure that any
height restriction plan(s) which may be furnished to the Lessee
shall at all times be held in strict confidence and shall not be
shown, revealed or copied to or by any person, contractor,
sub-contractor, watchman, employee, agent, representative or any
other person except with the prior written consent of the Lessor
and JTC.
(s) Subject to Clause 1(vii) of ML I/30809F, to ensure that the
maximum height of any chain-link fence (including the
anti-climb) or boundary wall erected by the Lessee at the
demised premises shall not exceed two(2) metres PROVIDED THAT
the chain-link fence or boundary wall shall be erected behind
any hedge that may be planted at the boundary of the demised
premises.
2. The Lessor hereby covenants as follows:-
(a) That the Lessee paying the rents hereby reserved and performing
and observing the several covenants herein contained and on the
Lessee's part to be performed and observed shall peaceably hold
and enjoy the demised premises without any interruption from the
Lessor or any person rightfully claiming under or in trust for
it.
<PAGE> 24
-23-
(b) The Lessor shall pay the rent and all other monies and shall
perform the lessee's covenants and conditions contained in the
Head Lease (save for such covenants as shall be performed by the
Lessee pursuant to the provisions of Clause 1(b) hereof);
(c) The Lessor shall take all reasonable steps to obtain the consent
of JTC whenever the Lessee makes any request in connection with
the demised premises that requires the approval of JTC under
this Sub-Lease or the Head Lease;
(d) Upon notice from the Lessee, the Lessor will take all reasonable
steps to enforce promptly the obligations undertaken by JTC in
the Head Lease.
3(1). The Lessor hereby further covenants with the Lessee that the Lessor
shall grant to the Lessee a lease of the demised premises for a further
term of thirty (30) years less one (1) day (hereinafter referred to as
"the further term") commencing from the second day following the date of
expiry of the term hereby created PROVIDED THAT:-
(i) at the expiry of the term hereby created, there by no existing
breach or non-observance of any of the covenants and conditions
herein contained on the part of the Lessee to be observed or
performed;
(ii) if required by the Lessor, the Lessee shall within four (4)
months from the commencement of the further term and at its own
cost and expense, carry out and complete such improvements to
the landscaping at the demised premises as may be stipulated in
writing by the Lessor or JTC;
(iii) the Lessee shall six (6) months before the expiry of the said
term submit, for the approval of the Lessor, JTC and the
relevant governmental and statutory authorities, plans for the
upgrading of the exterior of buildings on the demised premises
to the same highest quality of new buildings which JTC will be
building at that time, and the Lessee shall expeditiously do all
acts and things necessary to obtain the approval, all at the
cost and expense of the Lessee;
(iv) the Lessee shall at its own cost and expense complete, within
eighteen (18) months from the commencement of the further term,
the upgrading of the buildings in accordance with the plans
approved by the Lessor and JTC and the relevant governmental and
statutory authorities and to the satisfaction of the Lessor and
JTC;
(v) the Head Lease shall have been renewed by JTC in accordance with
the terms and conditions contained therein; and
(vi) the other terms and conditions that shall apply to the renewed
Sub-Lease shall be substantially similar to the terms and
conditions that shall apply to the renewed Head Lease save that
Clause 4(f) hereinafter appearing and the present covenant for
renewal shall not apply.
(2) If the further term is granted in accordance with clause 3(1) above, the
Lessee shall be permitted to remain on the premises on the day following
the expiry of the term created by this Sub-Lease as a licensee, free of
payment.
<PAGE> 25
-24-
4. PROVIDED ALWAYS and it is hereby agreed between the parties as follows:-
(a) No estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be
included in the demise hereinbefore contained.
(b) The Lessee shall not be entitled to any right of access of light
or air to the demised premises or any part thereof, which would
restrict or interfere with the user of any adjoining or
neighbouring land for building or any other purpose.
(c) If the said rent hereby reserved or any other sums due under
this Sub-Lease or any part thereof shall be unpaid for fourteen
days after becoming payable (whether the same shall have been
formally demanded or not) or if any of the covenants or
obligations on the part of the Lessee herein contained shall not
be performed or observed or if any charging order writ of
seizure and sale or its equivalent made in respect of the
demised premises shall be enforced by sale or by entry into
possession without the written consent of the Lessor having
first been obtained (Section 17 of the Conveyancing and Law of
Property Act shall also not apply in such event) by the Lessee
or by the person in whose favour the charging order writ of
seizure and sale or its equivalent shall have been made, then
and in any such case it shall be lawful for the Lessor or any
person or persons authorised by it in that behalf at any part
thereafter to re-enter upon the demised premises or any part
thereof in the name of the whole and thereupon the term hereby
created shall absolutely determine but without prejudice to any
right of action or remedy of the Lessor in respect of any breach
of any of the covenants or conditions by the Lessee herein
contained PROVIDED THAT if the demised premises have been
assigned by way of mortgage the provisions of this clause shall
not take effect until the Lessor has served upon the mortgagee a
notice in writing that such breach has occurred and the
mortgagee has failed to remedy such breach.
(d) If any failure on the Lessee's part to observe or perform any of
its covenants contained in this Sub-Lease results in the Lessor
failing to comply with its obligations under the Head Lease and
such failure entitles JTC to re-enter upon and take possession
of the demised premises and JTC exercises such right, then this
Sub-Lease shall forthwith terminate without the Lessor making to
the Lessee any compensation or allowance for the same and
without prejudice to any right of action or other remedy of the
Lessor for the recovery of any rents or other monies due to it
from the Lessee or in respect of any breach of this Sub-Lease.
(e) The Lessee may at any time prematurely terminate the term of
lease herein created by giving to the Lessor four (4) months'
prior notice in writing, but without prejudice to any right or
remedy which may have or will accrue to the Lessor prior to the
expiry of the four (4) months' notice under the terms and
conditions of the sub-lease herein created or in respect of the
termination.
(f) Subject to Clause 4(g) hereof in the event that premature
termination shall occur at any time within eight (8) years from
the commencement of the said term of the sub-lease herein
created or if JTC shall at any time within the said eight (8)
years exercise its right of re-entry under the Head Lease as a
result of the failure by the Lessor to observe or perform its
obligations under the Head Lease which was due to a failure by
the Lessee to observe or perform any covenant or condition
imposed on the Lessee under this Sub-Lease or if the Lessor
shall at any time within the said eight (8) years exercise its
right of re-entry under
<PAGE> 26
-25-
Clause 4(c) hereof, then in addition to rent, interest, property
tax and other sums payable by the Lessee to the date of
premature termination or re-entry as the case may be, liquidated
damages for the sum of $17.7 million ('the said sum') shall be
payable and paid by the Lessee to the Lessor and it is
acknowledged and agreed by the Lessee that the said sum shall
constitute liquidated damages and shall not be considered under
any circumstances as a penalty.
(g) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver of the liquidated damages provided in Clause
4(f) hereof in the event of any transfer or assignment of the
lease in accordance with Clause 1(f) hereinbefore appearing
PROVIDED THAT:-
(i) the transfer or assignment is approved in writing by the
Lessor and all other relevant governmental and statutory
authorities and
(ii) the Lessor reserves the right to revise the land rent to
the prevailing market rate at the time of the transfer
or assignment.
5. (a) 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 post (by air-mail if to
or from an address outside Singapore) with recorded delivery or
facsimile addressed to the intended recipient thereof at its
address set out below or at its last known address or at its
facsimile number set out below (or to such other address or
facsimile number as any party may from time to time duly notify
in writing to the other) and marked to the attention of the
person named below in respect of the intended recipient. Any
such notice, demand or communication shall be deemed to have
been duly served (if given or made by facsimile) immediately or
(if given or made by letter) 24 hours after posting or (if made
or given to or from an address outside Singapore) 72 hours after
posting and in proving the same it shall be sufficient to show
that the envelope containing the same was duly addressed,
stamped and posted. The initial addresses and facsimile numbers
of the parties for the purposes of this Sub-Lease are:-
Lessor: SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02
The Curie, Singapore Science Park,
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 773 4106
Lessee: CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 60 3812
<PAGE> 27
-26-
6. The illegality, invalidity or unenforceability of any provision of this
Sub-Lease under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7. (a) This Sub-Lease shall be construed and governed by the laws of
Singapore.
(b) Any dispute arising out of or in connection with this Sub-Lease,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre ("SIAC
Rules") for the time being in force which rules are deemed to be
incorporated by reference into this clause. The tribunal shall
consist of one (1) arbitrator to be appointed by the Chairman of
Singapore International Arbitration Centre and the language of
the arbitration shall be English.
(c) Nothing shall affect the right to serve process in any manner
permitted by law.
8. In this Sub-Lease where the context so requires or permits, words
importing the singular number or the masculine gender include the plural
number or the feminine gender and words importing persons include
corporation and vice versa, the expression "the Lessor" shall include
its successors-in-title and permitted assigns (if any), where there are
two or more persons included in the expression "the Lessee" covenants
expressed to be made by "the Lessee" shall be deemed to be made by such
persons jointly and severally, and except where otherwise provided the
expression "the demised premises" shall mean the land hereby demised and
all buildings, structures, fixtures and fittings therein.
(G) DATE OF LEASE:
---------------------------
(H) EXECUTION BY LESSOR
The Common Seal of SINGAPORE )
TECHNOLOGIES PTE LTD was hereunto )
affixed in the presence of:- )
Director
Director/Secretary
<PAGE> 28
-27-
(I) EXECUTION BY LESSEE
The Common Seal of CHARTERED )
SEMICONDUCTOR MANUFACTURING )
LTD was hereunto affixed in the presence of:- )
Director
Director/Secretary
(J) CERTIFICATE PURSUANT TO THE RESIDENTIAL PROPERTY ACT AND THE LAND
TITLES RULES AND PRACTICE CIRCULARS:
I, the solicitor for the Lessee hereby certify that the place of Incorporation
and registration number allocated by the Registry of Companies to the Lessee as
abovementioned specified in the within instrument have been verified from the
Certificate of Incorporation produced and shown to me, and are found to be
correct.
Dated this day of 19
-----------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
I, the Solicitor for the Lessee hereby certify that the within land is a
non-residential property as declared in the Residential Property Notification
1988. The land is zoned as and the approved specific
use of the property is for use.
Dated this day of 199
----------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
FOR THE LESSEE
<PAGE> 29
-28-
(K) SIMILAR INTEREST CONFIRMATION (IF ANY)
I, the solicitor for the Lessee
hereby confirms that the interest of the Lessee is similar to that in Caveat CV/
-----------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
(L) CERTIFICATE OF CORRECTNESS:
I, the Solicitor for the Lessor hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
-----------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSOR
I, the Solicitor for the Lessee hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
-----------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
<PAGE> 30
-29-
We, JURONG TOWN CORPORATION, hereby consent to the within Sub-Lease.
The Common Seal of JURONG TOWN )
CORPORATION was hereunto affixed )
in the presence of:- )
-----------------------------
General Manager
-----------------------------
Secretary
<PAGE> 31
-30-
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------
EXAMINED REGISTERED ON
Initials of
Date Signing Officer: Registrar of Titles
- --------------------------------------------------------------------------------
ALLEN & GLEDHILL
Advocates & Solicitors
36 Robinson Road
#18-01 City House
Singapore 068877
File Reference: (GHC)/JNVC/slll/12859/978
<PAGE> 32
-31-
IN WITNESS WHEREOF the parties hereto have hereunto SET their respective
hands or seals the day and year first above written.
SIGNED on behalf of SINGAPORE )
TECHNOLOGIES PTE LTD by Ho Ching ) /s/ HO CHING
President & CEO )
in the presence of:- )
/s/ ANGELA HON
- ----------------------
Angela Hon
Senior Manager, Legal
SIGNED on behalf of CHARTERED )
SEMICONDUCTOR MANUFACTURING )
LIMITED by Tan Bock Seng ) /s/ TAN BOCK SENG
President & CEO )
in the presence of:- )
/s/ ANGELA HON
- ----------------------
Angela Hon
Senior Manager, Legal
<PAGE> 1
EXHIBIT 10.36
PRIVATE LOT A12787(b):
DATED THIS 17TH DAY OF FEBRUARY 1998
BETWEEN
SINGAPORE TECHNOLOGIES PTE LTD
.. OF THE ONE PART
AND
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
.. OF THE OTHER PART
**********************************************************
AGREEMENT FOR SUB-LICENCE AND SUB-LEASE
(PRIVATE LOT A12787(b))
**********************************************************
FILE REF: GHC/JNVC/sll/12859/978
ALLEN & GLEDHILL
ADVOCATES & SOLICITORS
SINGAPORE
<PAGE> 2
1
THIS AGREEMENT is made the 17th day of February 1998 between:-
(1) SINGAPORE TECHNOLOGIES PTE LTD, a company incorporated in Singapore and
having its registered office at 83 Science Park Drive #01-01/02 The
Curie, Singapore Science Park, Singapore 118258 (hereinafter called "ST"
which expression shall include its successors-in-title); and
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore and having its registered office at 60 Woodlands Industrial
Park D Street 2, Singapore 738406 (hereinafter called "CSM" which
expression shall include its successors-in-title and permitted assigns).
WHEREAS:-
(A) ST has entered into a Building Agreement (hereinafter called "the
Building Agreement" which expression shall include all variations
thereof and supplements thereto) dated the 17th day of February 1998
with Jurong Town Corporation (hereinafter called "JTC" which expression
shall include its successors-in-title and assigns) in respect of the
land more particularly described in the First Schedule hereto
(hereinafter called "the Property") for the construction of factory
buildings and other structures therein and for the installation of
equipment fixtures and fittings thereof for the purpose of ancillary
services such as car-parking lots, process water treatment tank,
electrical sub-station and pump house only in accordance with the terms
and conditions contained in the Building Agreement.
(B) Under the terms of the Building Agreement, JTC has agreed to:-
(a) grant a licence to ST to enter upon the Property for a period of
three (3) years commencing from the 16th day of November 1995;
and
(b) lease the Property to ST for a term of thirty (30) years
(hereinafter called "the Head Lease") commencing from the 16th
day of February 1994 upon compliance with the conditions set out
in Clause 4 of the Building Agreement,
on the terms and conditions set out therein.
(C) With the consent of JTC, ST has agreed:-
(a) to grant a sub-licence to CSM for a period of three (3) years
(less one (1) day) commencing from the Commencement Date; and
(b) that upon the completion of the Development and subject to
compliance with the conditions set out in this Agreement, ST
shall grant to CSM a sub-lease of the Property for a term of
thirty (30) years less one (1) day commencing from the 16th day
of February 1994,
on the terms and conditions hereinafter set out.
NOW IT IS HEREBY AGREED as follows:-
1. In this Agreement, the following expressions shall have the following
meanings:-
<PAGE> 3
2
"Commencement Date" means the 16th day of November 1995;
"Development" means the construction on the Property of factory
buildings and other structures therein and the installation thereon of
equipment fixtures and fittings thereof for the purpose of ancillary
services such as car-parking lots, process water treatment tank,
electrical sub-station and pump house only in accordance with the terms
and conditions contained in the Building Agreement;
"Private Lot A12787" means all that piece of land known as Private Lot
A12787 forming part of the Government Survey Lots 937 and 1949 and part
of Marsiling Road (old), Mukim No. 13, Sembawang and situated in the
Republic of Singapore as shown on the plan annexed to the building
agreement relating thereto made between JTC and ST and estimated to
contain an area of 52,525 square metres more or less subject to survey.
"Private Lot A12878(a)" means all that piece of land known as Private
Lot A12787(a) forming part of the Government Survey Lot 3065V, Mukim No.
13, Sembawang and situated in the Republic of Singapore as shown on the
plan annexed to the building agreement relating thereto made between JTC
and ST and estimated to contain an area of 29,824 square metres more or
less subject to survey.
"Private Lot A12878(d)" means all that piece of land known as Private
Lot A12787(d) forming part of the Government Survey Lots 230L and 1179D,
Mukim No. 13, Sembawang and situated in the Republic of Singapore as
shown on the plan annexed to the building agreement relating thereto
made between JTC and ST and estimated to contain an area of 47,640
square metres more or less subject to survey.
"Sub-Licence Period" means the period of three (3) years less one (1)
day commencing from and including the Commencement Date.
2. For the Sub-Licence Period or for such further period as may be extended
by ST, CSM shall have the licence and authority to enter upon the
Property for the carrying-out of the works relating to the Development
in accordance with the stipulations hereinafter contained and as
contained in the Building Agreement and for no other purpose.
3. CSM hereby agrees to perform and observe the following stipulations:-
(i) To hold the Property until the same shall be comprised in a
sub-lease to be granted as hereinafter provided as licensee
upon the same terms as the form of the sub-lease set forth in
the Second Schedule hereto at the same rent and subject to the
same covenants and stipulations so far as applicable as if a
sub-lease thereto has been actually granted and so that ST
shall have all the remedies by whatsoever means for rent in
arrears that are incidental to the relationship of landlord and
tenant but so that nothing herein contained shall be construed
as creating a legal demise or any greater interest in the
licence than a tenancy at will;
(ii) To pay in advance as from the Commencement Date a licence fee,
calculated at the same rate and on the dates specified as for
the rent reserved in the sub-lease of the Property in the
Second Schedule hereto as if such sub-lease has actually been
granted;
<PAGE> 4
3
(iii) To pay on JTC's behalf to the Comptroller of Property Tax an
amount equivalent to the sum payable by JTC as property tax in
respect of the Property improvements and structures thereon
during the Sub-Licence Period or of such extended period (if
any) permitted under Clause 4(c) hereof by way of additional
licence fee or for the period prior to the issue of the
sub-lease to be granted under Clause 6 herein;
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by ST in respect of
any outstanding amount payable by CSM under this Agreement from
the date such amount becomes due until payment in full is
received by ST.
(v) To pay to ST all survey fees and other charges including those
payable to and claimed by the relevant Government Planning
Authorities for the survey of the Property for the purpose of
sub-division of the land of which the Property forms part and
amalgamation of the Property with Private Lot A12787 and for
the preparation and issue of a Certificate of Title PROVIDED
THAT JTC shall have the right to employ its own surveyor to
carry out the said survey in which event CSM shall bear all
costs incurred.
(vi) At the cost and expense of CSM:-
(a) to engage a professional engineer to carry out soil
investigations to advise on the soil conditions and to
design structurally sound buildings proposed to be erected
taking into consideration the condition of the Property;
and
(b) to execute such work as may be required to be done in
respect of the state and condition of the Property
(especially its ground levels, topography and soil
conditions) which state and condition CSM shall be deemed
to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within
three (3) months from the Commencement Date to ST for its and
JTC's approval and then to the relevant Government Planning and
Building Authorities full and complete plans elevations and
specifications of the buildings proposed to be erected on the
Property in accordance in every way with the requirements under
the Planning Act and the Local Government Integration Act
PROVIDED THAT ST or JTC may give or refuse their approval at
their absolute discretion.
(viii) At its own cost to commence erection on the Property either
within six (6) months from the Commencement Date or within one
(1) month from the date of approval of the plans by the
relevant Government Building Authorities, whichever is the
earlier, and in a substantial and workman-like manner with the
best materials of their available kinds and in conformity in
every respect with the plans, elevations, sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities to finish the Development so as
to be completely fit for immediate occupation and operation
within the Sub-Licence Period PROVIDED ALWAYS THAT in the
planning, erection, construction and completion of the said
buildings to be comprised on the Property, Private Lot A12787,
Private Lot A12787(a) and Private Lot A12787(d) and any other
and occupied by ST within Woodlands Industrial Park D,
<PAGE> 5
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to develop to an average gross plot ratio of not less than 0.6
but not more than 1.4 and in the event that the gross plot
ratio exceeds 1.4 CSM shall be responsible for such proportion
(as may be mutually agreed upon between ST and CSM) of the
development charges/differential land premium and other charges
payable in consequence thereof AND PROVIDED FURTHER THAT CSM
shall not install or use any electrical installation, machine
or apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the service
or use of any communication system or affects the operation of
other equipment, installations, machinery, apparatus or plants
of other licensees.
(ix) At its own cost to take such steps and execute such works upon
the Property as may be necessary for the protection of shores
and embankments if any and for the prevention of earth-slip
erosion of soil and failure of slopes expeditiously in a
workman-like manner and to the satisfaction of ST and JTC and
other relevant governmental and statutory authorities.
(x) If CSM shall fail to complete the Development and to commence
operations within the period specified in Clause 3(viii) or
within any extended period under Clause 4(c) hereof CSM shall
pay to ST a sum calculated at the rate of $200.00 per day as
liquidated damages for the period during which the said
buildings to be comprised in the Development shall so remain or
have remained incomplete.
(xi) To remove and replace any materials brought on the Property or
used for the Development or any part thereof which ST or JTC
shall require to be removed as being inferior or unfit and to
make good any workmanship which ST or JTC shall consider
imperfect and if CSM fails to remedy such defects ST or JTC may
enter upon the Property and remedy such defects at the expense
of CSM after expiry of fourteen (14) days' notice being given
to CSM to do so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than those
conforming with the plans elevations sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities nor to make any alterations in
the external elevation of any of the said buildings to be
comprised in the Development when erected without the prior
consent in writing of ST and JTC.
(xiii) In the erection and completion of the Development to do all
acts and things required by and to perform the works in
conformity in all respects with the provisions of any laws or
regulations made thereunder and to pay and keep ST and JTC
indemnified against all claims and other payments whatsoever
which during the progress of the works may become payable in
respect of the said works or of anything done under the
authority herein contained and from time to time to discharge
and pay all claims, assessments and outgoings now or at any
tine hereafter be chargeable against JTC or ST under any law or
otherwise in regard to the Property, the said buildings or any
structures or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the
Property or any part thereof anything which in the opinion of
ST or JTC may be or become a nuisance or
<PAGE> 6
5
annoyance or cause damage or inconvenience to ST or to JTC or
to the licensees or occupiers of any adjoining or neighbouring
premises or whereby any insurance for the time being effected
on the Property under sub-clause (xix) herein may be rendered
void or voidable or be in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand from
the Property or permit or suffer any of the same to be removed
except so far as shall be necessary for the execution of the
said works PROVIDED nevertheless that CSM may use for the
purpose of the said works any of the approved materials if so
required.
(xvi) Not without the prior consent in writing of ST and JTC to
remove or permit or suffer to be removed until after completion
of the buildings comprised in the Development in accordance
with the provisions herein contained any building materials
(other than inferior or unfit materials removed for the purpose
of being replaced by proper materials) or plant which shall be
brought upon the Property or Private Lot A12787 for the purpose
of the Development.
(xvii) Not without the prior consent in writing of ST and JTC to affix
or exhibit or erect or paint or permit or suffer to be affixed
or exhibited or erected or painted on or upon any part of the
exterior of the Property or of the external walls or rails or
fences thereof any nameplate, signboard, placard, poster or
other advertisement or hoarding.
(xviii) Not at any time to deposit or make up or manufacture or permit
or suffer to be deposited made up or manufactured upon the
Property any building or other materials except such as shall
be actually required for the buildings to be erected on the
Property in accordance with this Agreement and the Building
Agreement and as soon as the buildings hereinbefore agreed to
be erected shall be completed at its own expense to remove from
the road or footpath adjoining the Property or the ground
intended to be used for such road or footpath all building and
other materials and waste whatsoever.
(xix) As soon as any of the said buildings comprised in the
Development shall have reached a height of five (5) feet above
ground level to insure the same to the full value thereof in
the joint names of ST, JTC and CSM against loss or damage by
fire in some insurance office approved by JTC and ST and shall
increase such insurance proportionately as the said buildings
approach completion and to keep the same so insured until a
sub-lease shall be granted as hereinafter provided and to pay
all premiums thereof at least seven (7) days before the expiry
date of such insurance policy and to produce to ST or JTC (if
so directed by ST) or their respective agents without demand
the policy or policies of such insurance and the receipt for
each such payment and in the event the said buildings or any
part thereof are destroyed or damaged by fire then to forthwith
give to ST and JTC written notice of such destruction or damage
and to forthwith cause all monies received by virtue of any
such insurance to be forthwith laid out in rebuilding and
reinstating the buildings to the satisfaction of ST and JTC and
to make up any deficiency thereof out of its own monies, but
the rebuilding and reinstatement shall in any event commence
and be completed within the period specified by ST and JTC
PROVIDED ALWAYS THAT if CSM shall at any time fail to keep the
Property insured as aforesaid ST or JTC may without being under
any obligation to do so do all things necessary to effect or
maintain such insurance and any monies expended by either ST or
JTC for that purpose
<PAGE> 7
6
shall be repayable by CSM on demand and be recovered forthwith
from CSM as a debt PROVIDED FURTHER THAT notwithstanding the
covenant contained in this Clause 3(xix), CSM may exercise the
option not to rebuild or reinstate the buildings subject to the
following conditions:-
(a) without prejudice to Clause 4(b), CSM shall give ST four
(4) months' prior notice in writing to prematurely
terminate this Agreement; and
(b) CSM shall forthwith pay or cause to be paid to ST or if ST
so directs to JTC all monies received by virtue of such
insurance.
(xx) Not to sell, assign, create a trust or agency, let, subset or
underlet, charge, grant a licence or part with or share or in
any way dispose of its interest under this Agreement, or the
possession or occupation of the Property, or any part thereof
or otherwise in any way dispose of the Property or any part
thereof EXCEPT THAT, subject to ST's and JTC's prior written
consent (the consent of ST not to be unreasonably withheld) CSM
may mortgage or charge its interest under this Agreement by way
of assignment or debenture (as the case may be) to secure the
repayment of such sum or sums as CSM may require for the
purpose of erecting or completing the building or other
structure to be built on the Property in accordance with the
provisions of this Agreement and the Building Agreement
PROVIDED THAT CSM shall thereafter continue to be liable for
the observance and performance of the several stipulations
herein contained until the grant of the sub-lease as
hereinafter provided. Notwithstanding the foregoing, CSM may
sublet the Property or part thereof to Silicon Manufacturing
Partners Pte Ltd.
(xxi) Not to permit or suffer any person to occupy reside or make use
of any building erected on the Property before a final or a
temporary Certificate of Fitness for Occupation has been issued
by or except with the permission of the relevant Governmental
and Statutory authorities.
(xxii) To make reasonable provision against and be responsible for all
loss, injury and damage to any person (including loss of life)
or property including that of ST and JTC for which CSM may be
held liable arising out of or in connection with the occupation
and use of the Property and the structures erected thereon and
to indemnify ST and JTC against all proceedings, claims, costs
and expenses which ST or JTC may incur or for which ST or JTC
may be held liable as a result of any act, neglect or default
of CSM its servants, contractors, sub-contractors, or agents or
their respective servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the Property to the requirements and
satisfaction of ST and JTC and other relevant governmental and
statutory authorities PROVIDED THAT in the event of any default
by CSM under this covenant ST or JTC may carry out such
remedial measures as they think necessary and all costs and
expenses incurred thereby shall be recoverable forthwith from
CSM as a debt.
(xxiv) To construct an internal drainage system to the satisfaction of
ST and JTC to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
<PAGE> 8
7
(xxv) To construct and complete a permanent culvert within nine (9)
months from the Commencement Date or any extension thereof as
may be approved by ST and JTC and in connection thereof to
submit plans to and to obtain the prior approval in writing of
ST and JTC for the construction of a temporary crossing.
(xxvi) Within one (1) month of the completion of the permanent culvert
mentioned in sub-clause (xxv) above to remove the temporary
crossing and to reinstate any roads, roadside kerbs, drains,
turfing or the like damaged by CSM, its servants, contractors,
sub-contractors, or agents or their respective servants to the
satisfaction of ST and JTC and the relevant Governmental and
Statutory authorities.
(xxvii) Within one (1) month of the completion of the construction of
the said buildings and related civil works to reinstate any
damage caused to the roads, roadside kerbs, drains, turfing and
the said permanent culvert by CSM its servants contractors or
agents or their respective agents to the satisfaction of ST and
JTC and the relevant Governmental and Statutory authorities.
(xxviii) To place with ST or JTC (if directed by ST) a deposit of
$5,000.00 which shall be forfeited in the event of any breach
of any of the provisions in sub-clauses (xxv), (xxvi) and
(xxvii) herein without prejudice to the rights and remedies of
ST and JTC contained in this Agreement, the Building Agreement,
the Head Lease and the sub-lease.
(xxix) At its own cost to plant and maintain trees and landscape the
Property in accordance with all the requirements of the Parks
and Recreation Department, Ministry of National Development and
other relevant Governmental and Statutory authorities.
(xxx) At its own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and the
like (if any) to the requirements and satisfaction of ST and
JTC and other relevant Governmental and Statutory authorities.
(xxxi) If CSM shall at any time be found to have encroached upon any
area beyond the allocated boundaries of the Property, CSM shall
at its own cost and expense, but without prejudice to any other
right or remedy ST or JTC may have against CSM, immediately or
within the time specified (if any) by ST or JTC rectify and
remove the encroachment to the satisfaction of ST and JTC and
pay to ST or JTC (if so directed by ST) such compensation as
may be specified by ST or JTC. If, however, ST or JTC in their
absolute discretion permit CSM to regularise and retain the
encroached area or any part thereof upon such terms and
conditions as may be stipulated by ST or JTC and any other
relevant Governmental and Statutory authorities, CSM shall pay
licence fee on the encroached area with retrospective effect
from the date specified by ST, and CSM shall also pay all
survey fees, amalgamation fees, legal fees (including solicitor
and client costs and expense), and all other costs and charges
relating thereto.
(xxxii) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Property or any building or
structure or installation thereon, or any part thereof, to
forthwith give to ST and JTC written notice of the damage and
to remedy the
<PAGE> 9
8
damage to the satisfaction of ST and JTC within such time as
ST or JTC may specify, all at the cost of CSM.
(xxxiii) CSM accepts the Property in its existing state and condition
and further accepts and confirms that ST has made no
representation nor given any assurance as to the present or
future suitability of the Property or its surrounding or
adjacent lands in relation to CSM's use, operations or
occupation at the Property.
(xxxiv) Without prejudice to the generality of Clauses 3(xii) and
3(xiii) hereinbefore appearing, CSM shall not place, construct
or erect or permit the placing, construction or erection of
any building, structure or equipment whatsoever on the buffer
within the boundary of the Property as shown on the plan
annexed to the Building Agreement and shall comply with the
requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority and
the Building Control Division of the Ministry of National
Development.
(xxxv) Subject always to Clause 3(viii) herein, to develop the
Property for low rise and low density industrial development
limited to 100 persons per hectare.
(xxxvi) Subject to Clause 3(xii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by CSM shall not exceed two
(2) metres PROVIDED THAT boundary walls or fences (if any)
shall be erected behind baphia or other hedges planted on the
Property.
(xxxvii) At CSM's own cost, at all times, to comply with and observe
the maximum height restriction of 61.0 metres above Mean Sea
Level and any other height restriction(s) on buildings and
structures at the Property as imposed by any governmental or
statutory authority and to ensure that any height restriction
plan(s) which may be furnished to CSM shall at all times be
held in strict confidence and shall not be shown, revealed or
copied to or by any person, contractor, sub-contractor,
watchman, employee, agent, representative or any other person
except with the prior written consent of ST and JTC.
(xxxviii) Not to keep or allow to be kept any livestock or other animals
at the Property or any part thereof.
(xxxix) The licence fees and other taxable sums payable by CSM under
or in connection with the sub-licence herein shall be
exclusive of the goods and services tax (hereinafter called
"tax") chargeable by any government, statutory or tax
authority calculated by reference to the amount of the licence
fees and any other taxable sums received or receivable by ST
from CSM and which tax is payable by CSM. CSM shall pay the
tax and ST acting as the collecting agent for the government,
statutory or tax authority shall collect the tax from CSM
together with the licence fees hereinbefore reserved without
any deduction and in advance without demand on the first day
of each of the months of January, April, July and October, and
in the manner and within the period prescribed in accordance
with the applicable laws and regulations.
(xl) (a) CSM shall observe and be bound by the provisions in the
Bupilding Agreement and the Head Lease and perform all
the covenants and conditions on the part of
<PAGE> 10
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the lessee contained in the Head Lease insofar as they
relate to the Development and/or the Property;
(b) CSM shall not do omit suffer or permit in relation to the
Development and/or the Property any act or thing which
would or might cause ST to be in breach of the Building
Agreement and the Head Lease or which if done omitted or
suffered or permitted by ST would or might constitute a
breach of the covenants on the part of the lessee and the
conditions contained in the Building Agreement and the
Head Lease;
(c) CSM shall keep ST indemnified against any actions,
proceedings, claims, damages, costs, expenses, losses or
liability incurred by ST arising from any breach,
non-observance, or non-performance by CSM of the aforesaid
provisions, covenants and conditions in the Building
Agreement and the Head Lease.
(xli) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection
with the preparation stamping and issue of this Agreement and
the sub-lease herein agreed to be granted and any prior
accompanying or future documents or deeds supplementary
collateral or in any way relating to this Agreement and the
sub-lease.
(xlii) To pay all costs and fees legal or otherwise, including ST's
costs as between solicitor and client, in connection with the
enforcement of the covenants and conditions of this Agreement
and the sub-lease as well as JTC's costs if any action or
omission of CSM under this Agreement causes JTC to take action
to enforce the covenants and conditions of the Building
Agreement and the lease to be granted pursuant thereto.
4. It is hereby mutually agreed that until CSM has performed all its
obligations herein contained ST and JTC shall possess the rights and
powers following:-
(a) The right for ST and JTC and their respective agents with or
without workmen or others at all reasonable times to enter upon
the Property to view the state and progress of the said
buildings and works and the Development and to inspect and test
the materials and workmanship in connection therewith and for
any other reasonable purpose including the construction and
installation of sewers drains pipes and cables on or leading
from any adjoining or neighbouring land of JTC as may be
required by ST or JTC.
(b) Full right and liberty in case any part of the Development
hereby agreed to be erected be not completed and fit for
immediate occupation within the period hereinbefore limited
(time in this respect shall be of the essence of the contract)
and in accordance in every way with the stipulations
hereinbefore contained or in case CSM shall in any other way
fail to perform and observe any of the stipulations on its part
herein contained or if any charging order writ of seizure and
sale or its equivalent made in respect of the Property or any
structure thereon shall be enforced without the written consent
of ST and JTC having first been obtained by CSM or by the
person in whose favour the charging order writ of seizure and
sale or its equivalent shall have been made, ST shall have the
right to re-enter upon and take possession of the Property and
all buildings structures fixtures plant material and effects
whatsoever thereon with power to hold and dispose thereof as if
this Agreement had
<PAGE> 11
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not been entered into and without making to CSM any
compensation or allowance for the same and this Agreement shall
thereupon determine but without prejudice to any right of
action or other remedy of ST for the recovery of any licence
fee or monies due to it from CSM or in respect of any breach of
this Agreement PROVIDED ALWAYS THAT ST shall, in addition, also
be entitled to claim and to recover from CSM as a debt, firstly
liquidated damages calculated at and in accordance with the
same rates as that stipulated for liquidated damages in Clause
4(f) of the sub-lease set out in the Second Schedule hereto as
if the respective year of the term of the lease therein
referred to the respective year of the Sub-Licence Period or
any extended period in which ST exercised its aforesaid right
of re-entry under this Agreement and secondly any sum which ST
or JTC may incur in connection with the demolition and removal
of any building, structure, fitting, fixture or thing which ST
or JTC may consider necessary to demolish and remove AND
PROVIDED THAT if the Property has been assigned by way of
mortgage with the consent of ST and JTC the provisions of this
clause shall not take effect until ST or JTC has served upon
the mortgagee notice in writing specifying the breach and the
mortgagee has failed to remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such default as
aforesaid in completing the said buildings and works ST may in
its discretion give notice in writing to CSM of its intention
not to enforce the stipulations herein contained and may fix
any extended period for the completion of the Development in
substitution for the said period of three (3) years less one
(1) day hereby fixed for such completion and thereupon the
obligations hereunder of CSM to complete the said works and to
accept a sub-lease hereinafter mentioned shall be taken to
refer to such substituted period.
(d) Without prejudice to the generality of Clause 4(b) hereof full
right and liberty of ST in the event that CSM has failed to
either:-
(1) develop the Property to the gross plot ratio specified in
Clause 3(viii), or
(2) fulfil the investment criterion as stipulated in Clause 6
hereof,
with full and absolute discretion to ST to either:-
(i) re-enter upon and take possession of the Property or any
part thereof and all buildings, structures, fixtures,
plant, material and effects whatsoever thereon with power
to hold and dispose thereof as if this Agreement had not
been entered into and without making to CSM any
compensation or allowance for the same and this Agreement
shall thereupon determine but without prejudice to any
right of action or other remedy of ST or recovery of any
licence fee or monies due to ST from CSM or in respect of
any breach of this Agreement, or
(ii) reduce the term of sub-lease to such a lesser term that
JTC may grant to ST pursuant to the terms of the Building
Agreement (less one (1) day) in which event CSM shall
execute such documents as ST shall deem necessary and in
connection therewith, pay all costs disbursements fees and
charges legal or otherwise as provided in Clause 3(xlii).
<PAGE> 12
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PROVIDED ALWAYS that if the Property has been assigned by
way of mortgage with the consent of ST and JTC, the
provisions of this sub-clause (d) shall not take effect
until ST or JTC had served upon the mortgagee notice in
writing specifying the breach and the mortgagee has failed
to remedy such breach.
5. CSM hereby agrees that if any failure on its part to observe or perform
any of its covenants contained in this Agreement results in the failure
of ST to comply with its obligations under the Building Agreement and
such failure entitles JTC to re-enter upon and take possession of the
Property and JTC exercises such right, then this Agreement shall
forthwith terminate without ST making to CSM any compensation or
allowance for the same and without prejudice to any right of action or
other remedy of ST for the recovery of any licence fee or monies due to
it from CSM or in respect of any breach of this Agreement.
6. If the Development shall have been completed to the satisfaction of ST
and JTC and the relevant Government Building Authorities (to be
evidenced by their certificates in writing to that effect) within the
Sub-Licence Period or of such extended period (if any) as aforesaid and
if CSM shall have performed and observed all the stipulations herein on
its part contained other than such as any have been waived as aforesaid
and if there shall have been an average minimum investment for the
Property and Private Lot A12787 and A12787(a) by CSM of $1,000.00 per
square metre of the gross floor area of the buildings on buildings and
civil works, and a minimum investment of $500.00 per square metre on
plant and machinery, within the Sub-Licence Period (due proof thereof to
be produced by CSM to the satisfaction of ST and JTC on or before 14th
May 1999 and if JTC has granted to ST a lease of the Property and
premises together with the Development for the term of thirty (30) years
from the 16th day of February 1994 then ST shall grant and CSM shall
accept and execute a counter part of one good and sufficient sub-lease
of the Property and premises to CSM for the term of thirty (30) years
from the 16th day of February 1994 less one (1) day at the rent and in
the form containing the reservation exceptions covenants conditions and
provisions set forth in the Second Schedule hereto with such
modifications as circumstances may render necessary and such other
covenants conditions or stipulations to be performed by CSM governing or
regulating the use of the Property as ST and JTC thinks fit with a view
to preserving, the value thereof or protecting the interests of the
licensees or occupiers of land or premises adjacent to the Property from
any dangerous or obnoxious or otherwise harmful activities which may be
carried out by CSM whether or not such activities are incidental to
CSM's trade PROVIDED THAT until such sub-lease is executed CSM shall be
deemed to be the sub-lessee of the Property as though a sub-lease has
been executed at the same rent and subject to the covenants and
conditions contained in the Second Schedule hereto so far as the same
are applicable.
7. CSM may, at any time during the Sub-Licence Period and any extensions
thereof granted under Clause 4(c) terminate this Agreement or surrender
part of the Property or its licence in respect of the Property by giving
to ST four (4) months' prior notice in writing SUBJECT to the consent
and the conditions of the consent in writing of ST and JTC in relation
to the Property PROVIDED ALWAYS THAT such termination or surrender shall
be without prejudice to any right or remedy which may have or will
accrue to ST prior to the expiry of the four (4) months' notice AND
PROVIDED FURTHER THAT CSM shall in addition to the licence fee (which at
the discretion of ST may be apportioned for the period commencing from
the Commencement Date up to the date of delivery of vacant possession of
the Property or part thereof to ST) survey fees, property tax and other
charges specified herein forthwith pay to ST as liquidated damages in
accordance with and calculated at the same rates as that stipulated for
liquidated damages in
<PAGE> 13
12
Clause 4(f) of the sub-lease set out in the Second Schedule hereto
PROVIDED THAT before the delivery of vacant possession as aforesaid if
ST shall so desire CSM shall at the cost and expense of CSM properly
demolish and remove such building, structure, fixture, fitting or thing
as may be stipulated in writing by JTC or ST as well as properly render
the Property or part thereof as the case may be to its original state
and condition and licence fee and property tax shall continue to be
payable until the same has been completed to the satisfaction of JTC and
ST PROVIDED ALSO THAT CSM shall, without prejudice to Clauses 3(viii)
and 3(xxxiv), ensure that the Property and any other remaining land
occupied by ST within Woodlands Industrial Park D comply with the
setback requirements and other planning requirements and do not exceed
the average maximum gross plot ratio of 1.4 after the termination or
surrender.
8. ST hereby covenants that:-
(i) it has obtained the written consent of JTC to the sub-licence and
sub-lease herein;
(ii) ST shall pay the rent and all other monies and shall perform the
lessee's covenants and conditions contained in the Head Lease
(save for such covenants as shall be performed by CSM pursuant to
the provisions of Clause 3(xl) hereof);
(iii) ST shall take all reasonable steps to obtain the consent of JTC
whenever CSM makes any request in connection with the Property
that requires the approval of JTC under this Agreement or the
Building Agreement;
(iv) Upon notice from CSM, ST will take all reasonable steps to enforce
promptly the obligations undertaken by JTC in the Head Lease.
9. (a) 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 post (by air-mail if to or
from an address outside Singapore) with recorded delivery or
facsimile addressed to the intended recipient thereof at its
address set out below or at its last known address or at its
facsimile number set out below (or to such other address or
facsimile number as any party may from time to time duly notify in
writing to the other) and marked to the attention of the person
named below in respect of the intended recipient. Any such notice,
demand or communication shall be deemed to have been duly served
(if given or made by facsimile) immediately or (if given or made
by letter) 24 hours after posting or (if made or given to or from
an address outside Singapore) 72 hours after posting and in
proving the same it shall be sufficient to show that the envelope
containing the same was duly addressed, stamped and posted. The
initial addresses and facsimile numbers of the parties for the
purposes of this Agreement are:-
<PAGE> 14
13
ST : SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02 The Curie
Singapore Science Park
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 773 4106
CSM : CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 360 3812
10. The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
11. (a) This Agreement shall be construed and governed by the laws of
Singapore.
(b) Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration Rules of
the Singapore International Arbitration Centre ("SIAC Rules") for
the time being in force which rules are deemed to be incorporated by
reference into this clause. The tribunal shall consist of one (1)
arbitrator to be appointed by the Chairman of Singapore
International Arbitration Centre and the language of the arbitration
shall be English.
(c) Nothing shall affect the right to serve process in any manner
permitted by law.
THE FIRST SCHEDULE ABOVE REFERRED TO
All that piece of land known as Private Lot A12787(b) forming part of
the Government Survey Lot 3065V, Mukim No 13, Sembawang and situated in
the Republic of Singapore as shown on the plan annexed to the Building
Agreement and estimated to contain an area of 7,015 square metres more
or less subject to survey.
<PAGE> 15
THE SECOND SCHEDULE ABOVE REFERRED TO
------ -------- ---------
L 1 Ver 1
------ -------- ---------
THE LAND TITLES ACT
-------------------------
-------------------------
(For Official use only)
SUB-LEASE
<TABLE>
<CAPTION>
(A) DESCRIPTION OF LAND
- ---------------------- ------------ ------------- ------------- ------------------------------
<S> <C> <C> <C> <C> <C>
CT/SSCT/SCT Mukim Town Lot No. Property Address
Subdivision Whole or part (if part lot, to
state appd new lot/strata
lot)
- ------------ ---------
Volume Folio
- ------------ --------- ------------ ------------- ------------- ------------------------------
13 Whole
(Private Lot A12787(b)
(the "demised premises")
- ------------ --------- ------------ ------------- ------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
(B) LESSOR:
- ----------------------------------- ----------------------------------------------------------
<S> <C>
ID/CO REGISTRATION NO. 199004768N
- ----------------------------------- ----------------------------------------------------------
NAME: SINGAPORE TECHNOLOGIES PTE LTD (the "Lessor")
- ----------------------------------- ----------------------------------------------------------
ADDRESS: 83 Science Park Drive #01-01/02
(within Singapore for The Curie, Singapore Science Park
service of Notice) Singapore 118258
- ----------------------------------- ----------------------------------------------------------
</TABLE>
(the registered proprietor of a leasehold estate for the term of thirty (30)
years commencing from the 16th day of February 1994) HEREBY LEASES the
registered estate or interest of the Lessor in the land above described to:-
<PAGE> 16
15
<TABLE>
<CAPTION>
(C) LESSEE:
- ----------------------------------- ----------------------------------------------------------
<S> <C>
ID/CO REGISTRATION NO. 198703584K
- ----------------------------------- ----------------------------------------------------------
NAME: CHARTERED SEMICONDUCTOR MANUFACTURING LTD (the "Lessee")
- ----------------------------------- ----------------------------------------------------------
PLACE OF INCORPORATION Singapore
- ----------------------------------- ----------------------------------------------------------
ADDRESS: 60 Woodlands Industrial Park D Street 2
(within Singapore for Singapore 738406
service of Notice)
- ----------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE> 17
16
FOR TERM OF LEASE
Term of Lease: Thirty (30) years less one (1) day
Commencement Date: 16th day of February 1994 (hereinafter referred to as
"the Commencement Date")
Consideration: The average minimum investment by the Lessee on
building and civil works exceeding $1,000/- per
square metre of the gross floor area and on plant and
machinery of $500/- per square metre of Private Lots
A12787, A12787(a) and A12787(b) (hereinafter referred
to as "the fixed investment criteria") and the
average gross plot ratio of not less than 0.6.
Annual Rent: As stipulated in Clause 1(a) of the Special
Covenants and Conditions hereinafter appearing.
Easement & Reservation: TOGETHER WITH the benefit of the rights granted to
the Lessor and SUBJECT TO the rights reserved to
Jurong Town Corporation ("JTC") mentioned in the
Lease dated the [ ] day of [ ] made between JTC and
the Lessor (the "Head Lease" which expression shall
include the provisions of the Memorandum of Lease
filed in the Registry of Titles as No. ML I/30809F
and the First Variation of Memorandum of Lease VML
I/076384J as well as all variations thereof and
supplementals thereto).
SUBJECT TO:-
(D) PRIOR ENCUMBRANCES (TO STATE 'NIL' IF THERE ARE NONE):
- -------------------------------------------------------------------------------
Nil
- -------------------------------------------------------------------------------
AND the following:-
(E) COVENANTS AND CONDITIONS
The Lessee hereby covenants to perform and observe the covenants, conditions
and powers implied by law in instruments of lease (or to such of them as are
not hereinafter expressly negatived or modified);
(F) SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants as follows:-
(a) To pay from the 16th day of November 1995 the yearly rent of Dollars
One Hundred and Thirty-Seven Thousand Six Hundred and Thirty-Four
and Cents Thirty only ($137,634.30) to be paid by equal quarterly
instalments on the 1st day of each of the months of January, April,
July and October in every year of the said term without any
deduction and in
<PAGE> 18
17
advance without demand at the office of the Lessor or at such other
office as the Lessor may designate calculated at the rate of $19.62
per square metre per annum (hereinafter referred to as "the Initial
Rent") of the demised premises having an area of 7,015 square metres
(hereinafter referred to as "the preliminary survey area", which may
at any time be adjusted on completion of final survey, if any, and
in which event if the area adjusted exceeds five square metres more,
or less, than the preliminary survey area the rental paid or payable
by the Lessee shall accordingly also be adjusted and be paid and
payable or refunded as the case may be in respect of the full
difference between the preliminary survey area and the final survey
area, with retrospective effect from the commencement of the said
term of the Sub-Lease herein), which rate was last increased on the
16th day of February 1996 to the rate of $21.39 per square metre per
annum. The yearly rent so increased on the 16th day of February 1996
shall be increased by 9% per annum (compounded annually) on the 16th
day February 1997 and on the 16th day of February of every year
thereafter.
(b) (i) To observe and be bound by the provisions in the Head
Lease and perform all the covenants and conditions on the
part of the tenant contained in the Head Lease insofar as
they relate to the Property;
(ii) Not to do omit suffer or permit in relation to the Property
any act or thing which would or might cause the Lessor to be
in breach of the Head Lease or which if done omitted or
suffered or permitted by the Lessor would or might
constitute a breach of the covenants on the part of the
tenant and the conditions contained in the Head Lease; and
(iii) To keep the Lessor indemnified against any actions,
proceedings, claims, damages, costs, expenses, losses or
liability incurred by the Lessor arising from any breach,
non-observance, or non-performance by the Lessee of the
aforesaid covenants and conditions in the Head Lease.
(c) To pay the rents hereinbefore reserved on the days and in the manner
set out above, without any deductions, set-off or counterclaim.
(d) As often as any building or structure on the demised premises or any
part thereof shall be destroyed or damaged as aforesaid forthwith to
give to the Lessor written notice of such destruction or damage and
forthwith to cause all monies received by virtue of such insurance
to be laid out in rebuilding and reinstating the same to the
satisfaction of the Lessor and JTC and in accordance with the plans
and specifications approved by the Lessor and JTC and in accordance
with the laws, bye-laws regulations and planning schemes of every
relevant governmental and statutory authority prevailing at the
time, and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of its own monies
PROVIDED THAT the rebuilding and reinstatement shall in any event
commence and be completed within the period specified by the Lessor
and JTC PROVIDED FURTHER THAT notwithstanding the covenant contained
in this clause, the Lessee may exercise the option not to rebuild or
reinstate the buildings subject to the following conditions:
<PAGE> 19
18
(i) the Lessee shall give to the Lessor four (4) months' notice
in writing to prematurely terminate the term of the
Sub-Lease herein created but without prejudice to Clause
4(f) and any right or remedy which may have or will accrue
to the Lessor prior to the expiry of the four (4) months'
notice under the terms and conditions of the Sub-Lease
herein; and
(ii) the Lessee shall forthwith pay or cause to be paid to the
Lessor or to JTC if so directed by the Lessor, all monies
received by virtue of such insurance.
(e) The rent and other taxable sums payable by the Lessee under or in
connection with the lease herein shall be exclusive of the goods
and services tax (hereinafter called "tax") chargeable by any
government, statutory or tax authority calculated by reference to
the amount of the rent and any other taxable sums received or
receivable by the Lessor from the Lessee and which tax is payable
by the Lessee. The Lessee shall pay the tax and the Lessor acting
as the collecting agent for the government, statutory or tax
authority shall collect the tax from the Lessee together with the
rent hereinbefore reserved without any deduction and in advance
without demand on the first day of each of the months of January,
April, July and October, and in the manner and within the period
prescribed in accordance with the applicable laws and regulations.
(f) Not to demise assign mortgage charge create a trust or agency let
sublet or underlet or grant a licence or part with or share the
possession or occupation of the demised premises in whole or in
part or otherwise in any way dispose of the demised premises
whether in whole or in part within the period of five (5) years
from the 16th day of November 1995 (hereinafter referred to as
"the restrictive period") EXCEPT THAT and subject to the Lessor's
and JTC's prior written consent the Lessee may mortgage or charge
by way of a Debenture his interest in the demised premises. After
the restrictive period the Lessee shall not demise assign create a
trust or agency mortgage charge let sublet or underlet or grant a
licence or part with or share the possession or occupation of the
demised premises in whole or in part or otherwise in any way
dispose of the demised premises whether or in part at any time
without first obtaining the consent of the Lessor and JTC in
writing. PROVIDED ALWAYS THAT in the event that any consent to
assign is given, such consent shall, without prejudice to
Clauses 1(i) and 1(l), at all times be subject to the Lessee and
the assignee, where applicable, complying with the setback
requirements and any other planning requirements and not exceeding
the average maximum gross plot ratio of 1.4 in respect of the
demised premises and any other remaining land occupied by the
Lessor within Woodlands Industrial Park D after the assignment.
The restrictions contained in Section 17 of the Conveyancing and
Law of Property Act (Chapter 61) shall not apply. In addition, the
Lessor or JTC may in their absolute discretion in giving the
consent require, inter alia, that the fixed investment criteria be
met and due proof thereof be shown within such period of time as
the Lessor or JTC may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to exercise
its rights under Clause 4(c) herein. Notwithstanding the
foregoing, the Lessee may sublet the demised premises or part
thereof to Silicon Manufacturing Partners Pte Ltd.
(g) At the termination, by notice by the Lessee, or re-entry by JTC
under the Head Lease or re-entry by the Lessor or by expiry or
otherwise, of the term hereby created, to yield up the demised
premises to the Lessor in tenantable repair in accordance with the
Lessee's
<PAGE> 20
19
covenants herein contained PROVIDED THAT, if so required by the
Lessor and upon notice thereof, the Lessee shall at its own cost
and expense properly demolish and remove such buildings,
structures, fixtures and fittings, or any part thereof, as may be
specified by the Lessor and JTC and reinstate the demised premises
to the satisfaction of the Lessor and JTC and if the Lessee shall
fail to observe or perform this covenant the Lessor or JTC may
(but shall not be under any obligation to do so) execute such
works and recover the costs thereof from the Lessee as a debt.
(h) Not to use or permit or suffer the demised premises or any part
thereof to be used otherwise than for ancillary services such as
car-parking lots, process water treatment tank, electrical
sub-station and pump house only except with the prior consent in
writing of the Lessor and JTC. In granting its consent to any
change or extension of use, JTC and the Lessor may in their
absolute discretion require, inter alia, the Lessee to meet the
fixed investment criteria and to show due proof within such period
of time as the Lessor or JTC may stipulate, and in the event of
the non-observance thereof, the Lessor shall be entitled to
exercise its rights under Clause 4(c) hereof. For the avoidance of
any doubt, the words "meet" in this clause and "met" in Clause
2(e) shall include the maintenance of the fixed investment
criteria and if it has not been maintained then that it be met.
(i) Without prejudice to Clause 1(viii) of ML I/30809F, to ensure that
the gross plot ratio of Private Lots A12787(b) shall not be less
than 0.6 and not more than 1.4 and in the event the gross plot
ratio exceeds 1.4 the Lessee shall at its own cost and expense be
responsible for such proportion (as may be mutually agreed upon
between the Lessor and the Lessee) of the development charges,
differential premium and all other charges that may be payable in
consequence thereof. Notwithstanding the foregoing provisions the
Lessee shall ensure that the average gross plot ratio for Private
Lots A12787, A12787(a), A12787(b), A12787(d) and any other land
occupied by the Lessor within Woodlands Industrial Park D shall
not be less than 0.6 but shall not exceed the existing permitted
maximum average gross plot ratio of 1.4 except with the prior
written approval of the Lessor, JTC and the relevant governmental
and statutory authorities PROVIDED ALWAYS THAT and without
prejudice to Clause 1(viii) of ML I/30809F, the Lessee shall bear
such proportion of the development charges/ differential premium
which may be imposed on or charged to the Lessor and JTC by the
relevant governmental and statutory authorities, and any other
charges which may be imposed in connection with any increase in
the said average gross plot ratio beyond 1.4.
(j) The Lessee accepts the demised premises in its existing state and
condition and further accepts and confirms that neither JTC nor
the Lessor has made representation or given any assurance as to
the present or future suitability of the demised premises or its
surrounding or adjacent lands in relation to the Lessee's use,
operations or occupation at the demised premises.
(k) Not to place, construct or erect or permit the placing,
construction or erection of any building, structure or equipment
whatsoever on the buffers within the boundary of the demised
premises and to comply with the requirements of the relevant
governmental and statutory authorities including the Urban
Redevelopment Authority and the Building Control Division of the
Ministry of National Development
<PAGE> 21
20
(l) CSM shall not at any time hold the Lessor and/or JTC liable for
any claim, demand, action, proceeding, inconvenience, loss,
damages, costs or expenses of whatsoever kind or description which
the Lessee or any other person may suffer in connection with or
arising from the Easement referred to in VML I/076384J or any
works carried out in relation thereto.
(m) At all times throughout the term of lease hereby created to keep
in full operation and continue operations at the whole of the
demised premises in accordance with the use permitted in Clause
1(h) herein.
(n) If the Registrar of Titles issues in favour of the Lessee a
Certificate of Title for the leasehold estate comprised in the
Sub-Lease hereby created, the Lessee must, within 2 weeks of
receipt of the said Certificate of Title submit a copy of it to
the Lessor.
(o) If the term of Sub-Lease hereby created shall at any time be
determined by expiry or otherwise, the Lessee must at his own cost
and expense immediately surrender or cause to be surrendered the
said Certificate of Title for the leasehold estate (and any
duplicate instrument) to the Registrar of Titles for custody and
cancellation by the Registrar and the Lessee shall simultaneously
give to the Lessor written notice of such surrender.
(p) Subject always to Clause 1(i) herein, to develop the demised
premises for low rise and low density industrial development
limited to 100 persons per hectare.
(q) To pay all legal fees (including the Lessor's solicitors' charges
on a solicitor and client basis) stamp duty and all other
disbursements and out of pocket expenses incurred in the
preparation and completion of this Sub-Lease and in connection
with any assignment sub-letting surrender or other termination
thereof otherwise than by effluxion of time or with any claim or
legal proceedings which may be brought by the Lessor against the
Lessee in the event of a breach by the Lessee in connection with
this Sub-Lease.
(r) Subject to Clause 1(vii) of ML I/30809F, to ensure that the
maximum height of any chain-link fence (including the anti-climb)
or boundary wall erected by the Lessee at the demised premises
shall not exceed two(2) metres PROVIDED THAT the chain-link fence
or boundary wall shall be erected behind any hedge that may be
planted at the boundary of the demised premises.
2. The Lessor hereby covenants as follows:-
(a) That the Lessee paying the rents hereby reserved and performing
and observing the several covenants herein contained and on the
Lessee's part to be performed and observed shall peaceably hold
and enjoy the demised premises without any interruption from the
Lessor or any person rightfully claiming under or in trust for it.
(b) The Lessor shall pay the rent and all other monies and shall
perform the lessee's covenants and conditions contained in the
Head Lease (save for such covenants as shall be performed by the
Lessee pursuant to the provisions of Clause 1(b) hereof);
<PAGE> 22
21
(c) The Lessor shall take all reasonable steps to obtain the consent
of JTC whenever the Lessee makes any request in connection with
the demised premises that requires the approval of JTC under this
Sub-Lease or the Head Lease;
(d) Upon notice from the Lessee, the Lessor will take all reasonable
steps to enforce promptly the obligations undertaken by JTC in the
Head Lease.
3(1). The Lessor hereby further covenants with the Lessee that the Lessor
shall grant to the Lessee a lease of the demised premises for a further
term of thirty (30) years less one (1) day (hereinafter referred to as
"the further term") commencing from the second day following the date of
expiry of the term hereby created PROVIDED THAT:-
(i) at the expiry of the term hereby created, there by no existing
breach or non-observance of any of the covenants and conditions
herein contained on the part of the Lessee to be observed or
performed;
(ii) if required by the Lessor, the Lessee shall within four (4) months
from the commencement of the further term and at its own cost and
expense, carry out and complete such improvements to the
landscaping at the demised premises as may be stipulated in
writing by the Lessor or JTC;
(iii) the Lessee shall six (6) months before the expiry of the term
hereby created submit, for the approval of the Lessor, JTC and the
relevant governmental and statutory authorities, plans for the
upgrading of the exterior of buildings on the demised premises to
the same highest quality of new buildings which JTC will be
building at that time, and the Lessee shall expeditiously do all
acts and things necessary to obtain the approval, all at the cost
and expense of the Lessee;
(iv) the Lessee shall at its own cost and expense complete, within
eighteen (18) months from the commencement of the further term,
the upgrading of the buildings in accordance with the plans
approved by the Lessor and JTC and the relevant governmental and
statutory authorities and to the satisfaction of the Lessor and
JTC;
(v) the Head Lease shall have been renewed by JTC in accordance with
the terms and conditions contained therein; and
(vi) the other terms and conditions that shall apply to the renewed
Sub-Lease shall be substantially similar to the terms and
conditions that shall apply to the renewed Head Lease save that
the present covenant for renewal shall not apply.
(2) If the further term is granted in accordance with clause 3(1) above, the
Lessee shall be permitted to remain on the premises on the day following
the expiry of the term created by this Sub-Lease as a licensee, free of
payment.
4. PROVIDED ALWAYS and it is hereby agreed between the parties as follows:-
<PAGE> 23
22
(a) No estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be
included in the demise hereinbefore contained.
(b) The Lessee shall not be entitled to any right of access of light
or air to the demised premises or any part thereof, which would
restrict or interfere with the user of any adjoining or
neighbouring land for building or any other purpose.
(c) If the said rent hereby reserved or any other sums due under this
Sub-Lease or any part thereof shall be unpaid for fourteen days
after becoming payable (whether the same shall have been formally
demanded or not) or if any of the covenants or obligations on the
part of the Lessee herein contained shall not be performed or
observed or if any charging order writ of seizure and sale or its
equivalent made in respect of the demised premises shall be
enforced by sale or by entry into possession without the written
consent of the Lessor having first been obtained (Section 17 of
the Conveyancing and Law of Property Act shall also not apply in
such event) by the Lessee or by the person in whose favour the
charging order writ of seizure and sale or its equivalent shall
have been made, then and in any such case it shall be lawful for
the Lessor or any person or persons authorised by it in that
behalf at any part thereafter to re-enter upon the demised
premises or any part thereof in the name of the whole and
thereupon the term hereby created shall absolutely determine but
without prejudice to any right of action or remedy of the Lessor
in respect of any breach of any of the covenants or conditions by
the Lessee herein contained PROVIDED THAT if the demised premises
have been assigned by way of mortgage the provisions of this
clause shall not take effect until the Lessor has served upon the
mortgagee a notice in writing that such breach has occurred and
the mortgagee has failed to remedy such breach.
(d) If any failure on the Lessee's part to observe or perform any of
its covenants contained in this Sub-Lease results in the Lessor
failing to comply with its obligations under the Head Lease and
such failure entitles JTC to re-enter upon and take possession of
the demised premises and JTC exercises such right, then this
Sub-Lease shall forthwith terminate without the Lessor making to
the Lessee any compensation or allowance for the same and without
prejudice to any right of action or other remedy of the Lessor for
the recovery of any rents or other monies due to it from the
Lessee or in respect of any breach of this Sub-Lease.
(e) The Lessee may at any time prematurely terminate the term of lease
herein created by giving to the Lessor four (4) months' prior
notice in writing, but without prejudice to any right or remedy
which may have or will accrue to the Lessor prior to the expiry of
the four (4) months' notice under the terms and conditions of the
sub-lease herein created or in respect of the termination.
(f) Subject to Clause 4(g) hereof in the event that premature
termination shall occur at any time within eight (8) years from
the commencement of the term hereby created or if JTC shall at any
time within the said eight (8) years exercise its right of
re-entry under the Head Lease as a result of the failure by the
Lessor to observe or perform its obligations under the Head Lease
which was due to a failure by the Lessee to observe or perform any
covenant or condition imposed on the Lessee under this Sub-Lease
or if the Lessor shall at any time within the said eight (8) years
exercise its right of re-entry under Clause 4(c) hereof, then in
addition to rent, interest, property tax and other sums payable by
the Lessee to the date
<PAGE> 24
23
of premature termination or re-entry as the case may be,
liquidated damages for the sum of $17.7 million ('the said sum')
shall be payable and paid by the Lessee to the Lessor and it is
acknowledged and agreed by the Lessee that the said sum shall
constitute liquidated damages and shall not be considered under
any circumstances as a penalty.
(g) Notwithstanding anything contained herein, the Lessor hereby
agrees to a waiver of the liquidated damages provided in Clause
4(f) hereof in the event of any transfer or assignment of the
lease in accordance with Clause 1(f) hereinbefore appearing
PROVIDED THAT:-
(i) the transfer or assignment is approved in writing by the
Lessor and all other relevant governmental and statutory
authorities and
(ii) the Lessor reserves the right to revise the land rent to the
prevailing market rate at the time of the transfer or
assignment.
5. (a) 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 post (by air-mail if to or
from an address outside Singapore) with recorded delivery or
facsimile addressed to the intended recipient thereof at its
address set out below or at its last known address or at its
facsimile number set out below (or to such other address or
facsimile number as any party may from time to time duly notify in
writing to the other) and marked to the attention of the person
named below in respect of the intended recipient. Any such notice,
demand or communication shall be deemed to have been duly served
(if given or made by facsimile) immediately or (if given or made
by letter) 24 hours after posting or (if made or given to or from
an address outside Singapore) 72 hours after posting and in
proving the same it shall be sufficient to show that the envelope
containing the same was duly addressed, stamped and posted. The
initial addresses and facsimile numbers of the parties for the
purposes of this Sub-Lease are:-
Lessor: SINGAPORE TECHNOLOGIES PTE LTD
83 Science Park Drive #01-01/02
The Curie, Singapore Science Park,
Singapore 118258
Attention: Director,
Corporate Services
Facsimile No: 773 4106
Lessee: CHARTERED SEMICONDUCTOR MANUFACTURING LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 360 3812
<PAGE> 25
24
6. The illegality, invalidity or unenforceability of any provision of this
Sub-Lease under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7. (a) This Sub-Lease shall be construed and governed by the laws of
Singapore.
(b) Any dispute arising out of or in connection with this Sub-Lease,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in Singapore in accordance with the Arbitration Rules
of the Singapore International Arbitration Centre ("SIAC Rules")
for the time being in force which rules are deemed to be
incorporated by reference into this clause. The tribunal shall
consist of one (1) arbitrator to be appointed by the Chairman of
Singapore International Arbitration Centre and the language of the
arbitration shall be English.
(c) Nothing shall affect the right to serve process in any manner
permitted by law.
8. In this Sub-Lease where the context so requires or permits, words
importing the singular number or the masculine gender include the plural
number or the feminine gender and words importing persons include
corporation and vice versa, the expression "the Lessor" shall include its
successors-in-title and permitted assigns (if any), where there are two
or more persons included in the expression "the Lessee" covenants
expressed to be made by "the Lessee" shall be deemed to be made by such
persons jointly and severally, and except where otherwise provided the
expression "the demised premises" shall mean the land hereby demised and
all buildings, structures, fixtures and fittings therein.
(G) DATE OF LEASE:___________________________
(H) EXECUTION BY LESSOR
The Common Seal of SINGAPORE )
TECHNOLOGIES PTE LTD was hereunto )
affixed in the presence of:- )
Director
Director/Secretary
<PAGE> 26
25
(I) EXECUTION BY LESSEE
The Common Seal of CHARTERED )
SEMICONDUCTOR MANUFACTURING LTD )
was hereunto affixed in the presence of:- )
Director
Director/Secretary
(J) CERTIFICATE PURSUANT TO THE RESIDENTIAL PROPERTY ACT AND THE LAND TITLES
RULES AND PRACTICE CIRCULARS:
I, the solicitor for the Lessee hereby certify that the place of
Incorporation and registration number allocated by the Registry of Companies
to the Lessee as abovementioned specified in the within instrument have been
verified from the Certificate of Incorporation produced and shown to me, and
are found to be correct.
Dated this day of 19
------- ------------ -----
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
I, the Solicitor for the Lessee hereby certify that the within land is a
non-residential property as declared in the Residential Property Notification
1988. The land is zoned as _________ and the approved specific use of the
property is for _________ use.
Dated this day of 19
------- ------------ -----
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
<PAGE> 27
26
(K) SIMILAR INTEREST CONFIRMATION (IF ANY)
I, the solicitor for the Lessee hereby
------------------------------
confirms that the interest of the Lessee is similar to that in Caveat CV/
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
(L) CERTIFICATE OF CORRECTNESS:
I,the Solicitor for the Lessor hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
I,the Solicitor for the Lessee hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
We, JURONG TOWN CORPORATION, hereby consent to the within Sub-Lease.
The Common Seal of JURONG TOWN )
CORPORATION was hereunto affixed )
in the presence of:- )
-----------------
General Manager
-----------------
Secretary
<PAGE> 28
<TABLE>
<CAPTION>
FOR OFFICE USE ONLY
- ---------------------- -----------------------------------------------------
<S> <C>
EXAMINED REGISTERED ON
Initials of
Date Signing Officer: Registrar of Titles
- ---------------------- -----------------------------------------------------
</TABLE>
ALLEN & GLEDHILL
Advocates & Solicitors
36 Robinson Road
#18-01 City House
Singapore 068877
File Reference : (GHC)/JNVC/sll/12859/978
<PAGE> 29
28
IN WITNESS WHEREOF the parties hereto have hereunto SET their respective
hands or seals the day and year first above written.
SIGNED on behalf of SINGAPORE )
TECHNOLOGIES PTE LTD by Ho Ching ) /s/ Ho Ching
President & CEO )
in the presence of:- )
/s/ Angela Hon
- ---------------------------------------
Angela Hon
Senior Manager, Legal
SIGNED on behalf of CHARTERED )
SEMICONDUCTOR MANUFACTURING )
LIMITED by Tan Bock Seng ) /s/ Tan Bock Seng
President & CEO )
in the presence of:-
/s/ Angela Hon
- ---------------------------------------
Angela Hon
Senior Manager, Legal
<PAGE> 1
EXHIBIT 10.37
DATED THIS 17th DAY OF February 1998
Between
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
as Landlord
And
SILICON MANUFACTURING PARTNERS PTE LTD
as Subtenant
************************************
SUB-LEASE
************************************
Ref: GHC/JNVC/sll/12859/978
M/s Allen & Gledhill
Advocates & Solicitors
Singapore
<PAGE> 2
THIS SUB-LEASE (this "SUB-LEASE") is made the 17th day of February 1998
Between:-
(1) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore and having its registered office at 60 Woodlands Industrial
Park D Street 2, Singapore 738406, (the "Landlord"); and
(2) SILICON MANUFACTURING PARTNERS PTE LTD, a company incorporated in
Singapore and having its registered office at 60 Woodlands Industrial
Park D Street 2, Singapore 738406 (the "Subtenant").
WHEREAS:-
(A) Singapore Technologies Pte Ltd has leased the Property (as hereinafter
defined) from Jurong Town Corporation on the terms of the two (2)
Building Agreements both dated 17th February 1998 and made between
Jurong Town Corporation and Singapore Technologies Pte Ltd.
(B) With the consent of Jurong Town Corporation, Singapore Technologies Pte
Ltd has sub-let the Property to the Landlord on the terms of the
Agreements for Sub-License and Sub-Lease both dated 17th February 1998
and made between Singapore Technologies Pte Ltd and the Landlord.
(C) The Landlord is desirous of subletting part of the Building to the
Subtenant and the Head Lessor (as hereinafter defined) has consented to
such subletting.
NOW IT IS AGREED as follows:-
1. INTERPRETATION
1.1 In this Sub-Lease the following words and expressions shall where the
context so admits have the following meanings:-
"Allocable Share" means at any time of calculation, a percentage
reflecting (a) the sum of (i) the total gross floor area of the Sublet
Portions plus (ii) fifty percent (50%) of the total gross floor area of
the Common Portions expressed as a percentage of (b) the total gross
floor area of the Building, as each such gross floor area may be
modified from time to time;
"Building" means any carparks and building(s) on the Property of which
any part of the Sublet Portions is comprised in;
"Certificate of Statutory Completion" means the Certificate of
Statutory Completion in respect of the Building issued by the Building
Authority under the Building Control Act Cap. 29;
"Common Portions" means all those portions of the Building coloured in
yellow on the plans attached hereto in Appendix I;
"Conducting Media" means drains, sewers, conduits, flues, gutters,
gullies, channels, ducts, shafts, watercourses, pipes, cables, wires
and mains or any of them;
"CSM Portions" means all those portions of the Building coloured in
pink on the plans attached hereto in Appendix I.
<PAGE> 3
2
"Deposit" means the sum, if any, deposited or required to be deposited
by the Subtenant with the Landlord pursuant to Clause 3.2;
"Head Lease" means:-
(a) the Building Agreements both dated 17th February 1998 and made
between Jurong Town Corporation and Singapore Technologies Pte
Ltd; and
(b) the Agreements for Sub-Licence and Sub-Lease both dated 17th
February 1998 and made between Singapore Technologies Pte Ltd
and the Landlord,
and shall include any variations, supplements or modifications thereof
from time to time agreed upon between the relevant parties and all
instruments and documents made supplemental thereto;
"Head Lessor" means the Jurong Town Corporation and/or Singapore
Technologies Pte Ltd;
"Interest" means interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Jurong Town
Corporation;
"Notice to take possession" means the notice to be given by the
Landlord to the Subtenant under Clause 11;
"Permitted Occupier" means any person on the Sublet Portions expressly
or by implication with the Subtenant's authority;
"Property" means all that land known as Private Lots A12787(a) and
A12787(b) together with the Building erected thereon;
"Rent" means the rent payable by the Subtenant in accordance with
Schedule 3;
"Service Agreement" means the CSM Service Support Agreement dated 17th
February 1998 made between the parties hereto, as the same may be
amended or supplemented from time to time; and
"Sublet Portions" means all those portions of the Building coloured in
blue on the plans attached hereto in Appendix I.
1.2 Reference herein to the "Landlord's" shall include where the context so
admits the Landlord's successors-in-title and the person(s) for the
time being entitled to the reversion immediately expectant on the
determination of the terms herein mentioned.
1.3 Reference herein to the "Subtenant" shall include where the context so
admits the Subtenant's successors-in-title and permitted assigns.
1.4 Words importing the singular number include the plural number and vice
versa and words importing the masculine gender include the feminine
gender and words importing persons shall include companies,
corporations and other bodies, whether incorporated or unincorporated.
1.5 In any case where the Subtenant is placed under a restriction by reason
of the covenants and conditions contained in this Sub-Lease, the
restriction shall be deemed to include the obligation
<PAGE> 4
3
on the Subtenant not to permit or allow the infringement of the
restriction by any person claiming rights to use, enjoy or visit the
Sublet Portions and/or the Common Portions through, under or in trust
for the Subtenant.
1.6 Where the consent or approval of the Landlord is required under the
provisions of this Sub-Lease, for so long as the Service Agreement is
in effect and the Landlord has not objected thereunder to the matter
that is the subject of such consent or approval, any such approval or
consent shall automatically be deemed to have been requested by the
Subtenant and granted by the Landlord upon the taking by the Landlord
of the action requiring approval of the Landlord hereunder (as service
provider under the Service Agreement). In the event that the consent or
approval of the Landlord is required under the provisions of this
Sub-Lease and the Service Agreement is no longer in effect, the
Subtenant shall apply in writing for such consent or approval and the
Landlord shall not unreasonably withhold its consent or approval. It is
acknowledged that in order for the Landlord to provide consent
hereunder with respect to certain matters, it may be required under the
Head Lease to obtain the consent of the Head Lessor. Where the consent
or approval of the Head Lessor is required by the Head Lease to any
action or other matter proposed or taken by the Subtenant affecting the
Sublet Portions or the Common Portions, the Landlord shall liaise with
the Head Lessor and take all commercially reasonable actions that may
be necessary or desirable to obtain such consent or approval provided
nothing herein shall impose on the Landlord any obligation to ensure
that the Head Lessor's consent or approval will be given. The Subtenant
agrees that under the Service Agreement it will be charged the
Allocable Share of any costs and fees payable by the Landlord to
consultants engaged by the Landlord or the Head Lessor to advise upon
any application made by the Subtenant (including any plans,
specifications or materials submitted therewith) for any consent or
approval relating to the Common Portions and the Building. Any such
costs and fees payable in relation to any consent or approval required
in respect of the Sublet Portions or any part thereof shall be borne by
the Subtenant.
1.7 Subject to the provisions of Clause 1.6, references to "consent of the
Landlord" or words to similar effect mean a consent in writing signed
by or on behalf of the Landlord and references to "approved" and
"authorised" or words to similar effect mean (as the case may be)
approved or authorised in writing by or on behalf of the Landlord.
1.8 The Schedules hereto shall be taken, read and construed as parts of
this Sub-Lease and the provisions thereof shall have the same force and
effect as if expressly set out in the body of this Sub-Lease.
1.9 The clause and paragraph headings in this Sub-Lease are for ease of
reference only and shall not be taken into account in the construction
and interpretation of any covenant, condition or proviso to which they
relate.
1.10 References in this Sub-Lease to a clause or Schedule are references
where the context so admits to a clause or Schedule in this Sub-Lease.
References in a clause to a paragraph are (unless the context otherwise
requires) references to a paragraph of that clause, and references in a
Schedule to a paragraph are (unless the context otherwise requires)
references to a paragraph of that Schedule.
<PAGE> 5
4
1.11 References in this Sub-Lease to any statute or statutory instruments
shall includes and refer to any statute or statutory instrument
amending, consolidating or replacing them respectively from time to
time and for the time being in force.
1.12 Words in this Sub-Lease importing the singular meaning shall where the
context so admits include the plural meaning and vice versa.
2. SUB-LEASE
In consideration of the Rent and the Subtenant's covenants reserved and
contained in this Sub-Lease, the Landlord hereby sublets to the
Subtenant the Sublet Portions and allows the Subtenant to use, for so
long as this Sub-Lease is subsisting, the Common Portions in common
with the Landlord for the purposes stated herein or for such other
purpose(s) as may be prescribed from time to time by the Landlord for
the period of ten (10) years commencing from the date of receipt by the
Subtenant of the Notice to take possession (the "Term") on the terms
and conditions herein contained TOGETHER WITH (but to the exclusion of
all other liberties, rights or advantages) the rights set out in
Schedule 1 but EXCEPTING AND RESERVING unto the Landlord and the Head
Lessor at all times the rights set out in Schedule 2.
3. SUBTENANT'S COVENANTS
The Subtenant hereby covenants with the Landlord as follows:-
3.1 RENT
3.1.1 To pay the Rent at the times and in the manner specified in Schedule 3.
3.1.2 In addition and without prejudice to any other right, power or remedy
of the Landlord if the whole or any part of the Rent and other moneys
payable under any of the provisions of this Sub-Lease or any part
thereof shall at any time remain unpaid for seven (7) days after the
same shall have become due (whether such Rent or other moneys be
formally demanded or not) then the Subtenant shall pay to the Landlord
Interest thereon from and including the date they become due until the
date they are paid. The Landlord shall be entitled to recover any
moneys owing to the Landlord by the Subtenant (notwithstanding they are
not Rent) and Interest thereon as if such moneys and Interest were also
rent in arrears.
3.2 DEPOSIT
3.2.1 If at any time during the Term the Landlord shall cease to hold at
least 25% of the issued share capital of the Subtenant, the Subtenant
shall forthwith on demand by the Landlord, deposit with the Landlord in
cash a sum equal to three (3) months' Rent payable in respect of the
Term. The Subtenant shall, at all times thereafter during the Term,
maintain in cash with the Landlord a Deposit equivalent to three (3)
months' Rent.
3.2.2 The Deposit shall be held by the Landlord as security for the due
performance and observance by the Subtenant of all the covenants and
provisions contained in this Sub-Lease and as security for any claim by
the Landlord at any time against the Subtenant in relation to any
matter in connection with the Sublet Portions and/or the Common
Portions whether this Sub-Lease is subsisting
<PAGE> 6
5
or not and, subject to any deductions to be made by the Landlord
pursuant to the provisions of this Sub-Lease, shall be repaid to the
Subtenant without interest within one (1) month from the date the
Sublet Portions, duly repaired, cleaned, decorated and reinstated in
accordance with the Subtenant's covenants in this Sub-Lease, is
returned to the Landlord.
3.2.3 If the Subtenant shall commit a breach of any of the provisions of this
Sub-Lease, the Landlord shall be entitled but not obliged to apply the
Deposit or any part thereof in or towards payment of moneys outstanding
or making good any breach by the Subtenant or to deduct from the
Deposit the loss or expense to the Landlord occasioned by such breach
but without prejudice to any other remedy which the Landlord may be
entitled. If any part of the Deposit shall lawfully be applied by the
Landlord in accordance herewith, the Subtenant shall on demand by the
Landlord forthwith deposit with the Landlord the amount set-off by the
Landlord from the Deposit Provided Always that no part of the Deposit
shall without the written consent of the Landlord be set-off by the
Subtenant against any Rent or other sums owing to the Landlord.
3.3 OUTGOINGS
To pay all charges in respect of any telephone, telex, teleprinters,
facsimile and/or other services connected to the Sublet Portions and
all other charges or impositions imposed by any public authority for
the supply of any service separately supplied to the Sublet Portions.
3.4 USE
At all times, not without the previous consent in writing of the
Landlord, to carry on or to permit or suffer to be carried on in the
Sublet Portions and/or the Common Portions or any part thereof any
trade or business whatsoever other than the manufacture of
semiconductor wafers and all activities related or ancillary thereto.
3.5 CARPARKS
3.5.1 The Landlord and the Subtenant agree that the Subtenant shall be
allocated the use of such number of carpark spaces as are agreed upon
by the Landlord and the Subtenant. In any event:
(a) the Subtenant shall be allocated 70 carpark lots which will be
located on the Property and be available upon commencement of
the Term at no additional cost to the Subtenant; and
(b) the Subtenant shall be allocated 125 carpark lots which will
be made available to the Subtenant upon the completion of a
carpark complex which the Landlord shall cause to be built
near the Property and for which the Subtenant shall pay to the
Landlord or the owner of the carpark complex such rent or
other consideration as is agreed to by the Subtenant and the
Landlord taking into consideration the ground rent and
construction costs (and interest thereon, if applicable) for
such carpark complex and the proportion the 125 carpark lots
represents of the total number of carpark lots to be
constructed within the complex.
3.5.2 The carpark lots need not be specifically designated for the Subtenant.
<PAGE> 7
6
3.6 ALTERATIONS, ADDITIONS AND CHANGES
3.6.1 Not to carry out, suffer or permit to be carried out any alterations,
additions or other works whatsoever affecting the structure of the
Sublet Portions or the Building or the exterior appearance of any part
of the Sublet Portions except with the prior written consent of the
Landlord.
3.6.2 Not to carry out any other alterations, additions or other works at or
to or affecting the Sublet Portions and/or the Common Portions without
first having obtained the consent in writing of the Landlord to the
said alterations, additions or other works and to the plans, layouts,
designs, drawings, specifications and proposed materials to be used for
the said alterations, additions or other works, the Landlord's consent
not to be unreasonably withheld. Any alterations, additions or other
works whatsoever to be carried out at or to the Sublet Portions and/or
the Common Portions when consented to in writing by the Landlord upon
such terms and conditions as the Landlord may reasonably impose shall
only be carried out in accordance with the said terms and conditions
and by contractors approved by the Landlord, such approval not to be
unreasonably withheld and at the cost and expense of the Subtenant.
3.6.3 The Landlord shall be entitled to engage its architect, engineer or
other consultant(s) for the purpose of considering the plans, layouts,
designs, drawings, specifications and materials relating to the
proposed alterations, additions or other works, and the fees and
expenses of such architect, engineer and consultant(s) payable in
connection therewith shall be borne by the parties in accordance with
the provisions of Clause 1.6.
3.6.4 The costs and expenses payable to or incurred by the Landlord (if any)
in connection with obtaining the consent of the Head Lessor to the
proposed alterations, additions or other works, shall be borne by the
parties in accordance with the provisions of Clause 1.6. If the
Subtenant fails to make payment on demand of such fees, costs and
expenses referred to in Clauses 3.6.3 and 3.6.4, the Landlord may
effect payment of the same and all costs and expenses so incurred by
the Landlord shall be paid by the Subtenant to the Landlord forthwith
on demand and all costs and expenses so incurred by the Landlord
together with Interest thereon from the date the costs and expenses
were so incurred by the Landlord until the date they are paid by the
Subtenant to the Landlord shall be recoverable from the Subtenant as if
they were rent in arrears.
3.6.5 All planning and other consents necessary or required pursuant to the
provisions of any statute, rule, order, regulation or by-law for any
alterations, additions or other works at, to or affecting the Sublet
Portions and/or the Common Portions (if made by the Subtenant), shall
be applied for and obtained by the Subtenant at its own cost and
expense.
3.6.6 The Subtenant shall permit the Landlord and its servants or agents at
all reasonable times to enter into and inspect and view the Sublet
Portions to ascertain if all alterations, additions or other works are
or have been carried out in accordance with the provisions of this
Clause 3.6. If any breach of the provisions of this Clause 3.6 shall be
found upon such inspection for which the Subtenant is liable, then upon
notice by the Landlord to the Subtenant, the Subtenant shall execute
all repairs, works, replacements or removals required within thirty
(30) days (or
<PAGE> 8
7
sooner if reasonably required by the Landlord) after the date of
receipt by the Subtenant of such notice.
3.6.7 In case of default by the Subtenant, it shall be lawful for workmen or
agents of the Landlord to enter into the Sublet Portions at all
reasonable times to execute such repairs, works, replacements or
removals and the Subtenant shall pay to the Landlord on demand all
costs and expenses so incurred together with Interest from the date of
expenditure until the date they are paid by the Subtenant to the
Landlord (such costs and expenses and Interest to be recoverable as if
they were rent in arrears).
3.6.8 The Subtenant shall, where applicable, deliver to the Landlord
forthwith upon completion of the said alterations, additions or other
works, a set of the duly approved as-built drawings.
3.7 TAXES
3.7.1 The Rent and other sums expressed to be payable by the Subtenant under
this Sub-Lease (hereinafter collectively called the "Agreed Sum")
shall, as between the Landlord and the Subtenant be
exclusive of any applicable goods and services tax, imposition, duty
and levy whatsoever (hereinafter collectively called "Taxes" which, for
the avoidance of doubt, shall not include tax on the income of
the Landlord as charged or assessed by the Inland Revenue Authority of
Singapore) which may from time to time be imposed or charged before, on
or after the commencement of the Term (including any subsequent
revisions thereto) by any government, quasi-government, statutory or
tax authority (hereinafter called the "Authorities") on or calculated
by reference to the amount of the Agreed Sum (or any part
thereof) and the Subtenant shall pay all such Taxes or reimburse the
Landlord for the payment of such Taxes, as the case may be, in such
manner and within such period as to comply or enable the Landlord to
comply with any applicable orders or directives of the Authorities and
the relevant laws and regulations.
3.7.2 If the Landlord or the Subtenant (or any person on their behalf) is
required by law to make any deduction or withholding or to make any
payment, on account of such Taxes, from or calculated by reference to
the Agreed Sum (or any part thereof):-
(a) the Subtenant shall pay, without requiring any notice from the
Landlord all such Taxes for its own account (if the liability
to pay is imposed on the Subtenant), or on behalf of and in
the name of the Landlord (if the liability to pay is imposed
on the Landlord) on receipt of written notice from the
Landlord, and without prejudice to the foregoing, if the law
requires the Landlord to collect and to account for such
Taxes, the Subtenant shall pay such Taxes to the Landlord
(which shall be in addition to the Subtenant's liability to
pay the Agreed Sum) on receipt of written notice from the
Landlord; and
(b) the sum payable by the Subtenant in respect of which the
relevant deduction, withholding or payment is required on
account of such Taxes shall be increased to the extent
necessary to ensure that after making of the aforesaid
deduction, withholding or payment, the Landlord or any person
or persons to whom such sum is to be paid, receives on the due
date and retains (free from any liability in respect of any
such deduction, withholding or Taxes) a net sum equal to what
would have been received and retained had
<PAGE> 9
8
no such deduction, withholding or payment been required or
made.
The rights of the Landlord under this Clause 3.7 shall be in addition
and without prejudice to any other rights or powers of the Landlord
under any applicable order or directive of the Authorities or any
relevant law or regulation, to recover from the Subtenant the amount of
such Taxes which may be or is to be paid or borne by the Landlord.
The Subtenant shall indemnify and hold harmless the Landlord from any
losses, damages, claims, demands, proceedings, actions, costs,
expenses, interests and penalties suffered or incurred by the Landlord
arising from any claim, demand, proceeding or action that may be made
or instituted by the Authorities in respect of such Taxes and resulting
from any failure or delay on the part of the Subtenant in the payment
and discharge of any such Taxes.
3.8 COVENANTS AFFECTING USE OF SUBLET PORTIONS AND COMMON PORTIONS
3.8.1 Not to use the Sublet Portions and/or the Common Portions or any part
thereof for any noisy, noxious or offensive trade, business or
occupation nor for the carrying on of any vocation which may be
calculated to attract to the Property or any part thereof persons of an
undesirable character and not to do or permit to be done any act or
thing which may become a nuisance to or give cause for reasonable
complaints from the occupants of neighbouring premises.
3.8.2 Not to do or permit or suffer to be done anything whereby the policy or
policies of insurance on the Building and the Property for the time
being subsisting may become void or voidable or whereby the rate of
premium therefor may be increased and to make good all damage suffered
by the Landlord or Head Lessor and to repay to the Landlord or Head
Lessor forthwith on demand all sums paid by the Landlord or Head Lessor
by way of increased premiums and all expenses incurred by the Landlord
and Head Lessor in or about any renewal of such policy or policies
rendered necessary by a breach or non-observance of this covenant.
3.8.3 Not to permit any auction to take place on the Sublet Portions and/or
the Common Portions.
3.8.4 Not to hold in or on the Sublet Portions and/or the Common Portions any
exhibition, public meeting or public entertainment.
3.8.5 Not to bring or allow to be brought on to the Sublet Portions and/or
the Common Portions, the Property or any part of the surrounding
grounds which are used in common with the Landlord and other tenants,
any dog or other animal or bird or pet or any heavy machines or
machinery which have not been approved by the Landlord and
notwithstanding any prior approval of the Landlord, in relation to any
machines or machinery, not at any time to load or suffer to be loaded
any part of the floors of the Building or the Sublet Portions and/or
the Common Portions which may cause or lead to the subsidence or
cracking of the ground or any part of the Building and shall, when
required by the Landlord or the Head Lessor, distribute any load on any
part of the floor of the Sublet Portions and/or the Common Portions in
accordance with the directions and requirements of the Landlord and the
Head Lessor and in the interpretation and application of the provisions
of this Clause relating to loading the decision of the surveyor or
architect of the Landlord or the Head Lessor shall be final and binding
upon the Subtenant.
<PAGE> 10
9
3.8.6 Not to obstruct, litter or make untidy any part of the Property and the
surrounding grounds used in common with the Landlord, Head Lessor and
other persons authorized by them respectively.
3.8.7 Not to place or expose for sale or otherwise or permit or suffer so to
be upon or over the grounds outside the front of the Sublet Portions
and/or the Common Portions any goods or things whatsoever.
3.8.8 Not to use the Sublet Portions and/or the Common Portions or any part
thereof (save for the cafeteria contemplated to be a part of the Common
Portions) or permit the same to be used for the cooking or the
preparation of food nor to permit or suffer anyone to sleep or reside
therein save as otherwise permitted by the Landlord and/or any other
relevant authority.
3.8.9 Not to block up, darken or obstruct or obscure any of the windows or
light belonging to the Sublet Portions and/or the Common Portions or to
the Building.
3.8.10 To ensure that the Subtenant's employees, servants, agents or visitors
do not obstruct those areas of the Property allocated to temporary
vehicle parking or designated as loading/unloading areas and at all
times to comply with the directions of the Landlord's staff or agents
in exercising due control of such areas.
3.8.11 Not to use or permit to be used any lavatories, water-closets or
washroom accommodation in the Building other than that allocated by the
Landlord to the Subtenant (if any) available in the Sublet Portions or
the Common Portions nor any other facilities in the Building save as
otherwise permitted by the Landlord.
3.8.12 To keep the Sublet Portions and/or the Common Portions and every part
thereof clean and in the fullest possible hygienic condition and to
keep all pipes, drains, basins, sinks and water-closets in the Sublet
Portions and/or the Common Portions clean, unblocked and in the fullest
possible hygienic condition. The Subtenant shall not employ in or about
the Sublet Portions and/or the Common Portions any cleaner other than
the cleaning contractor approved by the Landlord to carry out the
cleaning work for the Building and the Subtenant shall not have any
claim against the Landlord in respect of any act, omission or
negligence of such cleaner in or about the performance or purported
performance of his duties.
3.8.13 To ensure that proper measures will be carried out to ensure proper
ventilation and to prevent smoke fumes or unpleasant odours and/or
leakage of any other substances or materials from and in the Sublet
Portions and/or the Common Portions and in the event that the Subtenant
fails to do so the Landlord may take all such measures as the Landlord
reasonably deems necessary to remedy this breach and all reasonable
costs and expenses incurred by the Landlord shall be solely borne by
the Subtenant and deemed to be a debt due from the Subtenant to the
Landlord.
3.8.14 To keep the Sublet Portions and/or the Common Portions free of pests,
rodents, vermin and insects.
3.8.15 Not to erect or install any sign, device, furnishing, ornament or
object which is visible from the street or from any other building and
which, in the reasonable opinion of the Landlord, is incongruous or
unsightly or may detract from the general
<PAGE> 11
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appearance of the Building without the prior written consent of the
Landlord, such consent not to be unreasonably withheld.
3.8.16 To ensure that all doors of the Sublet Portions are safely and properly
locked and secured when the Sublet Portions are not occupied.
3.8.17 Not to place or take into the passenger lift (if any) any baggage,
furniture, heavy articles or other goods or other merchandise save only
such light articles as brief-cases, attache cases and handbags.
3.9 SIGNS, NAME PLATES, ADVERTISEMENTS, ETC
3.9.1 Not to affix, paint, or otherwise exhibit or permit to be affixed,
painted or otherwise exhibited to or upon any part of the exterior of
the Sublet Portions and/or the Common Portions or the external walls,
rails or fences thereof or of the Property any air-conditioning unit,
signboard, announcement, placard, poster, advertisement, nameplate,
flag, flagstaff, wireless or television aerial, or any other thing
whatsoever or on the exterior of the Sublet Portions and/or the Common
Portions or on the windows or doors thereof or of the Property or in or
about any part of the Building except such as may be approved in
writing by the Landlord, the Landlord's approval not to be unreasonably
withheld.
3.9.2 If any signs, signboards, show-boards, name-plates, placards, notices,
hoardings, posters, plaques, advertisements, flag or flag staff or any
other thing whatsoever shall be affixed erected painted or otherwise
exhibited in breach of these provisions, to permit the Landlord and/or
the Head Lessor to enter the Sublet Portions and remove such signs,
signboards, show-boards, nameplates, placards, notices, hoardings,
posters, plaques, advertisements, flag or flag staff or any other thing
whatsoever and to pay the Landlord on demand the expense of so doing.
3.10 TENANTABLE REPAIR
3.10.1 At all times during the continuance of this Sub-Lease:
(a) to keep the Sublet Portions, the Subtenant's fixtures,
fittings, plant, furnishing and equipment therein, the
flooring, interior plaster or other surface material or
rendering on the walls and ceilings of the Sublet Portions and
all doors, windows, glass, locks, fastenings, installations
and fittings for light and power and the Conducting Media or
any of them within and/or serving the Sublet Portions and/or
the Common Portions, in a clean and good state of tenantable
repair and condition (fair wear and tear excepted);
(b) to give immediate notice to the Landlord of any material
damage that may occur to the Sublet Portions and/or the Common
Portions and of any material accident to or defects in the
Sublet Portions and/or the Common Portions or any part of the
Landlord's fixtures or fittings; and
(c) to make good to the satisfaction of the Landlord any damage or
breakage caused to any part of the Sublet Portions and/or the
Common Portions or to any of the Landlord's fixtures and
fittings therein resulting from any action or omission of the
Subtenant, its employees, independent
<PAGE> 12
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contractors, agents or any Permitted Occupier by the bringing
in or removal of the Subtenant's goods or effect.
3.10.2 The obligations of the Subtenant in this Clause 3.10 shall extend to
all improvements and additions to the Sublet Portions and/or the Common
Portions and all the Landlord's fixtures, fittings and appurtenances of
whatever nature affixed or fastened to the Sublet Portions and/or the
Common Portions.
3.10.3 It is understood and agreed that the obligation to effect maintenance,
repair and replacement with respect to the Building (including the
Sublet Portions and Common Portions) and Property is primarily vested
in the Landlord pursuant to Clause 5.9. The Subtenant's obligations
under this Clause 3.10 shall apply to any maintenance, repair and
replacement obligations not comprehended under Clause 5.9.
3.11 YIELD UP IN REPAIR
At the expiration or earlier determination of the Term:-
3.11.1 Quietly to yield up the Sublet Portions (together with, if so requested
by the Landlord, all structures and installations erected or installed
by the Subtenant at the Sublet Portions and/or the Common Portions with
the consent of the Landlord and Head Lessor), all additions and
improvements at the Sublet Portions and/or the Common Portions made by
the Subtenant and all fixtures (other than trade fixtures which may be
fixed or fastened by the Subtenant to or upon the Sublet Portions
and/or the Common Portions with the consent of the Landlord and Head
Lessor) repaired, cleaned, decorated and kept in accordance with the
Subtenant's covenants contained in this Sub-Lease.
3.11.2 If so requested by the Landlord to remove from the Sublet Portions
and/or the Common Portions all or any portion of the fixtures and
fittings installed or erected by the Subtenant and all notices, notice
boards and signs bearing the name of or otherwise relating to the
Subtenant (including in this context any persons deriving title to the
Sublet Portions under the Subtenant) or its business.
3.11.3 To redecorate the Sublet Portions to the reasonable satisfaction of the
Landlord, with two coats of good quality oil paint or emulsion paint
and other appropriate treatment of all internal parts of the Sublet
Portions in a good workmanlike manner using suitable and appropriate
materials as the Landlord may reasonably and properly require.
3.11.4 To make good to the reasonable satisfaction of the Landlord all damage
and defects to the Sublet Portions and the Common Portions resulting
from the removal of the Subtenant's belongings, reinstatement or
redecoration of the Sublet Portions and/or the Common Portions.
3.11.5 If the Subtenant fails to remove the fixtures and fittings, reinstate,
redecorate or make good any damage and defects to the Sublet Portions
and/or the Common Portions in accordance with the provisions of this
Clause 3.11 within fourteen (14) days from the date of notice in
writing to do the same, the Landlord may effect the same at the
Subtenant's cost and expense PROVIDED THAT the Landlord shall carry out
such works within a reasonable period and all reasonable costs and
expenses incurred by the Landlord together with the Rent which the
Landlord shall be entitled to receive had the period within which such
works were effected by
<PAGE> 13
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the Landlord been added to the relevant term which had hitherto expired
or been determined, shall be paid by the Subtenant within seven (7)
days of demand from the Landlord, and in this connection, a certificate
of the Landlord as to the amount of costs and expenses incurred shall
be conclusive and binding on the Subtenant in the absence of manifest
error.
3.12 COMPLIANCE WITH LEGISLATION ETC
3.12.1 Except where such liability may be expressly within the Landlord's
covenants contained in this Sub-Lease, to comply in all respects with
the provisions of all statutes and regulations for the time being in
force and requirements of any competent authority relating to, or
affecting, the Sublet Portions or anything done in or upon the Sublet
Portions and/or the Common Portions by the Subtenant.
3.12.2 In particular but without prejudice to the generality of Clause
3.12.1:-
(a) to comply with all requirements under any present or future
Act of Parliament, order, by-law or regulation as to the use
or occupation of or otherwise concerning the Sublet Portions
and/or the Common Portions;
(b) to comply with the provisions for health, safety and welfare
of persons employed to work in the Sublet Portions and/or the
Common Portions laid down by any law in force and any
regulations thereunder for the time being in force;
(c) to observe and conform with all regulations and restrictions
made by the Landlord and/or Head Lessor or other duly
authorized agents for the proper management of the Property
and the grounds around the Building and notified in writing by
the Landlord or the Head Lessor or their duly authorized
agents to the Subtenant from time to time;
(d) to execute with all due diligence all works to the Sublet
Portions and/or the Common Portions for which the Subtenant is
liable in accordance with this Clause 3.12 and of which the
Landlord has given notice to the Subtenant; and
(e) if the Subtenant shall not comply with Clause 3.12.2(d) to
permit the Landlord and/or the Head Lessor to enter the Sublet
Portions to carry out such works and to pay to the Landlord on
demand the expense of so doing (including surveyors' and other
professional advisers' fees) together with Interest from and
including the date of expenditure until payment by the
Subtenant to the Landlord (such monies to be recoverable as if
they were rent in arrears).
(f) Not to do or omit or suffer to be done or omitted any act
matter or thing in or on the Sublet Portions and/or the Common
Portions (to the extent used by the Subtenant) in respect of
the business, trade or industry carried out or conducted
therein by the Subtenant which shall contravene the provisions
of any laws, rules or regulations now or hereafter affecting
the same.
3.13 COMPLIANCE WITH HEAD LEASE
3.13.1 To observe the provisions in the Head Lease and perform all the
covenants and conditions on the part of the lessee contained in
<PAGE> 14
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the Head Lease (save for the covenant to pay the rent thereby reserved
and those covenants in this Sub-Lease which are to be performed and
observed only by the Landlord) insofar as they relate to the occupation
and use by the Subtenant of the Sublet Portions and/or the Common
Portions. For purposes of giving effect to the foregoing, the
provisions of the Head Lease relating to construction (such as with
respect to construction of the Building and boundary walls or removal
of building materials) or compliance with which would require the
Subtenant to control portions of the Property other than the Sublet
Portions (such as with respect to surveys of the Property, or
maintenance of any gross plot ratio for the Property) shall not be
deemed to relate to the occupation and use of the Sublet Portions.
3.13.2 Not to cause or do or suffer to be done any act or thing in relation to
the Sublet Portions, the Common Portions or the Property or any part
thereof which may as between the Landlord and the Head Lessor
constitute or cause a breach by the Landlord of any of the terms,
covenants, conditions or stipulations on the part of the Landlord to be
observed or performed by virtue of the Head Lease but shall do or
permit to be done any act or thing to comply with or to prevent a
breach of any of such terms, covenants, conditions or stipulations with
no liability on the part of the Landlord and/or the Head Lessor for any
inconvenience, loss, damage, costs, expenses or compensation whatsoever
in the event that the Head Lessor, its servants or authorised agents
with or without workmen, tools and equipment should enter upon the
Sublet Portions to do any act or thing which the Head Lessor is
entitled to do by virtue of the Head Lease or by virtue of any laws,
by-laws, rules or regulations.
3.13.3 The Subtenant hereby acknowledges that it has received copies of the
Head Lease and is acquainted with the terms, covenants, conditions and
stipulations therein.
3.13.4 To comply with, observe and perform all the conditions, to the extent
the same may be performed by the Subtenant, of the Head Lessor's
consent to the Sublease herein, including the payment of any subletting
fee, levy or other imposition which may from time to time be imposed by
the Head Lessor.
3.14 ASSIGNMENT AND SUBLETTING
3.14.1 Not to assign, sublet, grant a licence or part with or share the
possession or occupation of the Sublet Portions and/or the Common
Portions or any part thereof nor permit any other party or person by
way of a licence or otherwise to occupy the Sublet Portions and/or the
Common Portions or any part thereof and not at any time hereafter to
transfer, assign, mortgage, charge, encumber or otherwise deal with the
Sublet Portions and/or the Common Portions and the Subtenant's rights
title and interest under this Sub-Lease.
3.14.2 The provisions of Section 17 of the Conveyancing and Law of Property
Act (Cap. 61) shall not apply to this Sub-Lease.
3.15 DISPOSAL, CLEANING AND OTHER REMEDIAL MEASURES
3.15.1 To make good and sufficient provision for the safe and efficient
disposal of all waste, debris and rubbish, including but not limited to
pollutants in accordance with applicable laws and to the requirements
and satisfaction of the Landlord and Head Lessor, PROVIDED THAT in the
event of default by the Subtenant under this covenant the Landlord may
carry out such remedial
<PAGE> 15
14
measures as are reasonably necessary and all costs and expenses
reasonably incurred thereby shall forthwith be recoverable from the
Subtenant as rent in arrears and be repaid on demand.
3.15.2 To make good and sufficient provision for the disposal, cleaning and
all other remedial measures that are necessary at any part of the
Property as a result of any deposit, spillage or disposal of any
material or liquid by the Subtenant or by any of the Subtenant's
employees, independent contractors, agents or any Permitted Occupier,
provided that in the event of default by the Subtenant under this
covenant the Landlord may carry out such remedial measures as are
reasonably necessary and all costs and expenses incurred thereby shall
forthwith be recoverable from the Subtenant as rent in arrears and be
repaid on demand.
3.15.3 To keep the Sublet Portions and/or the Common Portions clean and tidy
and to remove therefrom all debris and rubbish to such place within the
grounds of the Property as the Landlord may designate and in the event
of default by the Subtenant the Landlord may do so and all costs and
expenses incurred thereby shall forthwith be repaid by the Subtenant to
the Landlord on demand.
3.15.4 To employ in or about the Sublet Portions and/or the Common Portions
only those cleaning or waste disposal contractors authorized by the
Landlord to carry out cleaning or waste disposal works in the Building.
Any such authorized contractors so employed by the Subtenant for the
purposes of cleaning or disposing of waste from the Sublet Portions
and/or the Common Portions shall be at the sole expense and
responsibility of Subtenant.
3.15.5 To allow the person or persons for the time being having the contract
for the cleaning of the Building and his or their servants, workmen,
employees, agents, contractors and subcontractors, free ingress and
egress to and from the Sublet Portions for the purposes of cleaning
thereof during business hours.
3.16 LANDLORD'S RIGHT OF INSPECTION AND RIGHT OF REPAIR
3.16.1 To permit the Landlord and its servants or agents at all reasonable
times by prior appointment but at any time if the Head Lessor has
served written notice on the Landlord pursuant to any of the terms of
the Head Lease giving notice of any breach of any of the terms
covenants and conditions of any of the Head Lease, to enter into,
inspect and view the Sublet Portions and examine their condition and
also to take a schedule of fixtures in the Sublet Portions.
3.16.2 If any breach of covenant, defects, disrepair, removal of fixtures or
unauthorised alterations or additions shall be found upon such
inspection for which the Subtenant is liable, then upon notice to the
Subtenant, to execute all repairs, works, replacements or removals
required within fourteen (14) days (or sooner if required by the
Landlord) after the receipt of such notice, to the satisfaction of the
Landlord or its surveyor.
3.16.3 In case of default by the Subtenant, it shall be lawful for workmen or
agents of the Landlord to enter into the Sublet Portions and execute
such repairs, works, replacements or removals.
3.16.4 To pay to the Landlord on demand all costs and expenses so incurred
with Interest from the date of expenditure until the
<PAGE> 16
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date they are paid by the Subtenant to the Landlord (such costs and
expenses and Interest to be recoverable as if they were rent in
arrears), such demand to be accompanied by supporting evidence as to
the amount of the said expenses.
3.17 DANGEROUS GOODS AND UNLAWFUL STORAGE
Not to store or bring upon the Property, the Sublet Portions and/or the
Common Portions or any part thereof, arms, ammunition, unlawful goods,
gunpowder, saltpetre, chemicals, petrol, kerosene, gas, any explosive
or combustible substance or any goods or things which in the opinion of
the Landlord are of an obnoxious, dangerous or hazardous nature and not
to place or leave in the entrance, stairways, passages, corridors,
lobbies or other common parts of the Sublet Portions and/or the Common
Portions, the Building or the Property, any boxes or rubbish or
otherwise encumber the same; PROVIDED ALWAYS that if combustible or
inflammable materials are stored in the Property, the Sublet Portions
and/or the Common Portions or any part thereof with the consent in
writing of the Landlord, any increase in premia for fire or other
insurance as may have been taken out by the Landlord shall be borne by
the Subtenant; PROVIDED THAT this provision shall not prohibit or
restrict the right of the Subtenant to use, store and possess such
chemicals or other materials, the use, storage and possession of which
are necessary or desirable for the uses permitted under Clause 3.4 so
long as the Subtenant otherwise complies with the laws, rules and
regulations applicable to the use, storage and possession of such
chemicals and materials.
3.18 FIRE PRECAUTIONS
3.18.1 To install adequate fire extinguishers or fire fighting or protection
equipment in the Sublet Portions and to ensure that they are at all
times properly maintained and in good working order and repair.
3.18.2 To ensure that all exits in the Sublet Portions are properly marked and
illuminated and that fire-fighting equipment are adequately installed
and provided for thereat.
3.18.3 To keep the Sublet Portions and all fixtures, fittings, installations
and appliances therein in a safe condition by adopting all necessary
measures to prevent any outbreak or occurrence of fire in the Sublet
Portions, to comply with the requirements of the Fire Safety Bureau or
other competent authority and upon written notice from the Landlord to
comply with such reasonable requirements as the Landlord may in its
discretion stipulate as to fire precautions relating to the Sublet
Portions and/or the Common Portions.
3.19 HEAD LESSOR'S AND LANDLORD'S RIGHTS OF ENTRY FOR REPAIRS ETC
In addition and without prejudice to Clause 3.18, to permit the Head
Lessor, the Landlord and the agents, workmen and others employed by the
Landlord and the Head Lessor at all reasonable times by prior
appointment to enter upon the Sublet Portions:-
(a) to inspect, cleanse, repair, remove, replace, alter or execute
any works whatsoever to or in connection with the Conducting
Media and ancillary apparatus, easements or services referred
to in Schedule 2; or
<PAGE> 17
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(b) to effect or carry out any maintenance, repairs, alterations
or additions or other works which the Landlord or the Head
Lessor may consider necessary or desirable in respect of other
parts of the Building, the water, electrical, airconditioning
or other facilities and services of the Building or of the
Property; or
(c) for the purpose of exercising any of the powers and
authorities of the Landlord under this Sub-Lease or for the
purpose of the Head Lessor exercising any of the powers and
authorities of the Head Lessor under the Head Lease; or
(d) to comply with an obligation of repair, maintenance or renewal
affecting the Sublet Portions; or
(e) for the purpose of allowing inspections to be carried out at
the Sublet Portions by the Head Lessor, the Landlord, the
relevant government authorities or regulatory bodies or the
Head Lessor's and/or the Landlord's maintenance contractors;
or
(f) to construct, alter, maintain, repair or fix anything or
additional thing serving the Building, the adjoining premises
or property of the Landlord, and running through or on the
Sublet Portions; or
(g) in connection with the development of the remainder of the
Building, the Property or any adjoining or neighbouring land
or premises.
Without payment of compensation for any nuisance, annoyance or
inconvenience caused to the Subtenant subject to the Landlord (or other
person so entering) exercising such right in a reasonable manner.
3.20 SUITABLE AND PROPER SUPPORTS
The Subtenant shall at its own cost and expense and subject to the
prior approval in writing of the Landlord and the relevant government
authorities provide suitable and proper supports for all machinery,
equipment and installations in connection with the approved usage at
the Sublet Portions and/or the Common Portions. The Head Lessor and the
Landlord shall not be liable for any loss, damage or inconvenience that
the Subtenant may suffer or incur in connection with any defects caused
to the ground/production floor slabs or apron slabs by overloading and
any subsidence or cracking of the ground/production floor slabs or
aprons, drains and driveways of the Sublet Portions and/or the Common
Portions or the Property, or from other defects inherent or otherwise
in the Sublet Portions and/or the Common Portions or the Property.
3.21 CONSTRUCTION AND FACILITY SYSTEM SERVICES UNDER THE SERVICE AGREEMENT
The Landlord and the Tenant each hereby acknowledge that construction
and facility system services are provided by the Landlord under the
Service Agreement. In the event that the Service Agreement is
terminated or amended during the Term and such termination or amendment
has the effect of terminating or reducing the Landlord's provision of
such construction and facility system services, the parties shall in
good faith negotiate amendments or supplements to this Sub-Lease in
respect of each party's obligations to perform the services
contemplated
<PAGE> 18
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in this Sub-Lease (such as, without limitation, maintenance and
repairs).
4. LANDLORD'S COVENANTS
The Landlord hereby covenants with the Subtenant as follows:-
4.1 QUIET ENJOYMENT
That the Subtenant duly paying the Rent hereby reserved and observing
and performing its several covenants and stipulations herein on its
part contained shall peaceably hold and enjoy the Sublet Portions and
use the Common Portions during the Term without any disturbance by the
Landlord or any person lawfully claiming under through or in trust for
the Landlord.
4.2 PERFORMANCE AND OBSERVANCE OF HEAD LEASE
4.2.1 To perform and observe the covenants on the lessee's part contained in
the Head Lease save and except those covenants in this Sub-Lease which
are to be performed and observed by the Subtenant.
4.2.2 To make payment of all rent and rates due to the Head Lessor under the
Head Lease, property tax or assessment by whatever name called as may
be rated or charged on the Sublet Portions (except as hereinbefore
covenanted to be paid by the Subtenant) payable by the Landlord in
respect of the Sublet Portions during the term hereby created.
4.2.3 For the purposes of Clause 3.15, to inform the Subtenant of the terms,
covenants, conditions and stipulations of the Head Lease and any
variations or amendments thereto.
4.2.4 Promptly after the Landlord receives a copy of any notice or other
communication from the Head Lessor with respect to or affecting the
Sublet Portions or the Common Portions, the Landlord shall provide the
Subtenant a copy of such notice or communication. In the event that any
such notice or communication requires performance by the Landlord, or
pertains to the breach, of any of its obligations under the Head Lease,
the Subtenant shall have the right, but not the obligation to perform
such obligation or cure such breach.
4.3 LANDLORD'S REPRESENTATIONS AND WARRANTIES
4.3.1 The Landlord represents and warrants that all applicable covenants,
restrictions, easements, zoning and other legal requirements in effect
as of the date hereof permit the use of Sublet Portions and the Common
Portions for purposes of operating a semiconductor wafer manufacturing
facility and uses accessory and incidental thereto.
4.3.2 The Landlord warrants to the Subtenant that the Landlord has
constructed the Building in a workmanlike manner, in compliance with
(a) all applicable legal requirements, (b) all applicable industry
standards for a semiconductor wafer manufacturing facility and (c) all
requirements of the Head Lease. Save as aforesaid, no other warranties
in respect of the construction of the Building are implied.
<PAGE> 19
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4.3.3 With respect to the property and the construction of the Building, the
Landlord warrants that (a) the Landlord is in compliance with all
applicable environmental and safety laws, rules, regulations and
orders; (b) the Landlord has obtained or will obtain all environmental,
health and safety governmental permits necessary for the holding of the
Property and the construction of the Building and all such governmental
permits are in full force and effect and the Landlord is in compliance
with all terms and conditions of such permits; and (c) the Landlord is
not subject to any judicial or administrative proceeding, order,
judgment, decree or settlement alleging or addressing a violation of or
liability under any environmental or safety laws, rules, regulations
and orders.
4.4 LANDLORD NOT TO ASSIGN
The Landlord shall not assign or transfer this Sub-Lease and/or the
Landlord's right, title and interest under this Sub-Lease to any other
party.
4.5 LANDLORD'S INDEMNITY
The Landlord unconditionally and irrevocably defend, indemnify and keep
harmless and indemnified the Subtenant and its officers, directors and
employees from and against all claims, demands, writs, summonses,
actions, suits, proceedings, judgments, decrees, orders, damages,
costs, losses and expenses of any nature whatsoever (but excluding all
indirect and consequential loss and damage) which the Subtenant or its
officers, directors or employees may suffer or incur and all loss and
damage to the Sublet Portions and the Common Portions arising from or
relating to the existence or Release on or prior to the date hereof in,
on, under or from the Building or the Property of any Contaminant (it
being understood that such indemnity shall cover, without limitation,
an obligation to take any required or appropriate Remedial Action).
For the purposes of the foregoing: (1) "Contaminant" means any waste,
pollutant, hazardous or toxic substance or waste, petroleum,
petroleum-based substance or waste, special waste, or any constituent
of any such substance or waste; (2) "Release" means any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration of a Contaminant into the indoor or
outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil surface water,
groundwater or property; and (3) "Remedial Action" means actions
required under any applicable laws, regulation, rulings, orders or
decisions or under the Head Lease to (i) clean up, remove, treat or in
any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threatened Release or minimise
the further Release of Contaminants or (iii) investigate and determine
if a remedial response is needed and to design such a response and
post-remedial investigation, monitoring operation and maintenance and
care.
4.6 LANDLORD'S PERFORMANCE
The Landlord shall perform, in a timely manner and at the cost and
expense of the Landlord, all of Singapore Technologies Pte Ltd's
("STPL") obligations under the Building Agreements (in so far as it is
possible and practicable for the Landlord to perform such obligations)
and shall use commercially reasonable efforts to complete as soon as is
practicable all conditions to the
<PAGE> 20
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conversion of the license granted to STPL under each Building Agreement
into a lease for the benefit of STPL in the form attached to such
Building Agreement.
5. PROVISOS
PROVIDED ALWAYS and it is hereby agreed and declared as follows:-
5.1 TERMINATION BY JURONG TOWN CORPORATION
5.1.1 Notwithstanding any other provision of this Sub-Lease, in the event
that Jurong Town Corporation, at any time before the expiry of the
Term, terminates the Head Lease and in connection therewith or
thereafter, gives notice in writing requiring that this Sub-Lease be
terminated or withdraws its consent to this subletting or becomes
entitled to and re-enters the Property, the Sublet Portions and/or the
Common Portions or any part thereof in the name of the whole, the Term
shall upon the expiry of the said notice or upon the said withdrawal or
upon the said re-entry absolutely determine without prejudice to any
rights and/or remedies which have accrued to either party against the
other for any antecedent breaches under this Sub-Lease but in any event
without the Head Lessor and (if the determination was not caused by any
act or omission of the Landlord) the Landlord being liable for any
inconvenience, loss, damages, compensation, costs or expenses
whatsoever arising from a termination of this Sub-Lease pursuant to
this Clause 5.1.
5.2 DETERMINATION
5.2.1 For the purposes of this Clause an event of default shall occur if:-
(a) any or any part of the Rent reserved by this Sub-Lease shall
be unpaid for thirty (30) days after any of the days when they
become due for payment (whether or not they shall have been
formally demanded); or
(b) the Subtenant shall fail to pay any other moneys hereby
covenanted to be paid on the due date or within thirty (30)
days after demand for payment therefor; or
(c) the, Subtenant shall at any time fail or neglect to perform or
observe any of the covenants, conditions or agreements
contained in this Sub-Lease to be performed or observed by the
Subtenant (other than the covenant for the payment of any
moneys due to the Landlord); or
(d) any distress or execution is levied on the Subtenant's goods
which is not stayed or removed within thirty (30) days after
such levy; or
(e) an event of insolvency shall occur in relation to the
Subtenant.
5.2.2 Upon the occurrence of an event of default, it shall be lawful for the
Landlord or any person or persons duly authorised by the Landlord for
that purpose to re-enter the Sublet Portions (or any part thereof in
the name of the whole) at any time (and even if any previous right of
re-entry has been waived) and to repossess the Sublet Portions
(including any structure or other installation on the Sublet Portions)
and the Term and this Sub-Lease shall absolutely cease and determine
and without the Landlord being required to pay to the Subtenant any
compensation
<PAGE> 21
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or allowance for moneys which may have been incurred by the Subtenant
for the installation or construction of any structure or other
installation on the Sublet Portions.
5.2.3 Re-entry in exercise of the rights contained in Clause 5.2.2 shall be
without prejudice to any rights or remedies of the Landlord in respect
of any breach of any of the covenants by the Subtenant contained in
this Sub-Lease (including the breach in respect of which the re-entry
is made).
5.2.4 Without prejudice to any other rights or remedies of the Landlord, the
Subtenant shall pay to the Landlord compensation and damages for any
loss of rent suffered by the Landlord consequential upon the Landlord
exercising its rights of re-entry.
5.2.5 The expression "an event of insolvency" in Clause 5.2.1 includes
inability of the Subtenant to pay its debts, entry into liquidation
either compulsory or voluntary (except for the purpose of amalgamation
or reconstruction which has been previously approved by the Landlord),
the passing of a resolution for winding up, the making of a proposal to
the Subtenant and its creditors for a composition in satisfaction of
its debts or a scheme of arrangement of its affairs, the application to
the court for the appointment of a judicial manager or the appointment
of a receiver or judicial manager.
5.3 NOTICES
All notices, demands or other communications required or permitted to
be given or made hereunder shall be in writing and shall be
sufficiently served on the Subtenant if the same is addressed to the
Subtenant and sent by telefax to the Subtenant's telefax number at the
Sublet Portions or delivered personally or sent by registered post to
the Sublet Portions or at its registered office recorded with the
Registrar of Companies and Businesses. All notices, demands or other
communications shall be sufficiently served on the Landlord if the same
is addressed to the Landlord and sent by telefax to the Landlord's
telefax number or delivered personally or sent by registered post to
the registered office for the time being of the Landlord. Any such
notice, demand or communication shall be deemed to have been duly
served immediately (if given or made by facsimile or delivered by hand)
or (if given or made by letter) 24 hours after posting and in proving
the same it shall be sufficient to show that the envelope containing
the same was duly addressed, stamped and posted.
5.4. RELATIONSHIP BETWEEN LANDLORD AND SUBTENANT
5.4.1 It is recognised that (i) the Landlord owns 49% of the issued share
capital of the Subtenant and is party with Lucent Technologies
Microelectronics Pte Ltd to a Joint Venture Agreement dated as of
December 19, 1997 (as the same may be amended, modified or
supplemented, the "Joint Venture Agreement") relating to the governance
of the Subtenant and (ii) the Landlord has agreed with the Subtenant
pursuant to the Service Agreement to provide certain administrative,
logistical, safety, environmental, engineering, system, operations
shipping and other services to the Subtenant (including various
services with respect to obligations of the Subtenant hereunder). In
view of the foregoing, and notwithstanding the generality of any other
provision of this Agreement:-.
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(a) the Subtenant shall be deemed to have fulfilled or performed
any obligation hereunder if (i) the same is performed by the
Landlord under the Service Agreement or (ii) the same belongs
to a category of service (for example, environmental and
safety management) that is required to be performed by the
Landlord under the Service Agreement, whether or not such
obligation is actually performed (except to the extent such
obligation is not performed pursuant to the express
instructions of the Subtenant to the Landlord under the
Service Agreement that are contrary to the recommendations of
the Landlord) and, in such circumstances, no default or breach
by the Subtenant shall arise or deem to exist hereunder; and
(b) for so long as the Service Agreement is in effect, any action
taken by the Subtenant or the Landlord (as service provider
under the Service Agreement) which is prohibited hereunder
shall be deemed permitted (except for any action taken by the
Landlord (as service provider under the Service Agreement)
pursuant to the express instructions of the Subtenant that are
contrary to the recommendations of the Landlord).
5.4.2 The Subtenant and the Landlord further acknowledge and agree that the
Common Portions are to be used jointly by the Landlord and the
Subtenant and that, as provided in the other provisions of this
Sublease and in the Service Agreement, the Subtenant has agreed to
compensate the Landlord for its use and the maintenance of the Common
Portions. The Subtenant and the Landlord further agree that with
respect to the Common Portions, notwithstanding any other provision of
this Sub-Lease:
(a) The Landlord shall be responsible for maintaining and
repairing the Common Portions, complying with all statutes and
regulations applicable to the Common Portions and shall be
responsible for any liability applicable to the occupation of
the Common Portions by the Landlord or the use of the Common
Portions by the Head Lessor, the Landlord or any of their
licensees or invitees; and
(b) the Subtenant shall not damage, destroy or otherwise harm the
Common Portions, shall comply with all statutes and
regulations applicable to its use of the Common Portions and
shall be responsible for any liability applicable to the use
of the Common Portions by the Subtenant or its Permitted
Occupiers.
5.5 NO CLAIM BY SUBTENANT
5.5.1 Except as otherwise expressly provided herein, the Landlord shall,
notwithstanding anything herein contained, not be liable to the
Subtenant, nor shall the Subtenant have any claim against the Landlord
in respect of:-
(a) any interruption in services (if any) provided by the Landlord
to the Subtenant under this Sub-Lease, by reason of necessary
repair or maintenance of any installations or apparatus or
damage thereto or destruction thereof by fire, water, riot,
act of God or other cause beyond the Landlord's control or by
reason of mechanical or other defect or breakdown or other
inclement conditions or shortage or manpower, fuel, materials,
electricity or water or by reason of labour disputes or by
reason of any circumstances beyond the Landlord's control
(including but
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not limited to fire, flood, act of God, escape of water, riot,
civil commotion, curfew or emergency);
(b) any act, omission, default, misconduct or negligence of any
porter, attendant or other servant or employee, independent
contractor or agent of the Landlord and/or the Head Lessor in
or about the performance or purported performance of any duty
relating to the provision of the said services or any of them;
(c) any damage, injury or loss arising out of the leakage of the
piping, wiring and sprinkler system in the Landlord Buildings
and/or any of the Sublet Portions and/or the Common Portions
and/or the structure of such buildings;
(d) any act, omission, default, misconduct or negligence of any
contractor nominated or approved by the Landlord pursuant to
this Sub-Lease and any such contractor appointed by the
Subtenant shall not be deemed to be an agent or employee of
the Landlord;
(e) any damage, injury or loss arising from or in connection with
the use of the carparks at the Property.
5.5.2 The Landlord may, by giving to the Subtenant three (3) months' notice
in writing, once in every calendar year during the Term, shut down the
cleanroom facility systems in the Sublet Portions for such periods to
be mutually agreed between the Landlord and the Subtenant to perform
any maintenance required and the Landlord shall not be liable to the
Subtenant nor shall the Subtenant have any claim against the Landlord
in respect of the shut down.
5.6 WAIVER OF CONSENT
5.6.1 Subject to the provisions of Clause 5.4.1, knowledge or acquiescence by
the Landlord of any breach by the Subtenant of any of the covenants,
conditions or obligations herein contained shall not operate or be
deemed to operate as a waiver of such covenants, conditions or
obligations. No consent or waiver expressed or implied by the Landlord
to or of any breach of any covenant, condition or obligation of the
Subtenant shall be construed as a consent or waiver to or of any other
breach of the same or any other covenant, condition or obligation and
shall not prejudice in any way the rights, powers and remedies of the
parties herein contained.
5.6.2 Any acceptance by the Landlord of Rent payable hereunder or any other
sum payable under this Sub-Lease shall not be deemed to operate as a
waiver by the Landlord of any right to proceed against the Subtenant in
respect of a breach by the Subtenant of any of the Subtenant's
obligations hereunder.
5.7 NO REPRESENTATIONS
The Landlord shall not be bound by any representations or promises with
respect to the Sublet Portions and/or the Common Portions, except as
expressly set forth in this Sub-Lease, with the object and intention
that the whole of the agreement between the Landlord and the Subtenant
shall be set forth herein, and shall in no way be modified by any
discussions which may have preceded the signing of this Sub-Lease.
Without diminishing the scope of the Landlord's warranties under Clause
4.3.2, the Landlord does not expressly or impliedly warrant that the
Sublet
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23
Portions and/or the Common Portions are now or will remain suitable or
adequate for all or any of the purposes of the Subtenant and all
warranties (if any) as to suitability and adequacy of the Sublet
Portions and/or the Common Portions implied by law are hereby expressly
negated.
5.8 PAYMENTS
The Subtenant covenants to pay to the Landlord promptly as and when due
without demand, deduction, set-off or counterclaim whatsoever all sums
due and payable by the Subtenant to the Landlord pursuant to the
provisions of this Sub-Lease.
5.9 INSURANCE, MAINTENANCE, REPAIR AND REPLACEMENT
5.9.1 Subject to the basis of allocation or reimbursement for the costs and
expenses for any maintenance, repair and replacement in accordance with
sub-clauses 5.9.3, 5.9.4 and 5.9.5, the Landlord shall be responsible
for all maintenance and repair of, and for all upkeep, replacement and
rebuilding works necessary or appropriate relating to, the Building
(including the Common Portions and the Sublet Portions) (the
"maintenance, repair and replacement works"). Such maintenance, repair
and replacement works shall be performed by the Landlord diligently,
promptly and in a good and workmanlike manner, in accordance with all
legal requirements. Such maintenance, repair and replacement works
shall include but are not limited to all maintenance, repairs and
replacements to (a) the structural components of the Building,
including without limitation the roof, roofing system, exterior walls,
bearing walls, support beams, foundations, columns, exterior doors and
windows and lateral support to the Building; (b) assure watertightness
of the Building (including caulking of the flashings) and repairs to
the roof, roofing system, curtain walls, windows, and skylights if
required to assure watertightness; (c) the parking lots, areas and
garages, common areas of the Property and Building, including the
lighting and drainage systems; and (d) landscaping and other
environmental improvements or maintenance of the Building, the
Property; and (e) the plumbing, lawn and fire sprinkler, heating,
ventilation and air conditioning systems, electrical and mechanical
lines and equipment associated therewith, including without limitation
elevators.
5.9.2 The Landlord shall where applicable maintain and enforce the warranties
provided by the Landlord's contractors with respect to the Building
(including the Common Portions and the Sublet Portions). During the
defects liability period for such warranties, the Landlord will enforce
such warranties in order for, as far as possible, the contractors to
either absorb the costs of, or themselves effect, any required repair,
replacement or rebuilding works. This principle shall also apply to any
additional construction contracts entered into by the Landlord with
respect to the Building (including the Common Portions and the Sublet
Portions), although the Landlord shall not in any such contracts be
obligated to negotiate or secure warranties from the contractors.
5.9.3 The Subtenant shall at its own cost and expense maintain liability and
property damage insurance for the Sublet Portions in amounts and on
terms to be mutually acceptable to the Subtenant and the Landlord.
5.9.4 The Landlord shall at its own cost and expense maintain liability and
property damage insurance for the Building (including the
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24
Common Portions but excluding the Sublet Portions) in amounts and on
terms to be mutually acceptable to the Subtenant and the Landlord.
5.9.5 To the extent that the provisions of Clause 5.9.2 are inapplicable, the
costs and expenses for any maintenance, repair and replacement works
shall be borne as follows:
(a) the Subtenant shall reimburse the Landlord for all such costs
and expenses reasonably incurred by the Landlord for works
performed with respect to Sublet Portions; and
(b) with respect to all such costs and expenses reasonably
incurred by the Landlord for works performed with respect to
the Building (including the Common Portions but excluding the
Sublet Portions ):
(i) to the extent such costs and expenses are covered by
insurance (or, if the Landlord fails to maintain any
insurance required by Clause 5.9.4, would have been
covered by insurance if the Landlord maintained such
insurance), and whether or not the Landlord makes a
claim under its insurance, the Landlord shall bear
such costs and expenses, and
(ii) to the extent such costs and expenses are not covered
by insurance, or are not borne or required to be
borne by the Landlord pursuant to (i) above, the
Subtenant shall reimburse the Landlord for its
Allocable Share of such costs and expenses; Provided,
in all cases under this sub-clause b(ii) the costs
and expenses subject to reimbursement by the
Subtenant shall exclude any costs and expenses
incurred for maintenance, repair and replacement
works with respect to the CSM Portions and all
equipment, machinery, fixtures, and cleanrooms
located or affixed in such area (but will include
costs and expenses for the Conducting Media located
thereon except if such costs and expenses relate
solely to the CSM Portions) .
6. SUBTENANT'S ACKNOWLEDGEMENT
The Subtenant hereby agrees and declares that it has no proprietary
claim to, nor any claim to compensation in respect of any structure or
other installation on the Sublet Portions and/or the Common Portions
which, if removed, will cause structural impact to the Building
notwithstanding that such structure, building or other installation may
have been erected or caused to be erected by the Subtenant at the
Subtenant's expense or with the express or implied consent of the
Landlord, and any right whether in law or in equity which the Subtenant
might otherwise have or claim to have is hereby relinquished by the
Subtenant in favour of the Landlord, and the Subtenant shall indemnify
the Landlord against any claim whatsoever in respect thereof.
7. LEGAL AND OTHER COSTS
The Subtenant shall pay to the Landlord on demand on an indemnity
basis:-
(a) all costs, expenses or charges legal or otherwise including
stamp duty of or connected with the preparation and
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execution of this Sub-Lease and its counterpart and any other
documents related thereto;
(b) all costs, expenses or charges legal or otherwise including
the Landlord's legal costs in connection with any surrender or
other termination of this Sub-Lease otherwise than by
effluxion of time or arising out of the Landlord's default;
(c) all the Head Lessor's and/or the Landlord's costs and expenses
(including solicitors' costs and costs of the Landlord's
architect, engineer, surveyor or other consultants where
applicable) of or connected with the Head Lessor's and/or the
Landlord's consideration, processing and approval or otherwise
of the Subtenant's applications for the Head Lessor's and/or
the Landlord's consent or waiver in respect of any matters
herein;
(d) all legal fees and other costs and disbursements incurred by
the Landlord on a full indemnity basis for or in connection
with demanding and enforcing payment of all monies due
hereunder or the observance and performance of any covenants,
terms and conditions herein contained; and
(e) all goods and services, value added and other duties or taxes
payable on the costs, fees and expenses referred to in this
Clause 7.
8. REMOVAL OF PROPERTY AFTER DETERMINATION
8.1 If at such time as the Subtenant has vacated the Sublet Portions after
the determination of this Sub-Lease, any property of the Subtenant
shall remain in or on the Sublet Portions and/or the Common Portions
and the Subtenant shall fail to remove the same within seven (7) days
after being requested by the Landlord so to do by a notice to that
effect then the Landlord may as the agent of the Subtenant sell such
property and shall then apply the proceeds of sale after deducting the
costs and expenses of removal, storage and sale reasonably and properly
incurred by it towards discharging any sum due from the Subtenant to
the Landlord under the provisions of this Sub-Lease and shall hold the
balance thereof (if any) to the order of the Subtenant.
8.2 The Subtenant shall indemnify the Landlord against any liability
incurred by it to any third party whose property shall have been sold
by the Landlord in the bona fide mistaken belief (which shall be
presumed unless the contrary be proved) that such property belonged to
the Subtenant and was liable to be dealt with as such pursuant to this
Clause 8.
9. POWER FOR LANDLORD TO DEAL WITH ADJOINING PROPERTY
9.1 The Landlord may deal as it may think fit with other property belonging
to the Landlord adjoining or nearby the Sublet Portions and/or the
Common Portions PROVIDED ALWAYS THAT no such dealing shall adversely
affect Subtenant's quiet enjoyment of the Sublet Portions and the use
thereof and of the Common Portions as contemplated by this Sublease.
The Landlord may erect or suffer to be erected on such property any
buildings whatsoever whether or not such buildings shall affect or
diminish the light or air which may now or at any time be enjoyed by
the Subtenant in respect of the Sublet Portions and/or the Common
Portions.
9.2 The Landlord shall have the right at all times without obtaining any
consent from or making any arrangement with the Subtenant to
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alter, reconstruct or modify in any way whatsoever or change the use of
those parts of the Building or the Property, the use of which is
granted in common with the Landlord and others so long as proper means
of access to and egress from the Sublet Portions and/or the Common
Portions are afforded and essential services are maintained at all
times.
9.3 Notwithstanding any limitation set forth herein on the liability or
obligations of Chartered Semiconductor Manufacturing Ltd in its
capacity as "Landlord" hereunder to the Subtenant, such limitations
shall not restrict, limit or otherwise negate any liability or
obligation of Chartered Semiconductor Manufacturing Ltd to Silicon
Manufacturing Partners Pte Ltd in any other capacity that may arise
under any other contractual obligation or by law.
9.4 Notwithstanding any limitation set forth herein on the liability or
obligations of Silicon Manufacturing Partners Pte Ltd in its capacity
as "Subtenant" hereunder to the Landlord, such limitations shall not
restrict, limit or otherwise negate any liability or obligation of
Silicon Manufacturing Partners Pte Ltd to Chartered Semiconductor
Manufacturing Ltd in any other capacity that may arise under any other
contractual obligation or by law.
10. UNTENANTABILITY
In case the Sublet Portions and/or the Common Portions comprised in the
Building or any part thereof shall be destroyed or rendered unfit for
use by fire (except where such fire shall have been caused by the
default or negligence of the Subtenant or any Permitted Occupier(s)
whereby payment of the policy monies under any policy of insurance is
refused) during the Term then and in such case and so often as the same
shall happen the Rent hereby reserved or a fair and just proportion
thereof according to the extent of the damage sustained shall cease and
be suspended during and for so long as such Sublet Portions and/or the
Common Portions or any part thereof shall remain unfit for use or
occupation by reason of such destruction or injury Provided that if
such Sublet Portions and/or the Common Portions or any part thereof
shall remain unfit for use and occupation for a period of three (3)
months either party shall be at liberty by notice in writing to the
other to terminate this Sub-Lease and upon such notice being given the
Term shall absolutely cease and determine but without prejudice to any
right of action of either party in respect of any antecedent breach of
this Sub-Lease by the other.
11. SPECIFICATION OF SUBLET PORTIONS AND NOTICE TO TAKE POSSESSION
11.1 As soon as practicable after the clean room at the Sublet Portions are
ready for equipment installation the Landlord shall give written notice
("Notice to take possession") to the Subtenant requiring the Subtenant
to take possession of the Sublet Portions. The Subtenant shall take
possession of the Sublet Portions within seven(7) days from the date of
the Notice to take possession.
11.2 For the purpose of Clause 11.1, the cleanroom within the Sublet
Portions is ready for equipment installation upon the Landlord's
receipt of the certificate as per the specifications in the
construction management contract between the Landlord and Meissner &
Wurst that the cleanroom is ready for equipment move-in/installation,
which certificate is expected to be provided by Meissner & Wurst not
later than 1st April 1998
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12. TERMINATION BY SUBTENANT
In the event that Certificate of Statutory Completion for the Building
is still not issued by 1st September 1998, (or such later date as may
be mutually agreed upon to be beneficial to both the Landlord and the
Subtenant) the Subtenant shall be entitled by written notice thereof to
rescind this Sub-Lease whereupon all moneys paid by the Subtenant to
the Landlord shall forthwith be refunded free of interest to the Tenant
and neither party shall have any claim or compensation against the
other party.
13. VALIDITY OF CLAUSES
If any one or more of the provisions contained in this Sublease shall
be deemed invalid, unlawful or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired.
14. GOVERNING LAW AND JURISDICTION
14.1 This Sub-Lease shall be construed and governed by the laws of
Singapore.
14.2 In case any dispute or difference shall arise between the Landlord and
Subtenant as to the construction of this Sub-Lease 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 promptly be submitted to
a committee comprising one Board member from each of the Subtenant
(such Board member shall not be a Director of the Landlord) and the
Landlord. If such committee is unable to resolve such dispute within 21
days of such submission, it shall submit the dispute to a committee
comprising one senior manager from each of the Subtenant and the
Landlord, being in the case of:-
Landlord : the President
Subtenant : the Customer Satisfaction Vice President of Lucent
Technologies Inc.
If such senior managers are unable to resolve such dispute within 14
days of such submission, it shall be submitted to a committee
comprising one senior officer from each of the Subtenant and the
Landlord being in the case of:-
Landlord : the Chairman of the Board of the Landlord
Subtenant : President of Lucent Microelectronics Group.
14.3 If such senior officers are unable to resolve the dispute within 14
days of such submission, it shall be submitted to a single arbitrator
to be appointed by the Subtenant and the Landlord (the "Arbitrator").
If the parties fail to agree on an Arbitrator within 14 days after the
Subtenant or the Landlord has given to the other in dispute a written
request to concur in the appointment of an Arbitrator, a single
arbitrator (the "ICC Arbitrator") to be appointed on the request of the
Subtenant or the Landlord within 10 days after the 14 day period by the
International Chamber of Commerce and such submission shall be a
submission to arbitration in accordance with the Rules of
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Conciliation and Arbitration of the International Chamber of Commerce
as presently in force by which the parties agree to be so bound. The
Arbitrator or the ICC Arbitrator, as applicable, shall have 14 days
after his appointment to request and receive all information (whether
written or oral) relating to the dispute from the Subtenant and the
Landlord.
Each of the Subtenant and the Landlord shall use its commercially
reasonable efforts to comply with all of such requests for information.
The place of arbitration shall be Singapore and the arbitration shall
be conducted wholly in the English language. The Arbitrator or the ICC
Arbitrator, as applicable, shall render his decision within 30 days
after his appointment or, in the event the Arbitrator or the ICC
Arbitrator, as applicable, requires any hearings or proceedings with
respect to such arbitration, within 15 days after the completion of
such hearings or proceedings.
14.4 Nothing shall affect the right to serve process in any manner permitted
by law.
15. PROVISION FOR RENEWAL
The Subtenant shall have the right to renew this Sub-Lease in
accordance with the terms and conditions set forth in Schedule 4.
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SCHEDULE 1
TOGETHER WITH (but to the exclusion of all other liberties, easements, rights or
advantages):-
1. The right for the Subtenant and others duly authorised by the Subtenant
of ingress to and egress from the Sublet Portions and/or the Common
Portions in over and along all the usual entrances, landings, lifts,
lobbies and corridors in the Building and all necessary roadway,
entrances, ramps and loading docks in the Property leading or related
to the sublet Portions and the Common Portions in common with the
Landlord and all others so authorised by the Landlord and all other
persons entitled thereto, such right being only so far as is necessary
and as the Landlord can lawfully grant;
2. The right for the Subtenant and others duly authorised by the Subtenant
to use such sufficient toilet facilities in the Building as shall be
designated from time to time in writing by the Landlord but such user
shall be in common with the Landlord and all others so authorised by
the Landlord and all other persons entitled thereto;
3. The right for the Subtenant and all others authorised by the Subtenant
to enjoy the benefit of the water, gas, sewage, electricity,
air-conditioning, telephone and other services or supplies installed in
or from and to the Building in common with the Landlord and all others
so authorised by the Landlord and all other persons entitled thereto;
and
4. The right for the Subtenant to use the plant, machinery, equipment and
appliances in the Common Portions (whether in common with the Landlord
or otherwise) on the terms and to the extent agreed upon by the
Landlord and the Subtenant from time to time.
SCHEDULE 2
EXCEPTING AND RESERVING unto the Landlord:-
1. the right to the free and uninterrupted passage and running of water,
gas, sewage, electricity, air-conditioning services, telephone and
other services or supplies from and to other parts of the Building in
and through the Conducting Media and ancillary apparatus which now are
or may during the Term be in, on, under or over the Sublet Portions.
2. all rights of entry upon the Sublet Portions referred to in clause 3 of
this Sub-Lease.
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SCHEDULE 3
1. SUBTENANT'S LIABILITY TO PAY RENT
1.1 The Subtenant shall during the Term pay to the Landlord the monthly
Rent by equal monthly payments in advance on the first day of each
month (each a `Payment Date').
1.2 On or before the date of commencement of the Term, the Subtenant shall
pay to the Landlord the pro-rated Rent calculated from the date of
commencement of the Term up to and including the day immediately
preceding the next Payment Date, and thereafter the Rent shall be paid
on each succeeding Payment Date.
1.3 The Rent payable by the Subtenant shall be the aggregate of :-
(a) a monthly charge of S$535,883.00 being the rent for the Sublet
Portions;
(b) a quarterly charge (payable on the 1st day of each of the
months of January, April, July and October of each year) equal
to the Allocable Share of the ground rent payable by the
Landlord to the Head Lessor in respect of the Property under
the provisions of the Head Lease; and
(c). a monthly charge of S$1,108,998.00 being reimbursement over
the Term of the cost and expenses of installation of
facilities and mechanical and electrical fittings on the
Property incurred by the Landlord prior to the commencement of
the Term in respect of the Sublet Portions and the Common
Portions.
1.4 In the event of the Head Lessor increasing the ground rent in respect
of the Property, the Rent payable by the Subtenant shall be increased
to such an amount equivalent to the Allocable Share of such increase by
the Head Lessor and payable with effect from the date of such increase
by the Head Lessor. A notice by the Landlord specifying the amount and
effective date of such increase shall be final and conclusive and
binding on the Subtenant.
1.5 In the event that both the Landlord and the Subtenant mutually shall
after the commencement of the Term decide that additional facilities
and mechanical and electrical fittings are required to support the
parties' operations at the Property, the Landlord and the Subtenant
shall in good faith negotiate and agree on the proportions of the cost
and expenses of the installation of such additional facilities and
mechanical and electrical fittings to be borne by the respective
parties and the Rent, where applicable, shall be adjusted accordingly.
<PAGE> 32
31
SCHEDULE 4
PROVISIONS OF RENEWAL
1. The Subtenant shall be entitled to two (2) options to renew its
sub-lease hereunder subject to the following terms and conditions:-
(a) Each renewal period shall hereinafter be called an Option
Term, for the following periods:-
First Option Term: for a period of ten (10) years
commencing on the day after the expiry of
the Term.
Second Option Term: for a period commencing on the day after
the expiry of the First Option Term and
ending on 14 February 2024.
(b) There shall be at the time of each renewal a valid sub-lease
in force in respect of the Sublet Portions and no action shall
have been commenced by the Landlord under Clause 5.2 of this
Sub-Lease (or the equivalent clause thereof in the sub-lease
then applicable).
(c) The Subtenant shall have given written notice ("Subtenant's
Notice") to the Landlord of its intention to exercise its
option to renew, such notice to be given not later than six
(6) months prior to expiration of the term of the sub-lease
then in force.
(d) At the time the Subtenant's Notice shall be served there shall
not be any existing breach or non-observance of any covenants
of the Subtenant under the sub-lease then in force in respect
of the Sublet Portions and/or the Common Portions.
2. Each renewal shall be in respect of the whole of the Sublet Portions
and not part thereof unless otherwise agreed by the Landlord in
writing.
3. The Rent for any renewal term shall consist of the following
components:.
(a) a rent for the Sublet Portions payable in equal monthly
installments through the renewal term in an amount equal to
(i) the difference between the residual value (as of the
beginning of the renewal term) of the Sublet Portions and the
Allocable Share of the Common Portions (as previously agreed
to by the parties) and the residual value (as of the end of
the renewal term) of the Sublet Portions and the Allocable
Share of the Common Portions (as agreed to by the parties on a
reasonable basis at the time of renewal) plus (ii) an amount
sufficient to provide the Landlord with a per annum return of
7% on the amount specified under sub-clause (i) above;
(b) the Subtenant's Allocable Share of the ground rent payable by
the Landlord to the Head Lessor under the Head Lease in
respect of the Property under the provisions of the Head
Lease; and
<PAGE> 33
32
(c) a monthly charge in an amount to be determined by the Landlord
and the Subtenant representing reimbursement of the costs and
expenses of the installation of facilities and mechanical and
electrical fittings on the Property incurred by the Landlord
in respect of the Sublet Portions an/or the Common Portions.
The monthly charge may include reimbursement for costs and
expenses incurred by the Landlord that were not fully
reimbursed in the previous term of this Sub-Lease and/or costs
incurred by the Landlord during the term of such new
sub-lease. Any interest component of such reimbursement shall
be determined by the parties at such time as the parties agree
on the terms and conditions of such installation work.
4. The new sub-lease shall, save for the new rent and the modifications to
the option terms necessary to reflect the previous exercise of renewal
options, be in the same form and substance as the then existing
sub-lease except for such changes to the terms thereof as are agreed
upon between the Landlord and the Subtenant.
<PAGE> 34
33
APPENDIX I
(to the Sub-Lease)
Plan of Demised Premises
(clause 1.1 of the Sub-Lease)
<PAGE> 35
34
IN WITNESS WHEREOF the parties have executed this Sub-Lease.
The Landlord
Signed by Tan Bock Seng )
President & CEO )
- --------------------------- )
for and on behalf of )
the Landlord Chartered ) /s/ TAN BOCK SENG
Semiconductor Manufacturing )
Ltd in the presence of:- )
/s/ ANGELA HON
- ----------------------------
Angela Hon
Senior Manager, Legal
The Subtenant
Signed by Paul J. Mostek )
for and on behalf of )
the Subtenant Silicon ) /s/ PAUL J. MOSTEK
Manufacturing Partners Pte Ltd )
in the presence of:- )
/s/ DENNIS DILLON
- ----------------------------
Dennis Dillon
Attorney
DATED THIS 17th DAY OF February 1998
<PAGE> 1
EXHIBIT 10.38
Legal Department
JTC(LG)3729/1220 Pt 1 Vol 2/SY/ZMY
BUILDING AGREMENT
Between
JURONG TOWN CORPORATION
And
SINGAPORE TECHNOLOGIES PTE LTD
relating to:
Private Lot A12787(d)
Mukim No. 13 Sembawang
Area: 47,640 square metres
<PAGE> 2
BUILDING AGREEMENT FOR LAND
AT PRIVATE LOT A12787(d) IN WOODLANDS INDUSTRIAL PARK D
(INLAND)
THIS AGREEMENT is made the 24th day of September 1999 BETWEEN JURONG
TOWN CORPORATION a body corporate incorporated under the Jurong Town Corporation
Act and having its Head Office at Jurong Town Hall, Jurong Town Hall Road,
Singapore (hereinafter called "the Owner" which expression shall include its
successors-in-title and assigns) of the one part AND SINGAPORE TECHNOLOGIES PTE
LTD a company incorporated in Singapore and having its registered office at
83 Science Park drive, #01-01/02 The Curie,
Singapore Science Park, Singapore 118258
(hereinafter called "the Licensee" which expression shall include its
successors-in-title) of the other part.
WHEREBY IT IS AGREED as follows:
1 For the period of three (3) years from the 1st day of July 1997
(hereinafter referred to as "the date hereof") or for such further period as may
be extended by the Owner the Licensee shall have the Licence and authority to
enter upon all that piece of land known as Private Lot A12787(d) forming part of
Government Survey Lots 230L & 1179P, Mukim No. 13 Sembawang and situated in the
Republic of Singapore as shown on the plan annexed hereto and estimated to
contain an area of 47,640 square metres more or less subject to survey
(hereinafter called "the said land") for the construction of factory buildings
and other structures therein and for the installation of equipment fixtures and
fittings thereat for the purpose of wafer fab production only in accordance with
the stipulations hereinafter contained and for no other purpose whatsoever.
<PAGE> 3
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2 The Licensee hereby agrees to perform and observe the following
stipulations :-
(i) To hold the said land until the same shall be comprised in a
lease to be granted as hereinafter provided as licensee upon
the same terms relating to the lease referred to in clause
2(ii) herein at the same rent and subject to the same covenants
and stipulations so far as applicable as if a lease thereto has
been actually granted and so that the Owner shall have all the
remedies by whatsoever means for rent in arrears that are
incidental to the relationship of landlord and tenant but so
that nothing herein contained shall be construed as creating a
legal demise or any greater interest in the licence than a
tenancy at will.
(ii) To pay in advance as from the date hereof a licence fee
calculated at the same rate and on the dates specified as for
the rent reserved in the lease of the said land set out in the
First Schedule hereto as if such lease has actually been
granted.
(iii) To pay on the Owner's behalf to the Comptroller of Property Tax
an amount equivalent to the sum payable by the Owner as
property tax in respect of the said land, improvements and
structures thereon during the said period or of such extended
period (if any) permitted under clause 3(c) hereof by way of
additional licence fee or for the period prior to the issue of
the lease to be granted under clause 4 herein.
(iv) To pay interest at the rate of 8.5% per annum or such higher
rate as may be determined from time to time by the Owner in
respect of any outstanding amount payable by the Licensee under
this Agreement from the date such amount becomes due until
payment in full is received by the Owner.
<PAGE> 4
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(v) To pay to the Owner all survey fees and other charges including
those payable to and claimed by the relevant Government Planning
Authorities for the survey of the said land for the purpose of
sub-division of the land of which the said land forms part and the
preparation and issue of a Certificate of Title PROVIDED THAT the
Owner shall have the right to employ his own surveyor to carry out
the said survey in which event the Licensee shall bear all costs
incurred.
(vi) At his own cost and expense -
(a) to engage a professional engineer to carry out soil
investigation to advise on the soil conditions and to design
structurally sound buildings proposed to be erected taking into
consideration the condition of the said land; and
(b) to execute such work as may be required to be done in respect
of the state and condition of the said land (especially its ground
levels, topography and soil conditions) which state and condition
the Licensee shall be deemed to have full knowledge.
(vii) Without prejudice to sub-clause (vi) above to submit within three
(3) months from the date hereof firstly to the Owner for his
approval and then to the relevant Government Planning and
<PAGE> 5
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Building Authorities full and complete plans elevations and
specifications of the buildings proposed to be erected on the said
land in accordance in every way with the requirements under the
Planning Act, Building Control Act, Fire Safety Act, Water Pollution
Control and Drainage Act and any other relevant statutory provisions
PROVIDED THAT the Owner may give or refuse his approval at his
absolute discretion.
(viii) At his own cost to commence erection on the said land either within
six (6) months from the date hereof or within one (1) month from the
date of approval of the plans by the relevant Government Building
Authorities, whichever is the earlier, and in a substantial and
workman-like manner with the best materials of their available kinds
and in conformity in every respect with the plans, elevations,
sections and specifications approved by the Owner and the relevant
Government Building Authorities to finish the factory buildings,
structures and other appurtenances including the installations of
all equipment, fixtures and fittings so as to be completely fit for
immediate occupation and operation within the said period of three
(3) years from the date hereof PROVIDED ALWAYS THAT in the planning,
erection, construction and completion of the said buildings, to
develope to an average gross plot ratio on Private Lots A 12787,
A12787(a), A12787(b), A12787(d) and any other land occupied by the
Licensee within Woodlands Industrial Park D together of not less
than 0.6 and not more than 1.4 and in the event that the aforesaid
average gross plot ratio exceeds 1.4 the Licensee shall at his own
cost and expense be responsible for all development
charges/differential premium and any other charges that may be
payable in consequence thereof AND PROVIDED FURTHER THAT the
Licensee shall not install or use any electrical installation,
machine or apparatus that may cause or causes heavy power surge,
high frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance whatsoever
which may prevent or prevents in any way the service or use of any
communication system or affects the operation of other equipment,
installations, machinery, apparatus or plants of other Licensees.
<PAGE> 6
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(ix) At his own cost to take such steps and execute such works upon the
said land as may be necessary for the protection of shores and
embankments if any and for the prevention of earth-slip erosion of
soil and failure of slopes expeditiously in a workman-like manner
and to the satisfaction of the Owner and other relevant governmental
and statutory authorities.
(x) If the Licensee shall fail to complete the said buildings works and
installations and to commence operations within the period specified
in clause 2 (viii) or within any extended period under clause 3(c)
hereof the Licensee shall pay to the Owner a sum calculated at the
rate of $200.00 per day as liquidated damages for the period during
which the said buildings shall so remain or have remained incomplete
Provided That such payment shall not prejudice any other right or
remedy the Owner may have against the Licensee including its right
of re-entry under Clauses 3(b) and 3(d) herein.
(xi) To remove and replace any materials brought on the said land or used
in any of the said buildings works or installations which the Owner
shall require to be removed as being inferior or unfit and to make
good any workmanship which he shall consider imperfect and if the
Licensee fails to remedy such defects the Owner may enter upon the
said land and remedy such defects at the expense of the Licensee
after expiry of fourteen (14) days' notice being given to the
Licensee to do so.
(xii) Not to erect or build or permit or suffer to be erected or built any
building, structure or installation other than those conforming with
the plans elevations sections and specifications approved by the
Owner and the relevant Government Building Authorities nor to make
any alterations in the external elevation of any of the said
buildings when erected without the prior consent in writing of the
Owner.
<PAGE> 7
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(xiii) In the erection and completion of the said buildings, structures
and installations to do all acts and things required by and to
perform the works in conformity with all respects with the
provisions of any laws or regulations made thereunder and to pay
and keep the Owner indemnified against all claims and other
payments whatsoever which during the progress of the works may
become payable in respect of the said works or of anything done
under the authority herein contained and from time to time to
discharge and pay all claims, assessments and outgoings now or at
any time hereafter be chargeable against the Owner under any law or
otherwise in regard to the said land, the said buildings or any
structures or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the said land
or any part thereof anything which in the opinion of the Owner may
be or become a nuisance or annoyance or cause damage or
inconvenience to the Owner or to the Licensees or occupiers of any
adjoining or neighbouring premises or whereby any insurance for the
time being effected on the premises under sub-clause (xix) herein
may be rendered void or voidable or be in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand from said
land or permit or suffer any of the same to be removed except so
far as shall be necessary for the execution of the said works
PROVIDED nevertheless that the Licensee may use for the purpose of
the said works any of the approved materials if so required.
<PAGE> 8
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(xvi) Not without the prior consent in writing of the Owner to remove or
permit or suffer to be removed until after completion of the said
buildings in accordance with the provisions herein contained any
building materials (other than inferior or unfit materials removed for
the purpose of being replaced by proper materials) or plant which shall
be brought upon the said land for the purpose of the said works.
(xvii) Not without the prior consent in writing of the Owner to affix or
exhibit or erect or paint or permit or suffer to be affixed or
exhibited or erected or painted on or upon any part of the exterior of
the said land or of the external walls or rails or fences thereof any
nameplate, signboard, placard, poster or other advertisement or
boarding.
(xviii) Not at any time to deposit or make up or manufacture or permit or
suffer to be deposited made up or manufactured upon the said land any
building or other materials except such as shall be actually required
for the buildings to be erected on the said land in accordance with
this Agreement and as soon as the buildings hereinbefore agreed to be
erected shall be completed at his own expense to remove from the road
or footpath adjoining the said land or the ground intended to be used
for such road or footpath all building and other materials and waste
whatsoever.
(xix) As soon as any of the said buildings shall have reached a height of
five (5) feet above ground level to insure the same to the full value
thereof in the joint names of the Owner and the Licensee against loss
or damage by fire in some insurance office approved by the Owner and
shall increase such insurance proportionately as the said buildings
approach completion and to keep the same so insured until a lease
shall be granted as hereinafter provided and to pay all premiums
<PAGE> 9
- 8 -
thereof at least seven (7) days before the expiry date of such
insurance policy and to produce to the Owner or his agent without
demand the policy or policies of such insurance and the receipt for
each such payment and in the event the said buildings or any part
thereof are destroyed or damaged by fire then to forthwith give to the
Owner written notice of such destruction or damage and to forthwith
cause all monies received by virtue of any such insurance to be
forthwith laid out in rebuilding and reinstating the buildings to the
satisfaction of the Owner and to make up any deficiency thereof out of
his own monies, but the rebuilding and reinstatement shall in any
event commence and be completed within the period specified by the
Owner PROVIDED ALWAYS THAT if the Licensee shall at any time fail to
keep the premises insured as aforesaid the Owner may without being
under any obligation to do so do all things necessary to effect or
maintain such insurance and any monies expended by him for that
purpose shall be repayable by the Licensee on demand and be recovered
forthwith from the Licensee as a debt PROVIDED FURTHER THAT
notwithstanding the covenant contained in this clause 2(xix), the
Licensee may exercise the option not to rebuild or reinstate the
buildings subject to the following conditions:
(a) without prejudice to clause 3(b), the Licensee shall give the
Owner three (3) months' prior notice in writing to prematurely
terminate this Agreement; and
(b) the Licensee shall forthwith pay or cause to be paid to the Owner
(whom the Licensee acknowledges to be entitled to) all monies
received by virtue of such insurance.
(xx) Not to assign charge create a trust or agency let sublet or underlet
or grant a license or part with or share his interest under this
Agreement, or the possession or occupation of the said land, or any
part thereof EXCEPT THAT, subject to the Owner's prior written
consent, which consent shall not be unreasonably withheld, the
Licensee may mortgage or charge his interest under this Agreement by
way of assignment or debenture (as the case may be) to secure the
repayment of such sum or sums as the Licensee may require for the
purpose only of erecting or completing the building or other structure
to be built on the said land in accordance with the provisions of this
Agreement PROVIDED THAT the Licensee shall thereafter continue to be
liable for the observance and performance of the several stipulations
herein contained until the grant of the lease as hereinafter provided.
<PAGE> 10
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(xxi) Not to permit or suffer any person to occupy reside or make use
of any building erected on the said land before a Temporary Occupation Licence
or Certificate of Statutory Completion has been issued by or except with the
permission of the relevant Governmental and Statutory authority.
(xxii) To make reasonable provision against and be responsible for all
loss, injury and damage to any person (including loss of life) or property
including that of the Owner for which the Licensee may be held liable arising
out of or in connection with the occupation and use of this said land and the
structures erected thereon and to indemnify the Owner against all proceedings,
claims, costs and expenses which he may incur or for which he may be held liable
as a result of any act, neglect or default of the Licensee his servants,
contractors, sub-contractors, or agents or their respective servants.
(xxiii) To make good and sufficient provision for the safe and efficient
disposal of all waste including but not limited to pollutants generated at the
said land to the requirements and satisfaction of the Owner and other relevant
Governmental and Statutory authorities PROVIDED THAT in the event of any default
by the Licensee under this covenant the Owner may carry out such remedial
measures as he thinks necessary and all costs and expenses incurred thereby
shall be recoverable forthwith from the Licensee as a debt.
(xxiv) Subject to Clause 2(xx) hereinbefore appearing, to give to the
Owner written notice of every change of name within one month from the date of
each change PROVIDED THAT where there has been, is or will also be any change in
the shareholders of the Licensee or the number of shares held by each and every
shareholder of the Licensee, the prior written consent in writing of the Owner
shall be obtained which consent if granted shall be subject to such terms and
conditions as the Owner may require.
<PAGE> 11
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(xxv) To construct an internal drainage system to the satisfaction of
the Owner to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxvi) (a) To construct and complete a permanent culvert within
nine (9) months from the date hereof or any extension
thereof as may be approved by the Owner and in
connection thereof to submit plans to and to obtain the
prior approval in writing of the Owner for the
construction of a temporary crossing.
(b) Within one (1) month of the completion of the permanent
culvert mentioned in sub-clause (xxvi) (a) above to
remove the temporary crossing and to reinstate any
roads, roadside kerbs, drains, turfing or the like
damaged by the Licensee, his servants, contractors,
subcontractors, or agents or their respective servants
to the satisfaction of the Owner and the relevant
Governmental and Statutory authorities.
(c) Within one (1) month of the completion of the
construction of the said buildings and related civil
works to reinstate any damage caused to the roads,
roadside kerbs, drains, turfing and the said permanent
culvert by the Licensee, his servants, contractors or
agents or their respective agents to the satisfaction
of the Owner and the relevant Governmental and
Statutory authorities.
(xxvii) To place with the Owner a deposit of $5,000.00 which shall be
forfeited in the event of any breach of any of the provisions in
clause (xxvi) herein without prejudice to the rights and
remedies of the Owner contained in this Agreement and the Lease.
<PAGE> 12
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(xxviii) At his own cost to plant and maintain trees and landscape the
said land in accordance with all the requirements of the Parks
and Recreation Department, Ministry of National Development and
other relevant Governmental and Statutory authorities.
(xxix) At his own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and the
like (if any) to the requirements and satisfaction of the Owner
and other relevant Governmental and Statutory authorities.
(xxx) If the Licensee shall at any time be found to have encroached
upon any area beyond the allocated boundaries of the said land,
the Licensee shall at his own cost and expense, but without
prejudice to any other right or remedy the Owner may have
against him, immediately or within the time specified (if any)
by the Owner to rectify and remove the encroachment to the
satisfaction of the Owner and pay to the Owner such compensation
as may be specified by the Owner. If, however, the Owner in his
absolute discretion permits the Licensee to regularise and
retain the encroached area or any part thereof upon such terms
and conditions as may be stipulated by the Owner and any other
relevant Governmental and Statutory authorities, the Licensee
shall pay license fee on the encroached area with retrospective
effect from the date hereof, and the Licensee shall also pay
all survey fees, amalgamation fees, legal fees (including
solicitor and client costs and expense), and all other costs and
charges relating thereto.
(xxxi) If any damage of whatsoever nature or description shall at any
time occur or be caused to the said land or any building or
structure or installation thereon, or any part thereof, to
forthwith give to the Owner written notice of the damage and to
remedy the damage to the satisfaction of the Owner within such
time as the Owner may specify, all at the cost of the Licensee.
(xxxii) Not to keep or allow to be kept any livestock or other animals
on the said land or any part thereof.
<PAGE> 13
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(xxxiii) The licence fees and other taxable sums payable by the Licensee under
or in connection with the licence herein shall be exclusive of the
goods and services tax (hereinafter called "tax") chargeable by any
governmental, statutory or tax authority calculated by reference to
the amount of the licence fees and any other taxable sums received or
receivable by the Owner from the Licensee and which tax is payable by
the Licensee. The Licensee shall pay the tax and the Owner acting as
the Collecting agent for the governmental, statutory or tax authority
shall collect the tax from the Licensee together with the licence
fees hereinabove reserved without any deduction and in advance
without demand on the 1st day of each of the months of January,
April, July and October, and in the manner and within the period
prescribed in accordance with the applicable laws and regulations.
(xxxiv) Subject to clause 2 (xii) hereinbefore appearing, to ensure that the
maximum height of any boundary wall or fence (including the
anti-climb) erected by the Licensee shall not exceed two (2) metres
PROVIDED THAT boundary walls or fences (if any) shall be erected
behind baphia or other hedges planted on the said land.
(xxxv) At the Licensee's own cost, at all times, to comply with and observe
the maximum height restriction of 55.0 metres above Mean Sea Level and
any other height restriction(s) on buildings and structures at the
said land as imposed by any governmental or statutory authority and to
ensure that any height restriction plan(s) which may be furnished to
the Licensee shall at all times be held in strict confidence and shall
not be shown, revealed or copied to or by any person, contractor,
subcontractor, watchman, employee, agent, representative or any other
person except with the prior written consent of the Owner.
(xxxvi) Without prejudice to the generality of Clauses 2(xiii) and 2(xiv)
herein, the Licensee shall not place, construct or erect or permit
the placing, construction or erection of any building, structure or
equipment whatsoever on the buffer within the boundary of the said
land as shown on the plan annexed hereto and shall comply with the
requirements of the relevant governmental and statutory authorities
including the Urban Redevelopment Authority and the Building Control
Division of the Ministry of National Development.
(xxxvii) The Licensee accepts the said land in its existing state and
condition and further accepts and confirms that the Owner has made no
representation not given any assurance as to the present or future
suitability of the said land or its surrounding or adjacent lands in
relation to the Licensee's use, operations or occupation at the said
land.
<PAGE> 14
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(xxxviii) To ensure that the buildings, boundary walls and landscaping works
fronting Woodlands Road are aesthetically designed to the
satisfaction of the Owner.
(xxix) To observe the requirement of a 50-metre health and safety buffer for
the proposed wafer fabrication activity, which buffer shall not
extend beyond the boundary of the said land.
(xl) To comply with the Land Transport Authority's Road Interpretation
Plan in respect of the road widening line.
(xli) To confine vehicular access to and from the said land as indicated by
the Land Transport Authority.
3. It is hereby mutually agreed that until the Licensee has performed all
his obligations herein contained the Owner shall possess the rights and powers
following:
(a) The right for himself and his agents with or without workmen or
others at all reasonable times to enter upon the said land to view
the state and progress of the said buildings and works and to
inspect and test the materials and workmanship in connection
therewith and for any other reasonable purpose including the
construction and installation of sewers, drains pipes and cables on
or leading from any adjoining or neighbouring land of the Owner as
may be required by the Owner.
(b) Full right and liberty in case any of the said buildings and other
structures or installations hereby agreed to be erected be not
completed and fit for immediate occupation within the period
hereinbefore limited (time in this respect shall be of the essence
of the contract) and in accordance in every way with the
stipulations hereinbefore contained or in case the Licensee shall in
any other way fail to perform and observe any of the stipulations on
his part herein contained or if any charging order writ of seizure
and sale or its equivalent made in respect of the said land or any
structure therein shall be enforced without the written consent of
the Owner having first been obtained by the Licensee or by the
person in whose favour the charging order writ of seizure and sale
or its equivalent shall have been made, to re-enter upon and take
possession of the said land and all buildings, structures, fixtures,
plant material and effects whatsoever thereon with power to hold and
dispose thereof as if this Agreement had not been entered into and
without making to the Licensee any compensation or allowance for the
same and this Agreement shall thereupon determine but without
prejudice to any right of action or other remedy of the Owner for
the recovery of any licence fee or monies due to him from the
Licensee or in respect of any breach of this Agreement PROVIDED
ALWAYS THAT the Owner shall, in addition, also be entitled to
<PAGE> 15
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claim and to recover from the Licensee as a debt, any sum which the
Owner may incur in connection with the demolition and removal of any
building, structure, fitting, fixture or thing which the Owner may
consider necessary to demolish and remove AND PROVIDED THAT if the
said land has been assigned by way of mortgage the provisions of this
clause shall not take effect until the Owner has served upon the
mortgagee notice in writing specifying the breach and the mortgagee
has failed to remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such default as
aforesaid in completing the said buildings and works the Owner may in
his discretion give notice in writing to the Licensee of his
intention not to enforce the stipulations herein contained and may,
subject to such conditions as the Owner may impose, fix any extended
period for the completion of the said works in substitution for the
said period of three (3) years hereby fixed for such completion and
thereupon the obligations hereunder of the Licensee to complete the
said works and to accept a lease hereinafter mentioned shall be taken
to refer to such substituted period.
(d) Without prejudice to the generality of clause 3(b) hereof full right
and liberty in the event that the Licensee has failed to either:
(1) develop the said land to the gross plot ratio specified in
clause 2(viii), or
(2) fulfill the investment criterion as stipulated in Clause 4
with full and absolute discretion to the Owner to either:
(i) re-enter upon and take possession of the said land or any part
thereof and all buildings, structures, fixtures, plant, material
and effects whatsoever thereon with power to hold and dispose
thereof as if this Agreement had not been entered into and
without making to the Licensee any compensation or allowance
for the same and this Agreement shall thereupon determine but
without prejudice to any right of action or other remedy of the
Owner or recovery of any licence fee or monies due to him from
the Licensee or in respect of any breach of this Agreement, or
<PAGE> 16
- 14 -
(ii) reduce the term of lease proportionately as the actual amount
invested bears with the required fixed investment on the said
land as stipulated in clause 4 in which event the Licensee
shall execute such documents as the Owner shall deem necessary
and in connection therewith, pay all costs disbursements fees
and charges legal or otherwise as provided in clause 5.
PROVIDED ALWAYS that if the said land has been assigned by way
of mortgage, the provisions of this sub-clause (d) shall not
take effect until the Owner had served upon the Mortgagee
notice in writing specifying the breach and the Mortgagee has
failed to remedy such breach.
4. If the said buildings and works shall have been completely finished to
the satisfaction of the Owner and the relevant Governmental Building
Authorities (to be evidenced by their certificates in writing to that effect)
within the said period of three (3) years or of such extended period (if any)
as aforesaid and of the Licensee shall have performed and observed all the
stipulations herein on his part contained other than such as may have been
waived as aforesaid and if the Licensee's minimum investment shall have been
the sum of $1,000/-per square metre of the gross floor area of the building(s)
on building and civil works and the sum of $500/- per square metre on plant and
machinery within three (3) years from the 1st day of July 1997 (due proof of
such investment to be produced to the satisfaction of Owner on or before the
31st day of December 2000) then the Owner shall grant and the Licensee shall
accept and execute a counter-part of one good and sufficient lease or sub-lease
of the said land and premises together with the buildings so erected thereon
with their appurtenances for the term of thirty (30) years from the 1st day of
July 1997 at the rent and in the form containing the reservation, exceptions,
covenants, conditions and provisions set forth in the FIRST SCHEDULE hereto with
such modification as circumstances may render necessary and such other
covenants, conditions or stipulations to be performed by the Licensee governing
or regulating the use of the said land as the Owner thinks fit with a view to
preserving the value thereof or protecting the interests of the licensees or
occupiers of land or premises adjacent to the said land from any dangerous or
obnoxious or otherwise harmful activities which may be carried out by the
Licensee whether or not such activities are incidental to the Licensee's trade
PROVIDED THAT until such lease is executed the Licensee shall be deemed to be
the Lessee of the said land as though a lease has been executed at the same
rent and subject to the covenants and conditions contained in the First
Schedule hereto so far as the same are applicable.
<PAGE> 17
- 15 -
5. The Licensee shall pay all costs, disbursements, fees and charges legal or
otherwise including stamp and registration fees in connection with the
preparation, stamping and issue of this Agreement and the Lease herein agreed to
be granted and any prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Agreement and the lease.
6. The Licensee shall pay all costs and fees legal or otherwise, including
the Owner's costs as between solicitor and client, in connection with the
enforcement of the covenants and conditions of this Agreement and the lease.
7. The Licensee may, at any time during the said period of three (3) years and
any extensions thereof granted under clause 3(c) by giving to the Owner three
(3) months' prior notice in writing, terminate this Agreement or surrender part
of the said land PROVIDED ALWAYS THAT such termination or surrender shall be
without prejudice to any right or remedy which may have or will accrue to the
Owner prior to the expiry of the three (3) months notice AND PROVIDED FURTHER
THAT the Licensee shall in addition to the license fee (which at the discretion
of the Owner may be apportioned for the period commencing from the date hereof
up to the date of delivery of vacant possession of the said land or part
thereof to the Owner) survey fees, property tax and other charges specified
herein pay to the Owner as liquidated damages a sum made up of firstly an
amount equivalent to three (3) additional year's property tax and thirdly an
amount of $500/- being administrative costs or such other sum as may be
determined from time to time by the Owner, AND PROVIDED FURTHER THAT before the
delivery of vacant possession as aforesaid if the Owner shall so desire the
Licensee shall at the cost and expense of the Licensee properly demolish and
remove such building, structure, fixture, fitting or thing as may be stipulated
in writing by the Owner as well as properly render the said land or part
thereof as the case may be to its original state and condition and licence fee
and property tax shall continue to be payable until the same has been completed
to the satisfaction of the Owner PROVIDED ALSO THAT the Licensee shall, without
prejudice to clauses 2(viii) and 2(xxxvi), ensure that the said land and any
other remaining land occupied by the Licensee within Woodlands Industrial Park
D comply with the setback requirements and other planning requirements and do
not exceed the average maximum gross plot ratio of 1.4 after the termination or
surrender.
<PAGE> 18
-16-
IN WITNESS WHEREOF the parties hereto have hereunto set their respective
hands or seals the day and year first above written.
SIGNED on behalf of )
)
JURONG TOWN CORPORATION )
)
By: HAN CHIAN JUAN ) /s/ Han Chian Juan
Director )
Specialized Parks )
Development Group )
)
in the presence of: )
/s/ Sharon Poh Jun-ee
---------------------------------
SHARON POH JUN-EE
The Common Seal of )
)
SINGAPORE TECHNOLOGIES )
PTE LTD. ) [SEAL]
)
was hereunto affixed )
)
in the presence of: )
Signature : /s/ Ho Ching
-----------------------------
Name (in full): Ho Ching (Ms.)
Designation : President & CEO
Signature : /s/ Chua Su Li
-----------------------------
Name (in full): Chua Su Li (Mrs.)
Designation : Company Secretary
<PAGE> 19
-17-
I, CHIA CHOON YANG, an Advocate and solicitor of the Supreme Court of
Singapore hereby certify that on the 17th day of September 1999, the Common Seal
of SINGAPORE TECHNOLOGIES PTE LTD was duly affixed to the within written
instrument at Singapore in my presence in accordance with the regulations of the
said Company which regulations have been produced and shown to me.
Witness my hand this 17th day of September 1999.
/s/ Chia Choon Yang
----------------------------------------
Advocate and Solicitor
Singapore
Chia Choon Yang
<PAGE> 20
THE FIRST SCHEDULE ABOVE REFERRED TO
------------------------
L 1 VER 1
------------------------
THE LAND TITLES ACT
------------------------
------------------------
(For official use only)
LEASE
DESCRIPTION OF LAND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
CT/SSCT/SCT Property Address
- --------------- Lot Whole or part (if part
VOL FOL MK TS No. lot, to state appd new
lot/strata lot)
- --------------------------------------------------------------------------------
13 Whole
(Private Lot A12787(d))
- --------------------------------------------------------------------------------
</TABLE>
LESSOR
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name: JURONG TOWN CORPORATION
<S> <C>
- --------------------------------------------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and
having its office at Jurong Town
Hall, 301 Jurong Town Hall Road.
Singapore 609431.
- --------------------------------------------------------------------------------
</TABLE>
(the registered proprietor) HEREBY LEASES the registered estate or interest in
the land to:
LESSEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ID/Co Regn no: 199004768N
<S> <C>
- --------------------------------------------------------------------------------
Name: SINGAPORE TECHNOLOGIES PTE LTD
- --------------------------------------------------------------------------------
Address: 83 Science Park Drive, #01-01/02, The
Curie, Singapore Science Park, Singapore
118258.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 21
- 2 -
FOR TERM OF LEASE
Term of Lease: Thirty (30) years
Commencement Date: 1st day of July 1997 (hereinafter referred to as "the
Commencement Date")
Consideration: The average fixed investment by the Lessee on building
and civil works exceeding $1,000/- per square metre of
the gross built-up area and on plant and machinery
exceeding $500/- per square metre (hereinafter referred
to as "the fixed investment criteria") and the average
gross plot ratio of not less than 0.6 and not more than
1.4 for Private Lots A12787, A12787(a), A12787(b) and
A12787(d) together.
Annual Rent: As stipulated in Clause 1(i) of the Special Covenants
and Conditions hereinafter appearing.
Easement: As provided in the Memorandum of Lease I/30809F and the
First Variation of Memorandum of Lease VML I/076384J
hereinafter referred to.
SUBJECT TO:
PRIOR ENCUMBRANCES:
- --------------------------------------------------------------------------------
NIL
- --------------------------------------------------------------------------------
<PAGE> 22
- 3 -
AND the following :-
COVENANTS AND CONDITIONS
(a) the covenants, conditions and powers implied by law in instruments of
lease (or to such of them as are not hereinafter expressly negatived
or modified);
(b) the covenants and conditions set forth in the Memorandum of Lease and
the First Variation of Memorandum of Lease filed in the Registry of
Titles and numbered as ML I/30809F and VML I/076384J with the
exception of covenants 1(i) and 1(xi) of ML I/30809F.
SPECIAL COVENANTS AND CONDITIONS
1 (i) To pay from the 1st day of July 1997 the yearly rent of Dollars One
million nineteen thousand and nineteen and Cents Sixty only
($1,019,019.60cts) to be paid by equal quarterly instalments on the
1st day of each of the months of January, April; July and October in
every year of the said term without any deduction and in advance
without demand at the office of the Lessor or at such other office as
the Lessor may designate calculated at the rate of $21.39cts per
square metre per annum (hereinafter referred to as "the Initial
Rent") of the demised premises having an area of 47,640 square metres
(hereinafter referred to as "the preliminary survey area", which may
at any time be adjusted on completion of final survey, if any, and in
which event if the area adjusted exceeds five square metres more, or
less, than the preliminary survey area the rental paid or payable by
the Lessee shall accordingly also be adjusted and be paid and
payable or refunded as the case may be in respect of the full
difference between the preliminary survey area and the final survey
area, with retrospective effect from the commencement of the said term
of the Lease herein), which rate shall be subject to revision on the
1st day of July 1998 at the rate based on the market rent on the date
of such revision determined in the manner following but so that the
increase shall not exceed 7.6% of the Initial Rent. The yearly rent
so revised on the 1st day of July 1998 shall be subject to revision
on the 1st day of July of every year thereafter at the rate based on
the market rent on the respective dates determined in the manner
following but so that the increase shall not exceed 7.6% of the
annual rent for each immediately preceding year. The market rent in
this context shall mean the rent per square metre per annum of the
demised premises excluding the buildings and other structures erected
thereon and shall be determined by the Lessor on or about the dates
mentioned (and payable retrospectively with effect from the dates
mentioned if determined after the dates mentioned) and the decision
of the Lessor shall be final.
<PAGE> 23
- 4 -
(x) As often as any building or structure on the demised premises or any
part thereof shall be destroyed or damaged as aforesaid forthwith to
give to the Lessor written notice of such destruction or damage and
forthwith to cause all monies received by virtue of such insurance to
be laid out in rebuilding and reinstating the same to the
satisfaction of the Lessor and in accordance with the plans and
specifications approved by the lessor and in accordance with the
laws, bye-laws, regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time, and in
case the monies so received shall be insufficient for that purpose
then to make up the deficiency out of his own monies PROVIDED THAT
the rebuilding and reinstatement shall in any event commence and be
completed within the period specified by the Lessor PROVIDED FURTHER
THAT notwithstanding the covenant contained in this Clause 1(x), the
Lessee may exercise the option not to rebuild or reinstate the
buildings subject to the following conditions:
(a) the Lessee shall give the Lessor three (3) months' prior notice
in writing to prematurely terminate the term of lease herein
created but without prejudice to any right or remedy which may
have or will accrue to the Lessor prior to the expiry of the
three (3) months' notice under the terms and conditions of the
Lease herein; and
(b) the Lessee shall forthwith pay or cause to be paid to the Lessor
(whom the Lessee acknowledges to be entitled to) all monies
received by virtue of such insurance.
(xi) Not to demise assign charge create a trust or agency mortgage 1st
sublet or underlet or grant a licence or part with or share the
possession or occupation of the demised premises in whole or in
part without first obtaining the consent of the Lessor in
writing. The restrictions contained in Section 17 of the
Conveyancing and Law of Property Act (Chapter 61) shall not
apply. In addition, the Lessor may in its absolute discretion in
giving the consent require, inter alia, that the fixed
investment criteria be met and due proof thereof be shown within
such period of time as the Lessor may stipulate, and in the
event of the non-observance thereof, the Lessor shall, without
prejudice to any other right or remedy the Lessor may have, be
entitled to exercise its rights under Clause 3(c) herein.
<PAGE> 24
- 5 -
(xvii) At the termination, by notice by the Lessee, or re-entry by the
Lessor or by expiry or otherwise, of the term hereby created, to
yield up the demised premises to the Lessor in tenantable repair
in accordance with the Lessee's covenants herein contained
PROVIDED THAT, if so required by the Lessor and upon notice
thereof, the Lessee shall at his own cost and expense properly
demolish and remove such buildings, structures, fixtures and
fittings, or any part thereof, as may be specified by the Lessor
and reinstate the demised premises to the satisfaction of the
Lessor and if the Lessee shall fail to observe or perform this
covenant the Lessor may (but shall not be under any obligation
to do so) execute such works and recover the costs thereof from
the Lessee as a debt.
(xxv) Subject always to Clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from the
date of each change PROVIDED THAT where there has been, is or
will also be a change in the shareholders of the Lessee or the
number of shares held by each and every shareholder of the
Lessee, the prior written consent in writing of the Lessor shall
be obtained which consent if granted shall be subject to such
terms and conditions as the Lessor may require.
(xli) Not to use or permit or suffer the demised premises or any part
thereof to be used otherwise than for wafer fab production only
except with the prior consent in writing of the Lessor. In
giving its consent, the Lessor may in its absolute discretion
require, inter alia, the Lessee to meet the fixed investment
criteria and to show due proof thereof within such period of
time as the Lessor may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to exercise
its rights under Clause 3(c) of VML I/076384J. For the avoidance
of any doubt, the words "meet" in this clause and "met" in
Clause 1(xi) herein shall include the maintenance of the fixed
investment criteria and if it has not been maintained, then that
it be met.
(xlii) (a) To ensure that the gross plot ratio shall not be less than
0.6 but shall not exceed the existing maximum gross plot
ratio of 1.4 permitted for the demised premises except with
the prior written approval of the Lessor and the relevant
governmental and statutory authorities PROVIDED ALWAYS THAT
and without prejudice to clause 1(viii) of ML I/30809F, the
Lessee shall pay all development charges/differential
premium which may be imposed on or charged to the Lessor by
the relevant governmental and statutory authorities, and any
other charges which may be imposed in connection with any
increase in the gross plot ratio beyond 1.4.
<PAGE> 25
-6-
(b) Notwithstanding Clause 1(xlii)(a) herein, if the Lessee is
Singapore Technologies Pte Ltd (hereinafter referred to as
"The Company"), the Company shall ensure that the average
gross plot ratio for Private Lots A12787, A12787(a),
A12787(b), A12787(d) and any other land occupied by the
Company within Woodlands Industrial Park D shall not be
less than 0.6 but shall not exceed the existing permitted
maximum average gross plot ratio of 1.4 except with the
prior written approval of the Lessor and the relevant
governmental and statutory authorities PROVIDED ALWAYS
THAT and without prejudice to clause 1(viii) of ML
I/30809F, the Lessee shall pay all development
charges/differential premium which may be imposed on or
charged to the Lessor by the relevant governmental and
statutory authorities, and any other charges which may be
imposed in connection with any increase in the said
average gross plot ratio beyond 1.4. For the avoidance of
doubt, Clause 1(xlii)(a) herein must be strictly complied
with in the event that the Company ceases to be the
Lessee.
(xliii) Not to place, construct or erect or permit the placing,
construction or erection of any building, structure or equipment
whatsoever on the buffer within the boundary of the demised
premises and to comply with the requirements of the relevant
governmental and statutory authorities including the Urban
Redevelopment Authority and the Building Control Division of the
Ministry of National Development.
(xliv) The Lessee shall not at any time hold the Lessor liable for any
claim, demand, action, proceeding, inconvenience, loss, damages,
costs or expenses of whatsoever kind or description which the
Lessee or any other person may suffer in connection with or
arising from the Easement referred to in VML I/076384J or any
works carried out in relation thereto.
(xlv) At all times throughout the term of lease hereby created to keep
in full operation and continue operations at the whole of the
demised premises in accordance with the use permitted in Clause
1(xli) herein.
<PAGE> 26
-7-
(xlvi) If the Registrar of Titles issues in favour of the Lessee a
Certificate of Title for the leasehold estate comprised in the
lease hereby created, the Lessee must, within one (1) month of
receipt of the said Certificate of Title submit a copy of it to the
Lessor.
(xlvii) If the term of lease hereby created shall at any time be determined
by expiry or otherwise, the Lessee must at his own cost and expense
immediately surrender or cause to be surrendered the said
Certificate of Title for the leasehold estate (and any duplicate
instrument) to the Registrar of Titles for custody and cancellation
by the Registrar and the Lessee shall simultaneously give to the
Lessor written notice of such surrender.
(xlviii) The Lessee accepts the demised premises in its existing state and
condition and further accepts and confirms that the Lessor has made
no representation nor given any assurance as to the present or
future suitability of the demised premises or its surrounding or
adjacent lands in relation to the Lessee's use, operations or
occupation at the demised premises.
(xlix) At the Lessee's own cost and at all times, to comply with and
observe the maximum height restriction of 55.0 metres above Mean
Sea Level and any other height restriction(s) on buildings and
structures at the demised premises as imposed by any governmental
or statutory authority and to ensure that any height restriction
plan(s) which may be furnished to the Lessee shall at all times be
held in strict confidence and shall not be shown, revealed or
copied to or by any person, contractor, sub-contractor, watchman,
employee, agent, representative or any other person except with the
prior written consent of the Lessor.
(l) Subject to Clause 1 (vii) of ML I/30809F, to ensure that the
maximum height of any chain-link fence (including the anti-climb)
or boundary wall erected by the Lessee at the demised premises
shall not exceed two (2) metres PROVIDED THAT the chain-link fence
or boundary wall shall be erected behind any hedge that may be
planted at the boundary of the demised premises.
<PAGE> 27
- 8 -
(li) To ensure that the buildings, boundary walls and landscaping works
fronting Woodlands Road are aesthetically designed to the Lessor's
satisfaction.
(lii) To comply with Land Transport Authority's Road Interpretation Plan
in respect of the road widening line.
(liii) To confine vehicular access to and from the demised premises as
indicated by the Land Transport Authority.
(liv) To observe the requirement of a 50-metre health and safety buffer
for the wafer fabrication activity, which buffer shall not extend
beyond the boundary of the demised premises.
2A The Lessor further covenants with the Lessee that he shall grant to the
Lessee a lease of the demised premises for a further term of thirty (30)
years (hereinafter referred to as "the further term") from the expiry of
the said term upon the same terms and conditions and containing like
covenants as are contained in this lease with the EXCEPTION of the present
covenant for renewal PROVIDED THAT:
(i) there shall be a minimum investment by the Lessee of $1,000/- per
square metre of the gross building floor area on buildings and
civil works and $500/- per square metre of the demised premises on
plant and machinery, (in this Lease also referred to as "the fixed
investment criteria") within three (3) years from the 1st day of
July 1997 and due proof of such investment is produced to the
satisfaction of the Lessor on or before the 31st day of December
2000;
(ii) at the time due proof of such investment is produced and at the
expiry of the said term, there be no existing breach or
non-observance of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or performed;
(iii) the rental payable for the further term shall be as set out
hereunder:
(a) the yearly rent for the further term shall be at the rate
based on the market rent at the commencement of the further
term (hereinafter referred to as "the Second Initial Rent");
(b) the Second Initial Rent shall be revised on the 1st day of
July 2028 and on the 1st day of July of every year
thereafter at the rate based on the market rent on the
respective dates determined in the manner following but so
that the increase shall not exceed 7.6% of the annual rent
for each immediately preceding year;
<PAGE> 28
- 9 -
(c) the yearly rent for the further term shall be payable by
equal quarterly installments without any deductions and in
advance without demand on the 1st day of each of the months
of January, April, July and October in every year of the
further term at the office of the Lessor or at such other
office as the Lessor may designate the 1st of such payments
to be made on or before the commencement of the further
term; and
(d) for the purposes of (a) and (b) above, the market rent shall
mean the rent per square metre per annum of the demised
premises excluding the buildings and other structures
erected thereon and shall be determined by the Lessor on or
about the dates mentioned (and payable retrospectively with
effect from the dates mentioned if determined after the
dates mentioned) and the decision of the Lessor shall be
final;
(iv) if required by the Lessor, the Lessee shall within four (4) months
from the commencement of the further term and at his own cost and
expense, carry out and complete such improvements to the
landscaping at the demised premises as may be stipulated in writing
by the Lessor;
(v) the Lessee shall six (6) months before the expiry of the said term
submit, for the approval of the Lessor and the relevant
governmental and statutory authorities, plans for the upgrading of
the exterior of buildings on the demised premises to the same
highest quality of new buildings which the Lessor will be building
at that time, and the Lessee shall expeditiously do all acts and
things necessary to obtain the approval, all at the cost and
expense of the Lessee; and
(vi) the Lessee shall at his own cost and expense complete, within
eighteen (18) months from the commencement of the further term, the
upgrading of the buildings in accordance with the plans approved by
the Lessor and the relevant governmental and statutory authorities
and to the satisfaction of the Lessor.
3 (d) The Lessee may at any time prematurely terminate the terms of
lease herein created by giving to the Lessor three (3) months'
prior notice in writing, but without prejudice to any right or
remedy which may have or will accrue to the Lessor prior to the
expiry of the three (3) months' notice under the terms and
conditions of the Lease herein created or in respect of the
termination.
<PAGE> 29
- 10 -
EXECUTION OF LESSOR
THE COMMON SEAL OF )
JURONG TOWN CORPORATION )
was hereunto affixed )
in the presence of :- )
---------------------------------------------
CHIEF EXECUTIVE OFFICER
---------------------------------------------
SECRETARY
EXECUTION OF LESSEE
THE COMMON SEAL OF )
)
)
)
)
)
was hereunto affixed )
in the presence of : )
Signature : ---------------------------------------------
Name :
Designation :
Signature : ---------------------------------------------
Name :
Designation :
<PAGE> 30
- 11 -
CERTIFICATE OF CORRECTNESS
I,
a duly authorised officer of the Jurong Town Corporation, under Section 31
of the Jurong Town Corporation Act (Cap 150) for and on behalf of the
Lessor hereby certify that this instrument is correct for the purposes of
the Land Titles Act.
________________________________________
Signature of Authorised Officer
I,
the Solicitor for the Lessee hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
________________________________________
Signature of Solicitor
<PAGE> 31
ML I/30809F
OFFICE USE ONLY
THE LAND TITLES ACT
[DIAGRAM]
(CHAPTER 157)
M E M O R A N D U M
-------------------
To the Registrar of Titles
On behalf of THE JURONG TOWN CORPORATION, a body corporate incorporated under
the Jurong Town Corporation Act and having its office at Jurong Town Hall,
Jurong Town Hall Road, Singapore, the Registered proprietor.
I, GLORIA and SIEW CHOO, certify that this memorandum (comprising seven pages),
contains the provisions which are deemed to be incorporated in any instrument in
which the abovementioned corporation is named as a lessor and such instrument
has reference to this memorandum.
Signature
Authorised Officer
Filed in the REGISTRY OF TITLES
LODGED BY:
ON 26TH JUNE, 1990
Jurong Town Corporation
Jurong Town Hall REGISTRAR OF TITLES
Jurong Town Hall Road
Singapore 2260
<PAGE> 32
- 1 -
SPECIAL COVENANTS AND CONDITIONS
--------------------------------
1 The Lessee hereby covenants with the Lessor as follows:-
(i) To pay the yearly rent hereinbefore reserved on the days and in the
manner appearing in the reddendum.
(ii) To pay unto the Lessor on demand by way of additional rent a sum
equal to all such sums as the Lessor may from time to time pay for
insuring and keeping insured the demised premises against loss or
damage by fire in case the Lessee shall make default in insuring and
keeping insured the demised premises pursuant to the covenant in that
behalf hereinafter contained PROVIDED ALWAYS THAT nothing herein
shall render it obligatory on the part of the Lessor to insure and
keep insured the demised premises or any part thereof.
(iii) To pay all rates taxes assessments and outgoings whatsoever which now
are or which at any time hereafter during the said term may be
imposed or charged upon or in respect of the demised premises or any
part thereof.
(iv) To repair and keep in tenantable repair the demised premises and
every part thereof throughout the said term.
(v) To pay a reasonable proportion of the expense of constructing
repairing rebuilding and cleansing all party walls fences sewers
drains pipes water-courses and other things the use of which is
common to the demised premises and the occupiers of any adjoining or
neighbouring premises and such proportion in the case of a dispute
shall be conclusively determined by the Lesser's surveyor for the
time being.
(vi) To permit the Lessor and his surveyors or agents with or without
workmen or others during the said term at reasonable times in the
day-time to enter upon the demised premises and every part thereof to
examine the state and condition of the same and of defects decays and
wants of reparations and of all breaches of covenant there found and
the Lessor may thereupon serve on the Lessee notice in writing by
leaving the same at or on the demised premises to or for the Lessee
to make good the same within such reasonable time as specified in
such notice.
(vii) To perform and observe all the obligations which the Lessor of the
demised premises may be liable to perform or observe during the term
hereby created by any direction or requirement of any governmental or
statutory authority and if the Lessee shall fail to observe or
perform this covenant the Lessor may in its absolute discretion
perform the same and all expenses and costs incurred thereby shall be
recoverable from the Lessee as a debt PROVIDED ALWAYS THAT the Lessor
shall not be liable to the Lessee for any loss damage or
inconvenience caused thereby.
<PAGE> 33
-2-
(viii) Not to make or cause to be made any addition or alteration affecting
the elevation external structure or stability of the demised
premises or any part thereof without the prior written consent of
the Lessor and the relevant governmental and statutory authorities
PROVIDED THAT on the granting of such consent and without prejudice
to other terms and conditions which may be imposed the Lessee shall
give to the Lessor security that the proposed addition alternation
or rebuilding will in fact be carried out within a reasonable time.
(ix) Forthwith to insure and keep insured the demised premises against
loss or damage by fire to the full value thereof with a well
established insurance company approved by the Lessor and to make all
payments necessary for that purpose within seven days after the same
shall become payable and upon reasonable notice to produce to the
Lessor the policy or policing of such insurance and the receipts for
all such payments.
(x) As often as the demised premises or any part thereof shall be
destroyed or damaged as aforesaid forthwith to cause all monies
received by virtue of such insurance to be laid out in rebuilding
and reinstating the same in accordance with the plans and
specifications approved by the Lessor and in accordance with the
existing laws, bye-laws, regulations and planning schemes of every
relevant governmental and statutory authority prevailing at the
time, and in case the monies so received shall be insufficient for
that propose then to make up the deficiency out of his own monies
PROVIDED THAT the rebuilding and reinstatement shall in any event
commence and be completed within the period specified by the Lessor.
(xi) Not to demise assign mortgage let sublet or underlet or grant a
license or part with or share the possession or occupation of the
demised premises in while or in part without first obtaining the
consent of the Lessor in writing. The restrictions contained in
Section 17 of the Conveyancing and Law of Property Act (Chapter 61)
shall not apply. In addition, the Lessor may in its absolute
discretion in giving the consent require, inter alia, that the fixed
investment criteria be met and due proof thereof be shown within
such period of time as the Lessor may stipulate, and in the event of
the non-observance thereof, the Lessor shall be entitled to exercise
its rights under Clause 3(c) herein.
(xii) Within six months of the devolution of the interest of the Lessee
not perfected by an assent to give notice thereof in writing with
particulars thereof to the Lessor and produce to the Lesser such
documentary evidence as may be required by the Lessor.
<PAGE> 34
- 3 -
(xiii) Not to use the demised premises or any part thereof for any illegal
or immoral purpose and not to do or permit or suffer to be done upon
the demised premises anything which in the opinion of the Lessor may
be or become a nuisance annoyance or cause damage or inconvenience to
the Lessor or his lessees or the occupiers of any adjoining or
neighbouring premises or whereby any insurance for the time being
affected on the demised premises may be rendered void or voidable or
be in any way affected.
(xiv) Not without the prior consent in writing of the Lessor to affix or
exhibit or erect or paint or permit or suffer to be affixed or
exhibited or erected or painted on or upon any part of the exterior
of the demised premises or of the external rails or fences thereof
any nameplate signboard placard poster or other advertisement or
boarding.
(xv) To make reasonable provision against and be responsible for all loss
injury or damage to any person or property including that of the
Lessor for which the Lessee may be held liable arising out of or in
connection with the occupation and use of the demised premises and to
indemnify the Lessor against all proceedings claims costs and
expenses which he may incur or for which he may be held liable as a
result of any act neglect or default of the Lessee his servants
contractors subcontractors or agents.
(xvi) To pay interest at the rate of 8.5% per annum or such higher rate as
may be determined from time to time by the Lessor in respect of any
arrears of rent or other outstanding sums due and payable under this
Lease from the due dates thereof until payment in full is received by
the Lessor.
(xvii) At the termination, by expiry or otherwise, of the term hereby
created, to yield up the demised premises to the Lessor in tenantable
repair in accordance with the Lessee's covenants herein contained
PROVIDED THAT, if so required by the Lessor and upon notice thereof,
the Lessee shall remove the fixtures and fittings, or any part
thereof, as may be specified by the Lessor and reinstate the demised
premises to the satisfaction of the Lessor and if the Lessee shall
fail to observe or perform this covenant the Lessor shall execute
such works and recover the costs thereof from the Lessee as a debt.
(xviii) To make good and sufficient provision for the safe and efficient
disposal of all waste including but not limited to pollutants to the
requirements and satisfaction of the Lessor PROVIDED THAT in the
event of default by the Lessee under this covenant the Lessor may
carry out such remedial measures as he thinks necessary and all costs
and expenses incurred thereby shall forthwith be recoverable from the
Lessee as a debt.
<PAGE> 35
- 4 -
(xix) Not to do or omit or suffer to be done or omitted any act matter
or thing in or on the demised premises in respect of the
operations business, trade or industry carried out or conducted
therein which shall contravene the provisions of any laws,
bye-laws, orders, rules or regulations now or hereafter affecting
the same but at his own cost and expense to comply with all such
provisions and at all times hereafter to indemnify and keep
indemnified the Lessor against all actions, proceedings, costs,
expenses, claims, fines, losses, penalties and demands in respect
of any act matter or thing done or omitted to be done in
contravention of the said provisions.
(xx) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection
with the preparation stamping and issue of this Lease and any
prior accompanying or future documents or deeds supplementary
collateral or in any way relating to this Lease.
(xxi) To pay all costs and fees legal or otherwise including costs as
between solicitor and client in connection with the enforcement
of the covenants and conditions herein.
(xxii) To pay to the Lessor all survey fees and other charges including
those payable to and claimed by the relevant Government Planning
Authorities and other relevant governmental and statutory
authorities for the survey of the demised premises for the
purpose of sub-division of the land of which the demised premises
forms part and issue of this Lease and a Certificate of Title
PROVIDED THAT the Lessor shall have the right to employ his own
surveyor to carry out the said survey in which event the Lessee
shall bear all costs thereby incurred.
(xxiii) At his own cost to take such steps and execute such works upon
the demised premises as may be necessary for the protection of
shores and embankments if any and for the prevention of earthslip
erosion of soil and failure of slopes expeditiously in a
workmanlike manner and to the satisfaction of the Lessor.
(xxiv) To construct an internal drainage system within the demised
premises to the satisfaction of the Lessor to ensure that all
surface water collected thereon is discharged into the public
drains.
(xxv) Not to effect a change of name except with the prior consent in
writing of the Lessor PROVIDED THAT on every change of name the
Lessee shall pay to the Lessor a fee to be specified by the
Lessor in relation to such consent.
(xxvi) To perform and observe the covenants on the Lessor's part
contained in the Head Lease made between the President of the
Republic of Singapore and the Lessor so far as they are not
varied herein and to keep the Lessor indemnified against all
claims damages costs and expenses in any way relating thereto.
<PAGE> 36
- 5 -
(xxvii) To maintain the demised premises and every part thereof in a neat
and tidy condition, and forthwith to comply with the Lessor's
direction to remove and clear any materials, goods, or articles
of whatever nature and description from the demised premises or
such part thereof as may be stipulated in writing by the Lessor.
(xxviii) At his own cost to plant and maintain trees and landscape the
demised premises in accordance with all the requirements of the
Parks and Recreation Department, Ministry of National Development
and other relevant governmental and statutory authorities.
(xxix) Not to install or use any electrical installation, machine or
apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or any
electrical or mechanical interference or disturbance whatsoever
which may prevent or prevents in any way the service or use of
any communication system or affects the operation of other
equipment, installations, machinery, apparatus or plants of other
Lessees in connection therewith, to allow the Lessor or any
authorised person to inspect at all reasonable times, such
installation, machine or apparatus in the demised premises to
determine the source of the interference or disturbance and
thereupon, to take suitable measures, at the Lessee's own
expense, to eliminate or reduce such interference or disturbance
to the Lessor's satisfaction, if it is found by the Lessor or
such authorised person that the Lessee's electrical installation,
machine or apparatus is causing or contributing to the said
interference or disturbance.
(xxx) To indemnify the Lessor against each and every claim, proceeding,
action, loss, penalty, damage, expense, cost and demand which may
arise in connection with clause (xxix) above.
(xxxi) At the Lessee's own cost to execute such works as may be
necessary to divert existing utility services such as pipes,
cables and the like (if any) to the requirements and satisfaction
of the Lessor and other relevant governmental and statutory
authorities.
(xxxii) Subject to that clause in the Special Covenants and Conditions of
this Lease which stipulates the specific use the Lessor permits
for the demised premises, the Lessee shall use and shall ensure
that at least sixty per centum (60%) of the total floor area of
the demised premises shall be used for purely industrial
activities, and may use the remaining floor area for ancillary
stores and offices, neutral areas, communal facilities and such
other uses as may be approved in writing by the Lessor and the
relevant governmental and statutory authorities PROVIDED THAT the
said ancillary offices shall not exceed twenty-five per centum
(25%) of the total floor area AND PROVIDED FURTHER THAT the
Lessee shall not use and occupy the demised premises for the
purpose of commercial office and storage unrelated to the
Lessee's approved industrial activity.
<PAGE> 37
- 6 -
(xxxiii) If the Lessee shall at any time be found to have encroached upon
any area behind the boundaries of the demised premises, the
Lessee shall at his own cost and expenses, but without prejudice
to any other right or remedy the Lessor may have against him,
immediately or within the time specified (if any) by the Lessor
rectify and remove the encroachment to the satisfaction of the
Lessor and pay to the Lessor such compensation as may be
specified by the Lessor. If, however, the Lessor in his absolute
discretion permits the Lessee to regularise and retain the
encroached area or any part thereof upon such terms and
conditions as may be stipulated by the Lessor and any other
relevant governmental and statutory authorities, the Lessee shall
pay land rent on the encroached area with retrospective effect
from the date of commencement of the term hereby created, and the
Lessee shall also pay all survey fees, amalgamation fees, legal
fees (including solicitor and client costs and expense), and all
other costs and charges relating thereto.
(xxxiv) If any damage of whatsoever nature or description shall at any
time occur or be caused to the demised premises or any part
thereof, to forthwith give to the Lessor written notice of the
damage and to remedy the damage to the satisfaction of the Lessor
within such time as the Lessor may specify, all at the cost of
the Lessee.
(xxxv) Not to keep or permit to be used or stored in the demised
premises or any part thereof any materials of a dangerous or
explosive nature without the prior consent in writing of the
Lessor and to keep the Lessor indemnified against all damages
claims and action caused by the use of storage of such materials
whether or not the same is done with the consent of the Lessor.
2 The Lessor hereby covenants with the Lessee that the Lessee paying the rent
hereinbefore reserved and performing and observing the covenants conditions
and agreements on the part of the Lessee hereinbefore contained shall
peaceably hold and enjoy the demised premises during the term hereby
granted without any interruption or by the Lessor or any person lawfully
claiming through under or in trust for him.
3 PROVIDED ALWAYS and it is hereby agreed between the parties as follows :-
(a) That no estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be included
in the demise hereinbefore contained.
(b) That the Lessee shall not be entitled to any right of access of light
or air to the demised premises or any part thereof, which would
restrict or interfere with the user of any adjoining or neighbouring
land for building or any other purpose.
<PAGE> 38
- 7 -
(c) That if the said rent hereby reserved or any part thereof shall be
unpaid for fourteen days after becoming payable (whether the same
shall have been formally demanded or not) or if any of the covenants
or obligations on the part of the Lessee herein contained shall not
be performed or observed or if any charging order made in respect of
the demised premises shall be enforced by sale or by entry into
possession without the written consent of the Lessor having first
been obtained (Section 17 of the Conveyancing and Law of Property Act
shall also not apply in such event) by the Lessee or by the person in
whose favour the charging order shall have been made, then and in any
such case it shall be lawful for the Lessor or any person or persons
authorized by him in that behalf at any time thereafter to re-enter
upon the demised premises or any part thereof in the name of the
whole and thereupon the term hereby created shall absolutely
determine but without prejudice to any right of action or remedy of
the Lessor in respect of any breach of any of the covenants or
conditions by the Lessor herein contained PROVIDED THAT if the
demised premises have been assigned by way of mortgage the provisions
of this clause shall not take effect until the Lessor has served upon
the mortgagee a notice in writing that such breach has occurred and
the mortgagee has failed to remedy such breach.
4 In this Lease where the context so requires or permits, words importing the
singular number or the masculine gender include the plural number or the
feminine gender and words importing persons include corporation and vice versa,
the expression "the Lessor" shall include its successors-in-title and assigns,
the expression "the Lessee" shall include its successors-in-title and permitted
assigns (if any), where there are two or more persons included in the expression
"the Lessee" covenants expressed to be made by "the Lessee" shall be deemed to
be made by such persons jointly and severally, and except where otherwise
provided the expression "the demised premises" shall mean the land hereby
demised and all buildings, structures, fixtures and fittings therein.
<PAGE> 39
BELOW THIS LINE FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------
Special Remarks Endorsing Instruction
First Schedule:
Second Schedule:
- --------------------------------------------------------------------------------
EXAMINED REGISTERED ON
--------------------
Initials of
Signing
Officer
Date: REGISTRAR OF TITLES
- --------------------------------------------------------------------------------
<PAGE> 40
------------------------------
VML 1 Ver 1
------------------------------
THE LAND TITLES ACT
------------------------------
------------------------------
(For official use only)
FIRST VARIATION OF MEMORANDUM OF LEASE
LESSOR
- ------
- --------------------------------------------------------------------------------
Name: JURONG TOWN CORPORATION
- --------------------------------------------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and having
its office at Jurong Town Hall, 301
Jurong Town Hall Road, Singapore 2260.
- --------------------------------------------------------------------------------
AUTHORISED OFFICER OF LESSOR
- ----------------------------
- --------------------------------------------------------------------------------
Name: GLORIA ONG SIEW CHOO
- --------------------------------------------------------------------------------
I, the abovementioned authorised officer of the Lessor, certify that in any
instrument of the Lessor's in which both the Memorandum of Lease filed in the
Land Titles Registry as No: I/30809F (hereinafter referred to as "ML I/30809F")
and this Variation of Memorandum of Lease have reference:
(a) the following Easement provisions set out in Schedule I herein shall
be inserted in addition to the clauses incorporated in ML I/30809F;
(b) the following sub-clause(s) as set out in Schedule II shall be in
substitution of the sub-clauses incorporated in clause 1 and clause 3
contained in ML I/30809F and more particularly set out in Schedule III; and
(c) the following sub-clauses as set out in Schedule IV shall be inserted in
addition to the sub-clauses in clause 1 contained in ML I/30809F.
<PAGE> 41
- 2 -
SCHEDULE I - Easement
EASEMENT: RESERVING TO THE LESSOR, and all others to whom the Lessor has granted
or may grant, as appurtenant to each and every premises adjoining and
neighbouring the demised premises which are capable of so enjoying, a free and
uninterrupted RIGHT OF PASSAGE AND RUNNING of water soil electricity power gas
telephone communication and other services from the adjoining and neighbouring
premises thereon through or by means of sewers drains pipes channels wires
cables and ducts upon over or under the demised premises and to make connections
with such sewers drains pipes channels wires cables and ducts or any of them for
the purpose of exercising the said right of passage and of running the aforesaid
services upon over or under the demised premises herein AND all other easements,
ancillary rights and obligations as are or may be implied by the Land Titles Act
(CAP 157).
SCHEDULE II - Replacement sub-clauses
1 (x) As often as any building or structure on the demised premises
or any part thereof shall be destroyed or damaged as aforesaid
forthwith to give to the Lessor written notice of such
destruction or damage and forthwith to cause all monies
received by virtue of such insurance to be laid out in
rebuilding and reinstating the same to the satisfaction of the
Lessor and in accordance with the plans and specifications
approved by the Lessor and in accordance with the laws,
bye-laws regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time,
and in case the monies so received shall be insufficient for
that purpose then to make up the deficiency out of his own
monies PROVIDED THAT the rebuilding and reinstatement shall in
any event commence and be completed within the period specified
by the Lessor.
(xxv) Subject always to clause 1(xi) herein, to give to the Lessor
written notice of every change of name within one month from
the date of each change.
<PAGE> 42
- 3 -
3 (c) That if the said rent hereby reserved or any other sums due under this
Lease, or any part thereof shall be unpaid for fourteen days after
becoming payable (whether the same shall have been formally demanded
or not) or if any of the covenants or obligations on the part of the
Lessee herein contained shall not be performed or observed or if any
charging order writ of seizure and sale or its equivalent made in
respect of the demised premises shall be enforced by sale or by entry
into possession without the written consent of the Lessor having first
been obtained (Section 17 of the Conveyancing and Law of Property Act
shall also not apply in such event) by the Lessee or by the person in
whose favour the charging order writ of seizure and sale or its
equivalent shall have been made, then and in any such case it shall be
lawful for the Lessor or any person or persons authorised by him in
that behalf at any time thereafter to re-enter upon the demised
premises or any part thereof in the name of the whole and thereupon
the term hereby created shall absolutely determine but without
prejudice to any right of action or remedy of the Lessor in respect of
any breach of any of the covenants or conditions by the Lessee herein
contained PROVIDED THAT if the demised premises have been assigned by
way of mortgage the provisions of this clause shall not take effect
until the Lessor has served upon the mortgagee a notice in writing
that such breach has occurred and the mortgagee has failed to remedy
such breach.
SCHEDULE III - Previous sub-clause
1 (x) As often as the demised premises or any part thereof shall be
destroyed or damaged as aforesaid forthwith to cause all monies
received by virtue of such insurance to be laid out in rebuilding and
reinstating the same in accordance with the plans and specifications
approved by the Lessor and in accordance with the existing laws,
bye-laws, regulations and planning schemes of every relevant
governmental and statutory authority prevailing at the time, and in
case the monies so received shall be insufficient for that purpose
then to make up the deficiency out of his own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence and be
completed within the period specified by the Lessor.
<PAGE> 43
- 4 -
(xxv) Not to effect a change of name except with the prior consent in
writing of the Lessor PROVIDED THAT on every change of name the
Lessee shall pay to the Lessor a fee to be specified by the
Lessor in relation to such consent.
3 (c) That if the said rent hereby reserved or any part thereof shall
be unpaid for fourteen days after becoming payable (whether the
same shall have been formally demanded or not) or if any of the
covenants or obligations on the part of the Lessee herein
contained shall not be performed or observed or if any charging
order made in respect of the demised premises shall be enforced
by sale or by entry into possession without the written consent
of the Lessor having first been obtained (Section 17 of the
Conveyancing and Law of Property Act shall also not apply in such
event) by the Lessee or by the person in whose favour the
charging order shall have been made, then and in any such case it
shall be lawful for the Lessor or any person or persons
authorised by him in that behalf at any time thereafter to
re-enter upon the demised premises or any part thereof in the
name of the whole and thereupon the term hereby created shall
absolutely determine but without prejudice to any right of action
or remedy of the Lessor in respect of any breach of any of the
covenants or conditions by the Lessee herein contained PROVIDED
THAT if the demised premises have been assigned by way of
mortgage the provisions of this clause shall not take effect
until the Lessor has served upon the mortgagee a notice in
writing that such breach has occurred and the mortgagee has
failed to remedy such breach.
SCHEDULE IV -- Additional sub-clauses
1 (xxxvi) At the Lessee's own cost and expense and subject to the Lessor's
prior written approval, to execute such works as may be deemed
necessary by the Lessee in respect of the state and condition of
the demised premises (especially its ground levels, topography
and soil condition) which state and condition the Lessee shall be
deemed to have full knowledge.
<PAGE> 44
- 5 -
(xxxvii) Not to keep or allow to be kept any livestock or other animals
at the demised premises or any part thereof.
(xxxviii) At the Lessee's own cost, to properly install and maintain exit
lightings and exit signs at staircases, exist passageways and
exits of the demised premises in accordance with all
requirements of the Building Control Division.
(xxxix) To forthwith install and at all times to properly maintain
sufficient emergency lighting in the production area of the
demised premises in accordance with all requirements of the Fire
Services bureau and to liaise directly with the Fire Services
Bureau in relation thereto, and in the event that any alteration
or addition to the demised premises shall thereby be necessary,
then to obtain the prior written consent of the Lessor and the
relevant governmental and statutory authorities in accordance
with Clause 1(viii) of ML I/30809F, all at the cost of the
Lessee.
(xl) Without prejudice to the generality of Clauses 1(iii) and 1(vii)
of ML I/30809F, the rent and other taxable sums payable by the
Lessee under or in connection with this lease shall be exclusive
of the goods and services tax (hereinafter called "tax")
chargeable by any government, statutory or tax authority
calculated by reference to the amount of rent and any other
taxable sums received or receivable by the Lessor from the
Lessee. The Lessee shall pay the tax and the Lessor acting as
the collecting agent for the government, statutory or tax
authority shall collect the tax from the Lessee together with
the rent hereinbefore reserved without any deduction and in
advance without demand on the 1st day of each of the months of
January, April, July and October, and in the manner and within
the period prescribed in accordance with the applicable laws and
regulations.
DATE OF APPLICATION: 4th day of May 1995
<PAGE> 45
- 6 -
EXECUTION BY THE AUTHORISED OFFICER:
- ------------------------------------
----------------------------------------
GLORIA ONG SIEW CHOO
Witness: ----------------------------------------
ANNIE NG KIN MUI nee AU
LODGED BY:
- ----------
- --------------------------------------------------------------------------------
Name: JURONG TOWN CORPORATION
- --------------------------------------------------------------------------------
Address: a body corporate incorporated under
Jurong Town Corporation Act and having
its office at Jurong Town Hall, 301
Jurong Town Hall Road, Singapore 2260.
- --------------------------------------------------------------------------------
<PAGE> 46
FOR OFFICE USE ONLY
- -------------------------------------------------------------------------------
EXAMINED REGISTERED ON
Date: Initials of Registrar of Titles
Signing Officer
- -------------------------------------------------------------------------------
<PAGE> 47
[MAP]
NOTE:
All grid references shown on this plan are based on Singapore Survey Department
origin [ILLEGIBLE] E300001
All distances are in metres.
Dimensions and area are subject to final survey.
Lessees are required to consult other relevant authorities for services
[ILLEGIBLE] by them.
Data incorporated from sketch #30 in S/MC [ILLEGIBLE] Vol C.
- -------------------------------------------------------------------------------
[JTC LOGO] Jurong Town Corporation
Technical Services Group
Survey Department
- -------------------------------------------------------------------------------
AGREEMENT PLAN
Part of
A127871d1: Lots 230L & 1179P
Mukim No.13
- -------------------------------------------------------------------------------
Approved
/s/ TAN HUCK JIN 6/10/97
- ------------------------------------------------
TAN HUCK JIN Date
DEPUTY DIRECTOR (SURVEY)
- -------------------------------------------------------------------------------
Approved
[Signature Illegible] 6/10/97
- ------------------------------------------------
[ILLEGIBLE] Date
Surveyor-in-charge
- -------------------------------------------------------------------------------
[ILLEGIBLE] DATE SCALE 1:2000
- ------------------------------------------------------------
SURVEYED COMPILED -- PLAN NO.
- -------------------------------------
DRAWN SULAIMAN 30.9.97 S/LA 499-5
- -------------------------------------
CHECKED [ILLEGIBLE] 5.10.97
- -------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 10.39
PRIVATE LOT A12787(d)
DATED THIS 24th DAY OF September 1999
BETWEEN
SINGAPORE TECHNOLOGIES PTE LTD
.. OF THE ONE PART
AND
CHARTERED SILICON PARTNERS PTE LTD
.. OF THE OTHER PART
**********************************************************
AGREEMENT FOR SUB-LICENCE AND SUB-LEASE
(PRIVATE LOT A12787(d))
**********************************************************
<PAGE> 2
THIS AGREEMENT is made the 24th day of September 1999 between:-
(1) SINGAPORE TECHNOLOGIES PTE LTD, a company incorporated in Singapore and
having its registered office at 51 Cuppage Road #09-01, Singapore 229469
(hereinafter called "ST" which expression shall include its
successors-in-title); and
(2) CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
and having its registered office at 60 Woodlands Industrial Park D
Street 2, Singapore 738406 (hereinafter called "CSP" which expression
shall include its successors-in-title and permitted assigns).
WHEREAS:-
(A) ST has entered into a Building Agreement (hereinafter called "the
Building Agreement" which expression shall include all variations
thereof and supplements thereto) dated the 24th day of September
1999 with Jurong Town Corporation (hereinafter called "JTC" which
expression shall include its successors-in-title and assigns) in respect
of the land more particularly described in the First Schedule hereto
(hereinafter called "the Property") for the construction of factory
buildings and other structures therein and for the installation of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and conditions
contained in the Building Agreement.
(B) Under the terms of the Building Agreement, JTC has agreed to:-
(a) grant a licence to ST to enter upon the Property for a period of
three (3) years commencing from the 1st day of July 1997; and
(b) lease the Property to ST for a term of thirty (30) years
(hereinafter called "the Head Lease") commencing from the 1st day
of July 1997 upon compliance with the conditions set out in Clause
4 of the Building Agreement,
on the terms and conditions set out therein.
(C) With the consent of JTC, ST has agreed:-
(a) to grant a sub-licence to CSP for a period of three (3) years
(less one (1) day) commencing from the Commencement Date; and
(b) that upon the completion of the Development and subject to
compliance with the conditions set out in this Agreement, ST shall
grant to CSP a sub-lease of the Property for a term of thirty (30)
years less one (1) day commencing from the 1st day of July 1997,
on the terms and conditions hereinafter set out.
NOW IT IS HEREBY AGREED as follows:-
1. In this Agreement, the following expressions shall have the following
meanings:-
"Commencement Date" means the 1st day of July 1997;
"Development" means the construction on the Property of factory
buildings and other structures therein and the installation thereon of
equipment fixtures and fittings thereof for the purpose of wafer
fabrication plant operations in accordance with the terms and conditions
contained in the Building Agreement;
-1-
<PAGE> 3
"Private Lot A12787" means all that piece of land known as Private Lot
A12787 forming part of the Government Survey Lots 937 and 1949 and part
of Marsiling Road (old), Mukim No. 13, Sembawang and situated in the
Republic of Singapore as shown on the plan annexed to the building
agreement relating thereto made between JTC and ST and estimated to
contain an area of 52,525 square metres more or less subject to survey.
"Private Lot A12787(a)" means all that piece of land known as Private
Lot A12787(a) forming part of the Government Survey Lots 3065V, Mukim
No. 13, Sembawang and situated in the Republic of Singapore as shown on
the plan annexed to the building agreement relating thereto made between
JTC and ST and estimated to contain an area of 29,824 square metres more
or less subject to survey.
"Private Lot A12878(b)" means all that piece of land known as Private
Lot A12787(b) forming part of the Government Survey Lot 3065V, Mukim No.
13, Sembawang and situated in the Republic of Singapore as shown on the
plan annexed to the building agreement relating thereto made between JTC
and ST and estimated to contain an area of 7,015 square metres more or
less subject to survey.
"Private Lot A12878(d)" means all that piece of land known as Private
Lot A12787(d) forming part of the Government Survey Lots 230L and 1179P,
Mukim No. 13, Sembawang and situated in the Republic of Singapore as
shown on the plan annexed to the building agreement relating thereto
made between JTC and ST and estimated to contain an area of 47,640
square metres more or less subject to survey.
"Sub-Licence Period" means the period of three (3) years less one (1)
day commencing from and including the Commencement Date.
2. For the Sub-Licence Period or for such further period as may be extended
by ST, CSP shall have the licence and authority to enter upon the
Property for the carrying-out of the works relating to the Development
in accordance with the stipulations hereinafter contained and as
contained in the Building Agreement and for no other purpose.
3. CSP hereby agrees to perform and observe the following stipulations:-
(i) To hold the Property until the same shall be comprised in a
sub-lease to be granted as hereinafter provided as licensee upon
the same terms as the form of the sub-lease set forth in the
Second Schedule hereto at the same rent and subject to the same
covenants and stipulations so far as applicable as if a sub-lease
thereto has been actually granted and so that ST shall have all
the remedies by whatsoever means for rent in arrears that are
incidental to the relationship of landlord and tenant but so that
nothing herein contained shall be construed as creating a legal
demise or any greater interest in the licence than a tenancy at
will;
(ii) To pay in advance as from the Commencement Date a licence fee,
calculated at the same rate and on the dates specified as for the
rent reserved in the sub-lease of the Property in the Second
Schedule hereto as if such sub-lease has actually been granted;
(iii) To pay on JTC's behalf to the Comptroller of Property Tax an
amount equivalent to the sum payable by JTC as property tax in
respect of the Property improvements and structures thereon during
the Sub-Licence Period or of such extended period (if any)
permitted under Clause 4(c) hereof by way of additional licence
fee or for the period prior to the issue of the sub-lease to be
granted under Clause 6 herein;
(iv) To pay interest at the rate of 8.5% per annum or such higher rate
as may be determined from time to time by ST in respect of any
outstanding amount payable
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by CSP under this Agreement from the date such amount becomes
due until payment in full is received by ST.
(v) To pay to ST all survey fees and other charges including those
payable to and claimed by the relevant Government Planning
Authorities for the survey of the Property for the purpose of
sub-division of the land of which the Property forms part and
for the preparation and issue of a Certificate of Title
PROVIDED THAT JTC shall have the right to employ its own
surveyor to carry out the said survey in which event CSP shall
bear all costs incurred.
(vi) At the cost and expense of CSP:-
(a) to engage a professional engineer to carry out soil
investigations to advise on the soil conditions and to
design structurally sound buildings proposed to be erected
taking into consideration the condition of the Property;
and
(b) to execute such work as may be required to be done in
respect of the state and condition of the Property
(especially its ground levels, topography and soil
conditions) which state and condition CSP shall be deemed
to have full knowledge.
(vii) Without prejudice to sub-Clause (vi) above to submit within
three (3) months from the Commencement Date to ST for its and
JTC's approval and then to the relevant Government Planning and
Building Authorities full and complete plans elevations and
specifications of the buildings proposed to be erected on the
Property in accordance in every way with the requirements under
the Planning Act, Building Control Act, Fire Safety Act, Water
Pollution Control and Drainage Act and any other relevant
statutory provisions PROVIDED THAT ST or JTC may give or refuse
their approval at their absolute discretion.
(viii) At its own cost to commence erection on the Property either
within six (6) months from the Commencement Date or within one
(1) month from the date of approval of the plans by the
relevant Government Building Authorities, whichever is the
earlier, and in a substantial and workman-like manner with the
best materials of their available kinds and in conformity in
every respect with the plans, elevations, sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities to finish the Development so as
to be completely fit for immediate occupation and operation
within the Sub-Licence Period PROVIDED ALWAYS THAT in the
planning, erection, construction and completion of the said
buildings to develop an average gross plot ratio on Private Lot
A12787, Private Lot A12787(a), Private Lot A12787(b), Private
Lot A12787(d) and any other land occupied by ST (or its
licensees or tenants) within Woodlands Industrial Park D,
together of not less than 0.6 but not more than 1.4 and in the
event that the aforesaid average gross plot ratio exceeds 1.4
CSP shall be responsible for such proportion (as may be
mutually agreed upon between ST and CSP) of the development
charges/differential land premium and other charges payable in
consequence thereof AND PROVIDED FURTHER THAT CSP shall not
install or use any electrical installation, machine or
apparatus that may cause or causes heavy power surge, high
frequency voltage and current, air borne noise, vibration or
any electrical or mechanical interference or disturbance
whatsoever which may prevent or prevents in any way the service
or use of any communication system or affects the operation of
other equipment, installations, machinery, apparatus or plants
of other licensees.
(ix) At its own cost to take such steps and execute such works upon
the Property as may be necessary for the protection of shores
and embankments if any and for the prevention of earth-slip
erosion of soil and failure of slopes expeditiously in a
workman-like manner and to the satisfaction of ST and JTC and
other relevant
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<PAGE> 5
governmental and statutory authorities.
(x) If CSP shall fail to complete the Development and to commence
operations within the period specified in Clause 3(viii) or
within any extended period under Clause 4(c) hereof CSP shall
pay to ST a sum calculated at the rate of $200.00 per day as
liquidated damages for the period during which the said
buildings to be comprised in the Development shall so remain or
have remained incomplete Provided that such payment shall not
prejudice any other right or remedy ST may have against CSP
including its rights of re-entry under Clause 4(b) and 4(d)
herein.
(xi) To remove and replace any materials brought on the Property or
used for the Development or any part thereof which ST or JTC
shall require to be removed as being inferior or unfit and to
make good any workmanship which ST or JTC shall consider
imperfect and if CSP fails to remedy such defects ST or JTC may
enter upon the Property and remedy such defects at the expense
of CSP after expiry of fourteen (14) days' notice being given
to CSP to do so.
(xii) Not to erect or build or permit or suffer to be erected or
built any building, structure or installation other than those
conforming with the plans elevations sections and
specifications approved by ST and JTC and the relevant
Government Building Authorities nor to make any alterations in
the external elevation of any of the said buildings to be
comprised in the Development when erected without the prior
consent in writing of ST and JTC.
(xiii) In the erection and completion of the Development to do all
acts and things required by and to perform the works in
conformity in all respects with the provisions of any laws or
regulations made thereunder and to pay and keep ST and JTC
indemnified against all claims and other payments whatsoever
which during the progress of the works may become payable in
respect of the said works or of anything done under the
authority herein contained and from time to time to discharge
and pay all claims, assessments and outgoings now or at any
tine hereafter be chargeable against JTC or ST under any law or
otherwise in regard to the Property, the said buildings or any
structures or installations thereon.
(xiv) Not to do or permit or suffer to be done in or upon the
Property or any part thereof anything which in the opinion of
ST or JTC may be or become a nuisance or annoyance or cause
damage or inconvenience to ST or to JTC or to the licensees or
occupiers of any adjoining or neighbouring premises or whereby
any insurance for the time being effected on the Property under
sub-Clause (xix) herein may be rendered void or voidable or be
in any way affected.
(xv) Not to sell or dispose of any earth, clay, gravel or sand from
the Property or permit or suffer any of the same to be removed
except so far as shall be necessary for the execution of the
said works PROVIDED nevertheless that CSP may use for the
purpose of the said works any of the approved materials if so
required.
(xvi) Not without the prior consent in writing of ST and JTC to
remove or permit or suffer to be removed until after completion
of the buildings comprised in the Development in accordance
with the provisions herein contained any building materials
(other than inferior or unfit materials removed for the purpose
of being replaced by proper materials) or plant which shall be
brought upon the Property for the purpose of the Development.
(xvii) Not without the prior consent in writing of ST and JTC to affix
or exhibit or erect or paint or permit or suffer to be affixed
or exhibited or erected or painted on or upon any part of the
exterior of the Property or of the external walls or rails or
fences thereof any nameplate, signboard, placard, poster or
other advertisement or
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<PAGE> 6
hoarding.
(xviii) Not at any time to deposit or make up or manufacture or permit
or suffer to be deposited made up or manufactured upon the
Property any building or other materials except such as shall
be actually required for the buildings to be erected on the
Property in accordance with this Agreement and the Building
Agreement and as soon as the buildings hereinbefore agreed to
be erected shall be completed at its own expense to remove from
the road or footpath adjoining the Property or the ground
intended to be used for such road or footpath all building and
other materials and waste whatsoever.
(xix) As soon as any of the said buildings comprised in the
Development shall have reached a height of five (5) feet above
ground level to insure the same to the full value thereof in
the joint names of ST, JTC and CSP against loss or damage by
fire in some insurance office approved by JTC and ST and shall
increase such insurance proportionately as the said buildings
approach completion and to keep the same so insured until a
sub-lease shall be granted as hereinafter provided and to pay
all premiums thereof at least seven (7) days before the expiry
date of such insurance policy and to produce to ST or JTC (if
so directed by ST) or their respective agents without demand
the policy or policies of such insurance and the receipt for
each such payment and in the event the said buildings or any
part thereof are destroyed or damaged by fire then to forthwith
give to ST and JTC written notice of such destruction or damage
and to forthwith cause all monies received by virtue of any
such insurance to be forthwith laid out in rebuilding and
reinstating the buildings to the satisfaction of ST and JTC and
to make up any deficiency thereof out of its own monies, but
the rebuilding and reinstatement shall in any event commence
and be completed within the period specified by ST and JTC
PROVIDED ALWAYS THAT if CSP shall at any time fail to keep the
Property insured as aforesaid ST or JTC may without being under
any obligation to do so do all things necessary to effect or
maintain such insurance and any monies expended by either ST or
JTC for that purpose shall be repayable by CSP on demand and be
recovered forthwith from CSP as a debt PROVIDED FURTHER THAT
notwithstanding the covenant contained in this Clause 3(xix),
CSP may exercise the option not to rebuild or reinstate the
buildings subject to the following conditions:-
(a) without prejudice to Clause 4(b), CSP shall give ST three
(3) months' and one (1) day's prior notice in writing to
prematurely terminate this Agreement; and
(b) CSP shall forthwith pay or cause to be paid to ST or if ST
so directs to JTC all monies received by virtue of such
insurance.
(xx) Not to sell, assign, create a trust or agency, let, subset or
underlet, charge, grant a licence or part with or share or in
any way dispose of its interest under this Agreement, or the
possession or occupation of the Property, or any part thereof
or otherwise in any way dispose of the Property or any part
thereof EXCEPT THAT, subject to ST's and JTC's prior written
consent (the consent of ST not to be unreasonably withheld),
CSP may mortgage or charge its interest under this Agreement by
way of assignment or debenture (as the case may be) to secure
the repayment of such sum or sums as CSP may require for the
purpose of erecting or completing the building or other
structure to be built on the Property in accordance with the
provisions of this Agreement and the Building Agreement
PROVIDED THAT CSP shall thereafter continue to be liable for
the observance and performance of the several stipulations
herein contained until the grant of the sub-lease as
hereinafter provided.
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<PAGE> 7
(xxi) Not to permit or suffer any person to occupy reside or make use
of any building erected on the Property before a final or a
temporary Certificate of Fitness for Occupation has been issued
by or except with the permission of the relevant Governmental
and statutory authorities.
(xxii) To make reasonable provision against and be responsible for all
loss, injury and damage to any person (including loss of life)
or property including that of ST and JTC for which CSP may be
held liable arising out of or in connection with the occupation
and use of the Property and the structures erected thereon and
to indemnify ST and JTC against all proceedings, claims, costs
and expenses which ST or JTC may incur or for which ST or JTC
may be held liable as a result of any act, neglect or default
of CSP its servants, contractors, sub-contractors, or agents or
their respective servants.
(xxiii) To make good and sufficient provision for the safe and
efficient disposal of all waste including but not limited to
pollutants generated at the Property to the requirements and
satisfaction of ST and JTC and other relevant governmental and
statutory authorities PROVIDED THAT in the event of any default
by CSP under this covenant ST or JTC may carry out such
remedial measures as they think necessary and all costs and
expenses incurred thereby shall be recoverable forthwith from
CSP as a debt.
(xxiv) To construct an internal drainage system to the satisfaction of
ST and JTC to ensure that all surface water collected is
discharged into the public drains and will not flow into
adjoining properties.
(xxv) To construct and complete a permanent culvert within nine (9)
months from the Commencement Date or any extension thereof as
may be approved by ST and JTC and in connection thereof to
submit plans to and to obtain the prior approval in writing of
ST and JTC for the construction of a temporary crossing.
(xxvi) Within one (1) month of the completion of the permanent culvert
mentioned in sub-Clause (xxv) above to remove the temporary
crossing and to reinstate any roads, roadside kerbs, drains,
turfing or the like damaged by CSP, its servants, contractors,
sub-contractors, or agents or their respective servants to the
satisfaction of ST and JTC and the relevant Governmental and
statutory authorities.
(xxvii) Within one (1) month of the completion of the construction of
the said buildings and related civil works to reinstate any
damage caused to the roads, roadside kerbs, drains, turfing and
the said permanent culvert by CSP its servants contractors or
agents or their respective agents to the satisfaction of ST and
JTC and the relevant Governmental and statutory authorities.
(xxviii) To place with ST or JTC (if directed by ST) a deposit of
$5,000.00 which shall be forfeited in the event of any breach
of any of the provisions in sub-Clauses (xxv), (xxvi) and
(xxvii) herein without prejudice to the rights and remedies of
ST and JTC contained in this Agreement, the Building Agreement,
the Head Lease and the sub-lease.
(xxix) At its own cost to plant and maintain trees and landscape the
Property in accordance with all the requirements of the Parks
and Recreation Department, Ministry of National Development and
other relevant Governmental and statutory authorities.
(xxx) At its own cost to execute such work as may be necessary to
divert existing utility services such as pipes, cables and the
like (if any) to the requirements and
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<PAGE> 8
satisfaction of ST and JTC and other relevant Governmental and
statutory authorities.
(xxxi) If CSP shall at any time be found to have encroached upon any
area beyond the allocated boundaries of the Property, CSP shall
at its own cost and expense, but without prejudice to any other
right or remedy ST or JTC may have against CSP, immediately or
within the time specified (if any) by ST or JTC rectify and
remove the encroachment to the satisfaction of ST and JTC and
pay to ST or JTC (if so directed by ST) such compensation as
may be specified by ST or JTC. If, however, ST or JTC in their
absolute discretion permit CSP to regularise and retain the
encroached area or any part thereof upon such terms and
conditions as may be stipulated by ST or JTC and any other
relevant Governmental and statutory authorities, CSP shall pay
licence fee on the encroached area with retrospective effect
from the date specified by ST, and CSP shall also pay all
survey fees, amalgamation fees, legal fees (including solicitor
and client costs and expense), and all other costs and charges
relating thereto.
(xxxii) If any damage of whatsoever nature or description shall at any
time occur or be caused to the Property or any building or
structure or installation thereon, or any part thereof, to
forthwith give to ST and JTC written notice of the damage and
to remedy the damage to the satisfaction of ST and JTC within
such time as ST or JTC may specify, all at the cost of CSP.
(xxxiii) CSP accepts the Property in its existing state and condition
and further accepts and confirms that ST has made no
representation nor given any assurance as to the present or
future suitability of the Property or its surrounding or
adjacent lands in relation to CSP's use, operations or
occupation at the Property.
(xxxiv) To ensure that the buildings, boundary walls and landscaping
works fronting Woodlands Road are aesthetically designed to the
satisfaction of ST and JTC.
(xxxv) To observe the requirement of a 50-metre health and safety
buffer for the proposed wafer fabrication activity, which
buffer shall not extend beyond the boundary of the Property.
(xxxvi) Subject to Clause 3(xiii) hereinbefore appearing, to ensure
that the maximum height of any boundary wall or fence
(including the anti-climb) erected by CSP shall not exceed two
(2) metres PROVIDED THAT boundary walls or fences (if any)
shall be erected behind baphia or other hedges planted on the
Property.
(xxxvii) At CSP's own cost, at all times, to comply with and observe the
maximum height restriction of 55.0 metres above Mean Sea Level
and any other height restriction(s) on buildings and structures
at the said land as imposed by any governmental or statutory
authority and to ensure that any height restriction plan(s)
which may be furnished to CSP shall at all times be held in
strict confidence and shall not be shown, revealed or copied to
or by any person, contractor, sub-contractor, watchman,
employee, agent, representative or any other person except with
the prior written consent of ST and JTC.
(xxxviii) Not to keep or allow to be kept any livestock or other animals
at the Property or any part thereof.
(xxxix) To comply with the Land Transport Authority's Road
Interpretation Plan in respect of the road widening line.
(xl) The licence fees and other taxable sums payable by CSP under or
in connection with the sublicence herein shall be exclusive of
the goods and services tax
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<PAGE> 9
(hereinafter called "tax") chargeable by any government,
statutory or tax authority calculated by reference to the
amount of the licence fees and any other taxable sums received
or receivable by ST from CSP and which tax is payable by CSP.
CSP shall pay the tax and ST acting as the collecting agent for
the government, statutory or tax authority shall collect the
tax from CSP together with the licence fees hereinbefore
reserved without any deduction and in advance without demand on
the first day of each of the months of January, April, July and
October, and in the manner and within the period prescribed in
accordance with the applicable laws and regulations.
(xli) Without prejudice to the generality of Clauses 3(xiii) and
3(xiv) hereinbefore appearing, CSP shall not place, construct
or erect or permit the placing, construction or erection of any
building, structure or equipment whatsoever on the buffers
within the boundary of the Property as shown on the plan
annexed to the Building Agreement and shall comply with the
requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority and the
Building Control Division of the Ministry of National
Development.
(xlii) (a) CSP shall observe and be bound by the provisions in the
Building Agreement and the Head Lease and perform all the
covenants and conditions on the part of the lessee
contained in the Head Lease insofar as they relate to the
Development and/or the Property;
(b) CSP shall not do omit suffer or permit in relation to the
Development and/or the Property any act or thing which
would or might cause ST to be in breach of the Building
Agreement and the Head Lease or which if done omitted or
suffered or permitted by ST would or might constitute a
breach of the covenants on the part of the lessee and the
conditions contained in the Building Agreement and the
Head Lease;
(c) CSP shall keep ST indemnified against any actions,
proceedings, claims, damages, costs, expenses, losses or
liability incurred by ST arising from any breach,
non-observance, or non-performance by CSP of the aforesaid
provisions, covenants and conditions in the Building
Agreement and the Head Lease.
(xliii) To pay all costs disbursements fees and charges legal or
otherwise including stamp and registration fees in connection
with the preparation stamping and issue of this Agreement and
the sub-lease herein agreed to be granted and any prior
accompanying or future documents or deeds supplementary
collateral or in any way relating to this Agreement and the
sub-lease.
(xliv) To pay all costs and fees legal or otherwise, including ST's
costs as between solicitor and client, in connection with the
enforcement of the covenants and conditions of this Agreement
and the sub-lease as well as JTC's costs if any action or
omission of CSP under this Agreement causes JTC to take action
to enforce the covenants and conditions of the Building
Agreement and the lease to be granted pursuant thereto.
(xlv) To confine vehicular access to and from the Property as
indicated by the Land Transport Authority.
4. It is hereby mutually agreed that until CSP has performed all its
obligations herein contained ST and JTC shall possess the rights and
powers following:-
(a) The right for ST and JTC and their respective agents with or
without workmen or
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<PAGE> 10
others at all reasonable times to enter upon the Property to
view the state and progress of the said buildings and works and
the Development and to inspect and test the materials and
workmanship in connection therewith and for any other reasonable
purpose including the construction and installation of sewers
drains pipes and cables on or leading from any adjoining or
neighbouring land of JTC as may be required by ST or JTC.
(b) Full right and liberty in case any part of the Development
hereby agreed to be erected be not completed and fit for
immediate occupation within the period hereinbefore limited
(time in this respect shall be of the essence of the contract)
and in accordance in every way with the stipulations
hereinbefore contained or in case CSP shall in any other way
fail to perform and observe any of the stipulations on its part
herein contained or if any charging order writ of seizure and
sale or its equivalent made in respect of the Property or any
structure thereon shall be enforced without the written consent
of ST and JTC having first been obtained by CSP or by the person
in whose favour the charging order writ of seizure and sale or
its equivalent shall have been made, ST shall have the right to
re-enter upon and take possession of the Property and all
buildings structures fixtures plant material and effects
whatsoever thereon with power to hold and dispose thereof as if
this Agreement had not been entered into and without making to
CSP any compensation or allowance for the same and this
Agreement shall thereupon determine but without prejudice to any
right of action or other remedy of ST for the recovery of any
licence fee or monies due to it from CSP or in respect of any
breach of this Agreement PROVIDED ALWAYS THAT ST shall, in
addition, also be entitled to claim and to recover from CSP as a
debt, any sum which ST or JTC may incur in connection with the
demolition and removal of any building, structure, fitting,
fixture or thing which ST or JTC may consider necessary to
demolish and remove AND PROVIDED THAT if the Property has been
assigned by way of mortgage with the consent of ST and JTC the
provisions of this Clause shall not take effect until ST or JTC
has served upon the mortgagee notice in writing specifying the
breach and the mortgagee has failed to remedy such breach.
(c) PROVIDED nevertheless that notwithstanding any such default as
aforesaid in completing the said buildings and works ST may in
its discretion give notice in writing to CSP of its intention
not to enforce the stipulations herein contained and may fix any
extended period for the completion of the Development in
substitution for the said period of three (3) years less one (1)
day hereby fixed for such completion and thereupon the
obligations hereunder of CSP to complete the said works and to
accept a sub-lease hereinafter mentioned shall be taken to refer
to such substituted period.
(d) Without prejudice to the generality of Clause 4(b) hereof full
right and liberty of ST in the event that CSP has failed to
either:-
(1) develop the Property to the gross plot ratio specified
in Clause 3(viii), or
(2) fulfil the investment criterion as stipulated in Clause
6 hereof or in the First Sublease Agreement,
with full and absolute discretion to ST to either:-
(i) re-enter upon and take possession of the Property or any
part thereof and all buildings, structures, fixtures,
plant, material and effects whatsoever thereon with
power to hold and dispose thereof as if this Agreement
had not been entered into and without making to CSP any
compensation or allowance for the same and this
Agreement shall thereupon determine but without
prejudice to any right of action or other remedy of ST
or recovery of any licence fee or monies due to ST from
CSP or in respect of any breach of this Agreement, or
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<PAGE> 11
(ii) reduce the term of sub-lease in respect of the Property
to such a lesser term that JTC may grant to ST pursuant
to the terms of the Building Agreement (less one (1)
day) in which event CSP shall execute such documents as
ST shall deem necessary and in connection therewith, pay
all costs disbursements fees and charges legal or
otherwise as provided in Clause 3(xliii).
PROVIDED ALWAYS that if the Property has been assigned by way of
mortgage with the consent of ST and JTC, the provisions of this
sub-Clause (d) shall not take effect until ST or JTC had served
upon the mortgagee notice in writing specifying the breach and
the mortgagee has failed to remedy such breach.
5. CSP hereby agrees that if any failure on its part to observe or perform
any of its covenants contained in this Agreement results in the failure
of ST to comply with its obligations under the Building Agreement and
such failure entitles JTC to re-enter upon and take possession of the
Property and JTC exercises such right, then this Agreement shall
forthwith terminate without ST making to CSP any compensation or
allowance for the same and without prejudice to any right of action or
other remedy of ST for the recovery of any licence fee or monies due to
it from CSP or in respect of any breach of this Agreement.
6. If the Development shall have been completed to the satisfaction of ST
and JTC and the relevant Government Building Authorities (to be
evidenced by their certificates in writing to that effect) within the
Sub-Licence Period or of such extended period (if any) as aforesaid and
if CSP shall have performed and observed all the stipulations herein on
its part contained other than such as any have been waived as aforesaid
and if CSP's minimum investment shall have been the sum of $1,000.00 per
square metre of the gross floor area of the buildings on buildings and
civil works, and the sum of $500.00 per square metre on plant and
machinery, within the Sub-Licence Period (due proof thereof to be
produced by CSP to the satisfaction of ST and JTC on or before 31st
December 2000 and if JTC has granted to ST a lease of the Property and
premises together with the Development for the term of thirty (30) years
from the 1st day of July 1997, then ST shall grant and CSP shall accept
and execute a counter part of one good and sufficient sub-lease of the
Property and premises to CSP for the term of thirty (30) years from the
1st day of July 1997 less one (1) day at the rent and in the form
containing the reservation exceptions covenants conditions and
provisions set forth in the Second Schedule hereto with such
modifications as circumstances may render necessary and such other
covenants conditions or stipulations to be performed by CSP governing or
regulating the use of the Property as ST and JTC thinks fit with a view
to preserving, the value thereof or protecting the interests of the
licensees or occupiers of land or premises adjacent to the Property from
any dangerous or obnoxious or otherwise harmful activities which may be
carried out by CSP whether or not such activities are incidental to
CSP's trade PROVIDED THAT until such sub-lease is executed CSP shall be
deemed to be the sub-lessee of the Property as though a sub-lease has
been executed at the same rent and subject to the covenants and
conditions contained in the Second Schedule hereto so far as the same
are applicable.
7. CSP may, at any time during the Sub-Licence Period and any extensions
thereof granted under Clause 4(c) terminate this Agreement or surrender
part of the Property by giving to ST three (3) months' and one (1) day's
prior notice in writing, PROVIDED ALWAYS THAT such termination or
surrender shall be without prejudice to any right or remedy which may
have or will accrue to ST prior to the expiry of the three (3) months'
and one (1) day's notice AND PROVIDED FURTHER THAT CSP shall in addition
to the licence fee (which at the discretion of ST may be apportioned for
the period commencing from the Commencement Date up to the date of
delivery of vacant possession of the Property or part thereof to ST)
survey fees, property tax and other charges specified herein forthwith
pay to ST as liquidated damages a sum made up of firstly an amount
equivalent to three (3) months' licence fee, secondly and amount
equivalent to one (1) additional year's property tax and thirdly an
amount of $500/- being administrative costs or such other sum as may be
determined from time to time by ST and JTC, AND PROVIDED FURTHER THAT
before the delivery of
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<PAGE> 12
vacant possession as aforesaid if ST shall so desire CSP shall at the
cost and expense of CSP properly demolish and remove such building,
structure, fixture, fitting or thing as may be stipulated in writing by
ST or JTC as well as properly render the Property or part thereof as the
case may be to its original state and condition and licence fee and
property tax shall continue to be payable until the same has been
completed to the satisfaction of JTC and ST PROVIDED ALSO THAT CSP
shall, without prejudice to Clause 3(viii) and 3(xli), ensure that the
Property and any other remaining land occupied by ST within Woodlands
Industrial Park D comply with the setback requirements and other
planning requirements and do not exceed the average maximum gross plot
ratio of 1.4 after the termination or surrender.
8. ST hereby covenants that:-
(i) it has obtained the written consent of JTC to the sub-licence
and sub-lease herein;
(ii) ST shall pay the rent and all other monies and shall perform the
lessee's covenants and conditions contained in the Head Lease
(save for such covenants as shall be performed by CSP pursuant
to the provisions of Clause 3(xliii) hereof);
(iii) ST shall take all reasonable steps to obtain the consent of JTC
whenever CSP makes any request in connection with the Property
that requires the approval of JTC under this Agreement or the
Building Agreement;
(iv) Upon notice from CSP, ST will take all reasonable steps to
enforce promptly the obligations undertaken by JTC in the Head
Lease.
9. 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 post with recorded delivery or facsimile addressed to
the intended recipient thereof at its address set out below or at its
last known address or at its facsimile number set out below (or to such
other address or facsimile number as any party may from time to time
duly notify in writing to the other) and marked to the attention of the
person named below in respect of the intended recipient. Any such
notice, demand or communication shall be deemed to have been duly served
(if given or made by facsimile) immediately or (if given or made by
letter) 24 hours after posting and in proving the same it shall be
sufficient to show that the envelope containing the same was duly
addressed, stamped and posted. The initial addresses and facsimile
numbers of the parties for the purposes of this Agreement are:-
ST : SINGAPORE TECHNOLOGIES PTE LTD
51 Cuppage Road #09-01
Singapore 229469
Attention: Director,
Corporate Services
Facsimile No: 836-1198
CSP : CHARTERED SILICON PARTNERS PTE LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 360-3812
10. The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
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<PAGE> 13
11. (a) This Agreement shall be construed and governed by the laws of Singapore.
(b) Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or termination,
shall be referred to and finally resolved by arbitration in Singapore in
accordance with the Arbitration Rules of the Singapore International
Arbitration Centre ("SIAC Rules") for the time being in force which
rules are deemed to be incorporated by reference into this Clause. The
tribunal shall consist of one (1) arbitrator to be appointed by the
Chairman of Singapore International Arbitration Centre and the language
of the arbitration shall be English.
(c) Nothing shall affect the right to serve process in any manner permitted
by law.
THE FIRST SCHEDULE ABOVE REFERRED TO
All that piece of land known as Private Lot A12787(d) forming part of the
Government Survey Lot 230L and 1179P, Mukim No 13, Sembawang and
situated in the Republic of Singapore as shown on the plan annexed to
the Building Agreement and estimated to contain an area of 47,640 square
metres more or less subject to survey.
-12-
<PAGE> 14
THE SECOND SCHEDULE ABOVE REFERRED TO
------ -------- ---------
L 1 Ver 1
------ -------- ---------
THE LAND TITLES ACT
-------------------------
-------------------------
(For Official use only)
SUB-LEASE
(A) DESCRIPTION OF LAND
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
CT/SSCT/SCT Mukim Town Lot No. Property Address
Subdivision Whole or part (if part lot, to
state appd new lot/strata
lot)
- ---------------------
Volume Folio
- ----------------------------------------------------------------------------------------------
13 Whole
(Private Lot A12787(d)
(the "demised premises")
- ----------------------------------------------------------------------------------------------
</TABLE>
(B) LESSOR:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 199004768N
- ----------------------------------------------------------------------------------------------
NAME: SINGAPORE TECHNOLOGIES PTE LTD (the "Lessor")
- ----------------------------------------------------------------------------------------------
ADDRESS: 51 Cuppage Road #09-01
(within Singapore for
service of Notice) Singapore 229469
- ----------------------------------------------------------------------------------------------
</TABLE>
(the registered proprietor of a leasehold estate for the term of thirty (30)
years commencing from the 1st day of July 1997) HEREBY LEASES the registered
estate or interest of the Lessor in the land above described to:-
(C) LESSEE:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
ID/CO REGISTRATION NO. 199701972G
- ----------------------------------------------------------------------------------------------
NAME: CHARTERED SILICON PARTNERS PTE LTD (the "Lessee")
- ----------------------------------------------------------------------------------------------
PLACE OF INCORPORATION Singapore
- ----------------------------------------------------------------------------------------------
ADDRESS: 60 Woodlands Industrial Park D Street 2
(within Singapore for
service of Notice) Singapore 738406
- ----------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE> 15
FOR TERM OF LEASE
Term of Lease: Thirty (30) years less one (1) day
Commencement Date: 1st day of July 1997 (hereinafter referred to as "the
Commencement Date")
Consideration: The average fixed investment by the Lessee on
building and civil works exceeding $1,000/- per square
metre of the gross built-up area and on plant and
machinery exceeding $500/- per square metre (hereinafter
referred to as "the fixed investment criteria") and the
average gross plot ratio of not less than 0.6 and not
more than 1.4 for Private Lots A12787, A12787(a),
A12787(b) and A12787(d) together.
Annual Rent: As stipulated in Clause 1(a) of the Special Covenants
and Conditions hereinafter appearing.
Easement &
Reservation: TOGETHER WITH the benefit of the rights granted to the
Lessor and SUBJECT TO the rights reserved to Jurong Town
Corporation ("JTC") mentioned in the Lease dated the [ ]
day of [ ] made between JTC and the Lessor (the
"Head Lease" which expression shall include the
provisions of the Memorandum of Lease filed in the
Registry of Titles as No. ML I/30809F and the First
Variation of Memorandum of Lease VML I/076384J as well
as all variations thereof and supplementals thereto).
SUBJECT TO:-
(D) PRIOR ENCUMBRANCES (TO STATE 'NIL' IF THERE ARE NONE):
- --------------------------------------------------------------------------------
Nil
- --------------------------------------------------------------------------------
AND the following:-
(E) COVENANTS AND CONDITIONS
The Lessee hereby covenants to perform and observe the covenants,
conditions and powers implied by law in instruments of lease (or to such
of them as are not hereinafter expressly negative or modified);
(F) SPECIAL COVENANTS AND CONDITIONS
1. The Lessee hereby covenants as follows:-
(a) To pay from the 1st day of July 1997 the yearly rent of
Dollars One Million Nineteen Thousand and Nineteen and
Cents Sixty only ($1,019,019.60) to be paid by equal
quarterly instalments on the 1st day of each of the
months of January, April, July and October in every year
of the said term without any deduction and in advance
without demand at the office of the Lessor or at such
other office as the Lessor may designate calculated at
the rate of $21.39 per square metre per annum
(hereinafter referred to as "the Initial Rent") of the
demised premises having an area of 47,640 square metres
(hereinafter referred to as "the preliminary survey
area", which may at any time be adjusted on completion
of final survey if any, and in which event if the area
adjusted exceeds five square metres more, or less, than
the preliminary survey area the rental paid or payable
by the Lessee shall accordingly also be adjusted and be
paid and payable or refunded as the case may be in
respect of the full difference between the preliminary
-14-
<PAGE> 16
survey area and the final survey area, with
retrospective effect from the commencement of the said
term of the Sub-Lease herein), which the rate shall be
subject to revision on the 1st day of July 1998 at the
rate based on the market rent on the date of such
revision determined in the manner following but so that
the increase shall not exceed 7.6% of the Initial Rent.
The yearly rent so revised on the 1st day of July 1998
shall be subject to revision on the 1st day of July of
every year thereafter at the rate based on the market
rent on the respective dates determined in the manner
following but so that the increase shall not exceed 7.6%
of the annual rent for each immediately preceding year.
The market rent in this context shall mean the rent per
square metre per annum of the demised premises excluding
the buildings and other structures erected thereon and
shall be determined by the Lessor and JTC on or about
the dates mentioned (and payable retrospectively with
effect from the dates mentioned if determined after the
dates mentioned) and the decision of the Lessor and JTC
shall be final.
(b) (i) To observe and be bound by the provisions in the
Head Lease and perform all the covenants and
conditions on the part of the tenant contained
in the Head Lease insofar as they relate to the
Property;
(ii) Not to do omit suffer or permit in relation to
the Property any act or thing which would or
might cause the Lessor to be in breach of the
Head Lease or which if done omitted or suffered
or permitted by the Lessor would or might
constitute a breach of the covenants on the part
of the tenant and the conditions contained in
the Head Lease; and
(iii) To keep the Lessor indemnified against any
actions, proceedings, claims, damages, costs,
expenses, losses or liability incurred by the
Lessor arising from any breach, non-observance,
or non-performance by the Lessee of the
aforesaid covenants and conditions in the Head
Lease.
(c) To pay the rents hereinbefore reserved on the days and
in the manner set out above, without any deductions,
set-off or counterclaim.
(d) As often as any building or structure on the demised
premises or any part thereof shall be destroyed or
damaged as aforesaid forthwith to give to the Lessor
written notice of such destruction or damage and
forthwith to cause all monies received by virtue of such
insurance to be laid out in rebuilding and reinstating
the same to the satisfaction of the Lessor and JTC and
in accordance with the plans and specifications approved
by the Lessor and JTC and in accordance with the laws,
bye-laws regulations and planning schemes of every
relevant governmental and statutory authority prevailing
at the time, and in case the monies so received shall be
insufficient for that purpose then to make up the
deficiency out of its own monies PROVIDED THAT the
rebuilding and reinstatement shall in any event commence
and be completed within the period specified by the
Lessor and JTC PROVIDED FURTHER THAT notwithstanding the
covenant contained in this Clause, the Lessee may
exercise the option not to rebuild or reinstate the
buildings subject to the following conditions:
(i) the Lessee shall give to the Lessor three (3)
months' and one (1) day's notice in writing to
prematurely terminate the term of the Sub-Lease
herein created but without prejudice to and any
right or remedy which may have or will accrue to
the Lessor prior to the expiry of the three (3)
months' and one (1) day's notice under the terms
and conditions of the Sub-Lease herein; and
(ii) the Lessee shall forthwith pay or cause to be
paid to the Lessor or to JTC if so directed by
the Lessor, all monies received by virtue of
such insurance.
(e) The rent and other taxable sums payable by the Lessee
under or in connection with the lease herein shall be
exclusive of the goods and services tax (hereinafter
called "tax")
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<PAGE> 17
chargeable by any government, statutory or tax authority
calculated by reference to the amount of the rent and
any other taxable sums received or receivable by the
Lessor from the Lessee and which tax is payable by the
Lessee. The Lessee shall pay the tax and the Lessor
acting as the collecting agent for the government,
statutory or tax authority shall collect the tax from
the Lessee together with the rent hereinbefore reserved
without any deduction and in advance without demand on
the first day of each of the months of January, April,
July and October, and in the manner and within the
period prescribed in accordance with the applicable laws
and regulations.
(f) Not to demise assign mortgage charge create a trust or
agency let sublet or underlet or grant a licence or part
with or share the possession or occupation of the
demised premises in whole or in part without first
obtaining the consent of the Lessor in writing. The
restrictions contained in Section 17 of the Conveyancing
and Law of Property Act (Chapter 61) shall not apply. In
addition, the Lessor or JTC may in their absolute
discretion in giving the consent require, inter alia,
that the fixed investment criteria be met and due proof
thereof be shown within such period of time as the
Lessor or JTC may stipulate, and in the event of the
non-observance thereof, the Lessor shall, without
prejudice to any other right or remedy the Lessor may
have, be entitled to exercise its rights under Clause
4(c) herein.
(g) At the termination, by notice by the Lessee, or re-entry
by JTC under the Head Lease or re-entry by the Lessor or
by expiry or otherwise, of the term hereby created, to
yield up the demised premises to the Lessor in
tenantable repair in accordance with the Lessee's
covenants herein contained PROVIDED THAT, if so required
by the Lessor and upon notice thereof, the Lessee shall
at its own cost and expense properly demolish and remove
such buildings, structures, fixtures and fittings, or
any part thereof, as may be specified by the Lessor and
JTC and reinstate the demised premises to the
satisfaction of the Lessor and JTC and if the Lessee
shall fail to observe or perform this covenant the
Lessor or JTC may (but shall not be under any obligation
to do so) execute such works and recover the costs
thereof from the Lessee as a debt.
(h) Not to use or permit or suffer the demised premises or
any part thereof to be used otherwise than for wafer
fabrication only except with the prior consent in
writing of the Lessor and JTC. In granting its consent
to any change or extension of use, JTC and the Lessor
may in their absolute discretion require, inter alia,
the Lessee to meet the fixed investment criteria and to
show due proof within such period of time as the Lessor
or JTC may stipulate, and in the event of the
non-observance thereof, the Lessor shall be entitled to
exercise its rights under Clause 4(c) hereof. For the
avoidance of any doubt, the words "meet" in this Clause
and "met" in Clause 1(f) shall include the maintenance
of the fixed investment criteria and if it has not been
maintained then that it be met.
(i) Without prejudice to Clause 1(viii) of ML I/30809F, to
ensure that the gross plot ratio shall not be less than
0.6 but not exceeding the existing maximum gross plot
ration of 1.4 permitted for the demised premises except
with the prior written approval of the Lessor, JTC and
the relevant governmental and statutory authorities
PROVIDED ALWAYS THAT and without prejudice to Clause
1(viii) of ML I/30809F, the Lessee shall bear such
proportion (as may be mutually agreed upon between the
Lessor and the Lessee) of the development
charges/differential premium which may be imposed on or
charged to the Lessor and/or JTC by the relevant
governmental and statutory authorities, and any other
charges which may be imposed in connection with any
increase in the said average gross plot ratio beyond 1.4
(j) The Lessee accepts the demised premises in its existing
state and condition and further accepts and confirms
that neither JTC nor the Lessor has made representation
or given any assurance as to the present or future
suitability of the demised premises or its surrounding
or adjacent lands in relation to the Lessee's use,
operations or occupation at the demised premises.
-16-
<PAGE> 18
(k) Not to place, construct or erect or permit the placing,
construction or erection of any building, structure or
equipment whatsoever on the buffer within the boundary
of the demised premises and to comply with the
requirements of the relevant governmental and statutory
authorities including the Urban Redevelopment Authority
and the Building Control Division of the Ministry of
National Development.
(l) The Lessee shall not at any time hold the Lessor and/or
JTC liable for any claim, demand, action, proceeding,
inconvenience, loss, damages, costs or expenses of
whatsoever kind or description which the Lessee or any
other person may suffer in connection with or arising
from the Easement referred to in VML I/076384J or any
works carried out in relation thereto.
(m) At all times throughout the term of lease hereby created
to keep in full operation and continue operations at the
whole of the demised premises in accordance with the use
permitted in Clause 1(h) herein.
(n) If the Registrar of Titles issues in favour of the
Lessee a Certificate of Title for the leasehold estate
comprised in the Sub-Lease hereby created, the Lessee
must, within 2 weeks of receipt of the said Certificate
of Title submit a copy of it to the Lessor.
(o) If the term of Sub-Lease hereby created shall at any
time be determined by expiry or otherwise, the Lessee
must at his own cost and expense immediately surrender
or cause to be surrendered the said Certificate of Title
for the leasehold estate (and any duplicate instrument)
to the Registrar of Titles for custody and cancellation
by the Registrar and the Lessee shall simultaneously
give to the Lessor written notice of such surrender.
(p) To ensure that the buildings, boundary walls and
landscaping works fronting Woodlands Road are
aesthetically designed to the Lessor's and JTC's
satisfaction.
(q) To pay all legal fees (including the Lessor's
solicitors' charges on a solicitor and client basis)
stamp duty and all other disbursements and out of pocket
expenses incurred in the preparation and completion of
this Sub-Lease and in connection with any assignment
sub-letting surrender or other termination thereof
otherwise than by effluxion of time or with any claim or
legal proceedings which may be brought by the Lessor
against the Lessee in the event of a breach by the
Lessee in connection with this Sub-Lease.
(r) At the Lessee's own cost and at all times, to comply
with and observe the maximum height restriction of 55.0
metres above Mean Sea Level and any other height
restriction(s) on buildings and structures at the
demised premises as imposed by any governmental or
statutory authorities and to ensure that any height
restriction plan(s) which may be furnished to the Lessee
shall at all times be held in strict confidence and
shall not be shown, revealed or copied to or by any
person, contractor, sub-contractor, watchman, employee,
agent, representative or any other person except with
the prior written consent of the Lessor and JTC.
(s) Subject to Clause 1(vii) of ML I/30809F, to ensure that
the maximum height of any chain-link fence (including
the anti-climb) or boundary wall erected by the Lessee
at the demised premises shall not exceed two (2) metres
PROVIDED THAT the chain-link fence or boundary wall
shall be erected behind any hedge that may be planted at
the boundary of the demised premises.
(t) To comply with Land Transport Authority's Road
Interpretation Plan in respect of the road widening
line.
(u) To confine vehicular access to and from the demised
premises as indicated by the Land Transport Authority.
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<PAGE> 19
(v) To observe the requirements of a 50-metre health and safety buffer
for the wafer fabrication activity, which buffer shall not extend
beyond the boundary of the demised premises.
2. The Lessor hereby covenants as follows:-
(a) That the Lessee paying the rents hereby reserved and performing
and observing the several covenants herein contained and on the
Lessee's part to be performed and observed shall peaceably hold
and enjoy the demised premises without any interruption from the
Lessor or any person rightfully claiming under or in trust for it;
(b) The Lessor shall pay the rent and all other monies and shall
perform the lessee's covenants and conditions contained in the
Head Lease (save for such covenants as shall be performed by the
Lessee pursuant to the provisions of Clause 1(b) hereof);
(c) The Lessor shall take all reasonable steps to obtain the consent
of JTC whenever the Lessee makes any request in connection with
the demised premises that requires the approval of JTC under this
Sub-Lease or the Head Lease;
(d) Upon notice from the Lessee, the Lessor will take all reasonable
steps to enforce promptly the obligations undertaken by JTC in the
Head Lease.
3(1). The Lessor hereby further covenants with the Lessee that the Lessor shall
grant to the Lessee a lease of the demised premises for a further term of
thirty (30) years less one (1) day (hereinafter referred to as "the
further term") commencing from the second day following the date of
expiry of the term hereby created PROVIDED THAT:-
(i) at the time due proof of such investment is produced and at the
expiry of the term hereby created, there by no existing breach or
non-observance of any of the covenants and conditions herein
contained on the part of the Lessee to be observed or performed;
(ii) if required by the Lessor, the Lessee shall within four (4) months
from the commencement of the further term and at its own cost and
expense, carry out and complete such improvements to the
landscaping at the demised premises as may be stipulated in
writing by the Lessor or JTC;
(iii) the Lessee shall six (6) months before the expiry of the said term
submit, for the approval of the Lessor, JTC and the relevant
governmental and statutory authorities, plans for the upgrading of
the exterior of buildings on the demised premises to the same
highest quality of new buildings which JTC will be building at
that time, and the Lessee shall expeditiously do all acts and
things necessary to obtain the approval, all at the cost and
expense of the Lessee;
(iv) the Lessee shall at its own cost and expense complete, within
eighteen (18) months from the commencement of the further term,
the upgrading of the buildings in accordance with the plans
approved by the Lessor and JTC and the relevant governmental and
statutory authorities and to the satisfaction of the Lessor and
JTC;
(v) the Head Lease shall have been renewed by JTC in accordance with
the terms and conditions contained therein;
(vi) the other terms and conditions that shall apply to the renewed
Sub-Lease shall be substantially similar to the terms and
conditions that shall apply to the renewed Head Lease save that
the present covenant for renewal shall not apply;
(v) there shall be a minimum investment by the Lessee of $1,000/- per
square metre of the
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<PAGE> 20
gross building floor area on buildings and civil works and
$500/- per square metre of the demised premises on plant and
machinery, (in this Lease also referred to as the "fixed
investment criteria") within three (3) years from the 1st day of
July 1997 and due proof of such investment is produced to the
satisfaction of the Lessor and JTC on or before the 31st day of
December 2000; and
(vi) the rental payable for the further term shall be as set out
hereunder:
(a) the yearly rent for the further term shall be at the rate
based on the market rent at the commencement of the further
term (hereinafter referred to as "the Second Initial Rent");
(b) the second Initial Rent shall be revised on the 1st day of
July 2028 and on the 1st day of July of every year
thereafter at the rate based on the market rent on the
respective dates determined in the manner following but so
that the increase shall not exceed 7.6% of the annual rent
for each immediately preceding year;
(c) the yearly rent for the further term shall be payable by
equal quarterly instalments without any deductions and in
advance without demand on the 1st day of each of the months
of January, April, July and October in every year of the
further term at the office of the Lessor or at such other
office as the Lessor may designate the 1st of such payments
to be made on or before the commencement of the further
term; and
(d) for the purposes of (a) and (b) above, the market rent shall
mean the rent per square metre per annum of the demised
premises excluding the buildings and other structures
erected thereon and shall be determined by the Lessor and
JTC on or about the dates mentioned (and payable
retrospectively with effect from the dates mentioned if
determined after the dates mentioned) and the decision of
the Lessor and JTC shall be final.
(2) If the further term is granted in accordance with Clause 3(1) above, the
Lessee shall be permitted to remain on the premises on the day following
the expiry of the term created by this Sub-Lease as a licensee, free of
payment.
4. PROVIDED ALWAYS and it is hereby agreed between the parties as follows:-
(a) No estate or interest in the soil of the road and footpath
adjacent to the demised premises is or shall be deemed to be
included in the demise hereinbefore contained.
(b) The Lessee shall not be entitled to any right of access of light
or air to the demised premises or any part thereof, which would
restrict or interfere with the user of any adjoining or
neighbouring land for building or any other purpose.
(c) If the said rent hereby reserved or any other sums due under this
Sub-Lease or any part thereof shall be unpaid for fourteen days
after becoming payable (whether the same shall have been formally
demanded or not) or if any of the covenants or obligations on the
part of the Lessee herein contained shall not be performed or
observed or if any charging order writ of seizure and sale or its
equivalent made in respect of the demised premises shall be
enforced by sale or by entry into possession without the written
consent of the Lessor having first been obtained (Section 17 of
the Conveyancing and Law of Property Act shall also not apply in
such event) by the Lessee or by the person in whose favour the
charging order writ of seizure and sale or its equivalent shall
have been made, then and in any such case it shall be lawful for
the Lessor or any person or persons authorised by it in that
behalf at any part thereafter to re-enter upon the demised
premises or any part thereof in the name of the whole and
thereupon the term hereby created shall absolutely determine but
without prejudice to any right of action or remedy of the Lessor
in respect
-19-
<PAGE> 21
of any breach of any of the covenants or conditions by the Lessee
herein contained PROVIDED THAT if the demised premises have been
assigned by way of mortgage the provisions of this Clause shall
not take effect until the Lessor has served upon the mortgagee a
notice in writing that such breach has occurred and the mortgagee
has failed to remedy such breach.
(d) If any failure on the Lessee's part to observe or perform any of
its covenants contained in this Sub-Lease results in the Lessor
failing to comply with its obligations under the Head Lease and
such failure entitles JTC to re-enter upon and take possession of
the demised premises and JTC exercises such right, then this
Sub-Lease shall forthwith terminate without the Lessor making to
the Lessee any compensation or allowance for the same and without
prejudice to any right of action or other remedy of the Lessor for
the recovery of any rents or other monies due to it from the
Lessee or in respect of any breach of this Sub-Lease.
(e) The Lessee may at any time prematurely terminate the term of lease
herein created by giving to the Lessor three (3) months' and one
(1) day's prior notice in writing, but without prejudice to any
right or remedy which may have or will accrue to the Lessor prior
to the expiry of the three (1) months' and one (1) day's notice
under the terms and conditions of the sub-lease herein created or
in respect of the termination.
5. (a) 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 post with recorded
delivery or facsimile addressed to the intended recipient thereof
at its address set out below or at its last known address or at
its facsimile number set out below (or to such other address or
facsimile number as any party may from time to time duly notify in
writing to the other) and marked to the attention of the person
named below in respect of the intended recipient. Any such notice,
demand or communication shall be deemed to have been duly served
(if given or made by facsimile) immediately or (if given or made
by letter) 24 hours after posting and in proving the same it shall
be sufficient to show that the envelope containing the same was
duly addressed, stamped and posted. The initial addresses and
facsimile numbers of the parties for the purposes of this
Sub-Lease are:-
Lessor: SINGAPORE TECHNOLOGIES PTE LTD
51 Cuppage Road #09-01
Singapore 229 469
Attention: Director,
Corporate Services
Facsimile No: 836 1198
Lessee: CHARTERED SILICON PARTNERS PTE LTD
60 Woodlands Industrial Park D Street 2
Singapore 738406
Attention: Vice President,
Facility Systems
Facsimile No: 360 3812
6. The illegality, invalidity or unenforceability of any provision of this
Sub-Lease under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7. (a) This Sub-Lease shall be construed and governed by the laws of Singapore.
(b) Any dispute arising out of or in connection with this Sub-Lease,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration in
Singapore in accordance with the Arbitration Rules of the Singapore
-20-
<PAGE> 22
International Arbitration Centre ("SIAC Rules") for the time being in
force which rules are deemed to be incorporated by reference into this
Clause. The tribunal shall consist of one (1) arbitrator to be appointed
by the Chairman of Singapore International Arbitration Centre and the
language of the arbitration shall be English.
(c) Nothing shall affect the right to serve process in any manner permitted
by law.
8. In this Sub-Lease where the context so requires or permits, words
importing the singular number or the masculine gender include the plural
number or the feminine gender and words importing persons include
corporation and vice versa, the expression "the Lessor" shall include
its successors-in-title and permitted assigns (if any), where there are
two or more persons included in the expression "the Lessee" covenants
expressed to be made by "the Lessee" shall be deemed to be made by such
persons jointly and severally, and except where otherwise provided the
expression "the demised premises" shall mean the land hereby demised and
all buildings, structures, fixtures and fittings therein.
(G) DATE OF LEASE:
---------------------------
(H) EXECUTION BY LESSOR
The Common Seal of SINGAPORE )
TECHNOLOGIES PTE LTD was hereunto )
affixed in the presence of:- )
Director
Director/Secretary
-21-
<PAGE> 23
(I) EXECUTION BY LESSEE
The Common Seal of CHARTERED )
SILICON PARTNERS PTE )
LTD was hereunto affixed in the presence of:- )
Director
Director/Secretary
(J) CERTIFICATE PURSUANT TO THE RESIDENTIAL PROPERTY ACT AND THE LAND TITLES
RULES AND PRACTICE CIRCULARS:
I, the solicitor for the Lessee hereby certify that the place of
Incorporation and registration number allocated by the Registry of
Companies to the Lessee as abovementioned specified in the within
instrument have been verified from the Certificate of Incorporation
produced and shown to me, and are found to be correct.
Dated this day of 19
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
I, the Solicitor for the Lessee hereby certify that the within land is a
non-residential property as declared in the Residential Property Notification
1988. The land is zoned as and the approved specific use of the
property is for use.
Dated this day of 199
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
FOR THE LESSEE
-22-
<PAGE> 24
(K) SIMILAR INTEREST CONFIRMATION (IF ANY)
I, the solicitor for the Lessee hereby confirms
that the interest of the Lessee is similar to that in Caveat CV/
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
- --------------------------------------------------------------------------------
(L) CERTIFICATE OF CORRECTNESS:
I, the Solicitor for the Lessor hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSOR
I, the Solicitor for the Lessee hereby certify that this instrument is
correct for the purposes of the Land Titles Act.
--------------------------------------------
NAME & SIGNATURE OF SOLICITOR FOR THE LESSEE
-23-
<PAGE> 25
We, JURONG TOWN CORPORATION, hereby consent to the within Sub-Lease.
The Common Seal of JURONG TOWN )
CORPORATION was hereunto affixed )
in the presence of:- )
-------------------------------------
General Manager
-------------------------------------
Secretary
-24-
<PAGE> 26
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------
EXAMINED REGISTERED ON
Initials of
Date Signing Officer: Registrar of Titles
- --------------------------------------------------------------------------------
-25-
<PAGE> 27
IN WITNESS WHEREOF the parties hereto have hereunto SET their respective
hands or seals the day and year first above written.
SIGNED on behalf of SINGAPORE )
TECHNOLOGIES PTE LTD )
by Ho Ching, President & CEO ) /s/ HO CHING
in the presence of:- ) ------------------------
Ho Ching (Ms)
President & CEO
/s/ CHUA SU LI
------------------------
Chua Su Li
Company Secretary
SIGNED on behalf of CHARTERED )
SILICON PARTNERS PTE LTD )
by Barry Waite, Director ) /s/ BARRY WAITE
in the presence of:- ) ------------------------
Barry Waite
Director
/s/ KELVIN KWEK
------------------------
Kelvin Kwek
Legal Officer
-26-
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF CHARTERED SEMICONDUCTOR MANUFACTURING LTD
1. Chartered Semiconductor Manufacturing Inc.
Jurisdiction of Incorporation: Delaware, United States
2. Chartered Silicon Partners Pte Ltd
Jurisdiction of Incorporation: Singapore
<PAGE> 1
EXHIBIT 23.3
The Board of Directors and Shareholders
Chartered Semiconductor Manufacturing Ltd:
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG
KPMG
Singapore
October 4, 1999
