CHARTERED SEMICONDUCTOR MANUFACTURING LTD
F-1/A, 1999-10-25
SEMICONDUCTORS & RELATED DEVICES
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<PAGE>   1


    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1999

                                                      Registration No. 333-88397
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------


                                AMENDMENT NO. 2

                                       TO
                        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)

<TABLE>
<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. [ ]

    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 25, 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 7 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>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
PROSPECTUS SUMMARY..........................................    1
RISK FACTORS................................................    7
USE OF PROCEEDS.............................................   20
DIVIDEND POLICY.............................................   21
CAPITALIZATION..............................................   22
EXCHANGE RATES..............................................   23
DILUTION....................................................   24
SELECTED FINANCIAL DATA.....................................   25
UNAUDITED PRO FORMA FINANCIAL INFORMATION...................   27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS.................................   29
BUSINESS....................................................   44
MANAGEMENT..................................................   57
PRINCIPAL SHAREHOLDERS......................................   65
RELATIONSHIP WITH SINGAPORE TECHNOLOGIES....................   66
DESCRIPTION OF ORDINARY SHARES..............................   69
DESCRIPTION OF AMERICAN DEPOSITARY SHARES...................   73
TAXATION....................................................   80
SHARES ELIGIBLE FOR FUTURE SALE.............................   84
UNDERWRITING................................................   86
LEGAL MATTERS...............................................   89
EXPERTS.....................................................   89
WHERE YOU CAN FIND MORE INFORMATION.........................   89
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.

     IT IS EXPECTED THAT DELIVERY OF THE ORDINARY SHARES, DIRECTLY OR IN THE
FORM OF ADSs, WILL BE MADE AGAINST PAYMENT THEREFOR ON OR ABOUT THE DATE
SPECIFIED IN THE LAST PARAGRAPH OF THE COVER PAGE OF THIS PROSPECTUS, WHICH IS
THE FIFTH BUSINESS DAY FOLLOWING THE DATE HEREOF (SUCH SETTLEMENT CYCLE BEING
HEREIN REFERRED TO AS "T+5"). PURCHASERS OF ORDINARY SHARES, DIRECTLY OR IN THE
FORM OF ADSs, SHOULD NOTE THAT TRADING OF THE ORDINARY SHARES, DIRECTLY OR IN
THE FORM OF ADSs, ON THE DATE HEREOF AND THE NEXT SUCCEEDING BUSINESS DAY MAY BE
AFFECTED BY THE T+5 SETTLEMENT.

                                        i
<PAGE>   5

                      (This Page Intentionally Left Blank)
<PAGE>   6

                               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.

                                        1
<PAGE>   7

     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.

                              RECENT DEVELOPMENTS

     The Company's net revenue for the three months ended September 30, 1999 was
$183.3 million, a 118.4% increase over the $83.9 million net revenue reported in
the corresponding period of 1998 and a 11.8% increase over the $163.9 million
recorded in the June 30, 1999 quarter. Gross profit was $48.4 million, or 26.4%
of net revenue, in the third quarter versus a gross loss of $19.3 million
reported in the corresponding period of 1998 and a gross profit of $34.8 million
in the June 30, 1999 quarter. Operating income totaled $7.1 million, or 3.9% of
net revenue, in the September 30, 1999 quarter against an operating loss of
$48.5 million in the corresponding period of 1998 and an operating loss of $0.6
million in the June 30, 1999 quarter. Operating income or loss included a charge
for stock-based compensation, which for the three months ended September 30,
1999 totaled $8.8 million, compared with a credit of $0.7 million in the
corresponding period of 1998 and $1.6 million charged in the June 30, 1999
quarter. Equity in loss of SMP and CSP for the three months ended September 30,
1999 totaled $10.2 million, compared with $7.4 million in the corresponding
period of 1998 and $9.5 million in the June 30, 1999 quarter. Net loss for the
three month period ended September 30, 1999 was $6.2 million, or -3.4% of net
revenue, versus a net loss of $52.7 million reported in the corresponding period
of 1998 and a net loss of $13.8 million recorded in the June 30, 1999 quarter.

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED (UNAUDITED)
                                          ------------------------------------------
                                          SEPTEMBER 30,    JUNE 30,    SEPTEMBER 30,
                                              1998           1999          1999
                                          -------------    --------    -------------
                                                        (IN MILLIONS)
<S>                                       <C>              <C>         <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.............................     $ 83.9         $163.9        $183.3
Gross profit (loss).....................      (19.3)          34.8          48.4
Charge for stock-based compensation.....       (0.7)           1.6           8.8
Operating income (loss).................      (48.5)          (0.6)          7.1
Equity in loss of SMP and CSP...........        7.4            9.5          10.2
Net loss................................      (52.7)         (13.8)         (6.2)
</TABLE>

<TABLE>
<CAPTION>
                                                                    AS OF
                                                              SEPTEMBER 30, 1999
                                                              ------------------
                                                                 (UNAUDITED)
                                                                (IN MILLIONS)
<S>                                                           <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................       $  17.1
Short-term borrowings and current portion of long-term
  debt......................................................          86.1
Current installments of obligations under capital leases....           5.2
Obligations under capital leases, excluding current
  installments..............................................          10.7
Other long-term debt........................................         320.6
Shareholders' equity........................................         561.1
</TABLE>

                                        2
<PAGE>   8

                              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. In connection with the global offering,
                                 we restructured our capital effective October
                                 14, 1999. 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 1,238,847,853 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, to directors, officers and
                                 employees of our affiliates and to certain
                                 charitable organizations in Singapore.


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...............   1,238,847,853 ordinary shares (including
                                 ordinary shares represented by ADSs) will be
                                 outstanding after the global offering. If the
                                 underwriters exercise their overallotment
                                 option

                                        3
<PAGE>   9

                                 in full, 1,276,347,853 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.

                                        4
<PAGE>   10

                        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>

                                        5
<PAGE>   11

<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.

                                        6
<PAGE>   12

                                  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.

                                        7
<PAGE>   13

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.

                                        8
<PAGE>   14

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,

                                        9
<PAGE>   15

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

                                       10
<PAGE>   16

seriously harm our company. Please see "Business -- Chartered Silicon Partners"
and "-- Silicon Manufacturing Partners" for a more detailed description of these
alliances and for certain recent developments regarding Hewlett-Packard.

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;

                                       11
<PAGE>   17

     - pay substantial monetary damages;

     - 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.

                                       12
<PAGE>   18

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.

                                       13
<PAGE>   19

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 72.5% of our
outstanding ordinary shares following completion of the global offering, or
70.3% 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

                                       14
<PAGE>   20

"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

                                       15
<PAGE>   21

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.

                                       16
<PAGE>   22

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.

                                       17
<PAGE>   23

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 1,238,847,853 ordinary shares issued and outstanding (including ordinary
shares represented by ADSs). ST and its affiliates will own, directly and
indirectly, 897,632,876 ordinary shares constituting approximately 72.5% 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
988,847,853 ordinary shares may be sold in the United States only pursuant to a
registration statement under the Securities Act or an exemption from the
registration requirements of the


                                       18
<PAGE>   24

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.

                                       19
<PAGE>   25

                                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.

                                       20
<PAGE>   26

                                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.

                                       21
<PAGE>   27

                                 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 restructured our capital
effective October 14, 1999. We currently have one class of ordinary shares with
a par value of S$0.26.

     In our capital restructuring, we:

     - issued one additional fully paid "A" ordinary share for every 20 partly
       paid "A" ordinary shares and cancelled the partly paid shares;

     - cancelled all unissued "A" ordinary shares and "B" ordinary shares;

     - cancelled the special rights attached to the "B" ordinary shares;

     - redesignated the "A" ordinary shares and "B" ordinary shares as one class
       of ordinary shares;

     - effected a share split such that each ordinary share with a par value of
       S$0.4888 was sub-divided into 1.88 ordinary shares with a par value of
       S$0.26;

     - adopted new Articles of Association; and

     - will issue new ordinary shares in connection with the global offering
       which will rank equal in all respects with our existing ordinary shares.

                                       22
<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.

                                       23
<PAGE>   29

                                    DILUTION

     The net tangible book value of our company as of June 30, 1999 was $552.4
million or S$0.93 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 S$2.88 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 S$1.29
per ordinary share (the equivalent of $7.63 per ADS). This represents an
immediate increase in net tangible book value of S$0.36 per ordinary share (the
equivalent of $2.11 per ADS) to our existing shareholders and an immediate
dilution in net tangible book value of S$1.59 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...................................................            S$2.88             $17.00
Net tangible book value per ordinary share and per ADS as of
  June 30, 1999.............................................  S$0.93               $5.52
Increase in net tangible book value per ordinary share and
  per ADS attributable to new
  public investors..........................................    0.36                2.11
                                                              ------               -----
Net tangible book value per ordinary share and per ADS after
  the global offering.......................................              1.29               7.63
                                                                        ------             ------
Dilution in net tangible book value per ordinary share and
  per ADS to new public investors...........................            S$1.59             $ 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.

                                       24
<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>

                                       25
<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.

                                       26
<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 revenue........................  $ 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>

                                       27
<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>

                                       28
<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 90.8% owned by ST and its affiliates (72.5% 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
                                       29
<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 terminated these plans effective September 30, 1999 and
replaced all unpaid portions of partly paid shares under these plans with share
options under our 1999 plan. These options have the same exercise price and
vesting schedule as the replaced partly paid shares.

     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.

                                       30
<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,

                                       31
<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

                                       32
<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

                                       33
<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.

                                       34
<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

                                       35
<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>

                                       36
<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

                                       37
<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.
                                       38
<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

                                       39
<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

                                       40
<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.

                                       41
<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

                                       42
<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>

                                       43
<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.

                                       44
<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.

                                       45
<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.

                                       46
<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

                                       47
<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.

                                       48
<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,

                                       49
<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.


     Hewlett-Packard has publicly announced that it is in the process of
spinning-off certain of its businesses into a new company, called Agilent
Technologies, Inc. Agilent Technologies is expected to assume the following
Hewlett-Packard businesses -- test and measurement, semiconductor products,
healthcare solutions and chemical analysis. Hewlett-Packard has informed us that
it expects to assign its rights and obligations under the agreements it has
entered into with us, including the agreements of its subsidiaries (including HP
Europe), to Agilent Technologies. Hewlett-Packard expects this assignment to
occur in November 1999. We intend to consent to the assignment.


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.

                                       50
<PAGE>   56

     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
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

                                       51
<PAGE>   57

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.

     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.

                                       52
<PAGE>   58

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.

     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
                                       53
<PAGE>   59

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.

     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
                                       54
<PAGE>   60

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 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.

                                       55
<PAGE>   61

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.

     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.

                                       56
<PAGE>   62

                                   MANAGEMENT

     The following table sets forth, as of October 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).....................  74    Director
Robert Edmund La Blanc(2).................  65    Director
Andre Borrel(1)(3)........................  63    Director
Charles E. Thompson(1)....................  70    Director
Koh Beng Seng(2)..........................  49    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...............................  42    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

                                       57
<PAGE>   63

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

                                       58
<PAGE>   64

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
                                       59
<PAGE>   65

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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<PAGE>   66

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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<PAGE>   67

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.

                                       62
<PAGE>   68

ISSUANCES OF SHARE OPTIONS


     As of October 15, 1999, options to purchase 17,273,481 ordinary shares were
issued and outstanding, of which 5,324,348 were held by our officers and
directors. The outstanding options were granted under our 1999 Share Option
Plan. The exercise prices of these options range from S$0.9309 to S$1.3830. The
expiration dates of the options range from April 2004 to April 2009.
Contemporaneously with the effectiveness of the registration statement of which
this prospectus is a part, we plan to grant 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 3,110,000 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).


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 provided for the grant
of options to subscribe for ordinary shares. The objectives of the 1995 scheme
were 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.

     In connection with the global offering, we terminated the 1995 scheme
effective September 30, 1999 and replaced all unpaid portions of partly paid
shares with share options under our 1999 Share Option Plan. These options have
the same exercise price and vesting schedule as the replaced options.

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, were
substantially similar to those with respect to the 1995 scheme.

     In connection with the global offering, we also terminated the 1997 scheme
effective September 30, 1999 and replaced all unpaid portions of partly paid
shares with share options under our 1999 Share Option Plan. These options 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;

     - employees, outside directors and consultants of our affiliates who are
       residents or citizens of the United States are not eligible for the grant
       of options; and

     - employees of SMP who are residents or citizens of the United States are
       not eligible for the grant of options.

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<PAGE>   69

     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 any 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. 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.


     We intend to amend the plan in connection with the global offering to
enable the plan and, at the ERCC's discretion, awards granted thereunder, to
comply with Section 162(m) of the United States Internal Revenue Code.


                                       64
<PAGE>   70

                             PRINCIPAL SHAREHOLDERS

     The following table sets forth certain information with respect to the
beneficial ownership of our ordinary shares as of October 15, 1999, based on an
aggregate of 988,847,853 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)................  499,116,152    50.5     499,116,152    40.3
Singapore Technologies Semiconductors
  Pte Ltd(3).....................................  398,516,724    40.3     398,516,724    32.2
Ho Ching.........................................           --       *              --       *
Lim Ming Seong...................................           --       *              --       *
Barry Waite......................................    1,692,000       *       1,692,000       *
Sum Soon Lim.....................................       65,847       *          65,847       *
James H. Van Tassel..............................       89,849       *          89,849       *
Aubrey C. Tobey..................................       19,928       *          19,928       *
Robert E. La Blanc...............................       16,168       *          16,168       *
Andre Borrel.....................................       16,168       *          16,168       *
Charles E. Thompson..............................       16,168       *          16,168       *
Koh Beng Seng....................................        7,520       *           7,520       *
Tsugio Makimoto..................................           --       *              --       *
All directors and executive officers as a group
  (20 persons)...................................    3,358,747       *         358,747       *
</TABLE>

- ---------------
 *  Less than 1% of total.

(1) Gives effect to the ordinary shares issuable within 60 days of October 15,
    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.

                                       65
<PAGE>   71

                    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 50.5% and 40.3% 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 72.5% of our
outstanding ordinary shares upon completion of the global offering, or 70.3% 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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<PAGE>   74

                         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 gives effect to the capital
restructuring which occurred effective October 14, 1999.

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 15, 1999, 988,847,853 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 decline to register any instrument of
transfer unless, among other things, it has been duly stamped and is
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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, Tampines 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, except
       as provided in the deposit agreement, "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 false 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
                                       76
<PAGE>   82

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

                                       77
<PAGE>   83

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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<PAGE>   84

     - 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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<PAGE>   85

                                    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>   86

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>   87

     - 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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<PAGE>   88

     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>   89

                        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
1,238,847,853 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 988,847,853 ordinary shares may be
sold in the United States 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 outstanding after 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 12,388,478 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. Ordinary shares (including ordinary shares represented by ADSs) issued
pursuant to Regulation S and held by non-affiliates may immediately be resold in
the United States. ST and ST Semiconductors may be deemed affiliates of our
company. Therefore, sales by them in the United States of the 897,632,876
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 at least 979,231,742 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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<PAGE>   90


underwriters' overallotment option or issuing shares pursuant to our 1999 Share
Option Plan. We intend to file a registration statement on Form S-8 under the
Securities Act on the date that the registration statement of which this
prospectus is a part becomes effective 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
effectiveness of the registration statement of which this prospectus is a part,
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 3,110,000
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."


                                       85
<PAGE>   91

                                  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>


ST, our controlling shareholder, indirectly owns 40% of Vickers Ballas & Company
Pte Ltd.


     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.

                                       86
<PAGE>   92

     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 underwriters expect that
delivery of the ordinary shares, directly or in the form of ADSs, will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of the final prospectus, which is the fifth business day
following the date of the final prospectus, or T+5. Trading of the ordinary
shares, directly or in the form of ADSs, on the date of the final prospectus and
the next succeeding business day may be affected by the T+5 settlement. 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, to directors, officers and employees of our
affiliates, and to certain charitable organizations in Singapore.


     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,

                                       87
<PAGE>   93

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 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.

                                       88
<PAGE>   94

     We estimate that the total expenses of the global 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.

     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

                                       89
<PAGE>   95

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.

                                       90
<PAGE>   96

                   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>   97

                          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.

/s/ KPMG
Singapore

August 12, 1999,
  except as to Note 26,
  which is as of October 14, 1999

                                       F-2
<PAGE>   98

            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>   99

            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>   100

            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 1999
                                  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>   101

            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>   102

<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>   103

            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>   104
            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>   105
            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>   106
            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>   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)

(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>   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)

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>   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)

     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>   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)

     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>   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)

     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 discontinuation of this development program,
certain equipment previously purchased and yet to be placed

                                      F-16
<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)

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>   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)

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>   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)

     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>   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)

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>   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)

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>   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)

     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>   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)

     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>   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)

     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>   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)

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>   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)

     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>   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)

(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>   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)

     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>   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)

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   $    --   $    --   $    --
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>   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)

     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>   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)

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>   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)

<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>   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)

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 and was effective 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 and the
       redesignation of all issued 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; and

     - adoption of 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>   129

                                                                         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>   130

     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>   131

                                                                         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

                                       B-1
<PAGE>   132

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>   133

     [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>   134

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                          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>   135

                                    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
Nasdaq listing fee..........................................     100,000
Legal fees and expenses.....................................   1,000,000
Accounting fees and expenses................................     380,000
Printing and engraving......................................     250,000
Blue sky fees and expenses (including legal fees)...........      25,000
Transfer agent fees.........................................      25,000
Miscellaneous...............................................      75,635
                                                              ----------
          Total.............................................  $2,030,000
                                                              ==========
</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>   136


     We intend to obtain directors and officers insurance providing
indemnification for certain of our directors, officers, affiliates and 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 effected on October 14, 1999 (except for the October 15,
1999 issuances and grants).



<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)
Former 1995 and 1997 Benefit Plan
  Participants................................  October 15, 1999        413,325         916,976(4)
</TABLE>


                                      II-2
<PAGE>   137


<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)
Former 1995 and 1997 Benefit Plan
  Participants............................  October 15, 1999      11,199,457(5)       13,173,566(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      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) (incorporated by
          reference to Exhibit 4 of the Form F-6 Registration
          Statement filed by Citibank, N.A. on October 8, 1999
          (Registration No. 333-88623))
  *4.2    Specimen certificate for ordinary shares
  *5      Opinion of Allen & Gledhill regarding the validity of the
          ordinary shares offered hereby
  *8.1    Opinion of Latham & Watkins regarding certain U.S. tax
          matters
  *8.2    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 Agreement 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
</TABLE>


                                      II-3
<PAGE>   138


<TABLE>
<CAPTION>
NUMBER                            DESCRIPTION
- ------                            -----------
<C>       <S>
*+10.7    Amendment Agreement No. 2 to Assured Supply and Demand
          Agreement dated June 17, 1999 by and among the Registrant,
          Chartered Silicon Partners Pte Ltd and Hewlett Packard
          Company
*+10.8    Joint Venture Agreement dated December 19, 1997 by and
          between the Registrant and Lucent Technologies
          Microelectronics Pte Ltd
*+10.9    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
*+10.10   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
*+10.11   License and Technology Transfer Agreement dated July 4, 1997
          by and among the Registrant, Chartered Silicon Partners Pte
          Ltd and Hewlett-Packard Company
*+10.12   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
*+10.13   Technology Transfer Agreement dated February 17, 1998 by and
          between the Registrant and Lucent Technologies Inc.
*+10.14   Technology Transfer and License Agreement dated May 20, 1999
          by and among the Registrant, Chartered Silicon Partners Pte
          Ltd and Motorola, Inc.
*+10.15   Patent License Agreement dated January 1, 1998 by and
          between the Registrant and Lucent Technologies Inc.
*+10.16   Patent License Agreement dated January 1, 1995 by and
          between the Registrant and International Business Machines
          Corporation
*+10.17   Patent Cross License Agreement dated August 12, 1999 by and
          between the Registrant and Toshiba Corporation
*+10.18   Joint Development Agreement for Process Technologies dated
          February 18, 1999 by and between the Registrant and Lucent
          Technologies Inc.
 *10.19   ST Group Management and Support Services Agreement dated
          March 3, 1997 by and between the Registrant and Singapore
          Technologies Pte Ltd
++10.20   Loan Agreement dated August 1, 1995 by and between the
          Registrant and the Economic Development Board of Singapore
++10.21   Loan Agreement dated April 14, 1997 by and between the
          Registrant and the Economic Development Board of Singapore,
          as supplemented on May 29, 1997
++10.22   Loan Agreement dated July 21, 1997 by and between the
          Registrant and the Economic Development Board of Singapore
++10.23   Loan Agreement dated February 11, 1997 by and between the
          Registrant and Post Office Savings Bank of Singapore
++10.24   Loan Agreement dated June 10, 1997 by and between the
          Registrant and Post Office Savings Bank of Singapore
++10.25   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
++10.26   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
</TABLE>


                                      II-4
<PAGE>   139


<TABLE>
<CAPTION>
NUMBER                            DESCRIPTION
- ------                            -----------
<C>       <S>
++10.27   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
++10.28   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
++10.29   Lease of Lot 2164 Mukim 3-2 Science Park Drive dated January
          18, 1995 by and between Technology Parks Private Limited and
          the Registrant
++10.30   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
++10.31   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
++10.32   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
++10.33   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
++10.34   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
++10.35   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
++10.36   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
++10.37   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
++10.38   Sub-Lease dated February 17, 1998 by and between the
          Registrant and Silicon Manufacturing Partners Pte Ltd
++10.39   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
++10.40   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
</TABLE>


                                      II-5
<PAGE>   140

- ---------------

 * Filed herewith


 + Certain portions of this exhibit have been omitted pursuant to a request for
   confidential treatment filed with the Commission. The omitted portions have
   been filed separately with the Commission.

++ Previously filed.

     (b) Financial Statement Schedules.

     None.

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>   141

                                   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 25th day of October, 1999.


                                          CHARTERED SEMICONDUCTOR MANUFACTURING
                                          LTD

                                          By:      /s/ CHIA SONG HWEE
                                            ------------------------------------
                                              Name: Chia Song Hwee
                                              Title: Chief Financial Officer

     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>

                          *                               Chairman of the Board       October 25, 1999
- -----------------------------------------------------
                      Ho Ching

                          *                            Deputy Chairman of the Board   October 25, 1999
- -----------------------------------------------------
                   Lim Ming Seong

                          *                                President and Chief        October 25, 1999
- -----------------------------------------------------  Executive Officer (principal
                     Barry Waite                            executive officer)

                 /s/ CHIA SONG HWEE                      Chief Financial Officer      October 25, 1999
- -----------------------------------------------------    (principal financial and
                   Chia Song Hwee                          accounting officer)

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                    Sum Soon Lim

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                 James H. Van Tassel

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                   Aubrey C. Tobey

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
               Robert Edmund La Blanc

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                    Andre Borrel

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                 Charles E. Thompson

                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                    Koh Beng Seng
</TABLE>


                                      II-7
<PAGE>   142


<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                     DATE
                      ---------                                   -----                     ----
<S>                                                    <C>                           <C>
                          *                                      Director             October 25, 1999
- -----------------------------------------------------
                   Tsugio Makimoto

                          *                            Authorized Representative in   October 25, 1999
- -----------------------------------------------------       the United States
                 Thomas H.R. Gurnee
</TABLE>


*By:      /s/ CHIA SONG HWEE
     -------------------------------
             Chia Song Hwee
            Attorney-in-fact

                                      II-8

<PAGE>   1
                                                                     EXHIBIT 1.3



                             DATED [ ] OCTOBER, 1999





                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                                   AS COMPANY


                           OVERSEAS UNION BANK LIMITED
                         AS LEAD MANAGER AND UNDERWRITER


                                     - AND -


                  CITICORP INVESTMENT BANK (SINGAPORE) LIMITED
                       AS CO-LEAD MANAGER AND UNDERWRITER






                -------------------------------------------------


                                    FORM OF
                      MANAGEMENT AND UNDERWRITING AGREEMENT
                                 RELATING TO THE
                            SINGAPORE RETAIL OFFERING


                -------------------------------------------------











                                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.             DEFINITIONS

   2.             SINGAPORE RETAIL OFFERING

   3.             SUBSCRIPTION AND OPTION

   4.             SINGAPORE PROSPECTUS

   5.             FEE AND COMMISSION

   6.             DELIVERY AND PAYMENT

   7.             WARRANTIES AND UNDERTAKINGS

   8.             SUB-UNDERWRITING

   9.             BROKERAGE

  10.             CONDITIONS

  11.             RESCISSION AND TERMINATION

  12.             ANNOUNCEMENTS

  13.             ADVERTISEMENT

  14.             CONSENT TO DISCLOSURE

  15.             TIME OF ESSENCE

  16.             NOTICES

  17.             AGREEMENT AMONG MANAGERS

  18.             SUCCESSORS

  19.             GOVERNING LAW


                  SCHEDULE 1  -  UNDERWRITING COMMITMENTS

                  SCHEDULE 2  -  FORM OF CERTIFICATE

                  SCHEDULE 3  -  AUTHORISED SIGNATORIES
</TABLE>
<PAGE>   3
            T H I S  A G R E E M E N T  is made on [ ] October, 1999
            B E T W E E N:-

(1)         CHARTERED SEMICONDUCTOR MANUFACTURING LTD (the "Company"), a company
            incorporated in Singapore with its registered office at 60,
            Woodlands Industrial Park D, Street 2, Singapore 738406;

(2)         OVERSEAS UNION BANK LIMITED ("OUB" or the "Lead Manager"), a company
            incorporated in Singapore with its registered office at 1, Raffles
            Place, OUB Centre, Singapore 048616; and

(3)         CITICORP INVESTMENT BANK (SINGAPORE) LIMITED, a company incorporated
            in Singapore with its registered office at 5, Shenton Way,
            #37-03/04, UIC Building, Singapore 068808 ("Citicorp" or the
            "Co-Lead Manager " and together with the Lead Manager, the
            "Managers").

            W H E R E A S:-

(A) The Company is a company limited by shares incorporated in Singapore on 16th
November, 1987 and has at the date of this Agreement an authorised share capital
of S$800,000,000.540 consisting of 3,076,923,079 ordinary shares of S$0.26 each,
of which 1,001,425,308 ordinary shares of S$0.26 each have been issued and are
fully paid.

(B) The Company proposes to issue the New Shares (as defined below) and to offer
the New Shares by way of a Global Offering (as defined below) comprising:-

            (i)   [150,000,000]  New  Shares  directly  or in the form of ADSs
                  (as  defined  below)  pursuant  to  the  U.S.  Offering  (as
                  defined below);

            (ii)  [75,000,000] New Shares directly or in the form of ADSs
                  pursuant to the International Offering (as defined below); and

            (iii) [25,000,000] New Shares pursuant to the Singapore Retail
                  Offering (as defined below),

at the Offering Price (as defined below).

(C) Pursuant to the U.S. Underwriting Agreement (as defined below), the Company
has agreed to issue an aggregate of [150,000,000] New Shares, directly or in the
form of ADSs (the "U.S. Underwritten Shares"), and to grant to the U.S.
Underwriters (as defined below) an option to purchase from the Company up to
[22,500,000] additional new Shares directly or in the form of ADSs to cover
over-allotments (the "U.S. Option Shares" and together with the U.S.
Underwritten Shares, the "U.S. Securities").

(D) Pursuant to the International Underwriting Agreement (as defined below), the
Company has agreed to issue an aggregate of [75,000,000] New Shares, directly or
in the form of ADSs (the "International Underwritten Shares"), and to grant to
the International Underwriters (as defined below) an option to purchase from the
Company up to [11,250,000] additional new Shares directly or in the form of ADSs
to cover over-allotments (the "International Option Shares" and, together with
the International Underwritten Shares, the "International Securities").

(E) Pursuant to the Agreement Among U.S. Underwriters, International
Underwriters and Singapore Underwriters (as defined below), the International
Underwriters and the Managers

                                       1

<PAGE>   4
may purchase from the U.S Underwriters a portion of the U.S. Securities, the U.S
Underwriters may purchase from the International Underwriters a portion of the
International Securities and the U.S Underwriters and the International
Underwriters may purchase from the Managers a portion of the Singapore
Securities (as defined below).

(F) As part of the Global Offering, the U.S. Underwriters, the International
Underwriters and the Managers have agreed to reserve up to five per cent. of the
Shares (including Shares represented by ADSs) out of the Global Offering (the
"Directed Shares") for priority allocation to the Company's employees, business
associates and one of its directors, the directors, officers and employees of
the Company's affiliates and to certain charitable organisations in Singapore
(the "Participants") as set out in the Prospectuses under the heading
"Underwriting", at the Offering Price. Any Directed Shares not orally confirmed
for purchase by any Participant by the end of the Business Day on which the
Underwriting Agreements (as defined below) are executed will be offered to the
public by the U.S. Underwriters, the International Underwriters and the Managers
as set out in the Prospectuses and the Agreement Among U.S Underwriters,
International Underwriters and Singapore Underwriters.

(G) The Company has obtained the approval in-principle from the Stock Exchange
of Singapore Limited (the "Stock Exchange") for the admission of all the issued
ordinary shares of S$0.26 each in the capital of the Company and all the New
Shares to the Official List of the Stock Exchange.

(H) The Company has requested OUB to lead manage and Citicorp to co-lead manage,
and OUB and Citicorp have agreed to lead manage and co-lead manage,
respectively, the Singapore Retail Offering (as defined below) on its behalf and
the Company has requested the Managers, and the Managers have agreed, to
subscribe for, or procure subscription for, the Invitation Shares (as defined
below), upon the terms and subject to the conditions of this Agreement.

            I T  I S  A G R E E D  as follows:-

1.          DEFINITIONS

(A)         In this Agreement:-

            (i)   except to the extent that the context requires otherwise:-

                  "ADSs" means American Depository Shares, evidenced by American
                  depository receipts, with each ADS representing 10 Shares;

                  "Agreement Among U.S. Underwriters, International Underwriters
                  and Singapore Underwriters" means [                     ];

                  "Closing Date" means [                  ], 1999 (or such later
                  date as the Company and OUB may agree);

                  "Depository" has the meaning ascribed to it in Section 130A of
                  the Companies Act, Chapter 50 of Singapore;

                  "Directors" means the Directors of the Company named in the
                  Singapore Prospectus;





                                       2
<PAGE>   5

                  "Global Offering" means the International Offering, the U.S.
                  Offering and the Singapore Retail Offering;

                  "Group" means the Company and its subsidiaries;

                  "International Offering" means the offering of New Shares
                  directly or in the form of ADSs to investors outside the U.S.
                  and Canada;

                  "International Underwriters" means the International
                  Underwriters named in the International Underwriting
                  Agreement;

                  "International Underwriting Agreement" means the underwriting
                  agreement dated [ ], 1999 entered into between the Company and
                  the International Underwriters, relating to the International
                  Offering;

                  "Invitation Shares" means Offer Shares and the Singapore
                  Directed Shares;

                  "market day" means a day on which the Stock Exchange is open
                  for securities trading;

                  "New Shares" means [250,000,000] new ordinary shares of S$0.26
                  each in the capital of the Company;

                  "Offer Shares" means [           ] of the New Shares offered
                  by way of a public offering in Singapore;

                  "Offering Price" means U.S.$[     ] for each ADS and S$[     ]
                  for each Share;

                  "Option Shares" means [      ] new ordinary shares of S$0.26
                  each in the capital of the Company;

                  "Prospectuses" means [the International Prospectus, the U.S.
                  Prospectus and the Singapore Prospectus];

                  "Shares" means ordinary shares of S$0.26 each in the capital
                  of the Company;

                  "Singapore Directed Shares" means [      ] of the New Shares
                  to be allocated to Participants in Singapore;

                  "Singapore Dollar(s)" and the symbol "S$" mean the lawful
                  currency of Singapore;

                  "Singapore Prospectus" means the prospectus in the agreed form
                  and relating to the Singapore Retail Offering;

                  "Singapore Retail Offering" means the offering of the
                  Invitation Shares to retail investors in Singapore on the
                  terms and conditions of the Singapore Prospectus;





                                       3
<PAGE>   6

                  "Singapore Securities" means the Invitation Shares and the
                  Option Shares;

                  "Specified Event" means an event occurring after the date of
                  this Agreement and prior to [time] on the Closing Date which,
                  if it had occurred before the date of this Agreement, would
                  have rendered any of the warranties contained in Clause 7(A)
                  untrue or incorrect in any material respect;

                  "subsidiary" has the meaning ascribed to it in Section 5 of
                  the Companies Act, Chapter 50;

                  "Total Underwriting Commitments" means the aggregate of the
                  Underwriting Commitments;

                  "Underwriting Commitment" means, in relation to a Manager, the
                  number of Invitation Shares set out opposite its name in
                  Schedule 1;

                  "U.S." means the United States of America;

                  "U.S. Dollars" or "US$" means the lawful currency of the U.S.;

                  "U.S. Offering" means the offering of New Shares directly or
                  in the form of ADSs to investors in the U.S. and Canada;

                  "U.S. Underwriters" means the U.S. Underwriters named in the
                  U.S. Underwriting Agreement;

                  "U.S. Underwriting Agreement" means the underwriting agreement
                  dated [           ], 1999 entered into between the Company and
                  the U.S. Underwriters, relating to the U.S. Offering; and

                  "Underwriting Agreements" means the International Underwriting
                  Agreement, the U.S. Underwriting Agreement and this Agreement;

            (ii)  any reference to a document being "in the agreed form" means
                  in the form of the proof or draft thereof signed for
                  identification on behalf of the Company and OUB with such
                  alterations (if any) as may be agreed between the Company and
                  OUB; and

            (iii) words importing the masculine gender shall, where applicable,
                  include the feminine and neuter genders and vice versa.

(B) References to "Recitals", "Clauses" and "Schedules" are to recitals of,
clauses of and schedules to this Agreement.

(C) The headings are for convenience only and shall not affect the
interpretation of the provisions of this Agreement.

2.          SINGAPORE RETAIL OFFERING

(A)         Subject to the terms and conditions of this Agreement:-





                                       4
<PAGE>   7

            (i)   the Company appoints OUB, and OUB agrees, to lead manage the
                  Singapore Retail Offering; and

            (ii)  the Company appoints Citicorp, and Citicorp agrees, to
                  co-manage the Singapore Retail Offering.

(B) The Company authorises and directs OUB to do all such acts and things as it
may deem necessary or advisable for or in connection with the Singapore Retail
Offering and, in particular, but without prejudice to the foregoing and the
other provisions of this Agreement:-

            (i)   to assist the Company in the Singapore Retail Offering on the
                  terms and subject to the conditions of this Agreement; and

            (ii)  to make available copies of the Singapore Prospectus to such
                  persons as it may in its discretion deem fit.

3.          SUBSCRIPTION AND OPTION

(A) Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties set out in Clause 7, the Company agrees to
issue, and each Manager agrees, severally and not jointly, to subscribe or
procure subscriptions for the number of Invitation Shares representing its
Underwriting Commitment at the Offering Price for each Invitation Share.

(B) Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties set out in Clause 7, the Company hereby
grants an option to the Managers to, severally and not jointly and each in the
proportion borne by its Underwriting Commitment to the Total Underwriting
Commitments, subscribe or procure subscriptions for up to [3,750,000] Option
Shares at the Offering Price, to cover over-allotments in the Singapore Retail
Offering. Such option may be exercised in whole or in part at any time (but not
more than once) on or before the 30th day after the date of the Singapore
Prospectus upon notice by OUB, on behalf of the Managers, to the Company,
setting out the number of Option Shares as to which the Managers are exercising
such option and the settlement date.

(C) The Company agrees with and undertakes to each of the Managers that the
Invitation Shares and the Option Shares will upon their issue rank in all
respects pari passu with the existing issued ordinary shares of S$0.26 each in
the capital of the Company.

4.          SINGAPORE PROSPECTUS

            Subject to the terms and conditions of this Agreement, not later
than [          ], 1999 (or such other date as the Company and OUB may agree),
the Company undertakes to procure:-

            (i)   a copy of the Singapore Prospectus (duly signed by or on
                  behalf of each of the Directors) to be lodged with the
                  Registrar of Companies and Businesses for registration
                  together with any other documents required by law to be
                  annexed to the Singapore Prospectus; and

            (ii)  all necessary copies of the Singapore Prospectus to be
                  delivered to the Stock Exchange.





                                       5
<PAGE>   8

5.          FEE AND COMMISSION

(A) In consideration of the agreement by OUB to manage the Invitation contained
in Clause 2, the Company agrees (whether or not OUB is called upon to take up
all or any New Shares pursuant to Clause 6) to pay to OUB a management fee in
the amount and on the terms as stated in a letter dated [17th September], 1999
from OUB to the Company.

(B) In consideration of the agreement by the Managers to subscribe or procure
subscriptions for the Invitation Shares contained in Clause 3(A) and the Option
Shares (subject to the option set out in Clause 3(B) having been duly exercised
in accordance with Clause 6), the Company agrees to pay to each Manager an
underwriting commission of 1.0 per cent. of the Offering Price for the total
number of Invitation Shares or the Option Shares, as the case may be, which that
Manager has agreed to subscribe or procure subscriptions for pursuant to this
Agreement. Such underwriting commission shall be payable on the Closing Date or
on the settlement date of the Option Shares, as the case may be, and deducted
from the aggregate Offering Price for the Invitation Shares and the Option
Shares, as the case may be, as provided in Clause 6.

(C) The Company shall bear all expenses of or incidental to the Invitation
including, without limiting the generality of the foregoing, the fees of the
professional advisers of the Company, the cost of printing and distributing the
Singapore Prospectus, the cost of advertising the Singapore Prospectus, the cost
of printing this Agreement, registrar's charges, accountancy fees, legal fees,
the listing fees and other incidental fees payable to the Stock Exchange for the
listing application. The Company shall forthwith upon request by OUB (supported
by documentary evidence thereof) reimburse the amount of any such expenses which
OUB may have paid on its behalf.

(D) Any goods and services tax or other levies now or hereafter imposed by law
(including but not limited to the Goods and Services Tax Act, Chapter 117A of
Singapore) or required to be paid in respect of any moneys payable to or
received or receivable by the Managers or any expenses incurred by the Managers
shall (except to the extent prohibited by law) be borne and paid by the Company.

6.          DELIVERY AND PAYMENT

(A) Delivery of and payment for the Invitation Shares and the Option Shares (if
the option provided for in Clause 3(B) shall have been exercised on or before
the fifth Business Day prior to the Closing Date) shall be made at 10:00 p.m.,
Singapore time, on the Closing Date.

(B) The share certificates in respect of the Invitation Shares and the Option
Shares (if the option provided for in Clause 3(B) shall have been exercised on
or before the fifth Business Day prior to the Closing Date) shall be issued in
the name of, and delivered to, the Depository for the account of the Managers or
such other persons as OUB, on behalf of the Managers, may direct, against
payment by the Managers, each in the proportion borne by its Underwriting
Commitment to the Total Underwriting Commitments, of the aggregate net
subscription moneys of the Invitation Shares and, if applicable, the Option
Shares (being the aggregate Offering Price of the Invitation Shares and, if
applicable, the Option Shares, less [(in the case of OUB only) the management
fee payable to OUB pursuant to Clause 5(A) and] the underwriting commission [and
brokerage] payable to the Managers pursuant to Clause 5(B) and Clause 9) to or
to the order of the Company in immediately available and freely transferable
funds to such account with such bank in Singapore as the Company shall have
notified to OUB




                                       6
<PAGE>   9

for such purpose.

(C) It is understood and agreed that the Closing Date shall occur simultaneously
with the "Closing Date" under the International Underwriting Agreement and the
U.S. Underwriting Agreement and that the settlement date for any Option Shares
occurring after the Closing Date, shall occur simultaneously within the
settlement date under the U.S. Underwriting Agreement and the International
Underwriting Agreement for any U.S. Option Shares and International Option
Shares occurring after the Closing Date.

(D) If the option provided for in Clause 3(B) is exercised after the fifth
Business Day prior to the Closing Date, the Company will deliver (at the expense
of the Company) to the Managers on the date specified by the Managers (which
shall be within five Business Days after exercise of said option), share
certificates representing the Option Shares in respect of which such option
shall have been exercised and issued in the name of the Depository, to the
Depository for the account of the Managers or such other persons as OUB, on
behalf of the Managers, may direct, against payment by the Managers, each in the
proportion borne by its Underwriting Commitment to the Total Underwriting
Commitments, of the aggregate net subscription moneys of the relevant number of
Option Shares in respect of which such options shall have been exercised (being
the aggregate Offering Price of such Option Shares, less the underwriting
commission [and brokerage] payable to the Managers pursuant to Clause 5(B) and
Clause 9) to or to the order of the Company in immediately available and freely
transferable funds to such account with such bank in Singapore as the Company
shall have notified to OUB for such purpose.

[(E) If settlement for the Option Shares occurs after the Closing Date, the
Company will deliver to the Managers on the settlement date for the Option
Shares, and the obligation of the Managers to subscribe or procure subscriptions
for the Option Shares shall be conditioned upon receipt of, supplemental
opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Clause [ ]
hereof.]

7.          WARRANTIES AND UNDERTAKINGS

(A)         The Company  warrants to and undertakes  with each of the Managers
as follows:-

            [to track warranties from International Underwriting Agreement]

[(B) The obligations of OUB under Clause 2 and the obligations of the Managers
under Clause 6 are made on the basis of the warranties contained in sub-Clause
(A) above and with the intention that the same shall remain true and accurate in
all respects up to and including the Closing Date, and the Company undertakes to
and agrees with each of the Managers:-

            (i)   to  use  all   reasonable   endeavours  not  to  permit  any
                  Specified Event to occur before the Closing Date; and

            (ii)  to forthwith give notice to OUB of any Specified Event which
                  has occurred or come to its knowledge prior to the Closing
                  Date and to forthwith take such steps as OUB may reasonably
                  require to remedy and/or publicise the same without prejudice
                  to OUB's rights and remedies under or pursuant to this
                  Agreement.]




                                       7
<PAGE>   10

(C) The Company undertakes to and agrees with each of the Managers to fully and
effectually indemnify each of the Managers from and against all losses, claims,
costs (including legal costs on a full indemnity basis), charges, liabilities,
actions and demands which any of the Managers may incur or suffer or which may
be made against any of the Managers in connection with or arising out of the
issue of the Singapore Prospectus or the Invitation or any breach of the
warranties contained in sub-Clause (A) above or any failure or delay by the
Company in performing the Company's undertakings in sub-Clause (E) below, save
and except for any loss or damage arising out of any wilful default, fraud or
negligence on the part of the relevant Manager.

(D) The warranties in sub-Clause (A) above shall be deemed to be repeated on and
as of the Closing Date and the obligations of the Company in respect thereof
shall continue in full force and effect notwithstanding completion of the
subscription of the New Shares under this Agreement or any investigation by any
of the Managers.

(E)         The Company hereby undertakes to OUB:-

            (i)   not to vary or issue any supplement to the Singapore
                  Prospectus without the prior consent in writing of OUB, such
                  consent not to be unreasonably withheld, and not to disclose,
                  announce or otherwise disseminate any information concerning
                  the Company and its subsidiaries or the New Shares pending the
                  issue of the Singapore Prospectus or any information which is
                  not contained in the Singapore Prospectus or which may in the
                  opinion of OUB be inconsistent with the information contained
                  therein, without the consent of OUB, such consent not to be
                  unreasonably withheld;

            (ii)  to supply OUB with any information or document which it may
                  reasonably require affecting the accounts or affairs of the
                  Company and to do all such other things and sign or execute
                  such documents as may reasonably be required by OUB in order
                  to complete the Invitation;

            (iii) to use their best endeavours to procure the share registrar to
                  do all such acts and things as may be required by OUB in
                  connection with the Invitation and the transactions associated
                  with the New Shares including the expeditious processing of
                  the applications for the New Shares;

            (iv)  to use their best endeavours to obtain and maintain the
                  listing and quotation of the New Shares on the Stock Exchange;

            (v)   not to take any action to permit a public offering of the New
                  Shares or distribute the Singapore Prospectus or any document
                  or form relating to the New Shares or other material relating
                  to the Invitation in any country or jurisdiction except in
                  Singapore or any other country or jurisdiction where such
                  offering or distribution is permitted;

            [(vi) except for the Option Shares and any Shares to be issued by
                  the Company pursuant to the exercise of options granted
                  pursuant to the Chartered Semiconductor Manufacturing Ltd
                  Share Option Plan 1999, not issue at any time on or before the
                  expiry of 60 days after the Closing Date, any marketable
                  securities (in the form of, or represented or evidenced by,
                  bonds, notes, debentures, loan stock or other securities) or





                                       8
<PAGE>   11
                    shares or options therefor without the prior written consent
                    of OUB, such consent not to be unreasonably withheld;

            (vii)   not, and will procure that its subsidiaries will not, at any
                    time on or before the Closing Date without the prior written
                    consent of OUB, such consent not to be unreasonably
                    withheld, dispose of in any manner (otherwise than in the
                    ordinary and normal course of their respective businesses)
                    any of their respective properties, fixed assets and/or
                    subsidiaries or any other asset which is (in the reasonable
                    opinion of OUB) of a material nature; and]


            (viii)  not to take any action or do any act or thing which may be
                    materially prejudicial to the Invitation.

8.          SUB-UNDERWRITING

            OUB shall be at liberty to sub-underwrite its underwriting
obligations under this Agreement upon such terms and conditions as set out in a
letter dated [17th September, 199] from OUB to the Company. Citicorp shall not
sub-underwrite its underwriting obligations under this Agreement.

9.          BROKERAGE

            The Company will pay brokerage at the rate of 1.0 per cent. of the
Offering Price of the Invitation Shares to the Managers for allocation between
members of the Singapore Retail Syndicate (as defined in the Singapore
Prospectus) based on the final allocation of Invitation Shares to investors
through the relevant member of the Singapore Retail Syndicate.

10.         CONDITIONS

(A)         This  Agreement  and the  obligations  of the Managers  under this
Agreement are conditional upon:-

            (i)   the Singapore  Prospectus  having been  registered  with the
                  Registrar of Companies and Businesses by [            ],
                  1999;

            (ii)  such approvals as may be required for the transactions
                  described in this Agreement and in the Singapore Prospectus
                  being obtained, and not withdrawn or amended, before [      ],
                  1999 (or such other date as the Company and OUB may agree);

            (iii) the delivery to OUB on the Closing Date of a certificate in
                  the form set out in Schedule 2 signed by a Director;

            (iv)  the International Underwriting Agreement and the U.S.
                  Underwriting Agreement not having been terminated or rescinded
                  prior to the Closing Date; and

            (vi)  the delivery of and payment for the New Shares (other than the
                  Invitation Shares) pursuant to the International Underwriting
                  Agreement and the U.S. Underwriting Agreement taking place
                  [substantially concurrently






                                       9
<PAGE>   12

                  (giving effect to the time difference between New York and
                  Singapore)] with the delivery of and payment for the
                  Invitation Shares pursuant to this Agreement on the Closing
                  Date.

(B) The Company shall use its best endeavours to procure the fulfilment of such
conditions and, in particular, shall furnish such information, supply such
documents, give such undertaking(s) and do all such acts and things as may be
required to enable the New Shares to be admitted to the Official List of the
Stock Exchange as aforesaid.

(C) If such conditions are not fulfilled, this Agreement shall ipso facto cease
and determine and (save in respect of any breach of sub-Clause (B) above) no
party shall have any claim against the others for costs, damage, compensation or
otherwise except that the Company shall continue to be bound by its obligations
under Clauses 5 and 7, shall indemnify OUB in accordance with Clause 7 and shall
reimburse OUB for all out-of-pocket expenses incurred by it in connection with
this Agreement and as agreed in a letter dated [17th September, 1999] from OUB
to the Company, provided that OUB shall be entitled to waive the condition in
sub-Clause (A)(iv) above.

11.         RESCISSION AND TERMINATION

(A) Notwithstanding anything herein contained, OUB may, by notice in writing to
the Company, rescind this Agreement if prior to [time] on the Closing Date:-

            [(i)  there shall come to the knowledge of OUB any breach of any of
                  the warranties or undertakings contained in Clause 7(A) or
                  that any of the warranties by the Company in Clause 7(A) is
                  untrue or incorrect; or

            (ii)  any Specified Event comes to the knowledge of OUB; or]

            (iii) [track Section 11 of International Underwriting Agreement.]

(B) If this Agreement is so rescinded, the Company shall reimburse OUB for all
out-of-pocket expenses incurred by them in connection with this Agreement and as
agreed in a letter dated [17th September, 1999] from OUB to the Company.

(C) In addition, rescission or termination of this Agreement for any reason
shall be without prejudice to any rights of OUB in respect of any such breach as
is therein referred to and shall not release the Company from its obligations
under Clauses 5, 6 and 7, which shall continue in full force and effect.

12.         ANNOUNCEMENTS

            No public announcement or communication concerning the Invitation
may be made or despatched by the Company without the prior consent in writing of
OUB (save as may be required by law or the rules of the Stock Exchange).

13.         ADVERTISEMENT

            The Company and OUB agree that tombstone advertisements of the
Invitation shall be made by OUB on behalf of and at the expense of the Company
on such dates and in such newspapers as OUB may, in consultation with the
Company, determine.





                                       10
<PAGE>   13

14.         CONSENT TO DISCLOSURE

            The Company consents to the disclosure by OUB to the Stock Exchange
of any information relating to the Company and its affairs, operations or
business, where such disclosure is deemed to be necessary by OUB for the
purposes of or in connection with the Invitation.

15.         TIME OF ESSENCE

            Any time, date or period mentioned in any provision of this
Agreement may be extended by mutual agreement between the parties but as regards
any time, date or period originally fixed or any time, date or period so
extended as aforesaid, time shall be of the essence.



16.         NOTICES

            Any notice or other communication required or permitted to be given
or made hereunder shall be in writing and delivered personally or sent by post
or by facsimile addressed to the intended recipient thereof at its address or at
its facsimile number set out below (or to such other address or facsimile number
it may from time to time duly notify the other parties hereto):-

            the Company       :     Chartered Semiconductor Manufacturing Ltd
                                    60, Woodlands Industrial Park D,
                                    Street 2, Singapore 738406.

                                    Attention   :     Legal Department
                                    Fax number  :     362 2909

            OUB               :     Overseas Union Bank Limited
                                    1, Raffles Place,
                                    OUB Centre, Singapore 048616.

                                    Attention   :     [           ]
                                    Fax number  :     [           ]

            Citicorp          :     Citicorp Investment Bank (Singapore) Limited
                                    5, Shenton Way, #37-03/04, UIC Building,
                                    Singapore 068808.

                                    Attention   :     [           ]
                                    Fax number  :     [           ]

Any notice or communication shall be deemed to have been duly served (if given
or made personally or by facsimile) immediately or (if given or made by letter)
24 hours after posting. In the case of any notice or communication given by the
Company pursuant to Clauses 6 and 8,




                                       11
<PAGE>   14

such notice or communication shall be delivered personally or sent by post and
shall be given by the Authorised Signatories (as defined in Schedule 3), whose
names(s) and signature(s) are set out in Schedule 3, on behalf of the Company.

17.         AGREEMENT AMONG MANAGERS

(A) Any notice, decision, approval, consent or waiver of the Managers under this
Agreement shall be made or given by OUB for itself and on behalf of Citicorp and
shall be binding on Citicorp.

(B) In making or giving any such notice, decision, approval, consent or waiver,
OUB is hereby irrevocably authorised by Citicorp to exercise its sole
discretion, and OUB shall not be under any obligation to account or disclose to
Citicorp its reason(s) for so doing.

(C) Citicorp hereby authorises OUB as its agent and on its behalf to do all acts
and things which it is required or entitled to do under this Agreement including
without prejudice to the generality of the foregoing:-


            (i)   arranging for payment for the Invitation Shares for which
                  Citicorp has applied or procured applications for pursuant to
                  Clause 4; and

            (ii)  arranging for delivery to the Depository of the Invitation
                  Shares for which Citicorp has applied or procured applications
                  for pursuant to Clause 4.

(D) Citicorp hereby authorises OUB to publish its name, in the form in which it
appears in this Agreement, in any publications relating to the Invitation.

(E) In acting under this Agreement, OUB shall be entitled to rely on any
communication or document believed by it to be genuine and correct and to have
been signed or sent by the proper person and shall be entitled to rely as to
legal or other professional matters on opinions or statements of any legal or
other professional advisers appointed by it.

(F) Nothing contained in this Agreement shall constitute the Managers an
association or partners with each other or render any of the Managers liable for
the obligations of the other Managers. Neither of the Managers shall be bound in
any way by the acts of the other Managers and none of the Managers shall have
any right to contribution or account against the other Managers except as
expressly or by necessary implication provided in this Agreement. Except as
otherwise expressly provided in this Agreement, each Manager shall bear all
losses and expenses incurred by it and be entitled to retain all profits earned
by it in connection with this Agreement.

(G) Citicorp acknowledges that it has not relied on any statement, opinion,
forecast or other representation made by OUB to induce it to enter into this
Agreement or the transactions contemplated by this Agreement and that it has
made and will continue to make, without reliance on OUB and based on such
documents as it considers appropriate, its own appraisal of the creditworthiness
of the Company and its own independent investigation of the financial condition
and affairs of the Company and of its own tax position in connection with the
execution of this Agreement or the transactions contemplated by this Agreement,
and the sale or purchase and resale (as the case may be) of the Invitation
Shares.

(H) OUB shall not have any responsibility to Citicorp on account of the
condition (financial or otherwise) of the Company or for the completeness or
accuracy of any statements,






                                       12
<PAGE>   15

representations or warranties in, or the validity, enforceability or sufficiency
of, this Agreement or any other document executed pursuant hereto or as hereby
contemplated.

(I) OUB shall not be liable to Citicorp for any loss or damage howsoever arising
from any action taken or omitted under or in connection with this Agreement or
the transactions hereby contemplated. Notwithstanding anything contained in this
Agreement, OUB shall have no responsibility or liability to Citicorp on account
of any loss Citicorp may suffer as a result of its execution or performance of
this Agreement or for the execution, effectiveness, adequacy, genuineness,
validity, enforceability or admissibility in evidence of this Agreement or the
transactions hereby contemplated or for acting (or for refraining from acting)
in accordance with the instructions of that Manager.

(J) OUB may, without any liability to account to Citicorp, accept deposits from,
lend money to, and generally engage in any kind of banking or trust or other
business with the Company or any of its subsidiaries or associated companies as
if OUB were not acting as agent for the Managers under this Agreement.

(K) Citicorp shall contribute (in the proportion in which its Underwriting
Commitment bears to the Total Underwriting Commitments) in reimbursing OUB for
any costs and expenses incurred by OUB in contemplation of, or otherwise in
connection with, the enforcement or preservation of any rights or the
performance of any term under this Agreement (including, in each case, the fees
and expenses of legal or other professional advisers on a full indemnity basis)
which are not recovered, or which OUB agrees (after prior consultation with
Citicorp) not to claim, from the Company under this Agreement. The liability of
Citicorp for such contribution under this sub-Clause shall remain
notwithstanding that this Agreement is terminated pursuant to the terms of this
Agreement.

(L) Citicorp shall indemnify OUB (in the proportion in which its Underwriting
Commitment bears to the Total Underwriting Commitments) against all liabilities,
damages, costs and claims whatsoever incurred by OUB in connection with this
Agreement or the performance of its obligations or the exercise or non-exercise
of any discretion, power or rights conferred under this Agreement or any action
taken or omitted by OUB under this Agreement unless such liabilities, damages,
costs or claims arise out of the negligence of OUB, its servants or agents.

18.         SUCCESSORS

            This Agreement shall be binding upon and shall enure to the benefit
of the respective successors in title of the parties thereto.

19.         GOVERNING LAW

            This Agreement shall be governed by, and construed in all respects
in accordance with, the laws of Singapore.





                                       13
<PAGE>   16

                               S C H E D U L E  1


                            UNDERWRITING COMMITMENTS



<TABLE>
<CAPTION>
                                                                   Number of
      Name of Manager                                          Invitation Shares
      ---------------                                          -----------------
<S>   <C>                                                      <C>
1.    Overseas Union Bank Limited                                 [         ]

2.    Citicorp Investment Bank (Singapore) Limited                [         ]
                                                                  -----------

      Total Underwriting Commitments                              [         ]
                                                                  ===========
</TABLE>




                                       14
<PAGE>   17

                               S C H E D U L E  2


                               FORM OF CERTIFICATE



To:   Overseas Union Bank Limited,
      1, Raffles Place,
      OUB Centre,
      Singapore 048616                                      [            ], 1999



Dear Sirs,

            I, [                ], a Director of Chartered Semiconductor
Manufacturing Ltd (the "Company"), refer to the Management and Underwriting
Agreement (the "Agreement") dated [ ], 1999 made between (1) the Company, as
Company, (2) Overseas Union Bank Limited, as Lead Manager and Underwriter for
the Singapore Retail Offering, and (3) Citicorp Investment Bank (Singapore)
Limited, as Co-Lead Manager and Underwriter for the Singapore Retail Offering,
and hereby certify, on behalf of the Company, that:-

            (i)   I have been duly authorised by the Company to sign this
                  Certificate; and

            [(ii) to the best of my knowledge and belief, having made all
                  reasonable enquiries, since the date of the Agreement, there
                  has been no material adverse change or any development
                  involving a prospective material adverse change in the
                  condition (financial or otherwise) of the Company or of the
                  Group as a whole from that set forth in the Singapore
                  Prospectus nor any breach of nor the occurrence of any event,
                  nor the discovery of any fact, rendering untrue or incorrect
                  in any material respect, any of the representations,
                  warranties or undertakings contained in the Agreement if they
                  were repeated on and as of the date hereof.](1)

            Terms defined and references construed in the Agreement shall bear
the same meanings and construction in this Certificate.

                                                   Yours faithfully,
                                                  For and on behalf of
                                                CHARTERED SEMICONDUCTOR
                                                    MANUFACTURING LTD



                                          By:_________________________________

                                          Name:_______________________________

                                          Title:______________________________


- --------

(1) to track the corresponding provisions in the representations and
    warranties.



                                       15
<PAGE>   18

                               S C H E D U L E  3


                             AUTHORISED SIGNATORIES


The following persons are designated by the Company as Group A signatories:-

                                     Group A

<TABLE>
<CAPTION>
Name                    Position Held                 Signature
- ----                    -------------                 ---------
<S>                     <C>                           <C>
[           ]           [           ]
[           ]           [           ]
</TABLE>


Either of the Group A signatories jointly with the [ ] of the Company (or its
equivalent), or in his absence, the Group A signatories signing jointly (the
"Authorised Signatories") shall be authorised to sign all notices and
communications required or permitted to be given by or on behalf of the Company
pursuant to Clauses 6 and 8 of this Agreement.


<TABLE>
<CAPTION>
Name                    Position Held                 Signature
- ----                    -------------                 ---------
<S>                     <C>                           <C>
[           ]           [           ]
</TABLE>




                                       16
<PAGE>   19

            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 Company


SIGNED by                                   )
          --------------------------------  )
for and on behalf of                        )
CHARTERED SEMICONDUCTOR                     )
MANUFACTURING LTD                           )
in the presence of:-                        )



The Lead Manager and Underwriter


SIGNED by                                   )
          --------------------------------  )
for and on behalf of                        )
OVERSEAS UNION BANK LIMITED                 )
in the presence of:-                        )



The Co-Lead Manager and Underwriter


SIGNED by                                   )
          --------------------------------  )
for and on behalf of                        )
CITICORP INVESTMENT BANK                    )
(SINGAPORE) LIMITED                         )
in the presence of:-                        )





                                       17

<PAGE>   1
                                                                       EXHIBIT 3


No. of Company

198703584-K


                        The Companies Act (Chapter 185)


                        ================================

                        PUBLIC COMPANY LIMITED BY SHARES

                        ================================


                                   MEMORANDUM


                                      AND


                          NEW ARTICLES OF ASSOCIATION


                                       OF


                   CHARTERED SEMICONDUCTOR MANUFACTURING LTD

           (Adopted by Special Resolution passed on 14 October 1999)





                     Lodged in the Office of the Registrar
                            of Companies, Singapore

<PAGE>   2
                               THE COMPANIES ACT                         FORM
                                  (CHAPTER 50)
                                 SECTION 73(7)                           29



                 CERTIFICATE OF LODGMENT OF ORDER OF HIGH COURT
                     CONFIRMING REDUCTION OF SHARE CAPITAL


NAME OF COMPANY   :   CHARTERED SEMICONDUCTOR MANUFACTURING LTD.

COMPANY NO        :   198703584K


     This is to certify that an order of the High Court dated 29 September
1999, confirming a reduction of the share capital of the abovenamed company has
this day been lodged with me.

     Given under my hand and seal on this 30 September 1999.




                                            /s/  TAN SHOOK YNG
                               ---------------------------------------------
                                            MISS TAN SHOOK YNG
                               SR ASST REGISTRAR OF COMPANIES AND BUSINESSES
                                                SINGAPORE


      [SEAL]



<PAGE>   3

                     THE COMPANIES ACT
                       (CHAPTER 50)
                       SECTION 31(3)                        FORM
               CERTIFICATE OF INCORPORATION                  20
             ON CONVERSION TO A PUBLIC COMPANY

<TABLE>
<S>                                                          <C>
                                                                Owing to a typographical error, the
NAME OF COMPANY: CHARTERED SEMICONDUCTOR                     date of incorporation of the company
                 MANUFACTURING PTE LTD                       was wrongly stated. The date of
                                                             incorporation is 16th November, 1987 and
COMPANY NO:      198703584K                                  the amendment is hereby made as shown.
\
                                                                  Given under my hand and seal on
                                                             23 December 1995.

                                                                     /s/ KELVIN TAN HENG KIAT
                                                                       KELVIN TAN HENG KIAT
                                                          SR ASST REGISTRAR OF COMPANIES AND BUSINESSES
                                                                            SINGAPORE
</TABLE>

     This is to certify that the abovenamed company, which was on 16 November
1987 incorporated under the Companies Act as a company limited by shares, did
on 31 October 1995 convert to a public company and that the name of the company
now is CHARTERED SEMICONDUCTOR MANUFACTURING LTD.

     Given under my hand and seal on 31 October 1995.



                            /s/ KELVIN TAN HENG KIAT
                              KELVIN TAN HENG KIAT
                 SR ASST REGISTRAR OF COMPANIES AND BUSINESSES
                                   SINGAPORE

<PAGE>   4

                                    FORM 13
                               THE COMPANIES ACT
                                  (CHAPTER 50)
                                 SECTION 28(2)

Company No.

198703584K
- ----------



                   CERTIFICATE OF INCORPORATION ON CHANGE OF
                                NAME OF COMPANY

     This is to certify that CHARTERED SEMICONDUCTOR PTE LTD incorporated under
the Companies Act on the 16th day November 1987 did by a special resolution
resolve to change its name to CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD and
that the company which is a private company limited by shares is now known by
its new name with effect from the 9th day of May 1991.

Given under my hand and seal on this 9th day of May 1991.



                             /s/ PEGGY TAN SING ENG

                            MISS PEGGY TAN SING ENG
                          ASST REGISTRAR OF COMPANIES
                                   SINGAPORE


<PAGE>   5
                                     FORM 9

                           THE COMPANIES ACT, CAP. 50

                                 Section 19(4).


No. of Company
03584/1987-K



                CERTIFICATE OF INCORPORATION OF PRIVATE COMPANY

     This is to certify that CHARTERED SEMICONDUCTOR PTE LTD is incorporated
under the Companies Act, Cap. 50, on 16/11/1987 and that the company is a
private company limited by shares.

      Given under my hand and seal on 16/11/1987



                                                  MISS JUTHIKA RAMANATHAN
                                          --------------------------------------
                                               Asst. Registrar of Companies &
                                                         Businesses
                                                    Republic of Singapore.
<PAGE>   6
                           THE COMPANIES ACT, CAP. 50

                                   ----------

                           COMPANY LIMITED BY SHARES

                                   ----------

                           Memorandum of Association

                                       of
                  * CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                               (formerly known as
                        CHARTERED SEMICONDUCTOR PTE LTD)

                  (Incorporated in the Republic of Singapore)


- --------------------------------------------------------------------------------

1.    The name of Company is *CHARTERED SEMICONDUCTOR MANUFACTURING LTD
      (formerly known as "CHARTERED SEMICONDUCTOR PTE LTD").

2.    The registered office of the Company will be situated at the Republic of
      Singapore.

3.    The objects for which the Company is established are:

(a)   To carry on the business of manufacturing, buying, selling, maintaining,
      assembling, importing, exporting, distributing, handling, testing,
      servicing, repairing and otherwise dealing in electrical and electronic
      components, parts, fittings, accessories, equipment and materials of every
      kind and description, including but not limited to semiconductor
      components, parts, fittings, accessories, equipment and materials
      industry.

(b)   To carry out research and development work (including but not limited to
      investigations and experimental work) of every description in relation to,
      but not limited to, the electrical and electronic industry and the
      application and use thereof and to collect, collate, prepare and
      distribute (by way of sale, licence, concession or otherwise) the
      technology thereof and information and statistics relating thereto.

(c)   To carry out modification, repairs, overhaul and testing of electronics,
      components, parts, fittings and accessories including but not limited to
      semiconductor components, parts, fittings and accessories.

(d)   To train personnel including but not limited to personnel for the
      electrical and electronic industry and to advance the skills of such
      persons.

     *The name of the Company was changed to Chartered Semiconductor
      Manufacturing Ltd on 31 October 1995.
<PAGE>   7
                                     - 2 -

(e)    To manufacture, buy, sell, maintain, repair, provide technical services,
       alter and otherwise deal in apparatus, plant, machinery, fittings,
       furnishings, tools, materials, products and things of all kinds capable
       of being used for the purposes of the abovementioned businesses or any of
       them or likely to be required in relation thereto.

(f)    To develop and turn to account any land acquired by or in which the
       Company is interested, and in particular by laying out and preparing the
       same for building purposes, constructing, altering, pulling down,
       decorating, maintaining, furnishing, fitting up and improving building,
       and by planting, paying, draining, farming, cultivating, letting on
       building lease or building agreement, and by advancing money to and
       entering into contract and arrangements of all kinds with builders,
       tenants and others.

(g)    To purchase or otherwise acquire for investment lands, houses, theatres,
       buildings, plantations, and immovable property of any description or any
       interest therein.

(h)    To purchase, establish and carry on business as general merchants,
       manufacturers, importers, exporters, commission agents, del credere
       agents, removers, packers, storers, storekeepers, factors and
       manufacturers of and dealers in foreign and local produce, manufactured
       goods, materials and general merchandise and to import, buy, prepare,
       manufacture, render marketable, sell, barter, exchange, pledge, charge,
       make advances on and otherwise deal in or turn to account, produce goods,
       materials and merchandise generally either in their prepared,
       manufactured or raw state and to undertake, carry on and execute all
       kinds of commercial trading and other manufacturing operations and all
       business whether wholesale or retail usually carried on by merchants.

(i)    To buy, sell, manufacture, repair, alter, improve, exchange, let out on
       hire, import, export and deal in all works, plant, machinery, tools,
       utensils, appliances, apparatus, products, materials, substances,
       articles and things capable of being used in any business which this
       company is competent to carry on or required by any customers of or
       persons having dealings with the company or commonly dealt in by persons
       engaged in any such business or which may seem capable of being
       profitably dealt with in connection therewith and to manufacture,
       experiment with, render marketable and deal in all products of residual
       and by-products incidental to or obtained in any of the businesses
       carried on by the company.

(j)    To purchase or otherwise acquire and hold and charter ships and vessels
       of all kinds.

(k)    To purchase take on lease or in exchange hire or otherwise acquire any
       real or personal property licenses rights or privileges which the company
       may think necessary or convenient for the purposes of its business and to
       construct, maintain and alter any buildings or works necessary or
       convenient for the purposes of the company.

<PAGE>   8
                                     - 3 -

(l)    To purchase or otherwise acquire, issue, re-issue, sell, place, and deal
       in shares, stocks, bonds, debentures and securities of all kinds.

(m)    To apply for purchase or otherwise acquire any patents, brevets
       d'invention, licences, concessions and the like, conferring any exclusive
       or non-exclusive or limited right to use or any secret or other
       information as to any invention or preparation which may seem capable of
       being used for any of the purposes of the company or the acquisition of
       which may seem calculated directly or indirectly to benefit the company
       and to use, exercise, develop or grant licences in respect of or
       otherwise turn to account the property rights or information so acquired.

(n)    To erect, construct, lay down, enlarge, alter and maintain any roads,
       railways, tramways, sidings, bridges, reservoirs, ship building yards,
       shops, stores, factories, building works, plant and machinery necessary
       to convenient for the company's business, and to contribute to or
       subsidise the erection, construction and maintenance of any of the above.

(o)    To borrow or raise or secure the payment of money for the purposes of or
       in connection with the company's business, and for the purposes of or in
       connection with the borrowing or raising of money by the company to
       become a member of any building society.

(p)    To mortgage and charge the undertaking of all or any of the real and
       personal property and assets, present or future, and all or any of the
       uncalled capital for the time being of the company, and to issue at par
       or at premium or discount, and for such consideration and with and
       subject to such rights, powers, privileges and conditions as may be
       thought fit, debentures or debenture stock, either permanent or
       redeemable or repayable, and collaterally or further to secure any
       securities of the company by a trust deed or other assurance.

(q)    To issue and deposit any securities which the company has power to issue
       by way of mortgage to secure any sum less than the nominal amount of such
       securities, and also by way of security for the performance of any
       contracts or obligations of the company or of its customers or other
       persons or corporations having dealings with the company, or in whose
       business or undertakings the company is interested, whether directly or
       indirectly.

(r)    To guarantee the obligations and contracts of customers and others.

(s)    To make advances to customers and others with or without security, and
       upon such terms as the Company may approve.

<PAGE>   9
                                      -4-


(t)   To grant pensions, allowances, gratuities and bonuses to officers,
      ex-officers, employees or ex-employees of the company or its predecessors
      in business or the dependants or connections of such persons, to
      establish and maintain or concur in establishing and maintaining trusts,
      funds or schemes (whether contributory or non-contributory) with a view
      to provide pensions or other benefits for any such persons as aforesaid,
      their dependants or connections, and to support or subscribe to any
      charitable funds or institutions, the support of which may, in the
      opinion of the directors, be calculated directly or indirectly to benefit
      the company or its employees, and to institute and maintain any club or
      other establishment or profit-sharing scheme calculated to advance the
      interests of company or its officers or employees.

(u)   To draw, make, accept, endorse, negotiate, discount and execute
      promissory notes, bills of exchange and other negotiable instruments.

(v)   To invest and deal with the moneys of the company not immediately required
      for the purposes of its business in or upon such investments or
      securities and in such manner as may from time to time be determined.

(w)   To pay for any property or rights, acquired by the company, either in
      cash or fully or partly paid-up shares, with or without preferred or
      deferred or special rights or restrictions in respect of dividend,
      repayment of capital, voting or otherwise, or by any securities which the
      company has power to issue, or partly in one mode and partly in another,
      and generally on such terms as the company may determine.

(x)   To accept payment for any property or rights sold or otherwise disposed
      of or dealt with by the company, either in cash, by instalments or
      otherwise, or in fully partly paid-up shares of any company or
      corporation, with or without deferred or preferred or special rights or
      restrictions in respect of dividend, repayment of capital, voting or
      otherwise, or in debentures or mortgage debentures or debenture stock,
      mortgages, or other securities of any company or corporation, or partly
      in one mode and partly in another, and generally on such terms as the
      company may determine, and to hold, dispose of or otherwise deal with any
      shares, stock or securities so acquired.

(y)   To enter into any partnership or joint-purpose arrangement or arrangement
      for sharing profits, union of interests or co-operation with any company,
      firm or person carrying on or proposing to carry on any business within
      the objects of this company, and to acquire and hold, sell, deal with or
      dispose of shares, stock or securities of any such company, and to
      guarantee the contracts or liabilities of, or the payment of the
      dividends, interests or capital of any shares, stock or securities of and
      to subsidise or otherwise assist any such company.

(z)   To make donations for patriotic or for charitable purposes.

<PAGE>   10
                                     - 5 -


(aa)  To transact any lawful business in aid of the Republic of Singapore in the
      prosecution of any war in which the Republic of Singapore is engaged.

(bb)  To establish or promote or concur in establishing or promoting any other
      company whose objects shall include the acquisition and taking over of
      all or any of the assets and liabilities of this company or the promotion
      of which shall be any manner calculated to advance directly or indirectly
      the objects or interests of this company, and to acquire and hold or
      dispose of shares, stocks or securities of and guarantee the payment of
      the dividends, interest or capital of any shares, stock or securities
      issued by or any other obligations of any such company.

(cc)  To purchase or otherwise acquire and undertake all or any part of the
      business, property, assets, liabilities and transactions of any person,
      firm or company carrying on any business which this company is authorised
      to carry on.

(dd)  To sell, improve, manage, develop, turn to account, exchange, let on
      rent, royalty, share of profits or otherwise, grant licences, easements
      and other rights in or over, and in any other manner deal with or dispose
      of the undertaking and all or any of the property and assets for the time
      being of the company for such consideration as the company may think fit.

(ee)  To amalgamate with any other company whose objects are or include objects
      similar to those of this company, whether by sale or purchase (for fully
      or partly paid-up shares or otherwise) of the undertaking, subject to
      the liabilities of this or any such other company as aforesaid, with or
      without winding up, or by sale or purchase (for fully or partly paid-up
      shares or otherwise) of all or a controlling interest in the shares or
      stock of this or any such other company as aforesaid, or by partnership,
      or any arrangement of the nature of partnership, or in any other manner.

(ff)  To distribute among the members in specie any property of the company, or
      any proceeds of sale or disposal of any property of the company, but so
      that no distribution amount to a reduction of capital be made except with
      the sanction (if any) for the time being required by law.

(gg)  To do all or any of the above things in any part of the world, and either
      as principals, agents, trustees, contractors or otherwise, and either
      alone or in conjunction with others, and either by or through agents,
      trustees, sub-contractors or otherwise.

(hh)  To do all such things as are incidental or conducive to the above objects
      or any of them.




<PAGE>   11
                                      -6-


      AND IT IS HEREBY declare that the word "company", save when used in
reference to this company in this clause shall be deemed to include any
partnership or other body of persons, whether incorporated or not incorporated,
whether domiciled in Singapore or elsewhere. None of the sub-clauses of this
clause or the objects therein specified or the powers thereby conferred shall
be deemed subsidiary or auxiliary merely to the objects mentioned in the first
sub-clause of this clause, the intention being that the objects specified in
each sub-clause of this clause shall, except where otherwise expressed in such
clause, be independent main objects and shall be in no wise limited or
restricted by reference to or interference from the terms of any other
sub-clause or the name of the company, but the company shall have full power to
exercise all or any of the powers conferred by any part of the world and
notwithstanding that the business undertaking, property or act proposed to be
transacted, acquired, dealt with or performed does not fall within the objects
of the first sub-clause of this clause.

4.    The liability of the members is limited.

5.    The authorised capital of the Company is $34,856,000/-*#@ divided into
      11,400,000#@ Preferred Shares of $2.20 each and 20,000,000**#@ Ordinary
      Shares of 48.88 cents each, and the Company shall have power to increase
      or reduce the capital to consolidate or subdivide the shares into shares
      of larger or smaller amounts, and to issue all or any part of the original
      or any additional capital as fully paid or partly paid shares and with any
      special or preferential rights or privileges or subject to any special
      terms or conditions, and either with or without any special designation,
      and also from time to time alter, modify, commute, abrogate or deal with
      any such rights, privileges, terms, conditions or designations in
      accordance with the regulations for the time being of the Company.

                         -----------------------------

*     By an Ordinary Resolution passed:-

      (i)   on 23 December 1991, the authorised share capital of the Company was
            increased to S$100,000,000.28 by the creation of 133,273,323 new
            Ordinary Shares of $0.4888 each; and

      (ii)  on 13 March 1992, the authorised share capital of the Company was
            increased to S$200,000,000.09 by the creation of 204,582,651 new
            Ordinary Shares of S$0.4888 each.

**    By an Ordinary Resolution passed:-

      (i)   on 23 December 1991, 133,273,323 new Ordinary Shares of S$0.4888
            each were created, thereby increasing the number of Ordinary Shares
            to 153,273,323 Ordinary Shares of S$0.4888 each; and

      (ii)  on 13 March 1992, 204,582,651 new Ordinary Shares of S$0.4888 each
            were created, thereby increasing the number of Ordinary Shares to
            357,855,974 Ordinary Shares of S$0.4888 each.

#     By a Special Resolution passed on 31 January 1994:-

      (i)   8,197,853 issued Preferred Shares of $2.20 each were subdivided and
            converted into 36,897,047 Ordinary Shares of 48.88 cents each and
            one Ordinary Share of 2.63 cents;

      (ii)  the authorised share capital of the Company was increased to
            $200,000,000.5525 by the creation of one Ordinary Share of 46.25
            cents;

      (iii) the one Ordinary Share of 46.25 cents was issued and consolidated
            with the one Ordinary Share of 2.63 cents to create one Ordinary
            Share of 48.88 cents;

      (iv)  3,202,147 unissued Preferred Shares of $2.20 each were cancelled;
            and

      (v)   the authorised share capital of the Company was increased to
            $800,000,000.4256 divided into 1,636,661,212 Ordinary Shares of
            48.88 cents each, by the creation of 1,241,908,190 Ordinary Shares
            of 48.88 cents each.

<PAGE>   12
@    By a Special Resolution passed on 14 October 1999:

     (i)    all unissued "A" and "B" shares were cancelled;

     (ii)   all the special rights or privileges attached to the "B" Shares
            were abrogated, cancelled and rescinded;

     (iii)  all the existing "A" and existing "B" were redesignated as ordinary
            shares of $0.4888 each in the capital of the Company;

     (iv)   each of the existing ordinary shares of $0.4888 each in the capital
            of the Company was sub-divided into 1.88 ordinary shares of $0.26
            each; and

     (v)    the authorised share capital of the Company was increased to
            $800,000,000.540.

<PAGE>   13


                                      -7-


     We, the several persons whose names, addresses and descriptions are
hereunto subscribed, are desirous of being formed into a Company in pursuance
of this Memorandum of Association, and we respectively agree to take the number
of shares in the Capital of the Company set opposite to our respective names.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
                                                                Number of Shares
Names, Addresses and Descriptions of Subscribers                 taken by each
                                                                   Subscriber.
- --------------------------------------------------------------------------------
<S>                                                                <C>

/s/ LIM MING SEONG                                                   ONE

Lim Ming Seong                                                     One (1)
69 Chartwell Road                                                  Preferred
Singapore 1955                                                     Share

Group Managing Director



/s/ TOH KIM HUAT                                                     ONE

Toh Kim Huat                                                       One (1)
17A Dunbar Walk                                                    Ordinary
Singapore 1544                                                     Share

General Manager


- --------------------------------------------------------------------------------

          Total number of shares taken .........................   Two (2)

- --------------------------------------------------------------------------------
</TABLE>

Dated this 13th day of November, 1987

Witness to the above signatures:

                                     /s/ TAN BAR TIEN

                                     TAN BAR TIEN, Advocate and Solicitor
                                     B.T. TAN & COMPANY
                                     No. 10, Anson Road,
                                     #20-15, International Plaza,
                                     Singapore 0207



<PAGE>   14




              ----------------------------------------------------


                           NEW ARTICLES OF ASSOCIATION

                                       OF

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                    (ADOPTED BY SPECIAL RESOLUTION PASSED ON
                               14TH OCTOBER, 1999)

              ----------------------------------------------------










                                ALLEN & GLEDHILL,
                           36, ROBINSON ROAD, #18-01,
                                   CITY HOUSE,
                                SINGAPORE 068877.

<PAGE>   15
                                 C O N T E N T S

                                                                          PAGE
                                                                          ----

ARTICLES OF ASSOCIATION:-

        Preliminary                                                         1

        Share Capital                                                       2

        Issue of Shares                                                     3

        Variation of Rights                                                 3

        Alteration of Share Capital                                         4

        Shares                                                              5

        Share Certificates                                                  6

        Calls on Shares                                                     7

        Forfeiture and Lien                                                 8

        Transfer of Shares                                                  9

        Transmission of Shares                                             11

        Stock                                                              12

        General Meetings                                                   12

        Notice of General Meetings                                         12

        Proceedings at General Meetings                                    14

        Votes of Members                                                   15

        Corporations Acting by Representatives                             18

        Directors                                                          18

        Managing Director or Chief Executive Officer or President          19

        Appointment and Retirement of Directors                            20

        Alternate Directors                                                21


<PAGE>   16
                                       ii

                                 C O N T E N T S

                                                                          PAGE
                                                                          ----

        Meetings and Proceedings of Directors                              22

        Borrowing Powers                                                   24

        General Powers of Directors                                        24

        Secretary                                                          25

        The Seal                                                           25

        Authentication of Documents                                        25

        Reserves                                                           26

        Dividends                                                          26

        Capitalisation of Profits and Reserves                             28

        Accounts                                                           28

        Auditors                                                           29

        Notices                                                            29

        Winding Up                                                         30

        Indemnity                                                          31

        Secrecy                                                            31


<PAGE>   17
<TABLE>
<S>                                                                                     <C>
                          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,         Table "A" not to
Chapter 50 (as amended) shall not apply to the Company.                                 apply.

2.      In these presents (if not inconsistent with the subject or context) the         Interpretation.
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.

        "Seal"               The Common Seal of the Company.
</TABLE>

<PAGE>   18
<TABLE>
<S>                                                                                     <C>
                                       2


        "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.
</TABLE>

<PAGE>   19
<TABLE>
<S>                                                                                     <C>
                                       3


                                 SHARE CAPITAL

3.      The authorised share capital of the Company is $800,000,000.540 divided         Authorised share
into 3,076,923,079 ordinary shares of $0.26 each.                                       capital.


                                 ISSUE OF SHARES

4.      Subject to the Statutes and to these presents, no shares may be issued          Issue of Shares.
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        Rights of
value of issued preference shares shall not at any time exceed the total nominal        preference
value of the issued ordinary shares and preference shareholders shall have the          shareholders.
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               Variation of
different classes of shares, the special rights attached to any class may,              rights.
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
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<PAGE>   20
<TABLE>
<S>                                                                                     <C>
                                       4


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 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               Creation or
preferential rights shall not unless otherwise expressly provided by the terms          issue of further
of issue thereof be deemed to be varied by the creation or issue of further             shares with
shares ranking as regards participation in the profits or assets of the Company         special rights.
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           Power to
share capital by such sum to be divided into shares of such amounts as the              increase share
resolution shall prescribe.                                                             capital.

8.      (A)     The Company may by Ordinary Resolution in General Meeting give          Authority to
to the Directors a general authority, either unconditionally or subject to such         issue shares.
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:-                                        Power to
                                                                                        consolidate, cancel
</TABLE>

<PAGE>   21
<TABLE>
<S>                                                                                     <C>
                                       5


                (a)     consolidate and divide all or any of its share capital          and sub-divide
                        into shares of larger amount than its existing shares;          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 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                 Power to reduce
redemption reserve fund, share premium account or other undistributable reserve         share capital.
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,        Company may
purchase or otherwise acquire shares in the issued share capital of the Company         acquire its own
on such terms and in such manner as the Company may from time to time think fit.        issued ordinary
If required by the Statutes, any share which is so purchased or acquired by the         shares.
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         Exclusion of
as holding any share upon any trust, and the Company shall not be bound by or           equities.
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
</TABLE>

<PAGE>   22
<TABLE>
<S>                                                                                     <C>
                                       6


Depository Register in respect of that share.

12.     Without prejudice to any special rights previously conferred on the             Redeemable
holders of any shares or class of shares for the time being issued, any share in        preference
the Company may be issued with such preferred, deferred or other special rights,        shares.
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        Unissued shares.
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), 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          Power to pay
the Statutes to the full extent thereby permitted provided that the rate or             commission and
amount of the commissions paid or agreed to be paid shall be disclosed in the           brokerage.
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          Renunciation of
Directors shall allot shares applied for within thirty days of the closing date         allotment.
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        Form of share
the number and class of shares to which it relates and the amount paid up               certificate.
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              Rights and
persons as the registered holder of a share except in the case of executors or          liabilities of
administrators of the estate of a deceased member.                                      joint holders.
</TABLE>

<PAGE>   23
<TABLE>
<S>                                                                                     <C>
                                       7


        (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         Entitlement to
any) on each share certificate prior to the delivery thereof which the Directors        certificate.
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 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              Shares comprised
transferred the old certificate shall be cancelled and a new certificate for the        in certificate.
balance of such shares issued in lieu without charge.

20.     (A)     Any two or more certificates representing shares of any one             Surrender for
class held by any person whose name is entered in the Register of Members may at        cancellation of
his request be cancelled and a single new certificate for such shares issued in         certificate.
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                 Replacement of
certificate shall be defaced, worn out, destroyed, lost or stolen, it may be            certificate.
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
</TABLE>

<PAGE>   24
<TABLE>
<S>                                                                                     <C>
                                       8


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              Calls on shares
respect of any moneys unpaid on their shares (whether on account of the nominal         and time when
value of the shares or, when permitted, by way of premium) but subject always to        made.
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          Calls on shares
specifying the time or times and place of payment) pay to the Company at the            and when payable.
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.

23.     If a sum called in respect of a share is not paid before or on the day          Interest on
appointed for payment thereof, the person from whom the sum is due shall pay            calls.
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         Sum due on
of premium) which by the terms of issue of a share becomes payable upon                 allotment.
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              Rights of member
meeting or upon a poll, until he shall have paid all calls for the time being           suspended until
due and payable on every share held by him, whether alone or jointly with any           calls are duly
other person, together with interest and expenses (if any).                             paid.


26.     The Directors may on the issue of shares differentiate between the              Power to
holders as to the amount of calls to be paid and the times of payment.                  differentiate.

27.     The Directors may if they think fit receive from any member willing to          Payment in
advance the same all or any part of the moneys (whether on account of the               advance of calls.
nominal value of the shares or by way of premium) uncalled and unpaid upon the
</TABLE>

<PAGE>   25
<TABLE>
<S>                                                                                     <C>
                                       9


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        Notice requiring
due date for payment thereof, the Directors may at any time thereafter serve a          payment of calls.
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          Notice to state
from the date of service of the notice) on or before which and the place where          time and place.
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            Forfeiture on
with, any share in respect of which such notice has been given may at any time          non-compliance
thereafter, before payment of all calls and interest and expenses due in respect        with notice.
thereof has been made, be forfeited by a resolution of the Directors 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            Sale or
Company and may be sold, re-allotted or otherwise disposed of either to the             disposition of
person who was before such forfeiture or surrender the holder thereof or                forfeited or
entitled thereto or to any other person upon such terms and in such manner as           surrendered
the Directors shall think fit and at any time before a sale, re-allotment or            shares.
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         Rights and
be a member in respect of the shares but shall notwithstanding the forfeiture or        liabilities of
surrender remain liable to pay to the Company all moneys which at the date of           members whose
forfeiture or surrender were presently payable by him to the Company in respect         shares have been
of the shares with interest thereon at eight per cent. per annum (or such lower         forfeited or
rate as the Directors may determine) from the date of forfeiture or surrender           surrendered.
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                Company's lien.
</TABLE>

<PAGE>   26
<TABLE>
<S>                                                                                     <C>
                                       10


(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        Sale of shares
on which the Company has a lien, but no sale shall be made unless some sum in           subject to lien.
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           Application of
shall be applied in or towards payment or satisfaction of the debts or                  proceeds of such
liabilities and any residue shall be paid to the person entitled to the shares          sale.
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          Title to shares
the Secretary of the Company and that a share has been duly forfeited or                forfeited and
surrendered or sold to satisfy a lien of the Company on a date stated in the            right of
declaration shall be conclusive evidence of the facts therein stated as against         purchaser of
all persons claiming to be entitled to the share. Such declaration and the              such share.
receipt of the Company for the consideration (if any) given for the share on the
sale, re-allotment or disposal thereof together (where the 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               Form of transfer.
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
</TABLE>

<PAGE>   27
<TABLE>
<S>                                                                                     <C>
                                       11


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         Closing of
as the Directors may from time to time determine, provided always that such             Register of
Register shall not be closed for more than thirty days in any year.                     Members.

39.     There shall be no restriction on the transfer of fully paid up shares           Directors' right
(except where required by law) but the Directors may, in their sole discretion,         to refuse to
decline to register any transfer of shares upon which the Company has a lien and        register a
in the case of shares not fully paid up may refuse to register a transfer to a          transfer.
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               When Directors
instrument of transfer of shares unless:-                                               may refuse to
                                                                                        register a transfer.

                (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;

                (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        Notice on
within thirty days after the date on which the application for transfer was             refusal to
lodged with the Company send to the transferor and the transferee a notice in           register a
writing stating the reasons justifying the refusal to transfer and a notice of          transfer.
refusal as required by the Statutes.

42.     All instruments of transfer which are registered may be retained by the         Retention of
Company.                                                                                transfers.
</TABLE>

<PAGE>   28
<TABLE>
<S>                                                                                     <C>
                                       12


43.     There shall be paid to the Company in respect of the registration of any        Fee for
instrument of transfer or probate or letters of administration or certificate of        registration of
marriage or death or stop notice or power of attorney or other document relating        probate etc.
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            Destruction of
which have been registered at any time after the expiration of six years from           instrument of
the date of registration thereof and all dividend mandates and notifications of         transfer.
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.


                             TRANSMISSION OF SHARES

45.     (A)     In the case of the death of a member whose name is entered in           Transmission.
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
</TABLE>

<PAGE>   29
<TABLE>
<S>                                                                                     <C>
                                       13


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                   Persons becoming
consequence of the death or bankruptcy of a person whose name is entered in the         entitled to
Register of Members may (subject as hereinafter provided) upon supplying to the         shares on death
Company such evidence as the Directors may reasonably require to show his legal         or bankruptcy of
title to the share either be registered himself as holder of the share upon             member.
giving to the Company notice in writing of such 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           Rights of
person becoming entitled to a share pursuant to Article 45(A) or (B) or Article         persons entitled
46 (upon supplying to the Company such evidence as the Directors may reasonably         to shares on
require to show his title to the share) shall be entitled to the same dividends         transmission.
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            Power to convert
paid-up shares into stock and may from time to time by like resolution reconvert        into stock.
any stock into paid-up shares of any denomination.



49.     The holders of stock may transfer the same or any part thereof in the           Transfer of
same manner and subject to the same Articles as and subject to which the shares         stock.
from which the stock arose might previously to conversion have been transferred
(or as near thereto as circumstances admit) but no stock 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            Rights of
them, have the same rights, privileges and advantages as regards dividend,              stockholders.
return of capital, voting and other matters, as if they held the shares from
which
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<PAGE>   30
<TABLE>
<S>                                                                                     <C>
                                       14


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        Annual General
(within a period of not more than fifteen months after the holding of the last          Meeting.
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          Extraordinary
accordance with the Statutes, proceed with proper expedition to convene an              General Meeting.
Extraordinary General Meeting.


                           NOTICE OF GENERAL MEETINGS

53.     Any General Meeting at which it is proposed to pass a Special Resolution        Notice of
or (save as provided by the Statutes) a resolution of which special notice has          Meetings.
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.

54.     (A)     Every notice calling a General Meeting shall specify the place          Contents of
and                                                                                     notice.
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<TABLE>
<S>                                                                                     <C>
                                       15


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          Routine business.
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           Notice to state
accompanied by a statement regarding the effect of any proposed resolution on           effect of
the Company in respect of such special business.                                        special business.


                         PROCEEDINGS AT GENERAL MEETINGS

57.     The Chairman of the Board of Directors, failing whom the Deputy                 Chairman.
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
</TABLE>

<PAGE>   32
<TABLE>
<S>                                                                                     <C>
                                       16


choose one of their number) to be chairman of the meeting.

58.     No business other than the appointment of a chairman shall be transacted        Quorum.
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          If quorum not
such longer interval as the chairman of the meeting may think fit to allow) a           present,
quorum is not present, the meeting, if convened on the requisition of members,          adjournment or
shall be dissolved. In any other case it shall stand adjourned to the same day          dissolution of
in the next week (or if that day is a public holiday then to the next business          meeting.
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            Adjournment.
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           Notice of
give any notice of an adjournment or of the business to be transacted at an             adjournment.
adjourned meeting.

62.     If an amendment shall be proposed to any resolution under consideration         Amendment to
but shall in good faith be ruled out of order by the chairman of the meeting,           resolution.
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        Method of voting.
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
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<PAGE>   33
<TABLE>
<S>                                                                                     <C>
                                       17


                        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 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              Taking a poll.
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         Casting vote of
poll, the chairman of the meeting at which the show of hands takes place or at          Chairman.
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         Polls and
such subsequent time (not being more than 30 days from the date of the meeting)         continuance of
and place as the chairman may direct. No notice need be given of a poll not             business after
taken immediately. The demand for a poll shall not prevent the continuance of           demand for a
the meeting for the transaction of any business other than the question on which        poll.
the poll has been demanded.


                                VOTES OF MEMBERS

67.     Subject and without prejudice to any special privileges or restrictions         Voting rights of
as to voting for the time being attached to any special class of shares for the         members.
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.
</TABLE>

<PAGE>   34
<TABLE>
<S>                                                                                     <C>
                                       18


68.     In the case of joint holders of a share the vote of the senior who              Voting rights of
tenders a vote, whether in person or by proxy, shall be accepted to the                 joint holders.
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         Voting rights of
name called) has been appointed by any court claiming jurisdiction in that              receiver or
behalf to exercise powers with respect to the property or affairs of any member         court appointed
on the ground (however formulated) of mental disorder, the Directors may in             persons.
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          Rights to be
in respect of shares held by him to vote at a General Meeting either personally         present and to
or by proxy or to exercise any other right conferred by membership in relation          vote.
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         When objection
at the meeting or adjourned meeting at which the vote objected to is or may be          to admissibility
given or tendered and every vote not disallowed at such meeting shall be valid          of votes may be
for all purposes. Any such objection shall be referred to the chairman of the           made.
meeting whose decision shall be final and conclusive.

72.     On a poll, votes may be given either personally or by proxy and a person        Voting.
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        Appointment of
the same General Meeting provided that if the member is a Depositor, the Company        proxies.
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.
</TABLE>

<PAGE>   35
<TABLE>
<S>                                                                                     <C>
                                       19


        (B)     The Company shall be entitled and bound, in determining rights          Notes and
to vote and other matters in respect of a completed instrument of proxy                 instructions.
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,         Proportion in
the proportion of the shareholding concerned to be represented by each proxy            shareholding to
shall be specified in the form of proxy.                                                be represented
                                                                                        by proxies.

        (D)     A proxy need not be a member of the Company.                            Proxy need not
                                                                                        be a member.

74.     (A)     An instrument appointing a proxy shall be in writing in any             Instrument
usual or common form or in any other form which the Directors may approve and:-         appointing proxies.

                (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           Deposit of
such places (if any) as may be specified for that purpose in or by way of note          instrument of
to or in any document accompanying the notice convening the meeting (or, if no          proxy.
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        Rights of
demand or join in demanding a poll, to move any resolution or amendment thereto         proxies.
and to speak at the meeting.

77.     A vote cast by proxy shall not be invalidated by the previous death or          Intervening death
insanity of the principal or by the revocation of the appointment of the proxy          or insanity of
or of the authority under which the appointment was made provided that no               principal not to
                                                                                        revoke proxy.
</TABLE>

<PAGE>   36
<TABLE>
<S>                                                                                     <C>
                                       20


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           Corporation
its directors or other governing body authorise such person as it thinks fit to         acting by
act as its representative at any meeting of the Company or of any class of              representatives.
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

79.     The number of Directors shall not be less than two. All Directors of the        Number and
Company shall be natural persons.                                                       characteristics
                                                                                        of Director.

80.     A Director shall not be required to hold any shares of the Company by           No shares
way of qualification. A Director who is not a member of the Company shall               qualification
nevertheless be entitled to attend and speak at General Meetings.                       for Directors.

81.     The ordinary remuneration of the Directors shall from time to time be           Remuneration of
determined by an Ordinary Resolution of the Company, shall not be increased             Directors.
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               Extra
committee of the Directors, or who otherwise performs services which in the             remuneration.
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         Expenses.
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              Pensions etc.
</TABLE>

<PAGE>   37
<TABLE>
<S>                                                                                     <C>
                                       21


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          Holding of
arrangement or transaction to which the Company is a party or in which the              office of profit
Company is in any way interested and he may hold and be remunerated in respect          and contracting
of any office or place of profit (other than the office of Auditor of the               with company.
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               Declaration of
whether directly or indirectly duties or interests might be created in conflict         Director's
with his duties or interests as Director shall declare the fact and the nature,         conflict of
character and extent of the conflict at a meeting of the Directors of the               interest.
Company in accordance with the Statutes.

87.     (A)     The Directors may from time to time appoint one or more of their        Appointment to
body to be the holder of any executive office (including, where considered              be holder of
appropriate, the office of Chairman or Deputy Chairman) on such terms and for           executive office.
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          Powers of
executive office any of the powers exercisable by them as Directors upon such           executive office
terms and conditions and with such restrictions as they think fit, and either           holders.
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
</TABLE>

<PAGE>   38
<TABLE>
<S>                                                                                     <C>
                                       22


89.     The Directors may from time to time appoint one or more of their body to        Appointment of
be Managing Director or Chief Executive Officer or President of the Company and         Managing
may from time to time (subject to the provisions of any contract between him or         Director or
them and the Company) remove or dismiss him or them from office and appoint             Chief Executive
another or others in his or their place or places.                                      Officer or
                                                                                        President.

90.     A Managing Director or Chief Executive Officer or President shall not           Retirement
while he continues to hold that office be subject to retirement by rotation and         removal and
he shall not be taken into account in determining the rotation of retirement of         registration of
Directors but he shall, subject to the provisions of any contract between him           Managing
and the Company, be subject to the same provisions as to resignation and removal        Director or
as the other Directors of the Company and if he ceases to hold the office of            Chief Executive
Director from any cause he shall ipso facto and immediately cease to be a               Officer or
Managing Director or Chief Executive Officer or President.                              President.

91.     The remuneration of a Managing Director or Chief Executive Officer or           Remuneration of
President shall from time to time be fixed by the Directors and may subject to          Managing
these presents be by way of salary or commission or participation in profits or         Director or
by any or all these modes.                                                              Chief Executive
                                                                                        Officer or
                                                                                        President.

92.     A Managing Director or Chief Executive Officer or President shall at all        Powers of
times be subject to the control of the Directors but subject thereto the                Managing
Directors may from time to time entrust to and confer upon a Managing Director          Director or
or Chief Executive Officer or President for the time being such of the powers           Chief Executive
exercisable under these presents by the Directors as they may think fit and may         Officer or
confer such powers for such time and to be exercised on such terms and                  President.
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
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               Vacation of
events, namely:-                                                                        office of Director.

                (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
</TABLE>

<PAGE>   39
<TABLE>
<S>                                                                                     <C>
                                       23


                        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          Retirement of
being (or, if their number is not a multiple of three, the number nearest to but        Directors by
not less than one-third) shall retire from office by rotation. Provided that no         rotation.
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                 Selection of
retirement by rotation who have been longest in office since their last                 Directors to
re-election or appointment and so that as between persons who became or were            retire of
last re-elected Directors on the same day those to retire shall (unless they            rotation.
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                Filling vacated
provision of these presents may by Ordinary Resolution fill the office being            office.
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;

                (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         Appointment of
a single resolution shall not be moved at any General Meeting unless a                  Directors.
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.
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<TABLE>
<S>                                                                                     <C>
                                       24


98.     The Company may in accordance with and subject to the provisions of the         Removal of
Statutes by Ordinary Resolution of which special notice has been given remove           Director.
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               Directors' power
Director either to fill a casual vacancy or as an additional Director. Without          to fill casual
prejudice thereto the Directors shall have power at any time so to do, but any          vacancies and
person so appointed by the Directors shall hold office only until the next              appoint
Annual General Meeting. He shall then be eligible for re-election, but shall not        additional
be taken into account in determining the number of Directors who are to retire          Directors.
by rotation at such meeting.


                               ALTERNATE DIRECTORS

100.    (A)     Any Director may at any time by writing under his hand and              Appointment of
deposited at the Office, or delivered at a meeting of the Directors, appoint any        Alternate
person (other than another Director) to be his alternate Director and may in            Director.
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.

        (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 committee 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
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<PAGE>   41
<TABLE>
<S>                                                                                     <C>
                                       25


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           Meetings of
meet together for the despatch of business, adjourn and otherwise regulate their        Directors.
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                 Quorum.
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        Casting vote of
a majority of votes. In case of an equality of votes (except where only two             chairman.
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.

104.    A Director shall not vote in respect of any contract or arrangement or          Prohibition
any other proposal whatsoever in which he has any interest, directly or                 against voting.
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        Proceeding in
act for the purpose of filling up such vacancies or of summoning General                case of vacancy.
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.
                                                                                        Chairman of
106.    (A)     The Directors may elect from their number a Chairman and a
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<PAGE>   42
<TABLE>
<S>                                                                                     <C>
                                       26


Deputy Chairman (or two or more Deputy Chairmen) and determine the period for           Directors.
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         Resolution in
in the absence of the Chairman to preside at a meeting of the Directors or of           writing.
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         Committee of
for the time being shall be as effective as a resolution duly passed at a               Directors.
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                 Meetings of
committees consisting of one or more members of their body and (if thought fit)         committee.
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         Validity of act
by any person acting as a Director or as a member of any such committee, shall          of Directors in
as regards all persons dealing in good faith with the Company, notwithstanding          spite of formal
that there was defect in the appointment of any of the persons acting as                defect.
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.


                                BORROWING POWERS

111.    Subject as hereinafter provided and to the provisions of the Statutes,          Borrowing powers.
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.
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<PAGE>   43
<TABLE>
<S>                                                                                     <C>
                                       27


                           GENERAL POWERS OF DIRECTORS

112.    The business and affairs of the Company shall be managed by the                 General power of
Directors, who may exercise all such powers of the Company as are not by the            Directors to
Statutes or by these presents required to be exercised by the Company in General        manage Company's
Meeting, subject nevertheless to any regulations of these presents, to the              business.
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           Power to
any of the affairs of the Company, either in Singapore or elsewhere, and may            establish local
appoint any persons to be members of such local boards, or any managers or              boards etc.
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        Power to appoint
or otherwise appoint any company, firm or person or any fluctuating body of             attorney.
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        Power to keep
the powers in that behalf conferred by the Statutes cause to be kept a Branch           Branch Register.
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.

116.    All cheques, promissory notes, drafts, bills of exchange, and other             Execution of
negotiable or transferable instruments, and all receipts for moneys paid to the         negotiable
Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as          instruments and
the case may be, in such manner as the Directors shall from time to time by             receipts for
                                                                                        money paid.
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<PAGE>   44
<TABLE>
<S>                                                                                     <C>
                                       28


resolution determine.


                                    SECRETARY

117.    The Secretary shall be appointed by the Directors on such terms and for         Appointment and
such period as they may think fit. Any Secretary so appointed may at any time be        removal of
removed from office by the Directors, but without prejudice to any claim for            Secretary.
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        Usage of Seal.
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             Seal.
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           Official Seal.
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           Share Seal.
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          Power to
for the purpose shall have power to authenticate any documents affecting the            authenticate
constitution of the Company and any resolutions passed by the Company or the            documents and
Directors or any committee, and any books, records, documents and accounts              certified copies
relating to the business of the Company, and to certify copies thereof or               of resolutions
extracts therefrom as true copies or extracts; and where any books, records,            of the Company
documents or accounts are elsewhere than at the Office the local manager or             or the Directors.
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
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<PAGE>   45
<TABLE>
<S>                                                                                     <C>
                                       29


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 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         Power to carry
Company and carry to reserve such sums as they think proper which, at the               profits to
discretion of the Directors, shall be applicable for any purpose to which the           reserve.
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            Dividends.
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             Interim dividend.
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          Apportionment of
terms of issue thereof otherwise provide, all dividends shall (as regards any           dividends.
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           Dividend payable
distribution under the provisions of the Statutes.                                      only out of
                                                                                        profits.

127.    No dividend or other moneys payable on or in respect of a share shall           Dividend not to
bear interest as against the Company.                                                   bear interest.

128.    (A)     The Directors may retain any dividend or other moneys payable on        Retention of

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<PAGE>   46
<TABLE>
<S>                                                                                     <C>
                                       30


or in respect of a share on which the Company has a lien and may apply the same         dividend.
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 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              Waiver of
document (whether or not under seal) shall be effective only if such document is        dividend.
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            Payment of
Resolution direct payment of a dividend in whole or in part by the distribution         dividend in
of specific assets (and in particular of paid-up shares or debentures of any            specie.
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        Dividends
may be paid by cheque or warrant sent through the post to the registered address        payable by
appearing in the Register of Members or (as the case may be) the Depository             cheque or
Register of a member or person entitled thereto (or, if two or more persons are         warrant.
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         Payment of
the case may be) the Depository Register as joint holders of any share, or are          dividend to
entitled jointly to a share in consequence of the death or bankruptcy of the            joint holders.
holder, any one of them may give effectual receipts for any dividend or other
moneys
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<PAGE>   47
<TABLE>
<S>                                                                                     <C>
                                       31


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
resolution of the Company in General Meeting or a resolution of the Directors,          declaring
may specify that the same shall be payable to the persons registered as the             dividends.
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.


                     CAPITALISATION OF PROFITS AND RESERVES

134.    The Directors may, with the sanction of an Ordinary Resolution of the           Power to
Company, capitalise any sum standing to the credit of any of the Company's              capitalise
reserve accounts (including Share Premium Account, Capital Redemption Reserve           profits and
Fund or other undistributable reserve) or any sum standing to the credit of             implementation
profit and loss account by appropriating such sum to the persons registered as          of resolution to
holders of shares in the Register of Members or (as the case may be) in the             capitalise
Depository Register at the close of business on the date of the Resolution (or          profits.
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        Power to
other moneys provided for by Article 134, the Directors shall have power to             capitalise
capitalise any undivided profits or other moneys of the Company not required for        profits for
the payment or provision of the fixed dividend on any shares entitled to fixed          paying up shares
cumulative or non-cumulative preferential dividends (including profits or moneys        to be issued
carried and standing to any reserve or reserves) and to apply such profits or           under share
moneys in paying up in full at par unissued shares on terms that such shares            option scheme.
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.
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<PAGE>   48
<TABLE>
<S>                                                                                     <C>
                                       32


                                    ACCOUNTS

136.    Accounting records sufficient to show and explain the Company's                 Accounting
transactions and otherwise complying with the Statutes shall be kept at the             records.
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                Presentation of
prepared and to be laid before the Company in General Meeting such profit and           accounts.
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.

138.    A copy of every balance sheet and profit and loss account which is to be        Copies of
laid before a General Meeting of the Company (including every document required         accounts.
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          Validity of acts
acting as an Auditor shall, as regards all persons dealing in good faith with           of Auditor
the Company, be valid, notwithstanding that there was some defect in his                despite formal
appointment or that he was at the time of his appointment not qualified for             defects.
appointment or subsequently became disqualified.

140.    An Auditor shall be entitled to attend any General Meeting and to               Notices to
receive all notices of and other communications relating to any General Meeting         Auditors.
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         Service of
or delivered to any member by the Company either personally or by sending it            notice or
through the post in a prepaid cover addressed to such member at his registered          document.
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,
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<PAGE>   49
<TABLE>
<S>                                                                                     <C>
                                       33


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         Service of
stands first in the Register of Members or (as the case may be) the Depository          notice to joint
Register in respect of the share shall be sufficient notice to all the joint            holders.
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          Service of
of a member upon supplying to the Company such evidence as the Directors may            notices after
reasonably require to show his title to the share, and upon supplying also to           death,
the Company or (as the case may be) the Depository an address within Singapore          bankruptcy etc.
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 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            No notice to
supplied to the Company or (as the case may be) the Depository an address within        member with no
Singapore for the service of notices shall not be entitled to receive notices           registered
from the Company.                                                                       address in
                                                                                        Singapore.

                                   WINDING UP

145.    The Directors shall have power in the name and on behalf of the Company         Voluntary
to present a petition to the court for the Company to be wound up.                      winding up.

146.    If the Company shall be wound up (whether the liquidation is voluntary,         Distribution of
under supervision, or by the court) the Liquidator may, with the authority of a         assets in specie.
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
</TABLE>

<PAGE>   50
<TABLE>
<S>                                                                                     <C>
                                       34


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         Liquidators'
paid to a Liquidator without the prior approval of the members in General               commission.
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         Service of
who is not for the time being in the Republic of Singapore shall be bound,              notice after
within fourteen days after the passing of an effective resolution to wind up the        winding up.
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 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              Indemnity of
Statutes, every Director, Auditor, Secretary or other officer of the Company            Directors and
shall be entitled to be indemnified by the Company against all costs, charges,          office.
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
</TABLE>

<PAGE>   51
<TABLE>
<S>                                                                                     <C>
                                       35


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          Secrecy.
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.
</TABLE>



<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




NOTE: 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>   1

                                                                       EXHIBIT 5

                     [On the letterhead of Allen & Gledhill]

Chartered Semiconductor Manufacturing Ltd,
60, Woodlands Industrial Park D,
Street 2,
Singapore 738406.                                               October 25, 1999

Dear Sirs,

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 registration statement on Form F-1 filed by the
Company with the Securities and Exchange Commission ("SEC") in the United States
on 4 October 1999 (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,

                                             /s/  Allen & Gledhill

<PAGE>   1

                                                                     EXHIBIT 8.1

                        [LETTERHEAD OF LATHAM & WATKINS]


                                October 25, 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 (the "Company"), in connection with its issuance of up to 287,500,000
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 October 4, 1999, (file No. 333-88397) (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
October 25, 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,

                                            /s/ Latham & Watkins


<PAGE>   1

                          REDACTED FOR CONFIDENTIALITY             EXHIBIT 10.1



                              Dated 13 March, 1997



                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                     - and -


                           HEWLETT-PACKARD EUROPE B.V.


                                     - and -


                             EDB INVESTMENTS PTE LTD




                        ---------------------------------

                             JOINT VENTURE AGREEMENT

                        ---------------------------------


                       The Company - CSM - HP Confidential


<PAGE>   2

                                 C O N T E N T S

<TABLE>
<CAPTION>
CLAUSE   HEADING                                                        PAGE
- ------   -------                                                        ----
<S>      <C>                                                            <C>
1.       DEFINITIONS AND INTERPRETATION                                    1

2.       FORMATION OF THE COMPANY                                          5

3.       SHARE CAPITAL                                                     6

4.       COMPLETION                                                        9

5.       BOARD OF DIRECTORS                                               11

6.       BUSINESS OF THE COMPANY                                          18

7.       SHAREHOLDERS' OBLIGATIONS AND RIGHTS                             20

8.       MANAGEMENT OF THE COMPANY                                        23

9.       GENERAL MEETINGS                                                 24

10.      TRANSFER OF SHARES                                               25

11.      FINANCE                                                          32

12.      DIVIDEND POLICY                                                  32

13.      WARRANTIES AS TO AUTHORITY                                       33

14.      DEFAULT                                                          34

15.      GENERAL OBLIGATIONS OF SHAREHOLDERS                              35
</TABLE>



                       The Company - CSM - HP Confidential


<PAGE>   3

<TABLE>
<CAPTION>
CLAUSE   HEADING                                                        PAGE
- ------   -------                                                        ----
<S>      <C>                                                            <C>
16.      PREVALENCE OF AGREEMENT                                          36

17.      DURATION AND TERMINATION                                         36

18.      CONFIDENTIAL INFORMATION                                         36

19.      NOTICES AND GENERAL                                              37

         SCHEDULE         -   COLLATERAL AGREEMENTS                       42

         APPENDIX A       -   FIRST COMPANY BUSINESS PLAN

         APPENDIX B       -   ASSURED SUPPLY AND
                              DEMAND AGREEMENT 64-225

         APPENDIX C       -   TERM SHEET FOR
                              MANUFACTURING AGREEMENT

         APPENDIX D       -   LICENSE AND TECHNOLOGY
                              TRANSFER AGREEMENT 64-224

         APPENDIX E       -   OPTION AGREEMENT

         APPENDIX F       -   CSM SERVICE SUPPORT AGREEMENT

         APPENDIX G       -   STPL GROUP MANAGEMENT AND
                              SUPPORT SERVICES AGREEMENT

         APPENDIX H       -   MEMORANDUM AND ARTICLES
                              OF ASSOCIATION

         APPENDIX I       -   JTC OFFER LETTER AND PLAN OF
                              THE SITE FOR THE COMPANY FAB
</TABLE>



                       The Company - CSM - HP Confidential



<PAGE>   4


        THIS AGREEMENT is made on 13 March, 1997

BETWEEN:-

(1)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
        incorporated in Singapore with its registered office at 60, Woodlands
        Industrial Park D Street 2, Singapore 738406;

(2)     HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
        Netherlands with its principal place of business at Startbaan 16, 1187
        XR Amstelveen, The Netherlands; and

(3)     EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
        with its registered office at 250, North Bridge Road, #27-04, Raffles
        City Tower, Singapore 179101.

        WHEREAS:-

(A) CSM, HP and EDBI are desirous of establishing and operating a joint venture
company in Singapore for the purpose of undertaking the construction and setting
up of the Company Fab (as defined below) and carrying on the Business (as
defined below).

(B) To give effect to the intention of the parties as hereinbefore recited, and
to regulate their relationship inter se as shareholders in the joint venture
company in the conduct of the business and affairs of the joint venture company
in the spirit of mutual confidence and co-operation, the parties have agreed to
enter into this Agreement on the terms and conditions hereinafter set out.

        IT IS AGREED as follows:-

1.      DEFINITIONS AND INTERPRETATION

(A)     Definitions

        In this Agreement and the Schedule, unless the subject or context
otherwise requires, the following words and expressions shall have the following
meanings respectively ascribed to them:-

        "Act" means the Companies Act of Singapore, Chapter 50;



                       The Company - CSM - HP Confidential


<PAGE>   5

        "Articles" means the Articles of Association for the time being of the
        Company. The Articles upon incorporation of the Company shall be in the
        form attached hereto as Appendix H;

        "Assured Supply and Demand Agreement" has the meaning ascribed thereto
        in item 1 of the Schedule;

        "Auditors" means the auditors for the time being of the Company;

        "Board" means the Board of Directors for the time being of the Company;

        "Business" has the meaning ascribed thereto in Clause 6(A);

        "Call Option Period" has the meaning ascribed thereto in the Option
        Agreement;

        "Collateral Agreements" means the agreements referred to in the
        Schedule;

        "Company" has the meaning ascribed thereto in Clause 2(A);

        "Company Business Plan" has the meaning ascribed thereto in Clause
        3(A)(i);

        "Company Fab" means the fab to be constructed by the Company;

        "Completion" means completion of the subscription for ordinary shares in
        the capital of the Company by CSM, HP and EDBI pursuant to Clause 4;

        "Completion Date" means the date falling 30 days after the date of
        incorporation of the Company (or such other date as the parties may
        agree in writing);

        "CSM Fabs" means the fabs owned and operated by CSM;

        "CSM Option Shares" has the meaning ascribed thereto in the Option
        Agreement;

        "CSM Service Support Agreement" has the meaning ascribed thereto in item
        5 of the Schedule;

        "Debt/Equity Ratio" means the ratio of External Bank Borrowings to Total
        Shareholder Funds;



                                       2


                       The Company - CSM - HP Confidential


<PAGE>   6

        "Directors" means the Directors for the time being of the Company;

        "EDB" means the Economic Development Board, a statutory body established
        under the Economic Development Board Act of Singapore, Chapter 85;

        "External Bank Borrowings" means all and any liabilities of, or amounts
        due from, the Company to banks, financial institutions or EDB, excluding
        loans from Shareholders;

        "Hewlett-Packard Company" means Hewlett-Packard Company, a company
        incorporated in the State of California, United States of America with
        its principal place of business at 3000 Hanover Street, Palo Alto, CA
        94304, United States of America;

        "HP Option Shares" has the meaning ascribed thereto in the Option
        Agreement;

        "JTC" means Jurong Town Corporation, a body corporate established under
        the Jurong Town Corporation Act of Singapore, Chapter 150;

        "JTC Offer Letter" means the letter from JTC to STPL in respect of the
        grant by JTC of an offer to lease the Site to STPL, attached hereto as
        Appendix I;

        "License and Technology Transfer Agreement" has the meaning ascribed
        thereto in item 3 of the Schedule;

        "Memorandum" means the Memorandum of Association for the time being of
        the Company. The Memorandum upon incorporation of the Company shall be
        substantially in the form attached hereto as Appendix H;

        "Module A" means Module A of the Company Fab;

        "Module B" means Module B of the Company Fab;

        "Option Agreement" has the meaning ascribed thereto in item 4 of the
        Schedule;

        "Option Shares" has the meaning ascribed thereto in the Option
        Agreement;



                                       3


                       The Company - CSM - HP Confidential


<PAGE>   7

        "Shareholders" means CSM, HP, EDBI and any other person holding shares
        in the capital of the Company who shall have executed a deed of
        ratification and accession pursuant to Clause 10(E);

        "Shareholding Percentage" means the percentage of all ordinary shares
        beneficially owned by the relevant Shareholder in the issued share
        capital of the Company for the time being;

        "Singapore Dollars" and the sign "S$" mean the lawful currency of
        Singapore;

        "Singapore GAAP" means generally accepted accounting principles in
        Singapore;

        "Site" means a site in Woodlands, Singapore, designated as private lot
        number A12787(d) on the plan attached hereto as Appendix I;

        "STPL" means Singapore Technologies Pte Ltd a company incorporated in
        Singapore and the holding company of CSM;

        "STPL Group Management and Support Services Agreement" has the meaning
        ascribed thereto in item 6 of the Schedule;

        "Sub-Lease Agreement" means a sub-lease agreement to be made between
        STPL and the Company relating to the grant by STPL of a sub-lease of the
        Site to the Company;

        "Term Sheet for Manufacturing Agreement" has the meaning ascribed
        thereto in item 2 of the Schedule;

        "Total Shareholder Funds" means the share capital of the Company plus
        capital reserves and retained earnings to date, of the Company; and

        "U.S. GAAP" means generally accepted accounting principles in the United
        States of America.

(B)     Interpretation

(i)     Any reference in this Agreement to:-

        (a)     "Clauses", "Schedule" or "Appendices" are to the clauses of, and
                the schedule and the appendices to, this Agreement;



                                       4


                       The Company - CSM - HP Confidential


<PAGE>   8

        (b)     "financial year" means the period beginning on 1 January and
                ending on 31 December of a given year, except that the first
                financial year of the Company shall begin on the date of
                incorporation of the Company and end on 31 December 1997;

        (c)     "fab" means wafer fabrication facility;

        (d)     "loadings" means orders for the supply of wafers;

        (e)     "wafers" means semiconductor wafers; and

        (f)     the headings are for convenience only and shall not affect the
                interpretation of this Agreement.

(ii) Unless the context otherwise requires or permits, references to the
singular number shall include references to the plural number and vice versa;
references to natural persons shall include bodies corporate and vice versa; and
words denoting any gender shall include all genders.

(iii) The expressions "holding company", "wholly-owned subsidiary" and "related
corporation" shall bear the meanings respectively ascribed thereto in Sections
5, 5B and 6 of the Act.

2.      FORMATION OF THE COMPANY

(A)     Formation

        Prior to the Completion Date, CSM shall procure the formation and
incorporation in Singapore of a private company limited by shares (the
"Company") under the Act and the Company shall be called "Chartered Silicon
Partners Pte Ltd".

(B)     Memorandum and Articles

        The Memorandum and the Articles upon incorporation of the Company shall
be in the form attached hereto in Appendix H.

(C)     Initial Subscribers



                                       5


                       The Company - CSM - HP Confidential


<PAGE>   9

        The Memorandum shall initially be subscribed by two persons and CSM
shall appoint two persons to act as its nominees for such purpose. Such nominees
will each agree in the Memorandum to subscribe for one share of S$1 each in the
capital of the Company. The shares to be so subscribed for and to be issued by
the Company to the two nominees shall be transferred to CSM in the manner
provided in Clause 3(H).

3.      SHARE CAPITAL

(A)     Module A Investment

(i)     The Company Business Plan is an annual management process and document
        which defines and updates the purpose and scope of the Company for a
        three-year period. The first Company Business Plan which has been
        approved by the parties is attached hereto as Appendix A. The General
        Manager shall be responsible for overseeing the preparation of the
        Company Business Plan and shall seek the advice of the Management
        Committee (as defined in Clause 8(B)) in doing so.

(ii)    Based on the first Company Business Plan, the total investment to be
        incurred by the Company for Module A (the "Module A Investment") is
        estimated at the date hereof to be the sum of S$1,794,000,000.

(iii)   Unless otherwise unanimously agreed by the parties in writing, the
        Module A Investment to be incurred by the Company shall be funded as
        to:-

        (a)     S$720,000,000 by way of equity through the subscription for new
                ordinary shares from time to time in the capital of the Company
                in accordance with sub-Clauses (C), (D) and (E) below and Clause
                4(C); and

        (b)     the balance of the Module A Investment by way of external loans
                from EDB, banks or other financial institutions.

(B)     Authorised Capital

        The parties agree that the authorised share capital of the Company shall
on incorporation be S$1,000,000,000 divided into 1,000,000,000 ordinary shares
of S$1 each.

(C)     Committed Capital Contribution



                                       6


                       The Company - CSM - HP Confidential


<PAGE>   10

        Each of the Shareholders agrees and undertakes that it shall, at such
times and in such amounts as may be determined by the Board of Directors in
accordance with the approved Company Business Plan for each financial year, and
in accordance with sub-Clauses (D) and (E) below, make capital contributions by
way of subscription, in cash, for shares in the capital of the Company of up to
an aggregate of S$720,000,000 from all the Shareholders (the "Committed Capital
Contribution").

(D)     Issued Capital

        The parties agree that the issued and paid-up share capital of the
Company shall on incorporation be S$2 divided into two ordinary shares of S$1
each. On the Completion Date and contemporaneously with the execution of the
Collateral Agreements, the issued and paid-up share capital of the Company shall
be increased, in accordance with Clause 4(C), from S$2 divided into two ordinary
shares of S$1 each to S$25,000,000 divided into 25,000,000 ordinary shares of
S$1 each which issued and paid-up share capital shall be held by the parties in
the following Shareholding Percentages:-

<TABLE>
<CAPTION>
                          Percentage        Number of Shares          Paid in Capital
                          ----------        ----------------          ---------------
<S>                       <C>               <C>                        <C>
         CSM        :     51 per cent.      12,750,000                S$12,750,000

         HP         :     30 per cent.       7,500,000                S$ 7,500,000

         EDBI       :     19 per cent.       4,750,000                S$ 4,750,000
</TABLE>

(E)     Calls for Capital Contributions

(i) Each of the Shareholders further severally agrees that, subject to the
aggregate Committed Capital Contribution, it shall make such capital
contributions required of it in proportion to its Shareholding Percentage as at
the date of the call for such capital contributions. If any Shareholder (the
"Defaulting Shareholder") fails to subscribe for its Shareholding Percentage of
the call, any one or more of the other Shareholders who have so subscribed for
their respective Shareholding Percentages of such call shall, without prejudice
to any other rights and remedies such Shareholders may have, be entitled (but
shall not be obliged) to subscribe for the Defaulting Shareholder's Shareholding
Percentage of such call in proportion (as nearly as practicable) to their
respective Shareholding Percentages. For the purposes of this sub-Clause (E), a
non-defaulting Shareholder's Shareholding Percentage shall not be deemed to be
increased if such increase is due solely to a



                                       7


                       The Company - CSM - HP Confidential


<PAGE>   11

Defaulting Shareholder's failure to subscribe for its Shareholding Percentage of
a call for capital contributions.

(ii) The initial schedule of calls for capital contributions beyond the capital
contribution to be paid on the Completion Date is as follows:-

<TABLE>
<CAPTION>
Period                    4Q1997    1Q1998     3Q1998     1Q1999     2Q1999     1Q2000
                          ------    ------     ------     ------     ------     ------
<S>                       <C>       <C>        <C>        <C>        <C>        <C>
Call Amount
(S$'000,000)                 15         100       160         135       245         40
</TABLE>

where "Q" means such consecutive period of three months in each calendar year.

In approving the annual Company Business Plan for each financial year, the Board
may approve such modifications to the above initial schedule as may be
necessitated by the Company's capital requirements, and such approved schedule
shall be incorporated into the annual Company Business Plan. All calls for
capital contributions in accordance with the approved schedule of calls shall be
made upon 7 days' written notice to the Shareholders. Any calls for capital
contributions other than in accordance with the approved schedule of calls shall
be made upon 30 days' written notice to the Shareholders.

(F)     Increases in Capital

        Each of the Shareholders shall exercise its voting rights for the time
being in the Company and take such steps as for the time being lie within its
powers to procure that (save for the shares to be subscribed for pursuant to the
provisions of this Agreement) the issue of any unissued shares or of any new
shares from time to time created in the capital of the Company shall before
issuance be offered for subscription in the first instance to such persons as at
the date of the offer are registered as shareholders of the Company in
proportion as nearly as practicable to their respective Shareholding
Percentages.

(G)     Additional Capital

        The Shareholders agree that if the Board of Directors shall, after
giving consideration to the provisions of Clause 11(A) determine that additional
capital is required by the Company in excess of the Committed Capital
Contribution, each Shareholder shall have the right to subscribe for additional
shares in proportion (as nearly as practicable) to its Shareholding Percentage
at the relevant time. If one or more of the Shareholders fails to subscribe for
their proportion of the additional shares, their additional shares will be
offered to the remaining Shareholders in proportion (as nearly as practicable)
to their respective Shareholding Percentages.



                                       8


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<PAGE>   12

(H)     Nominee Shares

        The restrictions on the transfer of shares contained in Clause 10 and in
the Articles shall not apply to the shares to be subscribed for and transferred
to CSM pursuant to Clause 2(C) and as soon as practicable after the allotment
and issue of such shares, the nominees appointed by CSM shall transfer their
respective shares to CSM.

(I)     Ordinary Shares

        Unless otherwise unanimously agreed by the Shareholders from time to
time, the issued share capital of the Company shall comprise ordinary shares
only and no other classes of shares will be issued.

4.      COMPLETION

(A)     Completion

        Completion shall take place at the registered office of the Company (or
at such other place as the parties may agree in writing) on the Completion Date.

(B)     Conditions precedent

        Prior to the Completion Date:-

        (i)     the Company shall have received confirmation of the availability
                of loan financing (including guarantee facilities) from banks or
                other third parties (excluding EDB) in the amount of
                S$500,000,000 on terms acceptable to the parties;

        (ii)    the Company shall have received a letter (in a form acceptable
                to CSM, HP and EDBI) from EDB indicating the availability of a
                loan in the amount of S$450,000,000;

        (iii)   the Company shall have received a letter from EDB indicating ten
                year Pioneer Status under the Economic Expansion Incentives
                (Relief from Income Tax) Act, Chapter 86 or under any tax
                incentive scheme of the EDB or any other government authority;
                and



                                       9


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<PAGE>   13

        (iv)    the Company shall have received a letter from EDB indicating the
                availability of:-

                (a)     training and manpower grants of up to S$40,000,000 under
                        EDB's INTECH and Overseas Manpower Programme (OMP)
                        schemes, subject to a maximum of S$20,000,000 grant for
                        OMP; and

                (b)     a maximum of S$20,000,000 grant under the Innovation
                        Development Scheme.

(C)     Application for Shares etc.

        On the Completion Date:-

        (i)     CSM shall make an unconditional application in writing to the
                Company for the allotment to CSM for cash at par for 12,750,000
                ordinary shares of S$1 each in the capital of the Company and
                CSM shall pay the sum of S$12,750,000 to the Company by way of a
                cashier's order, or bank draft drawn on a licensed bank in
                Singapore and made out in favour of the Company, or wire
                transfer, or such other means acceptable to the parties;

        (ii)    HP shall make an unconditional application in writing to the
                Company for the allotment to HP for cash at par for 7,500,000
                ordinary shares of S$1 each in the capital of the Company and HP
                shall pay the sum of S$7,500,000 to the Company by way of a
                cashier's order, or bank draft drawn on a licensed bank in
                Singapore and made out in favour of the Company, or wire
                transfer, or such other means acceptable to the parties;

        (iii)   EDBI shall make an unconditional application in writing to the
                Company for the allotment to EDBI for cash at par for 4,750,000
                ordinary shares of S$1 each in the capital of the Company and
                EDBI shall pay the sum of S$4,750,000 to the Company by way of a
                cashier's order, or bank draft drawn on a licensed bank in
                Singapore and made out in favour of the Company, or wire
                transfer, or such other means acceptable to the parties;



                                       10


                       The Company - CSM - HP Confidential


<PAGE>   14

        (iv)    each of the parties shall procure the entry by the Company into,
                HP shall procure the entry by Hewlett-Packard Company into, and
                CSM shall enter into, the Assured Supply and Demand Agreement;

        (v)     each of the parties shall procure the entry by the Company into,
                HP shall procure the entry by Hewlett-Packard Company into, and
                CSM shall enter into, the Term Sheet for Manufacturing
                Agreement;

        (vi)    each of the parties shall procure the entry by the Company into,
                HP shall procure the entry by Hewlett-Packard Company into, and
                CSM shall enter into, the License and Technology Transfer
                Agreement;

        (vii)   each of the parties shall procure the entry by the Company into,
                and CSM shall enter into, the CSM Service Support Agreement;

        (viii)  each of the parties shall procure the entry by the Company into,
                and CSM shall procure the entry by STPL into, the STPL Group
                Management and Support Services Agreement; and

        (ix)    CSM, HP and EDBI shall enter into the Option Agreement.

(D)     Allotment of Shares

        Each of the parties shall take such action as may be necessary to ensure
that the Company makes simultaneous allotments of the ordinary shares so applied
for pursuant to sub-Clause (C) above on the Completion Date and each of such
ordinary shares so allotted shall on allotment rank pari passu in all respects
with each other and with the existing issued ordinary shares of the Company.

5.      BOARD OF DIRECTORS

(A)     Number

        Unless otherwise unanimously agreed by CSM, HP and EDBI, the Board shall
consist of not more than seven Directors.



                                       11


                       The Company - CSM - HP Confidential


<PAGE>   15

(B)     Composition

(i)     The Board shall initially comprise:-

        (a)     four persons appointed by CSM for the time being as Directors
                (who shall be designated as "CSM Directors");

        (b)     two persons appointed by HP for the time being as Directors (who
                shall be designated as "HP Directors"); and

        (c)     one person appointed by EDBI for the time being as Director (who
                shall be designated as an "EDBI Director").

(ii) CSM shall be entitled to appoint as Director(s) four persons for so long as
CSM's Shareholding Percentage exceeds 50 per cent.; three persons for so long as
CSM's Shareholding Percentage exceeds 30 per cent., two persons for so long as
CSM's Shareholding Percentage is equal to or exceeds 15 per cent., and one
person for so long as CSM's Shareholding Percentage is equal to or exceeds five
per cent.

(iii) HP shall be entitled to appoint as Director(s) two persons for so long as
HP's Shareholding Percentage is equal to or exceeds 15 per cent., and one person
for so long as HP's Shareholding Percentage is equal to or exceeds five per
cent. In the event that HP's Shareholding Percentage is less than five per
cent., CSM and HP shall upon the written request of HP, enter into discussions
in respect of (1) the HP Percentage Commitment and the Company Percentage
Commitment (as defined in the Assured Supply and Demand Agreement), and (2) HP's
right to continue to appoint one person as a Director.

(iv) EDBI shall be entitled to appoint as Director one person for so long as
EDBI holds any shares in the issued share capital of the Company.

(v) In the event that either CSM or HP purchases all of the Option Shares (as
defined in the Option Agreement), then such purchasing party shall be entitled
to appoint as Director, one additional person in place of the EDBI Director.

(vi) In the event that CSM purchases all of the CSM Option Shares and HP
purchases all of the HP Option Shares, with the result that CSM's Shareholding
Percentage is equal to 60 per cent. and HP's Shareholding Percentage is equal to
40 per cent., then HP shall be entitled to appoint as Director, one additional
person in place of the EDBI Director.



                                       12


                       The Company - CSM - HP Confidential


<PAGE>   16

(vii) Upon the written request of the other Shareholders, a Shareholder shall
forthwith remove the relevant number of Director(s) from office upon a reduction
in its Shareholding Percentage in the event that the number of Director(s) it
has appointed exceeds its entitlement under any of the foregoing paragraphs of
this sub-Clause (B).

(C)     Right of Appointment

        The right of appointment conferred on a Shareholder under sub-Clause (B)
above shall include the right of that Shareholder to remove at any time from
office such person appointed by that Shareholder as a Director and the right of
that Shareholder at any time and from time to time to determine the period
during which such person shall hold the office of Director.

(D)     Notice in Writing

        Each appointment or removal of a Director pursuant to this Clause shall
be in writing and signed by or on behalf of the Shareholder appointing or
removing such Director and shall be delivered to the registered office for the
time being of the Company.

(E)     Further Director

        Whenever for any reason a person appointed by a Shareholder ceases to be
a Director, that Shareholder shall be entitled to appoint forthwith a Director
in his stead.

(F)     Alternate Director

        A Director shall be entitled at any time and from time to time to
appoint any person to act as his alternate and to terminate the appointment of
such person and in that connection the provisions of the Articles shall be
complied with. Such alternate director shall be entitled while holding office as
such to receive notices of meetings of the Board and to attend and vote as a
Director at any such meetings at which the Director appointing him is not
present and generally to exercise all the powers, rights, duties and authorities
and to perform all functions of his appointment as the Director appointing him.
Further, such alternate director shall be entitled to exercise the vote of the
Director appointing him at any meetings of the Board and if such alternate
director represents more than one Director such alternate director shall be
entitled to one vote for every Director he represents.

(G)     Chairman



                                       13


                       The Company - CSM - HP Confidential


<PAGE>   17

        For so long as CSM's Shareholding Percentage exceeds 50 per cent., the
Chairman of the Board shall be a CSM Director nominated by CSM, subject to the
approval of the Board. In the case of an equality of votes at any meetings of
the Board or at any general meetings of the Company, the Chairman shall be
entitled to a second or casting vote.

(H)     Meetings of Directors

(i) Meetings of the Board shall be held at such times as the Board shall
determine. Unless otherwise agreed by the Shareholders, a meeting of the Board
shall be held at least once every three months during the first three years from
the Completion Date and thereafter, at least once every six months.

(ii) The quorum at a meeting of Directors necessary for the transaction of any
business of the Company shall be three Directors, including at least one CSM
Director, at least one HP Director and the EDBI Director. Not less than 30 days'
notice (or such shorter period of notice in respect of any particular meeting as
may be agreed by all Directors) specifying the date, place and time of the
meeting and the business to be transacted thereat shall be given to all
Directors.

(iii) In the event that a meeting of Directors duly convened cannot be held for
lack of a quorum, the meeting shall be adjourned to the same time and day of the
following week and at the same place or such other agreed upon date (within 30
days of the adjourned meeting date), place and time, and notice specifying the
date, place and time of such adjourned meeting shall be given to all Directors.
In the event that a meeting of Directors is adjourned twice for lack of a quorum
because of the absence of a Director appointed by the same Shareholder at each
of such inquorate meetings, the quorum for the third adjourned meeting shall be
two Directors comprising one Director appointed by each of the other two
Shareholders.

(iv) The Directors may participate in a meeting of the Directors by means of a
conference telephone or a video conference telephone or similar communications
equipment by which all persons participating in the meeting are able to hear and
be heard by all other participants without the need for a Director to be in the
physical presence of another Director(s) and participation in the meeting in
this manner shall be deemed to constitute presence in person at such meeting.
The Directors participating in any such meeting shall be counted in the quorum
for such meeting and subject to there being a requisite quorum under paragraphs
(ii) or (iii) above (as the case may be) at all times during such meeting, all
resolutions agreed by the Directors in such meeting shall be deemed to be as
effective as a resolution passed at a meeting in person of the Directors duly
convened and held. A meeting conducted by means of a conference telephone or a
video



                                       14


                       The Company - CSM - HP Confidential


<PAGE>   18

conference telephone or similar communications equipment as aforesaid is deemed
to be held at the place agreed upon by the Directors attending the meeting,
provided that at least one of the Directors present at the meeting was at that
place for the duration of the meeting.

(v) In the case of a meeting which is not held in person, the fact that a
Director is taking part in the meeting must be made known to all the other
Directors taking part, and no Director may intentionally disconnect or cease to
take part in the meeting unless he makes known to all other Directors taking
part that he is ceasing to take part in the meeting.

(vi) Save as provided in sub-Clause (I) below, all resolutions of the Directors
at a meeting or adjourned meeting of the Directors shall be adopted by a simple
majority vote of the Directors present. Save as provided in sub-Clause (G)
above, each Director shall have one vote.

(vii) All resolutions to be passed by way of circulation among the Directors
(referred to as a "resolution in writing") shall be dispatched to each Director
contemporaneously. A resolution in writing of the Directors shall be as valid
and effectual as if it had been a resolution passed at a meeting of the Board
duly convened and held if the resolution in writing is approved and signed by at
least one CSM Director, at least one HP Director and the EDBI Director and may
consist of several documents in the like form each signed by one or more of the
Directors. The Company Secretary shall notify all the Directors in writing of
the effective date on which such resolution is passed.

(viii) None of the following actions shall be taken by the Company unless
approved by a simple majority vote of the duly represented Directors at a duly
convened meeting :-

        (a)     the incurring by the Company of any capital expenditure in
                excess of S$10,000,000 unless included in an approved Company
                Business Plan; and

        (b)     the exercise of the Company's borrowing powers in relation to
                incremental loans carrying a loan tenure exceeding one year
                (other than those included in an approved Company Business
                Plan), or financing from new financial institutions.

(I)     Important Matters Requiring Board's Special Approval

(i) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of not less than three-quarters of the duly represented Directors at a
duly convened meeting:-



                                       15


                       The Company - CSM - HP Confidential


<PAGE>   19

        (a)     the approval of any annual Company Business Plan of the Company
                (other than the first Company Business Plan), provided however
                that in the event that the annual Company Business Plan has not
                been approved prior to the commencement of the new financial
                year of the Company, until a new Company Business Plan is so
                approved, the Company shall be operated in accordance with the
                Company Business Plan most recently approved by the Board;

        (b)     the lease of any real estate for an amount in excess of
                S$5,000,000 unless included in an approved Company Business
                Plan, or the purchase of any real estate;

        (c)     the entry of the Company into new markets outside of the
                Business unless contemplated in an approved Company Business
                Plan;

        (d)     any sale, lease, transfer, or other disposition of the
                properties or assets of the Company other than in the ordinary
                course of business of the Company;

        (e)     the approval of, or change in, the method of computing the fee
                payable under the CSM Service Support Agreement or the STPL
                Group Management and Support Services Agreement unless
                contemplated in an approved Company Business Plan;

        (f)     the termination of research and development services provided by
                CSM pursuant to the CSM Service Support Agreement, or change in
                the Fab Equalization policy specified in the CSM Service Support
                Agreement;

        (g)     the exercise of any of the Company's borrowing powers equal to
                or in excess of S$70,000,000 unless included in an approved
                Company Business Plan;

        (h)     the entry into any major alliance unless contemplated in an
                approved Company Business Plan. For the purposes of this
                sub-paragraph (h) the expression "major alliance" means any
                major transaction entered into by the Company other than in the
                ordinary course of business (1) pursuant to which the Company
                acquires or disposes of intellectual property or other
                technology rights, (2) pursuant to which the Company is
                restricted as a result of such transaction in the products or
                services which it may provide to its customers,



                                       16


                       The Company - CSM - HP Confidential


<PAGE>   20

                including HP, or (3) which creates or grants exclusive rights to
                another party or parties;

        (i)     the issue by the Company of any guarantee to secure the
                indebtedness of any person;

        (j)     the incurring by the Company of any capital expenditure in
                excess of S$70,000,000; and

        (k)     a change in the Debt/Equity Ratio policy specified in Clause
                11(B).

(ii) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of each of the CSM Directors, the HP Directors and the EDBI Director duly
represented at a duly convened meeting:-

        (a)     the change in the authorised, issued or paid-up capital of the
                Company (unless pursuant to Clauses 2(C), 3(C), 3(D), 3(E) and
                4(C)) or the grant of any option over the unissued share capital
                of the Company;

        (b)     the listing of the shares in the capital of the Company on any
                stock exchange;

        (c)     the winding-up, liquidation or dissolution of the Company or the
                merger, consolidation or reorganisation of the Company with any
                corporation, firm or other body;

        (d)     any transfer of shares held by a Shareholder in the capital of
                the Company unless in accordance with Clause 10, Clause 14(B) or
                the Option Agreement;

        (e)     the subscription for, or acquisition or disposal of, any shares
                or interests in any corporation;

        (f)     the entry into any joint venture; and

        (g)     the declaration by the Company of dividends for any financial
                year in excess of the lower of:-

                (1)     70 per cent. of the profit after tax of the Company for
                        that financial year; and

                (2)     50 per cent. of the retained earnings of the Company.



                                       17


                       The Company - CSM - HP Confidential


<PAGE>   21

6.      BUSINESS OF THE COMPANY

(A)     Business

(i) The Shareholders agree that the business of the Company (the "Business")
shall be the construction, ownership, operation and management of the Company
Fab as an independent dedicated foundry. The initial financial and business
plans for the Company Fab provide for Module A which will have an installed
wafer manufacturing capacity of up to 35,000 wafers per month based on 18 mask
layers. If the Company deems fit, it may construct Module B, which is also
expected to have an installed wafer manufacturing capacity of up to 35,000
wafers per month based on 18 mask layers.

(ii) The Shareholders agree that the Company shall not engage in the production
and sale of its own products with its own brand name. However, the Company may
undertake turnkey projects providing customers with manufacturing, assembly and
test services.

(B)     Technology License and Development

(i) It is recognised that one of the values HP sees in this joint venture is the
ability to port HP's designs directly to the Company Fab. To this end, the
parties agree that the processes which the Company will run will include,
without limitation, 0.35um and 0.25um (and beyond) process flows that are
compatible with HP's design requirements (the "HP-Compatible Process
Technology").

(ii) HP and CSM shall each license certain intellectual property rights related
to the manufacture of semiconductor wafers and integrated circuits to the
Company on the terms and conditions of the License and Technology Transfer
Agreement.

(iii) The Company shall license certain intellectual property rights related to
the manufacture of semiconductor wafers and integrated circuits to CSM and HP on
the terms and conditions of the License and Technology Transfer Agreement.

(iv) The Company shall establish a Technology Committee comprising nominees of
CSM, HP and the Company. The Technology Committee shall meet at least quarterly
(a) to discuss and address the identification and development of appropriate
process technologies to meet the Company's business objectives, and (b) to
establish the commonality between those processes and ones running or planned in
CSM as well as HP-Compatible Processes (as defined in the License



                                       18


                       The Company - CSM - HP Confidential


<PAGE>   22

and Technology Transfer Agreement). In doing so, the Technology Committee will
make recommendations on the collaboration between CSM, HP and the Company on the
required development and implementation plans for process technologies and will
construct a process technology roadmap for the Company to be approved by the
General Manager of the Company. The Technology Committee shall communicate its
recommendations and any decisions within its scope to the General Manager, with
a copy to each of the CSM, HP and EDBI Directors. On an annual basis, working
with the Management Committee, this information, as appropriate, shall become
incorporated into the Company Business Plan.

(C)     Assured Supply and Demand

(i) The Company shall make available to HP quantities of wafer manufacturing
capacity from the Company Fab on the terms and conditions of the Assured Supply
and Demand Agreement.

(ii) CSM shall provide bridge wafer manufacturing capacity to the Company from
CSM Fabs on the terms and conditions of the Assured Supply and Demand Agreement.

(D)     Services

(i) CSM shall provide accounting services; general administration services;
information technology services; human resources management; legal services;
sales and marketing services; research and development services; customer
engineering and support services; facilities design and construction, and
facility system services to the Company on the terms and conditions of the CSM
Service Support Agreement.

(ii) In addition to providing the services set forth in paragraph (i) above, CSM
shall load the Company Fab in accordance with the Fab Equalization policy
specified in the CSM Service Support Agreement.

(iii) STPL shall provide services in the areas of treasury, investment risk
review, governmental relations, business development, human resources management
and development, corporate secretarial matters and internal audit to the Company
on the terms and conditions of the STPL Group Management and Support Services
Agreement.

(iv) HP may provide services to the Company on such terms and conditions as may
be agreed between the Company and HP.



                                       19


                       The Company - CSM - HP Confidential


<PAGE>   23

(E)     Sub-Lease of Site

(i) STPL shall procure a lease of the Site from the JTC for the Company Fab. The
Company shall sub-lease the Site from STPL for the construction of Module A
pursuant to the Sub-Lease Agreement which will be substantially in accordance
with the terms set forth in the JTC Offer Letter. The Sub-Lease Agreement shall
be subject to the JTC's approval.

(ii) STPL shall reserve a part of the land adjacent to Module A for Module B
(the "Module B Site") for a period of three and a half years after the
groundbreaking date of Module A (the "Reserved Period") subject always to the
terms and conditions of the lease (or any other applicable agreement) to be made
between STPL and the JTC. The Company shall bear all costs associated with the
land for Module B during the Reserved Period (including, without limitation, all
fees payable to the JTC in respect of the reservation of the land for Module B).

(iii) In the event that CSM notifies the Company in writing during the Reserved
Period that it desires to utilise the Module B Site for CSM's own use or with
other joint venture partners, the Company shall respond to CSM's notice within
90 days thereof as to whether the Company agrees to release the Module B Site to
CSM. If the Company is not agreeable to such release, it shall groundbreak and
commence construction of Module B within 180 days of CSM's notice.

(iv) If the Company agrees to release the Module B Site to CSM, CSM shall pay to
the Company 50 per cent. of the associated costs (including, without limitation,
all fees paid to the JTC in respect of the reservation of the land for Module B)
during the Reserved Period and shall groundbreak and commence construction of a
CSM Fab on the Module B Site within 180 days of CSM's notice. CSM shall use its
commercially reasonable endeavours to secure on behalf of the Company other
sites in Woodlands, Singapore near the location of Module A as possible
expansion sites for the Company.

7.      SHAREHOLDERS' OBLIGATIONS AND RIGHTS

(A)     Shareholders' Obligations

        Except as the Shareholders may otherwise agree in writing or save as
otherwise provided or contemplated in this Agreement, each of the Shareholders
shall use commercially reasonable endeavours to exercise its powers in relation
to the Company so as to ensure that:-

        (i)     the Company carries on its business and conducts its affairs in
                a proper and efficient manner;



                                       20


                       The Company - CSM - HP Confidential


<PAGE>   24

        (ii)    the Company, and the Directors appointed by that Shareholder,
                will comply strictly and expeditiously with the provisions of
                this Agreement and the Articles;

        (iii)   the Business shall be carried on pursuant to the policies set
                out herein or laid down from time to time by the Board, which
                shall hold Board meetings in accordance with Clause 5(H) and the
                Articles;

        (iv)    the Company shall cause to be kept full and proper accounting
                records relating to the business, undertakings and affairs of
                the Company, which records shall be made available at all
                reasonable times for inspection by the Directors by prior
                appointment during office hours;

        (v)     the Company shall prepare annual accounts, in each case in
                accordance with Singapore GAAP and in compliance with all
                applicable legislation in respect of each accounting reference
                period (with reconciliation or restatements to U.S. GAAP to be
                prepared by the Auditors at the expense of HP, which expense
                shall not be incurred without the prior written approval of HP
                or Hewlett-Packard Company), and shall procure that such
                accounts are audited as soon as practicable and shall supply
                copies of the same both in draft and final form, to each of the
                Shareholders within 120 days after the end of the financial year
                of the Company;

        (vi)    the Company shall prepare and provide to each of the Directors:-

                (a)     unaudited monthly profit and loss statements within four
                        business days after the end of each calendar month;

                (b)     updated profit and loss forecast for the following month
                        within 10 business days after the end of each calendar
                        month; and

                (c)     unaudited monthly profit and loss statements, cashflow
                        and balance sheet within 30 days after the end of each
                        calendar month;

                in each case in accordance with Singapore GAAP (with
                reconciliation or restatements to U.S. GAAP to be prepared in
                accordance with guidelines provided by HP), and



                                       21


                       The Company - CSM - HP Confidential


<PAGE>   25

                (vii)   the Company shall do all that the Auditors may
                        reasonably require by way of keeping records and
                        accounts and provide the Auditors with all such
                        information and explanation as they may reasonably
                        require and otherwise assist the Auditors in all
                        reasonable ways.

(B)     Shareholders' Inspection Rights

        (i)     The Company shall permit each of CSM, HP and EDBI (for so long
                as its respective Shareholding Percentage is equal to or exceeds
                15 per cent.) to send a certified public accountant (the
                "Accountant"), at such Shareholder's expense, upon giving the
                Company reasonable notice and during reasonable business hours,
                to visit and inspect any of the properties of the Company, to
                examine its books of account and records and to discuss the
                Company's affairs, finances and accounts with its officers. The
                Company shall also provide such other information concerning the
                Company, its business, prospects, finances, employees, officers
                and directors, as such Shareholder may reasonably request,
                Provided, however, that the Company shall not be obliged
                pursuant to this sub-Clause (B)(i) to provide access to any
                information which it reasonably considers to be trade secret or
                similar confidential information, the disclosure of which the
                Company reasonably believes may adversely affect its business.
                Each of CSM, HP and EDBI may only exercise this right of
                inspection once every 12 months unless the purpose of such
                inspection is to ensure compliance with any irregularities noted
                in the inspection report of the Accountant, in which case such
                Shareholder is entitled to exercise its right of inspection once
                every calendar quarter, until the relevant remedial actions have
                been taken, in which case such Shareholder's right of inspection
                may thereafter be exercised only once every 12 months. The
                Accountant shall be appointed from among the firms of Arthur
                Andersen, Coopers & Lybrand, Deloitte & Touche, Ernst & Young,
                KPMG Peat Marwick, and Price Waterhouse or such other firm as
                the relevant Shareholder and the Company may agree.

        (ii)    The Company shall further permit each of CSM, HP and EDBI (for
                so long as its respective Shareholding Percentage is equal to or
                exceeds 15 per cent.), at such Shareholder's expense, upon
                giving the Company reasonable notice and during reasonable
                business hours, to visit and inspect any of the properties,
                facilities or operations of the Company, to examine its
                operating records and to discuss the Company's operations with
                its officers for the purposes of



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                evaluating and auditing the same as regards environmental
                protection, worker health and safety, risk management and loss
                control and the Company's compliance with applicable laws with
                respect thereto; provided, however, that the Company shall not
                be obligated pursuant to this sub-Clause (B)(ii) to provide
                access to any information which it reasonably considers to be
                trade secret or similar confidential information, the disclosure
                of which the Company reasonably believes may adversely affect
                its business. An inspecting Shareholder shall be entitled to
                have up to three representatives on the Company's premises at
                any inspection and each such inspection shall be conducted so as
                not to unduly disrupt normal business operations. With regard to
                each of the following areas: (a) environmental protection, (b)
                worker health and safety, and (c) risk management and loss
                control, each of CSM, HP and EDBI may only exercise this right
                of inspection once every 12 months unless such inspection
                reveals any non-compliance with applicable laws, in which case
                such Shareholder is entitled to exercise its right of inspection
                once every calendar quarter, until the relevant remedial actions
                have been taken, in which case such Shareholder's right of
                inspection may thereafter be exercised only once every 12
                months. For clarification, each of CSM, HP and EDBI may send
                inspection teams in each of the areas listed above once every 12
                months and such visits do not need to be simultaneous with
                visits from the other Shareholders or from such Shareholder's
                other inspection teams.

8.      MANAGEMENT OF THE COMPANY

(A)     General Manager

        The General Manager of the Company shall be appointed by CSM in
consultation with HP. The General Manager shall be responsible for the day to
day running and management of the business of the Company within the limits
imposed by the Board, this Agreement and his contract of service, if any, with
the Company.

(B)     Management Committee

        The Company shall establish a Management Committee based in Singapore
comprising three members with one nominee of CSM, one nominee of HP and the
General Manager (the "Management Committee"). The Management Committee shall
review decisions on the allocation of loadings made by the CSM central planning
organization carried out between the CSM Fabs and the Company Fab, the timing of
technology introductions and the recommendations made by the



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Technology Committee to meet Company business objectives and to meet current and
future customer commitments and required qualifications. The Management
Committee will also review and make recommendations to the General Manager, as
appropriate, on pricing structure, capacity and mix of processes and other
operational issues relating to the Company. The Management Committee will also
provide advice to the General Manager in connection with the preparation of the
Company Business Plan.

(C)     Employees

(i) CSM and HP shall each contribute such manpower resources, either on a
contract or secondment basis, as may be required by the Company on such terms as
may be agreed in writing with the Company. To promote installation and practice
of the HP-Compatible Process Technology at the Company, construct operational
links into HP and share best practices with HP, HP will locate a team of not
more than 15 persons at the Company.

(ii) The Company shall be responsible for the costs and expenses associated with
such manpower resources as described in sub-Clause (C)(i) above. In addition,
the Company shall be responsible for all employee costs and expenses (including
salaries and living allowances) of all HP employees, including administrative,
engineering, and research and development staff, requested or approved by the
Company on such terms as may be agreed in writing between HP and the Company.

(iii) Notwithstanding sub-Clauses (C)(i) and (ii) above, HP may at its own
expense from time to time, upon giving reasonable prior written notice to the
Company, locate HP's employees at the Company.

(iv) The parties presently do not envisage that the Company will establish an
employee share option scheme. However, in the event that the employees of the
Company participate in CSM's employee share ownership scheme, the Company shall
pay to CSM the cost of acquisition, if any (such as, where applicable,
compensation charges pursuant to U.S. GAAP, charges on the issuance of shares at
a discount) of such shares in CSM as may be allocated to such employees.

9.      GENERAL MEETINGS

        No business shall be transacted at any general meeting of the Company
unless a quorum of Shareholders is present throughout the meeting. The quorum
for all general meetings (other than an adjourned meeting) of Shareholders shall
comprise three Shareholders present throughout the meeting, comprising the
proxies or representatives of CSM, HP and EDBI respectively. In the



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event that a general meeting duly convened cannot be held for lack of a quorum,
the meeting shall be adjourned to the same time and day of the following week
and at the same place or such other agreed upon date (within 30 days of the
adjourned meeting date), place and time, and notice specifying the date, place
and time of such adjourned meeting shall be given to all Shareholders. In the
event that a general meeting is adjourned twice for lack of a quorum because of
the absence of the same Shareholder at each of such inquorate meetings, the
quorum for the third adjourned meeting shall be the other two Shareholders.

10.     TRANSFER OF SHARES

(A)     Moratorium on Transfer

        Notwithstanding anything contained in this Agreement or the Articles but
subject to sub-Clauses (D) and (F) below and Clauses 3(H) and 14(B):-

(i)     neither CSM nor HP shall transfer all or any part of its shares in the
        capital of the Company to any person within a period of four years after
        the Completion Date unless with the prior written consent of all the
        other Shareholders; and

(ii)    EDBI shall not transfer all or any of the Option Shares in the capital
        of the Company to any person prior to the expiration of the Call Option
        Period unless such transfer is pursuant to the Option Agreement or
        unless with the prior written consent of all the other Shareholders.

(B)     Restriction on Transfer

(i)     No Shareholder shall create or have outstanding any pledge, lien, charge
        or other encumbrance or security interest on or over any shares in the
        capital of the Company or any part of its interest in such shares.

(ii)    Subject to sub-Clause (A) above and sub-Clauses (C), (D) and (F) below,
        no Shareholder shall transfer shares held by it in the capital of the
        Company or otherwise sell, dispose of or deal with all or any part of
        its interest in such shares unless and until the rights of pre-emption
        conferred by this sub-Clause (B) have been exhausted or waived by each
        of the other Shareholders. A waiver of its rights of pre-emption by a
        Shareholder in respect of any transfer shall not be revocable in respect
        of such transfer.



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(iii)   Subject to sub-Clause (A) above and sub-Clauses (C), (D) and (F) below,
        every Shareholder who desires to transfer any shares (the "Transferor")
        shall give to the Company notice in writing of such desire (a "Transfer
        Notice"). The Transfer Notice shall specify the number of shares offered
        for sale (the "Sale Shares"), the proposed sale price thereof and
        whether it is a condition that all (and not some only) of the Sale
        Shares shall be purchased.

(iv)    Subject as hereinafter mentioned, a Transfer Notice shall designate the
        Company as the Transferor's agent for the sale of the Sale Shares to all
        the Shareholders other than the Transferor and any Shareholder who has
        waived its right of pre-emption (the "Other Shareholders") at the
        Prescribed Price (as defined below). A Transfer Notice shall not be
        revocable except with the sanction of the Board or in the events
        specified in paragraphs (v) and (xi) below.

(v)     The Prescribed Price shall be:-

        (a)     the price specified in the Transfer Notice, if it is agreed to
                by all the Other Shareholders collectively (such agreement to be
                evidenced by notice in writing to the Company within 60 days
                from the date of the Transfer Notice) or failing agreement, the
                Company shall appoint the Auditors or an appraiser (as the case
                may be) within 14 days from the expiry of the said 60 days, and
                the Prescribed Price shall be;

        (b)     the price which the Auditors shall, within 30 days (or such
                other time period as the Auditors may reasonably require) of the
                Company's written request to the Auditors, certify in writing to
                be in their opinion the fair value thereof, or in the event that
                the Transferor or any of the Other Shareholders do not agree to
                the appointment of the Auditors for the purpose of determining
                the fair value of the Sale Shares;

        (c)     such price determined by an appraiser jointly designated by the
                Transferor and the Other Shareholders, within 30 days (or such
                other time period as the appraiser may reasonably require) of
                the appointment of such appraiser, or failing agreement on the
                appointment of such appraiser;

        (d)     such price determined by a three-appraiser method as follows:-

                The Transferor and collectively, the Other Shareholders shall
                each appoint one appraiser and those two appraisers shall
                appoint the third appraiser. The third



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                appraiser shall determine the fair value of the Sale Shares
                within 30 days (or such other time period as the appraiser may
                reasonably require) of its appointment;

                Provided that the Transferor has not notified the Company that
                it rejects the Auditors' or the appraiser's (as the case may be)
                determination of the Prescribed Price within 14 days after such
                determination (and such rejection shall operate to revoke the
                Transfer Notice and cancel the proposed transfer of the Sale
                Shares); in the absence of such rejection the Auditors' or the
                appraiser's (as the case may be) determination shall be final
                and binding on the Transferor and the Other Shareholders.

(vi)    In acting under paragraph (v) above, the Auditors and the appraiser (as
        the case may be) shall make the following assumptions:-

        (a)     that the Sale Shares are sold on an arm's length basis between a
                willing vendor and a willing purchaser; and

        (b)     that the Company would continue to carry on its business as a
                going concern.

(vii)   The appraisers shall be appointed from among the firms of Arthur
        Andersen, Coopers & Lybrand, Deloitte & Touche, Ernst & Young, KPMG Peat
        Marwick, and Price Waterhouse (or such other firm as the Transferor and
        the Other Shareholders may agree). The Auditors and the appraisers shall
        act hereunder as experts and not as arbitrators and their determination
        shall be final and binding on all persons concerned and in the absence
        of fraud, the Auditors or the appraisers (as the case may be) shall be
        under no liability to any such person by reason of their determination
        or by anything done or omitted to be done by the Auditors or the
        appraisers (as the case may be) for the purposes thereof or in
        connection therewith.

(viii)  The Transferor and each of the Other Shareholders shall each bear
        equally the fees and expenses of the Auditors or the appraisers (as the
        case may be).

(ix)    Upon the price being agreed or determined as aforesaid, the Company
        shall forthwith by notice in writing inform each of the Other
        Shareholders of the number and price of the Sale Shares and invite each
        of the Other Shareholders to apply in writing to the Company within 14
        days (or such other time period as the Transferor and the Other
        Shareholders may agree) of the date of dispatch of the notice (which
        date shall be specified therein) for



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        such maximum number of the Sale Shares (being all or any thereof) as it
        shall specify in such application.

(x)     If the Other Shareholders shall within the said period of 14 days (or
        such other time period as the Transferor and the Other Shareholders may
        agree) apply for all or (except where the Transfer Notice provides
        otherwise) any of the Sale Shares, the Board shall allocate the Sale
        Shares (or so many of them as shall be applied for as aforesaid) to or
        amongst the applicants and in case of competition pro rata (as nearly as
        possible) according to the number of shares in the Company of which they
        are registered or unconditionally entitled to be registered as holders
        provided that no applicant shall be obliged to take more than the
        maximum number of Sale Shares specified by it as aforesaid. The Company
        shall forthwith give notice of such allocations (an "Allocation Notice")
        to the Transferor and to the Shareholders to whom the Sale Shares have
        been allocated and shall specify in such Allocation Notice the place and
        time (being not earlier than 14 and not later than 28 days after the
        date of the Allocation Notice or as otherwise agreed among the
        Shareholders) at which the sale and purchase of the Sale Shares so
        allocated shall be completed.

(xi)    If it is a condition specified in the Transfer Notice that all (and not
        some only) of the Sale Shares shall be purchased and if the Other
        Shareholders do not, on a collective basis, apply to purchase all the
        Sale Shares, the Transferor shall be entitled to sell all the Sale
        Shares to any person or persons as the Transferor may choose, provided
        that such sale takes place in accordance with the provisions of
        paragraph (xiii) below.

(xii)   The Transferor shall be bound to transfer the Sale Shares comprised in
        an Allocation Notice to the purchasers named therein at the time and
        place therein specified by the delivery of duly executed transfer forms
        together with the relative share certificates in respect of such Sale
        Shares and, if it shall fail to do so, the Chairman of the Board or some
        other person appointed by the Board shall be deemed to have been
        appointed attorney of the Transferor with full power to execute,
        complete and deliver, in the name and on behalf of the Transferor,
        transfers of the Sale Shares to the purchaser therefor against payment
        of the price to the Company. On payment of the price to the Company the
        purchaser shall be deemed to have obtained a good quittance for such
        payment and on execution and delivery of the transfer the purchaser
        shall be entitled to insist upon its name being entered in the Register
        of Members as the holder by transfer of the Sale Shares. The Company
        shall forthwith pay the price into a bank account in the Company's name
        and shall hold such price in trust for the Transferor.



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(xiii)  During the six months following the expiry of the said period of 14 days
        (or such other time period as the Transferor and the Other Shareholders
        may agree) referred to in paragraph (ix) above, the Transferor shall be
        at liberty to transfer to any person approved by the Other Shareholders,
        such approval not to be unreasonably withheld, and at a price not less
        than the Prescribed Price and on the same terms:-

        (a)     any Sale Share not allocated by the Board in an Allocation
                Notice; or

        (b)     if paragraph (xi) above applies, all of the Sale Shares.

(C)     Right of First Refusal

(i)     Every Shareholder (the "Transferor") who desires to transfer any shares
        (the "Sale Shares") held by it in the capital of the Company to a third
        party (the "Third Party") who has made a bona fide offer to the
        Transferor shall give to the Company notice in writing of such offer and
        shall state in its notice whether it is a condition that all (and not
        some only) of the Sale Shares shall be purchased. The Company shall
        forthwith by notice in writing inform each of the Other Shareholders of
        the Third Party's offer (including the abovementioned condition, if
        applicable) and shall on behalf of the Transferor first offer the Sale
        Shares to the Other Shareholders at the price offered by the Third Party
        and on terms no less favourable than that available to the Third Party.
        The Other Shareholders shall apply in writing to the Company within 30
        days (or such other time period as the Transferor and the Other
        Shareholders may agree) of the date of dispatch of the Company's notice
        (which date shall be specified therein) for such maximum number of the
        Sale Shares (being all or any thereof) as it shall specify in such
        application. In case of competition for the Sale Shares, the Sale Shares
        shall be allocated among the Other Shareholders pro rata (as nearly as
        possible) according to the number of shares in the Company of which they
        are registered or unconditionally entitled to be registered as holders
        provided that no applicant shall be obliged to take more than the
        maximum number of Sale Shares specified by it as aforesaid. The Company
        shall forthwith give notice of such allocations (an "Allocation Notice")
        to the Transferor and to the Shareholders to whom the Sale Shares have
        been allocated and shall specify in such Allocation Notice the place and
        time (being not earlier than 14 and not later than 28 days after the
        date of the Allocation Notice or as otherwise agreed among the
        Shareholders) at which the sale and purchase of the Sale Shares so
        allocated shall be completed. The provisions of sub-Clause (B) paragraph
        (xii) shall apply mutatis mutandis in relation to such sale and
        purchase.



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(ii)    The Transferor shall be entitled to sell any Sale Shares not purchased
        by the Other Shareholders, to the Third Party. In the event that the
        Transferor states in its notice that it is a condition that all (and not
        some only) of the Sale Shares shall be purchased by the Other
        Shareholders, and if the Other Shareholders do not, on a collective
        basis, apply to purchase all the Sale Shares, the Transferor shall be
        entitled to sell all the Sale Shares to the Third Party.

(D)     Permitted Transfers

(i)(a)  For the purpose of this paragraph (i), the term "Permitted Transferee"
        in relation to CSM and EDBI shall mean a wholly-owned subsidiary of such
        Shareholder, and in relation to HP shall mean the following
        corporations:-

        (1)     Hewlett-Packard Company, incorporated in California

        (2)     Hewlett-Packard World Trade, Inc., incorporated in Delaware

        (3)     Hewlett-Packard Ireland (Holdings) Ltd., incorporated in Ireland

        (4)     Hewlett-Packard (Manufacturing) Ltd., incorporated in Ireland

        (5)     Hewlett-Packard S.A., incorporated in Switzerland

        (6)     Hewlett-Packard Singapore Pte. Ltd., incorporated in Singapore

        (7)     Hewlett-Packard Holdings Singapore Pte Ltd, incorporated in
                Singapore.

(b)     Notwithstanding anything in sub-Clause (B) above but subject to
        sub-Clause (E) below, a Shareholder being a corporation (the "Transferor
        Corporation") shall be entitled to transfer all (and not some only) of
        the shares held by it in the capital of the Company to a Permitted
        Transferee.

(c)     If however at any time after a transfer of shares is effected by the
        Transferor Corporation to a Permitted Transferee pursuant to
        sub-paragraph (b) above, the Permitted Transferee ceases to be a
        wholly-owned subsidiary of the Transferor Corporation, (or in the case
        where the Transferor Corporation is HP, Hewlett-Packard Company ceases
        to own directly or indirectly at least 95 per cent. of the issued share
        capital of the Permitted Transferee) it shall be the duty of the
        Permitted Transferee to notify the Board in writing that such event has
        occurred and both the Transferor Corporation and the Permitted
        Transferee jointly and severally undertake to procure and ensure that
        all (and not some only) of the shares held by the Permitted Transferee
        in the capital of the Company are forthwith transferred to the
        Transferor Corporation or another wholly-owned subsidiary of the
        Transferor Corporation (or in the case where the Transferor Corporation
        is HP, to another Permitted Transferee of HP).



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(ii)    The provisions of sub-Clause (B) above shall not apply to a transfer of
        shares in the capital of the Company made pursuant to the Option
        Agreement.

(E)     Supplementary Provision

        It shall be a condition precedent to the right of any Shareholder to
transfer shares in the capital of the Company that the purchaser or transferee
(if not already bound by the provisions of this Agreement) executes in such form
as may be reasonably required by and agreed between the other Shareholders a
deed of ratification and accession under which the purchaser or transferee shall
agree to be bound by and shall be entitled to the benefit of this Agreement as
if an original party hereto in place of or in addition to the transferring
Shareholder (as the case may be).

(F)     Change in Control of Shareholder

(i)     In the event that there is a change in control of any Shareholder, such
Shareholder (the "Affected Shareholder") shall notify the Company and the other
Shareholders in writing of such change in control. Any of the Shareholders who
objects to such change in control shall be entitled by notice in writing to the
Affected Shareholder (the "Objection Notice") to require the Affected
Shareholder to dispose of all its shares in the capital of the Company at the
Prescribed Price. A copy of the Objection Notice shall be promptly delivered to
the Company and to the other Shareholders. Upon receipt of the Objection Notice,
the Affected Shareholder shall be deemed to have served on the Company a
Transfer Notice on the date of the Objection Notice in accordance with the
provisions of Clause 10(B)(iii) and the provisions of Clause 10(B)(iii) to
Clause 10(B)(x), and Clause 10(B)(xii) shall apply mutatis mutandis in relation
to such Transfer Notice, save that:-

        (a)     the Transfer Notice shall be deemed to be an offer to sell all
                (and not some only) of the shares held by the Affected
                Shareholder;

        (b)     the price of the said shares shall be mutually agreed among the
                Affected Shareholder and all the other Shareholders, or failing
                agreement within 60 days from the date of the Objection Notice,
                the price of the said shares shall be deemed to be the
                Prescribed Price determined in accordance with Clause 10(B)(v);
                and

        (c)     the Affected Shareholder shall not be entitled to reject the
                Auditors' or the appraiser's (as the case may be) determination
                of the Prescribed Price.

The restriction on transfer of shares contained in Clause 10(A) and in the
Articles shall not apply to such disposal.



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(ii) For the purpose of this sub-Clause (F), a change in control of any
Shareholder shall be deemed to have occurred if more than 50 per cent. of the
issued voting shares of such Shareholder or of any holding company of such
Shareholder shall be acquired by any company or person, or by any two or more
persons acting in concert, other than by a related corporation of such
Shareholder. However, a change in control of a Shareholder pursuant to or after
a listing on a stock exchange of the shares in the capital of such Shareholder
or of the holding company of such Shareholder shall not be deemed to be a change
in control of such Shareholder for the purposes of this sub-Clause (F). Each of
the Shareholders undertakes to notify the other Shareholders in writing of any
change in control of such Shareholder within ten days of it becoming aware of
such a change in control.

11.     FINANCE

(A)     Loan Finance

        Each of the Shareholders shall use its commercially reasonable
endeavours to procure that the Company's business is financed as far as
practicable by borrowing from banks, financial institutions and other similar
sources on commercially reasonable terms, but without allowing any prospective
lender a right to participate in the share capital of the Company as a condition
of any loan. Such financing shall be procured without any additional security by
way of guarantee or otherwise from the Shareholders.

(B)     Debt/Equity Ratio

        The Company shall maintain a Debt/Equity Ratio of no greater than 1.5 to
1, that is, for every S$1 of Total Shareholder Funds, there shall not be more
than S$1.50 of External Bank Borrowings. In the event that the Debt/Equity Ratio
exceeds 1.5 to 1, then the General Manager shall inform the Board of Directors
thereof at the next Board meeting.

12.     DIVIDEND POLICY

        Each of the Shareholders shall take such action as may be necessary to
procure that, subject to the appropriation of prudent and proper reserves and
the retention out of profits of funds to meet any requirements as to solvency or
otherwise applicable to the Company (whether under any statute, regulation or
ruling or any requirements for the Company's expansion program, loan commitments
and working capital needs, whether or not having the force of law in Singapore
or otherwise), the Company distributes to and among the Shareholders as
dividends such percentage



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of its net profits after provision for tax paid or accrued due in any financial
year as may be decided by a resolution of the Board provided that the aggregate
amount of such dividends does not exceed the lower of:-

        (i)     70 per cent. of the profit after tax of the Company for that
                financial year; and

        (ii)    50 per cent. of the retained earnings of the Company.

It is not the intent of the Company to accumulate excess retained earnings
beyond what is required to fund the Company's expansion, loan commitments and
working capital needs.

13.     WARRANTIES AS TO AUTHORITY

        Each of the parties hereby represents and warrants to and undertakes
with the other parties as follows:-

        (i)     it is a corporation duly organised and validly existing under
                the laws of its place of incorporation, and has full power and
                authority to execute and deliver and perform all of its
                obligations under this Agreement and any other agreements to be
                executed by it hereunder;

        (ii)    all actions, conditions and things required to be taken,
                fulfilled and done (including the obtaining of any necessary
                consents) in order (a) to enable such party lawfully to enter
                into, exercise its rights and perform and comply with its
                obligations under, this Agreement and (b) to ensure that those
                obligations are legally binding and enforceable have been taken,
                fulfilled and done;

        (iii)   this Agreement is, and all other agreements and instruments of
                such party contemplated hereby shall be, the legal, valid and
                binding agreement of such party, enforceable against such party
                in accordance with their terms; and

        (iv)    the execution, delivery and performance of this Agreement by it
                will not conflict with any law, order, judgement, decree, rule
                or regulation of any court, arbitral tribunal or government
                agency, or any agreement, instrument or indenture to which such
                party or any of its related corporations is a party or by which
                any thereof is bound.



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14.     DEFAULT

(A)     Remedy of Breach or Default

        Where a Shareholder fails to perform its obligations hereunder or to
comply with the terms and conditions of this Agreement, the other Shareholders
shall be at liberty to issue to the defaulting Shareholder (the "Defaulting
Shareholder") a notice specifying the breach or default and, in the case of a
breach or default capable of remedy, stipulating a period of not less than 60
days during which such breach or default shall be remedied or steps taken in
pursuance thereof. For the purposes of this sub-Clause (A), a breach or default
shall be considered capable of remedy if the Defaulting Shareholder can comply
with the term or condition in question in all respects other than as to the time
of performance.

(B)     Disposal of Shares by Defaulting Shareholder

        In the event that a material breach of this Agreement or a material
default by a Shareholder has been admitted or established following upon the
failure of that Defaulting Shareholder to comply or attempt to comply with the
terms of a notice under sub-Clause (A) above and the failure to resolve the
breach or default after following the dispute resolution process described in
Clause 19 (F)(i), any of the other Shareholders shall, without prejudice to any
other rights and remedies such a Shareholder may have, be entitled by notice in
writing to the Defaulting Shareholder (the "Disposal Notice") to require the
Defaulting Shareholder to dispose of all its shares in the capital of the
Company at the Prescribed Price. A copy of the Disposal Notice shall be promptly
delivered to the Company and to the other Shareholders not in default. Upon
receipt of the Disposal Notice, the Defaulting Shareholder shall be deemed to
have served on the Company a Transfer Notice on the date of the Disposal Notice
in accordance with the provisions of Clause 10(B)(iii) and the provisions of
Clause 10(B)(iii) to Clause 10(B)(x), and Clause 10(B)(xii) shall apply mutatis
mutandis in relation to such Transfer Notice, save that:-

        (i)     the Transfer Notice shall be deemed to be an offer to sell all
                (and not some only) of the shares held by the Defaulting
                Shareholder;

        (ii)    the price of the said shares shall be mutually agreed among the
                Defaulting Shareholder and all the other Shareholders, or
                failing agreement within 60 days from the date of the Disposal
                Notice, the price of the said shares shall be deemed to be the
                Prescribed Price determined in accordance with Clause 10(B)(v);
                and



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        (iii)   the Defaulting Shareholder shall not be entitled to reject the
                Auditors' or the appraiser's (as the case may be) determination
                of the Prescribed Price.

The restriction on transfer of shares contained in Clause 10(A) and in the
Articles shall not apply to such disposal.

(C)     Deemed Breaches

        In the event that:-

        (i)     any Shareholder shall become bankrupt or insolvent; or

        (ii)    a resolution is passed for the winding up of any Shareholder; or

        (iii)   a proceeding has been instituted seeking a declaration that any
                Shareholder is bankrupt or insolvent or seeking bankruptcy,
                arrangement or composition with creditors, liquidation or the
                appointment of a trustee, receiver or liquidator or analogous
                procedure under any applicable law and such proceedings remain
                undismissed and unstayed for a period of 60 days or are being
                consented to by that Shareholder;

then a material breach of this Agreement or material default shall be deemed to
have been committed by the Shareholder concerned and the provisions of
sub-Clause (B) above shall apply mutatis mutandis as if a material breach of
this Agreement or material default has been admitted or established.

15.     GENERAL OBLIGATIONS OF SHAREHOLDERS

        Each Shareholder shall take all commercially reasonable steps necessary
on its part to give full effect to the provisions of this Agreement and to
procure (so far as it is able by the exercise of voting rights or otherwise so
to do) that the Company and the Directors shall perform and observe the
provisions of this Agreement.



                                       35


                       The Company - CSM - HP Confidential


<PAGE>   39

16.     PREVALENCE OF AGREEMENT

        In the event of any inconsistency or conflict between the provisions of
this Agreement and the provisions of the Articles, the provisions of this
Agreement shall as between the Shareholders prevail.

17.     DURATION AND TERMINATION

(A)     Duration

        This Agreement shall take effect from the date hereof and continue
thereafter without limit in point of time but, upon the transfer by any
Shareholder of the entirety of its shares in the capital of the Company, it
shall have no further rights hereunder and shall be released from all its
obligations hereunder (other than under Clauses 10(D)(i)(c) and 18) but, if at
that time there are two or more Shareholders bound by the provisions of this
Agreement, this Agreement shall continue in full force and effect as between the
continuing Shareholders.

(B)     Termination

        The termination of this Agreement from any cause shall not release any
Shareholder from any liability which at the time of termination has already
accrued, or which thereafter may accrue.

18.     CONFIDENTIAL INFORMATION

(A)     Communications Confidential

        All communications between the Company and the Shareholders or any of
them and all information and other material supplied to or received by any of
them from any one or more of the others in connection with the performance of
this Agreement which is either marked "confidential" or is by its nature
intended to be exclusively for the knowledge of the recipient alone, or to be
used by the recipient only for the benefit of the Company, any information
concerning the business transactions or the financial arrangements, including
without limitation, trade secrets, customer lists, know-how, designs, processes,
drawings and specifications, of the Company or of the Shareholders or any of
them, or of any person with whom any of them is in a confidential relationship
with regard to the matter in question coming to the knowledge of the recipient
shall be kept confidential by the recipient and shall be used by the recipient
solely and



                                       36


                       The Company - CSM - HP Confidential


<PAGE>   40

exclusively for achieving the purposes of this Agreement unless disclosure is
require by law; unless such information or materials were in the recipient's
possession before receipt from the discloser; unless such information or
materials are rightfully received by the recipient from a third party without a
duty of confidentiality on the third party; unless such information or materials
are provided by the discloser to a third party without a duty of confidentiality
on such third party; unless such information or materials are independently
developed by recipient; or unless or until any party can reasonably demonstrate
that it is or part of it is, in the public domain through no act or default on
the part of the recipient, its servants and/or agents, whereupon, to the extent
that it is public, this obligation shall cease. All parties shall be entitled to
use for any purpose (provided that such use is not, to the knowledge of such
party, in breach of this Agreement) confidential information in intangible form
that may be retained in the minds of a party's employees who have authorized
access to such confidential information.

(B)     Shareholders' Obligations

        The Shareholders shall procure the observance of the abovementioned
restrictions by the Company and shall take all reasonable steps to minimise the
risk of disclosure of confidential information, by ensuring that only their
employees and directors and those of the Company whose duties will require them
to possess any of such information shall have access thereto, and that they
shall be instructed to treat the same as confidential. The Shareholders shall in
addition procure that such employees of the Company whose duties will require
them to possess, or have access to, confidential information, shall sign
confidentiality agreements with the Company respecting the confidentiality of
such information.

(C)     Obligations to Continue

        The obligations contained in this Clause shall endure, even after the
termination of this Agreement, without limit in point of time except and until
any confidential information enters the public domain as set out above.

19.     NOTICES AND GENERAL

(A)     Notices

        All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post



                                       37


                       The Company - CSM - HP Confidential


<PAGE>   41

(by air-mail if to or from an address outside Singapore) with recorded delivery,
or by facsimile transmission (provided that the receipt of such facsimile
transmission is confirmed by the dispatch of a hard copy of the facsimile sent
immediately thereafter by prepaid registered post) addressed to the intended
recipient thereof at its address or at its facsimile number set out in this
Agreement (or to such other address or facsimile number as a party to this
Agreement may from time to time duly notify the others in writing). Any such
notice, demand or communication shall be deemed to have been duly served, if
given or made by facsimile, immediately at the time of dispatch (provided that
the receipt of such facsimile transmission is confirmed by the dispatch of a
hard copy of the facsimile sent immediately thereafter by prepaid registered
post) or, if given or made by letter, immediately if delivered personally or 48
hours after posting or, if given or made by air-mail, ten days after posting and
in proving the same it shall be sufficient to show that personal delivery was
made or that the envelope containing such notice was duly addressed, stamped and
posted. The address and facsimile numbers of the parties for the purpose of this
Agreement are:-

         CSM        :     CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No.     :       (65) 362 2909
                          Attention         :       Legal Department

         HP         :     HEWLETT-PACKARD EUROPE B.V.
                          Startbaan 16
                          1187 XR Amsterdam
                          The Netherlands
                          Facsimile No.     :       (31)(20) 547 7755
                          Attention         :       Legal Department

                          With a copy to:
                    :     HEWLETT-PACKARD COMPANY
                          3000 Hanover Street, MS 20BQ
                          Palo Alto, CA 94304
                          United States of America
                          Facsimile No.     :       (01)(415) 857 4392
                          Attention         :       General Counsel



                                       38


                       The Company - CSM - HP Confidential


<PAGE>   42

         EDBI       :     EDB INVESTMENTS PTE LTD

                          250, North Bridge Road
                          #27-04 Raffles City Tower
                          Singapore 179101
                          Facsimile No.     :       (65) 336 2503
                          Attention         :       General Manager

(B)     Remedies

        No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise available at
law, in equity, by statute or otherwise, and each and every other remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity, by statute or otherwise. The
election of any one or more of such remedies by any of the Shareholders shall
not constitute a waiver by such Shareholder of the right to pursue any other
available remedies. No failure on the part of any Shareholder to exercise and no
delay on the part of any Shareholder in exercising any right hereunder will
operate as a release or waiver thereof, nor will any single or partial exercise
of any right under this Agreement preclude any other or further exercise of it.

(C)     Severance

        If any provision of this Agreement or part thereof is rendered void,
illegal or unenforceable by any legislation to which it is subject, it shall be
rendered void, illegal or unenforceable to that extent and it shall in no way
affect or prejudice the enforceability of the remainder of such provision or the
other provisions of this Agreement.

(D)     Entire Agreement

        This Agreement embodies all the terms and conditions agreed upon between
the Shareholders as to the subject matter of this Agreement and supersedes and
cancels in all respects all previous agreements and undertakings, if any,
between the Shareholders with respect to the subject matter hereof, whether such
be written or oral. Any amendment to or variation of this Agreement shall be
effective only if it is in writing and duly signed and confirmed in writing by
the authorised representative of each Shareholder.



                                       39


                       The Company - CSM - HP Confidential


<PAGE>   43

(E)     Governing Law

        This Agreement shall be governed by, and construed in accordance with,
the laws of Singapore.

(F)     Dispute Resolution and Arbitration

        (i) In case any dispute or difference shall arise amongst the
Shareholders as to the construction of this Agreement or as to any matter or
thing of whatsoever nature arising hereunder or in connection herewith,
including any question regarding its existence, validity or termination, such
dispute or difference shall be submitted to a committee comprised of one Board
member from each of the Shareholders. If such committee is unable to resolve
such dispute, it shall submit the dispute to a committee comprised of one senior
manager from each Shareholder, being in the case of:-

        CSM     : the President

        HP      : the General Manager of Integrated Circuit Business Division
                  (or its successor division) of Hewlett-Packard Company

        EDBI    : the General Manager.

If such senior managers are unable to resolve such dispute, it shall be
submitted to a committee comprised of one senior officer from each Shareholder
being in the case of:-

        CSM     : the Chairman of the Board of CSM

        HP      : the General Manager of Measurement Systems Organisation (or
                  its successor organisation) of Hewlett-Packard Company

        EDBI    : the Chairman.

        (ii) If such senior officers are unable to resolve the dispute, it shall
be submitted to a single arbitrator to be appointed by the Shareholders in
dispute or, failing agreement within 14 days after any Shareholder has given to
the other Shareholder(s) in dispute a written request to concur in the
appointment of an arbitrator, a single arbitrator to be appointed on the request
of any Shareholder by the Chairman of the Singapore International Arbitration
Centre ("SIAC") and such submission shall be a submission to arbitration in
accordance with the Rules of the SIAC as presently in force by which the
Shareholders in dispute agree to be so bound. The place of arbitration shall be
Singapore and the arbitration shall be conducted wholly in the English language.



                                       40


                       The Company - CSM - HP Confidential


<PAGE>   44

(G)     Announcements

        None of the parties shall prior to Completion divulge to any third party
(except to their respective professional advisers and to any stock exchange or
other regulatory body or except as required by applicable law) any information
regarding the existence or subject matter of this Agreement, or any other
agreement referred to in, or executed in connection with, this Agreement,
without the prior agreement of the other parties in writing.

(H)     No Right To Bind Other Shareholders

        No Shareholder has the power or the right to bind, commit or pledge the
credit of the other Shareholders or the Company.

(I)     Costs

        Each of the Shareholders shall bear its own legal and other professional
costs and expenses incurred by it in the negotiation and preparation of this
Agreement.

(J)     Counterparts

        This Agreement may be entered into in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any party may
enter into this Agreement by signing any such counterpart.



                                       41


                       The Company - CSM - HP Confidential


<PAGE>   45

                                 S C H E D U L E

                              COLLATERAL AGREEMENTS

1.      Agreement to be made between CSM, Hewlett-Packard Company and the
        Company relating to the Company's capacity and loading arrangements
        substantially in the form of Appendix B (the "Assured Supply and Demand
        Agreement").

2.      Term sheet to be made between CSM, Hewlett-Packard Company and the
        Company relating to the supply of semiconductor wafers by the Company to
        Hewlett-Packard Company substantially in the form of Appendix C (the
        "Term Sheet for Manufacturing Agreement").

3.      Agreement to be made between CSM, Hewlett-Packard Company and the
        Company relating to the license of certain intellectual property rights
        related to the manufacture of semiconductor wafers and integrated
        circuits, substantially in the form of Appendix D (the "License and
        Technology Transfer Agreement").

4.      Agreement to be made between CSM, HP and EDBI relating to call options
        for the sale of the shares held by EDBI in the capital of the Company
        substantially in the form of Appendix E (the "Option Agreement").

5.      Agreement to be made between CSM and the Company relating to the
        provision of certain services by CSM to the Company substantially in the
        form of Appendix F (the "CSM Service Support Agreement").

6.      Agreement to be made between STPL and the Company relating to the
        provision of certain services by STPL to the Company substantially in
        the form of Appendix G (the "STPL Group Management and Support Services
        Agreement").



                                       42


                       The Company - CSM - HP Confidential


<PAGE>   46



                                   APPENDIX A

                           FIRST COMPANY BUSINESS PLAN

                     Please refer to the attached 69 pages.





                       The Company - CSM - HP Confidential


<PAGE>   47


                                   APPENDIX B

                       ASSURED SUPPLY AND DEMAND AGREEMENT

                     Please refer to the attached 28 pages.





                       The Company - CSM - HP Confidential


<PAGE>   48



                                   APPENDIX C

                     TERM SHEET FOR MANUFACTURING AGREEMENT

                     Please refer to the attached 60 pages.





                       The Company - CSM - HP Confidential


<PAGE>   49


                                   APPENDIX D

                    LICENSE AND TECHNOLOGY TRANSFER AGREEMENT

                     Please refer to the attached 26 pages.




                       The Company - CSM - HP Confidential


<PAGE>   50




                                   APPENDIX E

                                OPTION AGREEMENT

                     Please refer to the attached 16 pages.




                       The Company - CSM - HP Confidential


<PAGE>   51




                                   APPENDIX F

                          CSM SERVICE SUPPORT AGREEMENT

                     Please refer to the attached 31 pages.





                       The Company - CSM - HP Confidential


<PAGE>   52


                                   APPENDIX G

              STPL GROUP MANAGEMENT AND SUPPORT SERVICES AGREEMENT

                      Please refer to the attached 9 pages.





                       The Company - CSM - HP Confidential


<PAGE>   53




                                   APPENDIX H

                     MEMORANDUM AND ARTICLES OF ASSOCIATION

                     Please refer to the attached 62 pages.




                       The Company - CSM - HP Confidential


<PAGE>   54




                                   APPENDIX I

              JTC OFFER LETTER AND PLAN OF SITE FOR THE COMPANY FAB

                     Please refer to the attached 61 pages.





                       The Company - CSM - HP Confidential


<PAGE>   55
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



OUTLINE FOR JV BUSINESS PLAN




                                      ****
<PAGE>   56
[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------







                                   HP/CSM JV

                                 BUSINESS PLAN









- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   57
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------


                                    MISSION

o    Be the preferred supplier of foundry services to the semiconductor
     industry. Along with CSM, become the most nimble, service-oriented foundry
     to customers worldwide. Become a key value chain element to HP's
     semiconductor requirements as a "virtual fab".









- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   58
[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------


                          SCOPE OF PRODUCTS & SERVICES

o    Supply sorted and unsorted CMOS semiconductor wafers to a broad range of
     semiconductor users. Provide "virtual fab" services to integrated
     manufacturers to make outsourcing attractive, and "one-stop-shopping" to
     fabless and semiconductor users switching from ASIC houses to internal
     design with foundry manufacturing.











- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   59
[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------






                              GOALS AND OBJECTIVES









- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   60
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------


                              GOALS AND OBJECTIVES


                                      ****












- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   61
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------


                         GOALS AND OBJECTIVES (CONT'D)


                                      ****












- -------------------------------------------------------------------------------
27 November, 1996
<PAGE>   62



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------


                                 KEY STRATEGIES




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   63


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                                 KEY STRATEGIES


                                      ****



- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   64
[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                              JV CORE COMPETENCIES

o Customer service orientation

o Time to revenue

o C10 core competency

o Adaptability to changes in market conditions

o Yield engineering


- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   65
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------
                              JV CORE COMPETENCIES


o CUSTOMER SERVICE ORIENTATION

  o Customer service is a corporate culture that is difficult to build and
    duplicate. It's a culture that recognizes there must be a delighted
    customer at the end of every task in every delivery chain. It's supported
    by both systems and the state of mind of every employee.


o TIME TO REVENUE

  o Time to revenue is defined in terms of the customers' business. Shortening
    time to revenue for customers means removing obstacles on their road from
    product conception to production. Potential obstacles include time
    availability of process technology, cell libraries, mega cells;
    best-in-class proto and production cycle times; a single interface for
    turnkey requirements (masks, wafers, sort, assembly & test). A
    comprehensive program that provides solutions to these obstacles is
    difficult to build and duplicate.

- -------------------------------------------------------------------------------
27 November, 1996









<PAGE>   66
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------
                             JV CORE COMPETENCIES


o C10 CORE COMPETENCY

  o An ASIC process for a wide range of markets.

    o performance for graphics, computer electronics cores.

    o density for system-on-a-chip applications.

    o extension into mixed-signal applications with precision analog components.

  o Process technology architecture leads into 0.25um.

    o complementary Vt's

    o planarity (CMP) for greater levels of interconnect with high yields.


- -------------------------------------------------------------------------------
27 November, 1996




<PAGE>   67
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------
                             JV CORE COMPETENCIES


o ADAPTABILITY TO CHANGES IN MARKET CONDITIONS

  o Adaptability includes a flexible infrastructure that can quickly respond to
    the changing demands of the industry, a nimble management team that can
    make timely and sound decisions and a well cross-trained workforce that can
    be quickly redeployed.


o YIELD ENGINEERING

  o Yield engineering (YE) is the ability to plan for good initial yield on a
    new process and to accelerate the learning curve of a process based on both
    theory and empirical findings. A key part of a successful YE program is a
    core team of highly competent technical staff armed with best-in-class
    tools.


- -------------------------------------------------------------------------------
27 November, 1996


<PAGE>   68


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


- --------------------------------------------------------------------------------
                                      CSM
- --------------------------------------------------------------------------------



                                      ****
<PAGE>   69


[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                     MARKET






- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   70
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                            TOTAL SEMICONDUCTOR TAM

               EXPECTED TAM IN YEAR 2000 = US$250 TO 350 BILLION


                                    [CHART]




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   71




[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                TAM/SAM ANALYSIS






- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   72
 [PICTURE]     SEMICONDUCTOR FOUNDRY ON THE RISE - SO WILL ITS CONTRIBUTION TO
               WWIC MARKET

WW FOUNDRY REVENUE                                     FOUNDRY'S CONTRIBUTION TO
(U.S. $B)                                                   SEMICONDUCTOR MARKET


                                    [CHART]


<PAGE>   73



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------




                              APPLICATION MARKETS





- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   74


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                               CSM GROWTH DRIVERS



                                      ****



- --------------------------------------------------------------------------------
Ben Lee                         CSM Confidential                          Page 8

<PAGE>   75

 [PICTURE]     FABLESS COMPANIES GROWING IN SIZE AND NUMBER


                                    [CHART]


<PAGE>   76

 [PICTURE]     ESCALATING COST OF IC FABS
                    -    MOST IMPORTANT TREND IN IC MANUFACTURING


                                    [CHART]


<PAGE>   77

 [PICTURE]     AS NEW FABS GET COSTLIER, FEW CAN AFFORD BUILDING THEM AND MORE
               MUST RELY ON FOUNDRY



<TABLE>
<CAPTION>
                         1985-1990           1991-1996           1997-2002
                         ---------           ---------           ---------
<S>                      <C>                 <C>                <C>
New fabs                    258                 202             approx. 175

Companies building
  solely owned fabs          80%                 50%            approx. 30%

Companies relying
  on foundry                 20%                 50%            approx. 70%

</TABLE>
<PAGE>   78
[PICTURE] SUMMARY

o SCM Service Providers Will Play An Increasing Important Role In Semiconductor
  Manufacturing

o All semiconductor companies are expected to use SCM services to some extent

o Dedicated foundries will take a growing share of SCM capacity

o Turnkey manufacturing expected to become the predominant business model

<PAGE>   79




[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                  COMPETITION





- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   80




[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                INDUSTRY FORCES





- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   81

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                      ****




- --------------------------------------------------------------------------------
27 November, 1996



<PAGE>   82



REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission





                                      ****
<PAGE>   83


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                      ****




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   84

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                      ****




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   85




[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                      SWOT





- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   86


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission





                                      ****
<PAGE>   87


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission





                                      ****
<PAGE>   88

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission





                                      ****
<PAGE>   89





[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                             FUNCTIONAL STRATEGIES




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   90
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING LTD
- --------------------------------------------------------------------------------
                  SERVING THE GLOBAL SEMICONDUCTOR CUSTOMERS




                                     [MAP]




<PAGE>   91

[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                             SYNERGISTIC OPERATIONS

                             ----------------------
                             Singapore Technologies
                                 Semiconductor
                             ----------------------

 ------------------------    -----------------------    ------------------------
 TriTech Microelectronics    Chartered Semiconductor     Singapore Technologies
  International Pte. Ltd.    Manufacturing Pte. Ltd.    Assembly & Test services
        (TriTech)                    (CSM)                      (STATS)
 ------------------------    -----------------------    ------------------------
    IC PRODUCTS & ASIC           WAFER FABRICATION          ASSEMBLY & TEST


- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   92
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

             INFRASTRUCTURE AND FLEXIBILITY TO MEET CUSTOMER NEEDS

<TABLE>
<S>                 <C>            <C>                  <C>
                    ----------------------------------
Customer            TriTech        Design Services
Netlist/Spec
                    ----------------------------------
                                   -------------------------------------
Customer                           Mask Making           Photronics etc.
GDSII/PG
                                   -------------------------------------
                    ---------------------------------
Customer            CSM            Wafer Fabrication     Untested
Masks                                                    Wafers
                    ---------------------------------

                    ---------------------------------
Customer            STATS          Wafer Probe           Tested Wafers
Wafers                             Assembly & Test       Tested Parts
                    ---------------------------------
</TABLE>



- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   93
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------

                                BUSINESS CHARTER


o Efficient turnkey & wafer manufacturing service

o Superior service, cycle time and product reliability

o Long term commitment to meet the demand of global semiconductor companies

  o Reliable supply

  o Consistent yield

  o Leading edge technology

  o Continuous capacity growth


- -------------------------------------------------------------------------------
27 November, 1996



<PAGE>   94
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                    FAB I               FAB II                FAB III
                    -----               ------                -------
<S>             <C>                 <C>                   <C>

Year            1989                1995                  1997

Investment      S$360M              S$1,300M              S$1,800M

Clean room      35,000 ft(2)        70,000 ft(2) SMIF     92,000 ft(2) SMIF
                Class 10            Mini Env. Class 1     Mini Env. Class 1

Capacity        24,000/month 6"     33,000/month 8"       40,000/month 8"

Technology      3.0 - 0.6 u.m.      0.6 -0.35 u.m.        0.5 - 0.18 u.m.
                o Digital           o Digital             o Digital
                o Analog            o Analog              o Analog
                o SRAM              o SRAM                o Memories
                o ROM               o ROM                 o Others
                o E(2)PROM          o Flash EPROM
</TABLE>



- --------------------------------------------------------------------------------
27 November, 1996

<PAGE>   95


REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                      ****




- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   96
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------

                      FIELD & CUSTOMER ENGINEERING SUPPORT



o Support new and existing customers in Technology assessment and qualification

o Ensure successful tape out and mask generation

o Provide technical interface with manufacturing to set up appropriate flow for
  specific customer needs

o Assist customers in addressing ET and wafer sort testing requirements

o Initiate qual plans and keep customers informed of ongoing reliability and QA
  monitoring results


- -------------------------------------------------------------------------------
27 November, 1996



<PAGE>   97
[SINGAPORE TECHNOLOGIES LOGO]      CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                                        SUMMARY

o Commitment to leading-edge foundry service

  o Investment in capacity, R&D, CIM, yield and quality
  o Customer engineering in factory and at all sales offices

o Commitment to technology

  o State of the art FAB 2 and sub-u technology

o Flexible business model

  o Turnkey service to partial wafers
  o Wafer-based pricing
  o Die-based pricing

o Strong Infrastructure

  o TriTech, STATS, CiNERGi, and mask shop in Singapore

- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   98
[SINGAPORE TECHNOLOGIES LOGO]     CHARTERED SEMICONDUCTOR MANUFACTURING
- -------------------------------------------------------------------------------
                               THE STS ADVANTAGE


The member companies of STS are each an independent entity with dedicated focus,
expertise and excellence in each of the critical process of a product
realization: Design, Wafer Fabrication and Assembly & Test.

The interdependent business model and the independent focuses provide the
advantages of economies of scale and efficiency of specialization, and the
flexibility and convenience of a vertically integrated environment.



- -------------------------------------------------------------------------------
27 November, 1996



<PAGE>   99
[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------


                             SYNERGISTIC OPERATIONS


                                   [PICTURE]


- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   100

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------

                            KEY STRATEGIES (CONT'D)

                           R/D Functional Strategies


                                      ****



- --------------------------------------------------------------------------------
27 November, 1996
<PAGE>   101



[SINGAPORE TECHNOLOGIES LOGO]       CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------------



                                     R & D
                                     - ROADMAP





- --------------------------------------------------------------------------------
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<PAGE>   102
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange
                Commission






[Singapore Technologies Logo]       CHARTERED SEMICONDUCTOR MANUFACTURING





                                     *****
<PAGE>   103

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange
                Commission



[Singapore Technologies Logo]       CHARTERED SEMICONDUCTOR MANUFACTURING


                            KEY STRATEGIES (CONT'D)




                                     *****



<PAGE>   104
[Singapore Technologies Logo]          CHARTERED SEMICONDUCTOR MANUFACTURING

- --------------------------------------------------------------------------------

FINANCIAL ANALYSIS

- --------------------------------------------------------------------------------

27 November, 1996



<PAGE>   105
 REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                 --------------------------------
                 The asterisked portions of this document have been omitted and
                 are filed separately with the Securities and Exchange
                 Commission


<TABLE>
<CAPTION>

                        --------------------------------------------------------------------------------------------------
FAB 4 (MODULE A ONLY)       1997      1998     1999     2000      2001      2002     2003       2004      2005     GRAND
P & L (SSM)                 TOTAL     TOTAL    TOTAL    TOTAL     TOTAL     TOTAL    TOTAL      TOTAL     TOTAL    TOTAL
                         -------------------------------------------------------------------------------------------------
<S>                       <C>       <C>      <C>       <C>       <C>       <C>     <C>        <C>      <C>      <C>


Wafer Out(K)
ASP
GSB
MSB
                                                        *****
COST OF SALES
Material
Non-Depn
Depn
Subcon
Insty Chg
Tech Lic


Gross Margin

Pre-operating exp
G&A
R&D
CE
CSM Support Costs

OPERATING PROFIT
Interest expense
Interest income
Grants (royalty)
NET OF PROFIT bf PBMF
ST Mgt Fees
Profit Bonus
NET OF PROFIT af PBMF
TAX@
NOPAT

ROS

</TABLE>


<PAGE>   106
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



     FAB 4
RAMP PLAN (38 mths) (REV 2D)


                                    *****

<PAGE>   107
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                              FAB 4 PROJECT: (REV 2D)
                               ASP AND CAPACITY PLAN

<TABLE>
<CAPTION>
               1996      1997      1998      1999      2000      2001      2002   2003    2004      2005

<S>            <C>       <C>       <C>       <C>       <C>       <C>       <C>    <C>     <C>       <C>

                                     *****
</TABLE>
<PAGE>   108
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


<TABLE>
<CAPTION>

FAB 4               1997      1998      1999      2000      2001      2002   2003    2004      2005      GRAND
P&L (S$M)           TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL  TOTAL   TOTAL     TOTAL     TOTAL
<S>                 <C>       <C>       <C>       <C>       <C>       <C>    <C>     <C>       <C>       <C>


                                     *****
</TABLE>
<PAGE>   109
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


<TABLE>
<CAPTION>

FAB 4          1996      1997      1998      1999      2000      2001      2002     2003     2004      2005      GRAND
CF(S$M)        TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL    TOTAL    TOTAL     TOTAL     TOTAL
<S>            <C>       <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>       <C>       <C>


                                     *****
</TABLE>
<PAGE>   110
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
FAB 4                 1997                     1998                     1999                     2000
CF(S$M)        1Q   2Q   3Q   4Q        1Q   2Q   3Q   4Q        1Q   2Q   3Q   4Q        1Q   2Q   3Q   4Q
<S>            <C>  <C>  <C>  <C>       <C>  <C>  <C>  <C>       <C>  <C>  <C>  <C>       <C>  <C>  <C>  <C>
                                        ****
</TABLE>

<PAGE>   111
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
FAB 4                 2001                     2002                     2003
CF(S$M)        1Q   2Q   3Q   4Q        1Q   2Q   3Q   4Q        1Q   2Q   3Q   4Q
<S>            <C>  <C>  <C>  <C>       <C>  <C>  <C>  <C>       <C>  <C>  <C>  <C>
                                        ****
</TABLE>
<PAGE>   112
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
FAB 4                1997      1998      1999      2000      2001      2002      2003      2004      2005
BAL SHT (S$M)       TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL     TOTAL
<S>                 <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>

                                      ****

</TABLE>
<PAGE>   113
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
                ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


<TABLE>
<CAPTION>
FAB4                   1997      1998     1999     2000      2001     2002    2003    2004     2005
<S>                  <C>       <C>      <C>      <C>       <C>      <C>     <C>     <C>      <C>      <C>
BS SCHEDULES (S$M)    TOTAL     TOTAL    TOTAL    TOTAL     TOTAL    TOTAL   TOTAL   TOTAL    TOTAL    TOTAL
</TABLE>



                                      ****


<PAGE>   114

REDACTED                 CONFIDENTIAL TREATMENT REQUESTED
                         The asterisked portions of this document have been
                         omitted and are filed separately with the
                         Securities and Exchange Commission.

<TABLE>
<CAPTION>
FAB 4                      1997          1998          1999          2000
                        1Q 2Q 3Q 4Q   1Q 2Q 3Q 4Q   1Q 2Q 3Q 4Q   1Q 2Q 3Q 4Q
<S>                     <C>           <C>           <C>           <C>
BS SCHEDULES (S$M)      TOTAL         TOTAL         TOTAL         TOTAL
</TABLE>
                                      ****
<PAGE>   115
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
                ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

                        2001                2002                2003
                   1Q  2Q  3Q  4Q      1Q  2Q  3Q  4Q      1Q  2Q  3Q  4Q

                                      ****


<PAGE>   116
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
                ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION



<TABLE>
<CAPTION>
FAB4                   1997      1998     1999     2000      2001     2002    2003    2004     2005    GRAND
                      TOTAL     TOTAL    TOTAL    TOTAL     TOTAL    TOTAL   TOTAL   TOTAL    TOTAL    TOTAL
<S>                 <C>        <C>      <C>      <C>       <C>      <C>     <C>     <C>      <C>      <C>
</TABLE>



                                     ******

<PAGE>   117
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
                ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


     FAB 4

     CAPITAL EXPENDITURES BY PHASES (S$m)




                                      ****

<PAGE>   118
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                --------------------------------
                THE ASTERISKED PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND
                ARE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

                FAB 4
                CAPITAL EXPENDITURE B



                                      ****
<PAGE>   119
[SINGAPORE TECHNOLOGIES LOGO]    CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------





                            ISSUES & RECOMMENDATIONS

- --------------------------------------------------------------------------
27 November, 1996
<PAGE>   120
REDACTED       CONFIDENTIAL TREATMENT REQUESTED
               The asterisked portions of this document have been omitted and
               are filed separately with the Securities and Exchange Commission


[SINGAPORE TECHNOLOGIES LOGO]    CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------





                            ISSUES & RECOMMENDATIONS



                                     *****




- --------------------------------------------------------------------------
27 November, 1996
<PAGE>   121
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


[SINGAPORE TECHNOLOGIES LOGO]    CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------





                      ISSUES & RECOMMENDATIONS (CONT'D)



- --------------------------------------------------------------------------
27 November, 1996


                                     *****
<PAGE>   122
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


[SINGAPORE TECHNOLOGIES LOGO]    CHARTERED SEMICONDUCTOR MANUFACTURING
- --------------------------------------------------------------------------



                       ISSUES & RECOMMENDATIONS (CONT'D)

POTENTIAL PROBLEM                                         RECOMMENDATIONS



                                     *****


- --------------------------------------------------------------------------
27 November, 1996

<PAGE>   123



IN WITNESS WHEREOF the parties have entered into this Agreement as of the date
stated above.


CSM

SIGNED by TAN BOCK SENG                 )
President & CEO                         )
for and on behalf of                    )
CHARTERED SEMICONDUCTOR                 )
MANUFACTURING LTD                       )
in the presence of:-                    ) /s/ Tan Bock Seng
                                          ------------------------------

/s/ Angela Hon
- --------------------------------
Name: Angela Hon, Senior Manager legal


HP

SIGNED by ALAN W. MARTY                 )
General Manager, Integrated             )
Circuit Business Division               )
HEWLETT-PACKARD COMPANY                 )
for and on behalf of                    )
HEWLETT-PACKARD EUROPE B.V.             )
in the presence of:-                    )  /s/ Alan W. Marty
                                          ------------------------------

/s/ Christine S.P. Chua
- --------------------------------
Name: Christine S.P. Chua


EDBI

SIGNED by LIOW VOON KHEONG              )
General Manager                         )
for and on behalf of                    )
EDB INVESTMENTS PTE LTD                 )
in the presence of:-                    )  /s/ Liow Voon Kheong
                                          ------------------------------

/s/ Terence Teo Keng
- --------------------------------
Name: Terence Teo Keng





                       The Company - CSM - HP Confidential


<PAGE>   124


ACKNOWLEDGED AND AGREED TO
by RICK KENNETH HODGMAN                 )
  ------------------------------        )
  General Manager                       )
  ------------------------------        )
for and on behalf of                    )
CHARTERED SILICON PARTNERS PTE LTD      )
Date:- July 4, 1997                     ) /s/ RICK KENNETH HODGMAN
in the presence of:-                      -----------------------------

/s/ ANGELA HON
- --------------------------------
Name: Angela Hon
      Senior Manager Legal






                       The Company - CSM - HP Confidential



<PAGE>   1
                                                                    EXHIBIT 10.2





                               Dated 4 July, 1997





                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD



                                     - and -



                           HEWLETT-PACKARD EUROPE B.V.



                                     - and -



                             EDB INVESTMENTS PTE LTD





             -------------------------------------------------------


                           AMENDMENT AGREEMENT (NO. 1)
                                       TO
                   JOINT VENTURE AGREEMENT DATED 13 MARCH 1997

             -------------------------------------------------------




                      The Company - CSM - HP Confidential
<PAGE>   2



                           AMENDMENT AGREEMENT (NO. 1)


         THIS AMENDMENT AGREEMENT (NO. 1) is made on 4 July, 1997
BETWEEN :-

(1)      CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
         incorporated in Singapore with its registered office at 60, Woodlands
         Industrial Park D, Street 2, Singapore 738406;

(2)      HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
         Netherlands with its principal place of business at Startbaan 16, 1187
         XR Amstelveen, The Netherlands; and

(3)      EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
         with its registered office at 250, North Bridge Road, #27-04, Raffles
         City Tower, Singapore 179101.

CSM, HP and EDBI are collectively referred to herein as "Parties" and
individually referred to herein as a "Party".

         WHEREAS:-

(A)      The Parties have entered into a Joint Venture Agreement dated 13 March,
         1997 (the "Joint Venture Agreement") for the purpose of regulating
         their relationship inter se as shareholders in the joint venture
         company called Chartered Silicon Partners Pte Ltd.

(B)      The Parties are entering into this Amendment Agreement to vary the
         Joint Venture Agreement with effect from the date hereof.

         IT IS AGREED as follows:-

1.       INTERPRETATION

         All terms and references used in the Joint Venture Agreement and which
         are defined or construed in the Joint Venture Agreement but are not
         defined or construed in this Amendment Agreement shall have the same
         meaning and construction in this Amendment Agreement.

2.       AMENDMENT TO THE JOINT VENTURE AGREEMENT

         The Parties agree that with effect from the date of this Amendment
         Agreement, the Joint Venture Agreement shall be amended as follows :-


                                       1
                      The Company - CSM - HP Confidential
<PAGE>   3

(A)      Clause 3(D)   Issued Capital

(i)      All references to the figure "25,000,000" appearing in Clause 3(D)
         shall be deleted and shall be replaced with the figure "15,000,000".

(ii)     The table specified in Clause 3(D) shall be deleted in its entirety and
         replaced with the following table:-

<TABLE>
<CAPTION>
                     "Percentage        Number of Shares        Paid in Capital
                     -----------        ----------------        ---------------
         <S>         <C>                <C>                     <C>
         CSM  :      51 per cent.       7,650,000               S$7,650,000

         HP   :      30 per cent.       4,500,000               S$4,500,000

         EDBI :      19 per cent.       2,850,000               S$2,850,000"
</TABLE>

(B)      Clause 3(E)   Calls for Capital Contributions

         The table specified in Clause 3(E)(ii) shall be deleted in its entirety
         and replaced with the following table:-

<TABLE>
<CAPTION>
         "Period            3Q1997   1Q1998   4Q1998   1Q1999   3Q1999   4Q1999   1Q2000
                            ------   ------   ------   ------   ------   ------   ------
         <S>                <C>      <C>      <C>      <C>      <C>      <C>      <C>
         Call Amount
         (S$'000,000)          5       100       60      150      120      100      170
</TABLE>

         where "Q" means such consecutive period of three months in each
         calendar year."

(C)      Clause 4(C)   Application for Shares etc

(i)      All references to the figure "12,750,000" appearing in Clause 4(C)(i)
         shall be deleted and shall be replaced with the figure "7,649,998".

(ii)     All references to the figure "7,500,000" appearing in Clause 4(C)(ii)
         shall be deleted and shall be replaced with the figure "4,500,000".

(iii)    All references to the figure "4,750,000" appearing in Clause 4(C)(iii)
         shall be deleted and shall be replaced with the figure "2,850,000".

3.       SAVING AND INCORPORATION

(A)      Save as expressly amended by this Amendment Agreement, the terms and
         conditions of the Joint Venture Agreement shall continue to be in full
         force and effect in all other respects.


                                       2
                      The Company - CSM - HP Confidential
<PAGE>   4

(B)      The Joint Venture Agreement and this Amendment Agreement shall be
         construed as one document and this Amendment Agreement shall be deemed
         to be part of the Joint Venture Agreement. Where the context so
         permits, references in the Joint Venture Agreement and in this
         Amendment Agreement to "the Joint Venture Agreement" or "this
         Agreement" shall be read and construed as references to the Joint
         Venture Agreement as amended and supplemented by this Amendment
         Agreement.

4.       Governing Law

         This Amendment Agreement shall be governed by, and construed in
accordance with, the laws of Singapore.


I N  W I T N E S S  W H E R E O F  the parties have entered into this Amendment
Agreement as of the date stated above.


CSM

SIGNED by TAN BOCK SENG                    )
President & CEO                            )
for and on behalf of                       )
CHARTERED SEMICONDUCTOR                    )
MANUFACTURING LTD                          )
in the presence of:-                       )     /s/ Tan Bock Seng
                                                 -----------------------------

         /s/ Angela Hon
- --------------------------------------
Name: Angela Hon, Senior Manager Legal

HP

SIGNED by ALAN W. MARTY                    )
General Manager, Integrated Circuit        )
  Business Division                        )
HEWLETT-PACKARD COMPANY                    )
for and on behalf of                       )
HEWLETT-PACKARD EUROPE B.V.                )
- ---------------------------
in the presence of:-                       )       /s/ Alan W. Marty
                                                 -----------------------------

          /s/ Christine Chua
     ---------------------------------
Name:      Christine Chua



                                       3
                      The Company - CSM - HP Confidential
<PAGE>   5

EDBI

SIGNED by LIOW VOON KHEONG                 )
General Manager                            )
for and on behalf of                       )
EDB INVESTMENTS PTE LTD                    )
in the presence of:-                       )         /s/ Liow Voon Kheong
                                                 -----------------------------

          /s/ Terence Teo Keng Yu
     ---------------------------------
Name:      Terence Teo Keng Yu



ACKNOWLEDGED AND AGREED TO
by RICK KENNETH HODGMAN                    )
General Manager                            )
for and on behalf of                       )
CHARTERED SILICON PARTNERS PTE LTD         )
Date:-     4 July 1997                     )         /s/ Rick Kenneth Hodgman
                                                 -----------------------------
in the presence of:-

          /s/ Angela Hon
     ---------------------------------
Name:  Angela Hon, Senior Manager Legal





                                      4
                      The Company - CSM - HP Confidential

<PAGE>   1
                                                                    EXHIBIT 10.3




                              Dated 1 October, 1999





                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD



                                     - and -



                           HEWLETT-PACKARD EUROPE B.V.



                                     - and -



                             EDB INVESTMENTS PTE LTD





             -------------------------------------------------------


                           AMENDMENT AGREEMENT (NO. 2)
                                       TO
                   JOINT VENTURE AGREEMENT DATED 13 MARCH 1997


             -------------------------------------------------------



<PAGE>   2
                           AMENDMENT AGREEMENT (NO. 2)


         THIS AMENDMENT AGREEMENT (NO. 2) is made on 1 October, 1999
BETWEEN :-

(1)      CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("Chartered"), a company
         incorporated in Singapore with its registered office at 60, Woodlands
         Industrial Park D, Street 2, Singapore 738406;

(2)      HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
         Netherlands with its principal place of business at Startbaan 16, 1187
         XR Amstelveen, The Netherlands; and

(3)      EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
         with its registered office at 250, North Bridge Road, #27-04, Raffles
         City Tower, Singapore 179101.

Chartered, HP and EDBI are collectively referred to herein as "Parties" and
individually referred to herein as a "Party".

         WHEREAS:-

(A)      The Parties have entered into a Joint Venture Agreement dated 13 March,
         1997 (the "Joint Venture Agreement") for the purpose of regulating
         their relationship inter se as shareholders in the joint venture
         company called Chartered Silicon Partners Pte Ltd.

(B)      The Parties have entered into an Amendment Agreement (No. 1) to vary
         the Joint Venture Agreement with effect from 4 July, 1997.

(C)      The Parties are entering into this Amendment Agreement (No. 2) to
         further vary the Joint Venture Agreement with effect from the date
         hereof.

         IT IS AGREED as follows:-

1.       INTERPRETATION

         All terms and references used in the Joint Venture Agreement and which
         are defined or construed in the Joint Venture Agreement but are not
         defined or construed in this Amendment Agreement shall have the same
         meaning and construction in this Amendment Agreement (No. 2).

2.       AMENDMENT TO THE JOINT VENTURE AGREEMENT

         The Parties agree that with effect from the date of this Amendment
         Agreement (No. 2), the following clauses of the Joint Venture Agreement
         shall be as follows:





                                       1
<PAGE>   3

Clause 5(H) Meetings of Directors

5(H)(viii) None of the following actions shall be taken by the Company unless
approved by a simple majority vote of the duly represented Directors at a duly
convened meeting:-


         (a)      the incurring by the Company of any capital expenditure in
                  excess of S$10,000,000 unless included in an approved Company
                  Business Plan;


         (b)      the exercise of the Company's borrowing powers in relation to
                  incremental loans carrying a loan tenure exceeding one year
                  (other than those included in an approved Company Business
                  Plan), or financing from new financial institutions;


         (c)      the approval of any proposed annual Company Business Plan of
                  the Company (other than the first Company Business Plan),
                  provided however that in the event that the annual Company
                  Business Plan has not been approved prior to the commencement
                  of the new financial year of the Company, until a new Company
                  Business Plan is so approved, the Company shall be operated in
                  accordance with the Company Business Plan most recently
                  approved by the Board; and


         (d)      any sale, lease, transfer or other disposition of the
                  properties or assets of the Company other than in the ordinary
                  course of business of the Company.


Clause 5(I) Important Matters Requiring Board's Special Approval

(i) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of not less than three-quarters of the duly represented Directors at a
duly convened meeting:-

         (a)      the approval of any proposed annual Company Business Plan or
                  interim revision of the Company Business Plan of the Company
                  (other than the first Company Business Plan), if it impacts
                  the Company's ability to service HP's wafer requirements under
                  the Assured Supply and Demand Agreement provided however that
                  in the event that the annual Company Business Plan has not
                  been approved prior to the commencement of the new financial
                  year of the Company, until a new Company Business Plan is so
                  approved, the Company shall be operated in accordance with the
                  Company Business Plan, or interim revision of the Company
                  Business Plan most recently approved by the Board;

         (b)      the lease of any real estate for an amount in excess of
                  S$5,000,000 unless included in an approved Company Business
                  Plan, or the purchase of any real estate;

         (c)      the entry of the Company into new markets outside of the
                  Business, as defined under Clause 6(A);




                                       2
<PAGE>   4

         (d)      any sale, lease, transfer or other disposition of the
                  properties or assets of the Company in excess of 20% of the
                  fair market value of total assets at the time of sale, lease,
                  transfer or other disposition, as the case may be, other than
                  in the ordinary course of business of the Company;

         (e)      the approval of, or change in, the method of computing the fee
                  payable under the CSM Service Support Agreement or the STPL
                  Group Management and Support Services Agreement unless
                  contemplated in an approved Company Business Plan;

         (f)      the termination of research and development services provided
                  by CSM pursuant to the CSM Service Support Agreement, or
                  change in the Fab Equalization policy specified in the CSM
                  Service Support Agreement;

         (g)      the exercise of any of the Company's borrowing powers in
                  excess of 20% of the fair market value of total assets at time
                  of borrowing;

         (h)      the entry into any major alliance unless contemplated in an
                  approved Company Business Plan. For the purposes of this
                  sub-paragraph (h) the expression "major alliance" means any
                  major transaction entered into by the Company other than in
                  the ordinary course of business (1) pursuant to which the
                  Company acquires or disposes of intellectual property or other
                  technology rights, (2) pursuant to which the Company is
                  restricted as a result of such transaction in the products or
                  services which it may provide to its customers, including HP,
                  or (3) which creates or grants exclusion rights to another
                  party or parties;

         (i)      the issue by the Company of any guarantee to secure the
                  indebtedness of any person;

         (j)      the incurring by the Company of any capital expenditure in
                  excess of 20% of the fair market value of total assets at time
                  of expenditure;

         (k)      a change in the Debt/Equity Ratio policy specified in Clause
                  11(B); and

         (l)      the approval of any proposed interim revision to the annual
                  Company Business Plan which is required in the event (1) there
                  is a negative deviation of actual net income results for a
                  quarter from the existing plan for that quarter which,
                  annualized, exceeds 10% of the paid-up share capital of the
                  Company or (2) there is a negative deterioration of forecasted
                  net income for the year from the existing annual Company
                  Business Plan for that year which exceeds 10% of the paid-up
                  share capital of the Company.






                                       3
<PAGE>   5

(ii) Subject to any requirements specified by law or by the Act, none of the
following actions shall be taken by the Company unless with the affirmative
votes of each of the CSM Directors, the HP Directors and the EDBI Director duly
represented at a duly convened meeting:-

         (a)      the change in the authorized, issued or paid-up capital of the
                  Company (unless pursuant to Clauses 2(C), 3(C), 3(D), 3(E) and
                  4(C)) or the grant of any option over the unissued share
                  capital of the Company;

         (b)      the listing of the shares in the capital of the Company on any
                  stock exchange;

         (c)      the winding-up, liquidation or dissolution of the Company or
                  the merger, consolidation or reorganization of the Company
                  with any corporation, firm or other body;

         (d)      any transfer of shares held by a Shareholder in the capital of
                  the Company unless in accordance with Clause 10, Clause 14(B)
                  or the Option Agreement;

         (e)      the subscription for, or acquisition or disposal of, any
                  shares or interests in any corporation;

         (f)      the entry into any joint venture; and

         (g)      the declaration by the Company if dividends for any financial
                  year in excess of the lower of :-

                  (1) 70 per cent. of the profit after tax of the Company for
                      the financial year; and

                  (2) 50 per cent. of the retained earnings of the Company.

3.       SAVING AND INCORPORATION

(A)      Save as expressly amended by this Amendment Agreement (No. 2) and
         Amendment Agreement (No. 1), the terms and conditions of the Joint
         Venture Agreement shall continue to be in full force and effect in all
         other respects.

(B)      The Joint Venture Agreement, the Amendment Agreement (No. 1) and this
         Amendment Agreement (No. 2) shall be construed as one document and this
         Amendment Agreement (No. 2) shall be deemed to be part of the Joint
         Venture Agreement. Where the context so permits, references in the
         Joint Venture Agreement and in this Amendment Agreement (No. 2) to "the
         Joint Venture Agreement" or "this Agreement" shall be read and
         construed as references to the Joint Venture Agreement as amended and
         supplemented by the Amendment Agreement (No. 1) and this Amendment
         Agreement (No. 2).




                                       4
<PAGE>   6

4.       Governing Law

         This Amendment Agreement (No. 2) shall be governed by, and construed in
         accordance with, the laws of Singapore.


I N  W I T N E S S  W H E R E O F  the parties have entered into this Amendment
Agreement (No. 2) as of the date stated above.


Chartered

SIGNED by BARRY WAITE            )
President & CEO                  )
for and on behalf of             )
CHARTERED SEMICONDUCTOR          )
MANUFACTURING LTD                )
in the presence of:-             )      /s/  BARRY WAITE
                                  ------------------------------

/s/  ANGELA HON
- ----------------------------
Name: Angela Hon


HP

SIGNED by DICK M. CHANG
General Manager, Integrated     )
Circuit Business Division       )
HEWLETT-PACKARD COMPANY         )
for and on behalf of            )
HEWLETT-PACKARD EUROPE B.V.     )
in the presence of:-            )     /s/  DICK M. CHANG
                                 -------------------------------

/s/  ANGELO CAREY
- ----------------------------
Name: Angelo Carey




                                       5
<PAGE>   7

EDBI

SIGNED by LIOW VOON KHEONG
General Manager                 )
for and on behalf of            )
EDB INVESTMENTS PTE LTD         )
in the presence of:-            )    /s/  LIOW VOON KHEONG
                                --------------------------------

/s/  MONICA HO
- ----------------------------
Name: Monica Ho

ACKNOWLEDGED AND AGREED TO
by ANG TANG YONG                )
General Manager                 )
for and on behalf of            )
CHARTERED SILICON
  PARTNERS PTE LTD              )
Date:- 1, October 1999          )    /s/  ANG TANG YONG
                                --------------------------------
in the presence of:-

/s/  JULIET NG
- ----------------------------
Name:      Juliet Ng




                                       6

<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY
                                                                   EXHIBIT 10.4



                               DATED 4 JULY, 1997





                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                     - and -


                           HEWLETT-PACKARD EUROPE B.V.


                                     - and -


                             EDB INVESTMENTS PTE LTD





                    ----------------------------------------


                                OPTION AGREEMENT
                                   RELATING TO
                            SHARES IN THE CAPITAL OF
                       CHARTERED SILICON PARTNERS PTE LTD


                    ----------------------------------------


<PAGE>   2

                                 C O N T E N T S



<TABLE>
<CAPTION>
CLAUSE      HEADING                                                                     PAGE
- ------      -------                                                                     ----
<S>        <C>                                                                           <C>
1.          DEFINITIONS AND INTERPRETATION                                                1

2.          CALL OPTIONS                                                                  3

3.          PRICE                                                                         6

4.          OPTION COMPLETION                                                             6

5.          WARRANTIES                                                                    7

6.          PREVALENCE OF AGREEMENT                                                       8

7.          REMEDIES                                                                      8

8.          COSTS                                                                         9

9.          SUCCESSORS AND ASSIGNS                                                        9

10.         NOTICES                                                                       9

11.         GOVERNING LAW                                                                11

            APPENDIX A          -     CALL OPTION NOTICE                                 13

            APPENDIX B          -     PARTY A NOTICE                                     14
</TABLE>



                       The Company - CSM - HP Confidential
<PAGE>   3

        T H I S   A G R E E M E N T  is made on 4 July, 1997 B E T W E E N:-

(1)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
        incorporated in Singapore with its registered office at 60, Woodlands
        Industrial Park D, Street 2, Singapore 738406;

(2)     HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
        Netherlands with its principal place of business at Startbaan 16, 1187
        XR Amstelveen, The Netherlands; and

(3)     EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
        with its registered office at 250, North Bridge Road, #27-04 Raffles
        City Tower, Singapore 179101.

        W H E R E A S:-

(A)     Pursuant to a Joint Venture Agreement dated 13 March, 1997 (the "Joint
Venture Agreement") made between the parties, the parties agreed to establish
Chartered Silicon Partners Pte Ltd (the "Company") as a joint venture company to
own and operate a wafer fabrication facility in Singapore.

(B)     EDBI has agreed to grant to each of CSM and HP a call option, over
ordinary shares held or to be held by EDBI in the capital of the Company upon
the terms and conditions set out in this Agreement.

(C)     It is a condition of Completion (as defined in the Joint Venture
Agreement) that this Agreement be entered into between the parties.

        I T   I S   A G R E E D  as follows:-

1.      DEFINITIONS AND INTERPRETATION

        In this Agreement and the Appendices, unless there is something in the
subject or context inconsistent therewith:-

        (i)     the following expressions bear the following meanings, namely:-



                       The Company - CSM - HP Confidential
<PAGE>   4

                "Call Option Notice" means a notice from an Option Holder to
                EDBI substantially in the form set out in Appendix A;

                "Call Option Period" means the period commencing from the
                Completion Date and ending on the date falling five years from
                such date (both dates inclusive);

                "CSM Call Option" has the meaning ascribed thereto in Clause
                2(A);

                "CSM Option Shares" means such number of ordinary shares in the
                capital of the Company for the time being held by EDBI as shall
                be equal to nine per cent. of the total issued ordinary shares
                for the time being in the capital of the Company;

                "HP Call Option" has the meaning ascribed thereto in Clause
                2(B);

                "HP Option Shares" means such number of ordinary shares in the
                capital of the Company for the time being held by EDBI as shall
                be equal to ten per cent. of the total issued ordinary shares
                for the time being in the capital of the Company;

                "Option" means any of the following:-

                (i)     the CSM Call Option;

                (ii)    the HP Call Option; and

                (iii)   the Party A Option.

                "Option Holder" means CSM or HP;

                "Option Notice" means either of the following:-

                (i)     the Call Option Notice; and

                (ii)    the Party A Notice.

                "Option Shares" means the CSM Option Shares and the HP Option
                Shares;



                                       2

                       The Company - CSM - HP Confidential
<PAGE>   5


                "Party A Notice" means a notice from an Option Holder to the
                other Option Holder and EDBI substantially in the form set out
                in Appendix B;

                "Party A Option" has the meaning ascribed thereto in Clause
                2(C)(v); and

                "Singapore Dollars" means the lawful currency of Singapore;

                (ii)    all terms and references which are defined in the Joint
                        Venture Agreement but are not defined in this Agreement
                        shall have the same meaning ascribed thereto in the
                        Joint Venture Agreement; and

                (iii)   references to "Clauses" and the "Appendices" are to
                        clauses of, and the appendices to, this Agreement. The
                        headings in this Agreement are for convenience only and
                        shall not affect the interpretation of this Agreement.

2.      CALL OPTIONS

(A)     CSM Call Option

        In consideration of CSM acting under or in connection with the Joint
Venture Agreement, EDBI hereby grants to CSM a call option (the "CSM Call
Option"), being the right of CSM to require EDBI to sell to CSM free from all
liens, charges and other encumbrances and with all rights and advantages
attaching thereto, the CSM Option Shares at any time during the Call Option
Period.

(B)     HP Call Option

        In consideration of HP acting under or in connection with the Joint
Venture Agreement, EDBI hereby grants to HP a call option (the "HP Call
Option"), being the right of HP to require EDBI to sell to HP free from all
liens, charges and other encumbrances and with all rights and advantages
attaching thereto, the HP Option Shares at any time during the Call Option
Period.

(C)     Exercise

(i) The CSM Call Option may be exercised by CSM by serving a Call Option Notice
on EDBI specifying the number of CSM Option Shares CSM wishes to purchase at any
time during the Call Option Period Provided that:-



                                       3

                       The Company - CSM - HP Confidential
<PAGE>   6

        (a)     the CSM Call Option may be exercised only twice in respect of
                all or any part of the CSM Option Shares;

        (b)     the first exercise of the CSM Call Option shall be in respect of
                either all the CSM Option Shares; or four per cent. of the total
                issued ordinary shares for the time being in the capital of the
                Company;

        (c)     the second exercise (if any) of the CSM Call Option shall be in
                respect of the full balance of the CSM Option Shares at that
                time held by EDBI;

        (d)     in respect of the Option Shares allotted on the same date, CSM
                may exercise its right to purchase up to 9/19ths of such Option
                Shares but CSM must purchase the Option Shares on a "FIFO"
                basis, that is, the Option Shares allotted earliest must be
                purchased first; and

        (e)     the CSM Call Option shall automatically lapse and become null
                and void in the event that CSM sells or otherwise transfers
                (other than to a Permitted Transferee or to any third party
                approved by EDBI in writing) any ordinary shares in the capital
                of the Company.

(ii) EDBI agrees that it shall, upon receiving a Call Option Notice from CSM,
sell to CSM free from all liens, charges and other encumbrances and with all
rights and advantages attaching thereto the number of CSM Option Shares
specified in the Call Option Notice.

(iii) The HP Call Option may be exercised by HP by serving a Call Option Notice
on EDBI specifying the number of HP Option Shares HP wishes to purchase at any
time during the Call Option Period Provided that:-

        (a)     the HP Call Option may be exercised only twice in respect of all
                or any part of the HP Option Shares;

        (b)     the first exercise of the HP Call Option shall be in respect of
                either all the HP Option Shares; or five per cent. of the total
                issued ordinary shares for the time being in the capital of the
                Company;



                                       4

                       The Company - CSM - HP Confidential
<PAGE>   7

        (c)     the second exercise (if any) of the HP Call Option shall be in
                respect of the full balance of the HP Option Shares at that time
                held by EDBI;

        (d)     in respect of the Option Shares allotted on the same date, HP
                may exercise its right to purchase up to 10/19ths of such Option
                Shares but HP must purchase the Option Shares on a "FIFO" basis,
                that is, the Option Shares allotted earliest must be purchased
                first; and

        (e)     the HP Call Option shall automatically lapse and become null and
                void in the event that HP sells or otherwise transfers (other
                than to a Permitted Transferee or to any third party approved by
                EDBI in writing) any ordinary shares in the capital of the
                Company.

(iv) EDBI agrees that it shall, upon receiving a Call Option Notice from HP,
sell to HP free from all liens, charges and other encumbrances and with all
rights and advantages attaching thereto the number of HP Option Shares specified
in the Call Option Notice.

(v) Notwithstanding any other provision of this Agreement but subject to
paragraph (vi) below, the parties agree that an Option Holder ("Party A") shall
have the right to require EDBI to sell to Party A (the "Party A Option") free
from all liens, charges and other encumbrances and with all rights and
advantages attaching thereto, any Option Shares which the other Option Holder
("Party B") has not exercised its option to acquire by the beginning of the
fifth year of the Call Option Period (the "Unacquired Option Shares") on and
subject to the following terms:-

        (a)     if Party A wishes to exercise the Party A Option, it shall serve
                the Party A Notice on EDBI and Party B no earlier than the sixth
                month of such fifth year;

        (b)     if Party B shall, prior to the expiry of the Call Option Period,
                serve a Call Option Notice on EDBI in respect of the Unacquired
                Option Shares, the Party A Option shall automatically lapse and
                become null and void; and

        (c)     if Party B fails to serve a Call Option Notice prior to the
                expiry of the Call Option Period, or if Party B serves written
                notice on Party A and EDBI that it does not wish to acquire the
                Unacquired Option Shares, completion of the sale and purchase of
                the Unacquired Option Shares as between Party A and EDBI shall
                take place on the date falling 30 days from (1) the date of
                expiry of the Call Option Period; or (2) the date Party B
                notifies Party A and EDBI that it does not wish to acquire the




                                       5

                       The Company - CSM - HP Confidential
<PAGE>   8
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                Unacquired Option Shares (as the case may be) but otherwise in
                accordance with Clause 4.

(vi)    Party A shall have the right to exercise the Party A Option only upon
        the satisfaction of the following conditions:-

        (a)     Party A has exercised it rights to purchase all the relevant
                Option Shares pursuant to the Option granted to it under Clause
                2 (A) or Clause 2 (B) (as the case may be); and

        (b)     Party A has obtained the written approval of EDBI (such approval
                not to be unreasonably withheld) prior to Party A serving the
                Party A Notice on Party B.

3.      PRICE

        The purchase price for each of the Option Shares shall be the sum equal
        to ****

4.      OPTION COMPLETION

(A) Completion of the sale and purchase of the relevant number of Option Shares
(the "Option Completion") pursuant to the exercise of an Option shall take place
at the registered office of the Company (or at such other place as the parties
to such Option may agree in writing) on the date falling 30 days from the date
of the Option Notice (in the case of the CSM Call Option and the HP Call Option
(as the case may be)) or on the date specified in Clause 2(C)(v)(c) (in the case
of the Party A Option), or such other date as the parties to such Option may
agree.



                                       6

                       The Company - CSM - HP Confidential
<PAGE>   9

(B)     On each Option Completion:-

        (i)     EDBI shall deliver to the Option Holder a duly executed transfer
                form together with the relative share certificates in respect of
                the number of Option Shares specified in the Option Notice; and

        (ii)    the Option Holder shall pay to EDBI the purchase price for the
                number of Option Shares specified in the Option Notice in
                Singapore Dollars by way of a cashier's order, bank draft drawn
                on a licensed bank in Singapore and made out in favour of EDBI,
                or wire transfer, or such other means acceptable to the Option
                Holder and EDBI.

(C)     The restrictions on transfer of shares contained in the Joint Venture
Agreement and the Articles shall not apply to the sale and transfer of Option
Shares to either Option Holder pursuant to this Agreement.

5.      WARRANTIES

(A)     Warranties by EDBI

        EDBI hereby warrants and undertakes to each of the Option Holders and
its successors in title (with the intent that the provisions of this sub-Clause
(A) shall continue to have full force and effect notwithstanding each Option
Completion) that:-

        (i)    it will not, in respect of any of the Option Shares, prior to the
               expiry of the Call Option Period, sell, transfer, dispose of,
               charge, pledge or encumber in any way its interest in that Option
               Share except in accordance with this Agreement;

        (ii)   it is or will on each Option Completion be legally and
               beneficially entitled to transfer the relevant Option Shares to
               such Option Holder; and

        (iii)  the relevant Option Shares are or will on each Option Completion
               be free from all and any charges, liens and other encumbrances
               whatsoever.



                                       7

                       The Company - CSM - HP Confidential
<PAGE>   10

(B)     Warranties by Option Holder

        Each of the Option Holders hereby warrants and undertakes to EDBI and
its successors in title (with the intent that the provisions of this sub-Clause
(B) shall continue to have full force and effect notwithstanding each Option
Completion) that:-

        (i)     it will not sell, transfer and dispose of any of the Option
                Shares acquired by it from EDBI pursuant to the exercise of an
                Option until the expiration of the Lock-Up Period as determined
                in paragraphs (a) and (b) of this Clause:-

                (a)     in respect of the Option Shares purchased pursuant to an
                        exercise of such Option during the first or second year
                        of the Option Period, the Lock-Up Period shall expire on
                        the expiry date of the moratorium on transfer of shares
                        by CSM and HP as specified in Clause 10(A)(i) of the
                        Joint Venture Agreement; and

                (b)     in respect of the Option Shares purchased pursuant to an
                        exercise of such Option during the third, fourth or
                        fifth year of the Option Period, the Lock-Up Period
                        shall expire on the date falling two years from the date
                        of exercise of such Option in respect of such Option
                        Shares; and

        (ii)    it will ensure that the Company does not declare any dividend
                payments to the Shareholders during the period of six months
                immediately following each exercise by either of the Option
                Holders of its Option.

6.      PREVALENCE OF AGREEMENT

        In the event of any inconsistency or conflict between the provisions of
this Agreement and the provisions of the Articles, the provisions of this
Agreement shall as between the parties prevail.

7.      REMEDIES

        No failure on the part of any party to exercise and no delay on the part
of any party in exercising any right hereunder will operate as a release or
waiver thereof, nor will any single or partial exercise of any right under this
Agreement preclude any other or further exercise of it. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any right or
remedy provided by law.



                                       8

                       The Company - CSM - HP Confidential
<PAGE>   11

8.      COSTS

        Each party shall bear its own legal and other professional costs and
expenses incurred by it in connection with this Agreement. Each Option Holder
shall bear the stamp duty payable on the purchase by it of any Option Shares.

9.      SUCCESSORS AND ASSIGNS

(A)     Agreement Binding

        This Agreement shall be binding on and shall inure for the benefit of
each party's successors and assigns.

(B)     Assignment

        In the event that any party (the "Transferor") transfers all of the
shares held by it in the capital of the Company to its Permitted Transferee
pursuant to Clause 10(D) of the Joint Venture Agreement, the Transferor shall
procure that its Permitted Transferee executes in such form as may be reasonably
required by and agreed between the other parties a deed of ratification and
accession under which the Permitted Transferee shall agree to be bound by and
shall be entitled to the benefit of this Agreement as if an original party
hereto in place of the Transferor. Unless and until a Permitted Transferee
executes such deed of ratification and accession, such Permitted Transferee
shall not be entitled to exercise its benefits hereunder.

10.     NOTICES

        All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post (by air-mail if to or from an address outside Singapore)
with recorded delivery, or by facsimile transmission (provided that the receipt
of such facsimile transmission is confirmed by the dispatch of a hard copy of
the facsimile sent immediately thereafter by prepaid registered post) addressed
to the intended recipient thereof at its address or at its facsimile number set
out in this Agreement (or to such other address or facsimile number as a party
to this Agreement may from time to time duly notify the others in writing). Any
such notice, demand or communication shall be deemed to have been duly served,
if given or made by facsimile, immediately at the time of dispatch (provided
that the receipt of such facsimile transmission is confirmed by the dispatch of
a hard copy of the



                                       9

                       The Company - CSM - HP Confidential
<PAGE>   12

facsimile sent immediately thereafter by prepaid registered post) or, if given
or made by letter, immediately if delivered personally or 48 hours after posting
or, if given or made by air-mail, ten days after posting and in proving the same
it shall be sufficient to show that personal delivery was made or that the
envelope containing such notice was duly addressed, stamped and posted. The
addresses and facsimile numbers of the parties for the purpose of this Agreement
are:-

        CSM    :      CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                      60, Woodlands Industrial Park D Street 2
                      Singapore 738406
                      Facsimile No.         :      (65) 362 2909
                      Attention             :      Legal Department

        HP     :      HEWLETT-PACKARD EUROPE B.V.
                      Startbaan 16
                      1187 XR Amstelveen
                      The Netherlands
                      Facsimile No.         :      (31)(20) 547 7755
                      Attention             :      Legal Department

                      With a copy to:- HEWLETT-PACKARD COMPANY 3000 Hanover
                      Street MS 20 BQ Palo Alto, CA 94304
                      United States of America
                      Facsimile No.         :      (01)(415) 857 4392
                      Attention             :      General Counsel

        EDBI   :      EDB INVESTMENTS PTE LTD

                      250, North Bridge Road
                      #27-04 Raffles City Tower
                      Singapore 179101
                      Facsimile No.         :      (65) 336 2503
                      Attention             :      General Manager



                                       10

                       The Company - CSM - HP Confidential
<PAGE>   13

11.     GOVERNING LAW

        This Agreement shall be governed by, and construed in accordance with,
the laws of Singapore.





                                       11

                       The Company - CSM - HP Confidential
<PAGE>   14


I N  W I T N E S S  W H E R E O F the parties have entered into this Agreement
as of the date stated above.

CSM

SIGNED by TAN BOCK SENG                            )
President & CEO                                    )
for and on behalf of                               )
CHARTERED SEMICONDUCTOR                            )
MANUFACTURING LTD                                  )
in the presence of:-                               ) /s/ Tan Book Seng
                                                     --------------------------

 /s/ Angela Hon
- --------------------------
Name:  Angela Hon, Senior Manager Legal



HP

SIGNED by ALAN W. MARTY
General Manager, Integrated Circuit Business
Division                                           )
for and on behalf of                               )
HEWLETT-PACKARD EUROPE B.V.                        )
in the presence of:-                               ) /s/ Alan W. Marty
                                                    ---------------------------

 /s/ Christine Chua
- --------------------------
Name:  Christine Chua, Senior Attorney



EDBI

SIGNED by LIOW VOON KHEONG                         )
General Manager                                    )
for and on behalf of                               )
EDB INVESTMENTS PTE LTD                            )
in the presence of:-                               ) /s/ Liow Voon Kheong
                                                     --------------------------

 /s/ Terence Teo Keng Yu
- --------------------------
Name:  Terence Teo Keng Yu




                                       12

                       The Company - CSM - HP Confidential
<PAGE>   15


                               A P P E N D I X  A

                               CALL OPTION NOTICE



To      :      EDB Investments Pte Ltd

From    :      [NAME OF OPTION HOLDER]

We refer to the Option Agreement (the "Option Agreement") dated [ ], 1997 made
between us. Terms defined in the Option Agreement have the same meaning herein.
We hereby give you notice that we require you to sell to us in accordance with
the terms and conditions of the Option Agreement, [SPECIFY NUMBER] of the Option
Shares, such sale to be completed on the date specified in Clause 4(A) of the
Option Agreement.

Yours faithfully
for and on behalf of
[NAME OF OPTION HOLDER]

By      :      ___________________

Name    :      ___________________

Title   :      ___________________




                                       13

                       The Company - CSM - HP Confidential
<PAGE>   16

                               A P P E N D I X  B

                                 PARTY A NOTICE



To      :      (1)    EDB Investments Pte Ltd

               (2)    [NAME OF PARTY B]

From    :      [NAME OF PARTY A]


We refer to the Option Agreement (the "Option Agreement") dated [ ], 1997 made
between us. Terms defined in the Option Agreement have the same meaning herein.
If [NAME OF PARTY B] does not, prior to the expiry of the Call Option Period,
serve a Call Option Notice on EDBI in respect of the Unacquired Option Shares,
we hereby give you notice that we require EDBI to sell to us in accordance with
the terms and conditions of the Option Agreement, the Unacquired Option Shares,
such sale to be completed on the date specified in Clause 2(C)(v)(c) of the
Option Agreement.

Yours faithfully
for and on behalf of
[NAME OF PARTY A]




By      :      ___________________

Name    :      ___________________

Title   :      ___________________








                                       14

                       The Company - CSM - HP Confidential

<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY

                                                                    EXHIBIT 10.5

                        Dated this 4th day of July, 1997




                                      Among

                       CHARTERED SILICON PARTNERS PTE LTD,

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                                       And

                             HEWLETT-PACKARD COMPANY




                    -----------------------------------------


                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225


                    -----------------------------------------

                      The Company - CSM - HP Confidential
<PAGE>   2

                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225

                                    CONTENTS

<TABLE>
<CAPTION>
     CLAUSE                          HEADING                           PAGE
     ------                          -------                           ----
<S>              <C>                                                   <C>
      ---        DEFINITIONS AND INTERPRETATION                         2
      1.         THE COMPANY WAFER SUPPLY COMMITMENT                    3

      2.         HP WAFER PURCHASE COMMITMENT                           6

      3.         CSM BRIDGE SUPPLY COMMITMENT                           8

      4.         LIQUIDATED DAMAGES                                     9

      5.         TERM AND TERMINATION                                   11

      6.         FORCE MAJEURE                                          12

      7.         WARRANTY AND INDEMNITY                                 13

      8.         CONFIDENTIALITY                                        14

      9.         OZONE DEPLETING SUBSTANCES AND UNITED NATIONS
                 CONVENTION ON CONTRACTS                                15

      10.        PROSCRIBED COUNTRY LISTING(S)                          15

      11.        NOTICES                                                15

      12.        WAIVER AND REMEDIES                                    16

      13.        SEVERANCE                                              17

      14.        GOVERNING LAW                                          17

      15.        DISPUTE RESOLUTION AND ARBITRATION                     17

      16.        ENTIRE AGREEMENT                                       18

                                     ANNEXES

                 ANNEX A: THE COMPANY WAFER SUPPLY COMMITMENT
                                     HP WAFER PURCHASE COMMITMENT       20

                 ANNEX B: DEFECT DENSITY CEILING                        23

                 ANNEX C: INFORMATION AND COMPATIBILITIES               25
</TABLE>

                      The Company - CSM - HP Confidential
<PAGE>   3


                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225

THIS ASSURED SUPPLY AND DEMAND AGREEMENT 64-225 ("the Agreement") is made the
4th day of July 1997 by and among:

(1)     CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
        with its registered office at 60 Woodlands Industrial Park D, Street 2,
        Singapore 738406 (hereinafter referred to as the "Company");

(2)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
        Singapore with its registered office at 60 Woodlands Industrial Park D,
        Street 2, Singapore 738406 (hereinafter referred to as "CSM"); and

(3)     HEWLETT-PACKARD COMPANY, a company incorporated in California, U.S.A.
        and having its principal place of business at 3000 Hanover Street, Palo
        Alto, California, U.S.A. 94304  (hereinafter referred to as "HP").

The Company, CSM and HP are sometimes collectively referred to herein as
"Parties" and individually referred to herein as a "Party."

WHEREAS:

(A)     CSM, Hewlett-Packard Europe B.V., a subsidiary of HP ("HP Europe"), and
        EDB Investments Pte Ltd ("EDBI") have entered into a Joint Venture
        Agreement dated 13 March, 1997 (the "JV Agreement") pursuant to which
        they have agreed, among other things, to establish the Company, a joint
        venture dedicated to the independent foundry business.

(B)     CSM, HP Europe and EDBI intend that the Company be engaged primarily in
        the business of the development, manufacture, assembly, marketing and
        sale of semiconductor wafers. The Company intends to establish one or
        more wafer fabrication facilities (the "Company Fab").

(C)     CSM is engaged primarily in the business of the development,
        manufacture, assembly, marketing and sale of semiconductor wafers, with
        its wafer fabrication facilities (the "CSM Fab").

(D)     HP desires to have access to certain wafer manufacturing capacity and
        the Company and CSM desire to provide such wafer manufacturing capacity
        to HP on the terms and conditions of this Agreement.

                      The Company - CSM - HP Confidential
<PAGE>   4



IT IS HEREBY AGREED as follows:-

DEFINITIONS AND INTERPRETATION

Definitions

In this Agreement, unless the subject or context otherwise requires, the
following words and expressions shall have the following meanings respectively
ascribed to them:

"Bridge Supply Commitment" has the meaning ascribed thereto in Clause 3.1;

"Company Layer Capacity" shall have the meaning ascribed thereto in Annex A
hereto;

"Company Percentage Commitment" shall have the meaning ascribed thereto in Annex
A hereto;

"Company Wafer Supply Commitment" shall have the meaning ascribed thereto in
Clause 1.1;

"HP Average Layers" shall mean the average number of mask layers calculated
every calendar quarter based on the HP Forecast;

"HP Equity Holding" shall mean the percentage of the outstanding shares of the
Company owned by HP Europe or its Permitted Transferees (as defined in the JV
Agreement), as the case may be;

"HP Forecast" shall have the meaning ascribed thereto in Clause 2.2;

"HP Option Shares" shall mean those shares that HP Europe has the right to
purchase from EDBI as defined in the Option Agreement dated the date hereof
among EDBI, CSM and HP Europe (the "Option Agreement");

"HP Percentage Commitment" shall have the meaning ascribed thereto in Annex A
hereto;

"HP Purchase Order(s)" shall mean orders placed by HP to the Company for Wafers;
such orders shall state Wafer quantities, process flow to be used, required
delivery dates ex-Works, and shipping instructions, and may state product part
numbers;

"HP Wafer Purchase Commitment" shall have the meaning ascribed thereto in Clause
2.1;

"Management Committee" has the meaning ascribed thereto in the JV Agreement;

"Market Price" shall have the meaning ascribed thereto in Clause 1.4;

"Substitute Loading" has the meaning ascribed thereto in Clause 2.5;

"Technology Committee" has the meaning ascribed thereto in the JV Agreement;

                      The Company - CSM - HP Confidential
                                       2
<PAGE>   5

"Wafer(s)" shall mean 8-inch equivalent semiconductor wafers manufactured in the
Company Fab or the CSM Fab. The Parties hereto shall mutually determine
appropriate conversion factors for any non 8-inch wafers.

Interpretation

Any reference in this Agreement to:

- -- "Clauses" or "Annexes" are to the clauses of and the Annexes to this
   Agreement;

- -- The headings are for convenience only and shall not affect the interpretation
   of this Agreement.

Unless the context otherwise requires or permits, references to the singular
number shall include references to the plural number and vice versa; references
to natural persons shall include bodies corporate and vice versa; and words
denoting any gender shall include all genders.

1.      THE COMPANY WAFER SUPPLY COMMITMENT

1.1     In consideration for the HP Wafer Purchase Commitment, the Company will
        make available to HP wafer manufacturing capacity for semiconductor
        wafers during the term of this Agreement (the "Company Wafer Supply
        Commitment"). The Company Wafer Supply Commitment shall be expressed as
        a quantity of Wafers and shall be determined in accordance with Annex A
        hereto. The general principle governing the Company Wafer Supply
        Commitment is that the Company shall make available to HP a percentage
        of the total available capacity in the Company Fab which percentage
        shall be adjusted in accordance with adjustments to the HP Equity
        Holding. The Company Wafer Supply Commitment shall be in respect of
        products and processes as specified in manufacturing agreements to be
        entered into between the Company and HP (and CSM, as appropriate) from
        time-to-time (the "Manufacturing Agreements").

1.2     Every quarter, the Company, HP and CSM shall determine the Company Wafer
        Supply Commitment using the process set forth in Annex A. At such time,
        the Company and HP shall also determine which technologies are available
        in the Company Fab and HP's order mix among such available technologies.
        The Company shall maintain a record of the then current Company Wafer
        Supply Commitment, as determined from time-to-time in accordance with
        Annex A, and shall maintain archive copies of the previous Company Wafer
        Supply Commitments.

1.3     Unless otherwise expressly provided in this Agreement, the sale of
        Wafers by the Company to HP under this Agreement shall be governed by
        the terms and conditions (including qualification specifications and
        reliability monitoring specifications) of the Manufacturing Agreements.

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1.4    (a)     Every quarter, the Company and HP shall agree on the price of
               Wafers to be purchased and sold under this Agreement. The price
               of Wafers supplied to HP shall be ****









               For purposes of this Agreement, ****





















        (b)    Price Increases: Notwithstanding sub-Clause (a) above, after the
               price of Wafers to HP is determined in accordance with sub-Clause
               (a) above, the price of Wafers on new HP Purchase Orders placed
               may be increased by the Company ******
               *********************************, provided that such increased
               price is in accordance with sub-Clause (a) above.

        (c)    The parties acknowledge that ******************************
               described in Clause 1.4(a)(i) is available to HP for so long as
               ****

                      The Company - CSM - HP Confidential
                                       4
<PAGE>   7

        (d)    The Company shall maintain a record of the then current Wafer
               prices, as determined from time-to-time in accordance with this
               Clause 1.4, and shall maintain archive copies of the previous
               Wafer prices.

1.5     Defect Density

        (a)    Yields and Pricing. The Company and HP agree that the pricing
               specified in Clause 1.4 shall be subject to adjustment in the
               event that the Company fails to meet the applicable defect
               density ceilings or part yield minimums specified for a given
               process and part produced for HP. The process for determining
               defect density ceilings is set forth in Annex B.

        (b)    Yield Prediction. The Company, CSM and HP agree that defect
               density goals, derived in a form compatible with HP's yield
               modeling are important in order to predict yields on released and
               yet-to-be-released parts. The Company, CSM and HP will mutually
               agree on these goals for all processes produced by the Company
               and used by HP. This will be done in the form of a rolling, half
               annual, forecast, extending out 2 years of defect density for
               each process used by HP. The forecast will be set and reviewed
               twice in each year (approximately once every six months) with due
               consideration of data and experience of CSM, HP and the Company.
               It will be recommended by the Management Committee, approved by
               the General Manager of the Company and a record will be kept by
               the Company with copies to HP, CSM and the Company. The form and
               definition of defect density compatible with HP's yield modeling
               shall be described in the then current "Die per Wafer Conversion
               Procedure," HP Document No. A-5964-2929-1.

1.6     In the event that the Company gives written notice to HP that the
        Company has available additional wafer manufacturing capacity in excess
        of the Company Wafer Supply Commitment, HP shall inform the Company of
        its acceptance of such additional capacity by written notice within five
        working days from the date of the Company's notice, failing which the
        Company's offer of such additional capacity shall lapse upon the expiry
        of the said period. Such additional wafer manufacturing capacity shall
        be made available at the prices specified in Clause 1.4 but shall not be
        included in calculating either the Company Wafer Supply Commitment or
        the HP Wafer Purchase Commitment or subject to the forecasting
        limitations set forth in Clause 2.2. Other terms and conditions of the
        supply and purchase of such additional wafer manufacturing capacity
        shall be mutually agreed between the Parties.

1.7     To facilitate the use by HP of capacity made available by the Company,
        the Company shall provide HP with information which is similar in type,
        level of detail and timeliness to that HP uses to plan and manage its
        business. This information shall be in a form such that it can be
        utilized by and is accessible to HP systems. A description of the
        compatibilities and type of information required is given in Annex C.
        For the avoidance

                      The Company - CSM - HP Confidential
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REDACTED        CONFIDENTIAL TREATMENT REQUESTED
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                are filed separately with the Securities and Exchange Commission


        of doubt, the Parties agree that the Company shall not be obligated to
        purchase systems which are identical or similar to HP systems.

2.      HP WAFER PURCHASE COMMITMENT

2.1     HP agrees to place HP Purchase Orders with the Company for certain
        semiconductor Wafers during the term of this Agreement (the "HP Wafer
        Purchase Commitment"). The HP Wafer Purchase Commitment shall be
        expressed as a quantity of Wafers and shall be determined in accordance
        with Annex A hereto. Similar to the Company Wafer Supply Commitment, the
        general principle governing the HP Wafer Purchase Commitment is that HP
        shall place HP Purchase Orders with the Company for a minimum percentage
        of the total available capacity in the Company Fab which percentage
        shall be adjusted in accordance with adjustments to the HP Equity
        Holding. At the time when the Company determines the Company Wafer
        Supply Commitment in accordance with Annex A, the Company and HP shall
        also determine the HP Wafer Purchase Commitment as set forth in Annex A.
        The HP Wafer Purchase Commitment shall be in respect of products and
        processes as specified in the Manufacturing Agreements.

        In the event that any of the Company's processes fails to meet and
        maintain the written quality specifications as agreed upon by the
        Company and HP in the Manufacturing Agreements or any such process
        cannot be qualified by the agreed date of qualification set forth in the
        relevant Manufacturing Agreement (an "Unqualified Process"), and the
        Company is unable to rectify such failure within a period of
        ************ from such failure or from the agreed date of qualification,
        as the case may be, then (i) the HP Wafer Purchase Commitment shall be
        reduced by the number of Wafers forecast in the HP Forecast to be
        manufactured using the Unqualified Process until such time as the
        Unqualified Process is qualified, and (ii) the Company and HP shall meet
        in good faith to discuss and determine the appropriate level for the HP
        Wafer Purchase Commitment.

2.2     Every *****, HP will provide to the Company a rolling ******** forecast
        for HP's ******* Wafer purchases (the "HP Forecast"). The first
        ********** shall be backed by HP Purchase Orders. On a ******* basis, HP
        may modify the HP Forecast in accordance with the following table:

                                      ****





                      The Company - CSM - HP Confidential
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REDACTED        CONFIDENTIAL TREATMENT REQUESTED
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        An example demonstrating potential forecast modification follows.

                                      ****


















2.3     (a)    Subject to Clause 2.2, the Company shall confirm HP Purchase
               Orders so long as the aggregate HP Purchase Orders for each
               calendar quarter does not exceed the Company Wafer Supply
               Commitment for such quarter. The Company shall confirm the HP
               Purchase Order requested delivery date or such other delivery
               date as the Company and HP shall agree upon (the "Acknowledged
               Delivery Date").

        (b)    HP may specify or change the part number of Wafers ordered
               pursuant to HP Purchase Orders no later than ************ prior
               to said part number's physical lot start. The Company will have a
               goal of reducing the *********** period for specifying part
               numbers for lot start to *********.

2.4     In the event that the Company fails to deliver against such confirmed HP
        Purchase Orders by the Acknowledged Delivery Date, the Company shall
        rectify such failure within ** **** of the Acknowledged Delivery Date.
        In the event that the Company fails to deliver such HP Purchase Orders
        within ******* of the Acknowledged Delivery Date, the Company shall have
        a further cure period of ****** from said ****** (the "Further Cure
        Period"). If the Company fails to deliver the HP Purchase Orders during
        the Further Cure Period, HP shall have the right to terminate this
        Agreement and/or to hold the Company in technical default of this
        Agreement. HP shall be entitled to waive the Company's breach of its
        obligation under this Clause 2.4 on a case-by-case basis.

        During the Further Cure Period, the HP Wafer Purchase Commitment shall
        be ******** and shall not be reinstated until such delinquent HP
        Purchase Orders are delivered (the "Cure Date") and provided that all HP
        Purchase Orders placed subsequently to such delinquent HP Purchase
        Orders with an Acknowledged Delivery Date on or prior to the Cure Date
        have been delivered.

                      The Company - CSM - HP Confidential
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REDACTED        CONFIDENTIAL TREATMENT REQUESTED
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                are filed separately with the Securities and Exchange Commission


2.5     Fab Source Flexibility:

        (a)    HP, the Company and CSM may from time-to-time determine and agree
               that it will be more advantageous to load all or part of the HP
               Purchase Orders in a CSM Fab rather than the Company Fab
               ("Substitute Loading"). In this case, the Technology Committee
               will make a recommendation for approval by the General Manager.
               In that event, such Substitute Loading shall be included in
               determining the HP Wafer Purchase Commitment and the Company
               Wafer Supply Commitment as if such HP Purchase Order was actually
               loaded in the Company Fab. Substitute Loading shall be distinct
               from and shall not be considered the Bridge Supply Commitment as
               defined in Clause 3. CSM shall make Substitute Loading available
               to the Company for the benefit of HP on the terms and conditions
               set forth in this Agreement except that references to the
               "Company Fab" shall refer to the "CSM Fab" to the extent
               appropriate.

        (b)    Notwithstanding sub-Clause (a), the price of Wafers supplied by
               CSM to the Company under Substitute Loading shall be ****

3.      CSM BRIDGE SUPPLY COMMITMENT

3.1     CSM hereby agrees to provide bridge wafer manufacturing capacity (the
        "Bridge Supply Commitment") to the Company for the benefit of HP in the
        event the Company, for whatever reason, fails or is unable to comply
        with the Company Wafer Supply Commitment during the period (the "Bridge
        Period") beginning with the Company's first planned production Wafer out
        to HP (as set forth in the Company Business Plan as defined in the JV
        Agreement) and ending on the earlier of: (i) ********* from the
        Company's first pilot line commercial production shipment or **********
        from the first production out from the Company Fab, whichever is later,
        and (ii) termination of the term of this Agreement.

3.2     CSM hereby agrees to provide such Bridge Supply Commitment to the
        Company for the benefit of HP in a maximum amount of *******************
        ****************************************************** during the Bridge
        Period on the same terms and conditions as the Company has offered to HP
        hereunder, including but not limited to the terms and conditions set
        forth in Clauses 1, 2.2 to 2.5, 4 and Annex A. For purposes of this
        Clause 3, such Clauses shall be interpreted to read "CSM" in place of
        "the Company" and "CSM Fab" in place of "the Company Fab" to the extent
        appropriate.

3.3     Notwithstanding Clause 3.2, the price of Wafers supplied by CSM to the
        Company to satisfy the Bridge Supply Commitment shall be ***************
        ************************************************************************

                      The Company - CSM - HP Confidential
                                       8
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REDACTED        CONFIDENTIAL TREATMENT REQUESTED
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        ***********************************************************************
        **************************************************************.


4.      LIQUIDATED DAMAGES

4.1     The parties acknowledge that they intend to work together to establish
        and ramp the Company Fab. Accordingly, the provisions of this Clause 4
        for the payment of liquidated damages shall not be effective in respect
        of the Company Wafer Supply Commitment, the Bridge Supply Commitment,
        the HP Wafer Purchase Commitment and HP's compliance with its monthly HP
        Forecast commitments until such time as the Company Fab has produced and
        shipped at least ***** Wafers out per month (the "Initial Ramp Period").

4.2     (a)    In the event that the monthly HP Purchase Orders (i) for any
               ********** calendar months or (ii) averaged over the previous
               ******* month period, are less than *** of the HP Forecast for
               such month the Company shall be entitled to collect from HP
               liquidated damages calculated based on the shortfall from *****
               of the HP Forecast for such period (the "HP Damages Period"),
               based on *************************************************** for
               the HP Damages Period.

        (b)    The formula for calculation of such liquidated damages shall be
               as follows:

               ****















4.3     (a)    Notwithstanding Clause 4.2, in the event that HP's Purchase
               Orders for ****** ************* are less than the HP Wafer
               Purchase Commitment for such *************, then the Company
               shall be entitled to collect from HP liquidated damages
               calculated based on the shortfall from **** of the HP Wafer
               Purchase Commitment for such quarter,****************************
               ****************************************************************.

        (b)    The formula for calculation of such liquidated damages shall be
               as follows:
               ****

                      The Company - CSM - HP Confidential
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               ****













4.4     Notwithstanding the foregoing, for any given shortfall event the Company
        shall only be entitled to collect liquidated damages from HP under
        either Clause 4.2 or 4.3.

4.5     (a)    In the event that the Company fails to deliver at least *** of
               the confirmed HP Purchase Orders (i) for any ****************
               calendar months or (ii) averaged over the previous ******* month
               period, HP shall be entitled to collect from the Company
               liquidated damages calculated based on the shortfall from **** of
               the HP Purchase Orders for such period (the "Company Damages
               Period"), based on *********************************************
               ***************************************************************.

        (b)    The formula for calculation of such liquidated damages shall be
               as follows: ****







4.6     The Company, HP and CSM (to the extent applicable) agree and acknowledge
        that the amount payable as liquidated damages pursuant to Clauses 4.2,
        4.3 and 4.5 is a genuine pre-estimate of the loss which would be
        suffered by the non-defaulting Party as a consequence of the failure of
        the defaulting Party to fulfill its respective obligations under Clauses
        1, 2 and 3 (to the extent applicable) of this Agreement.

4.7     The Company, CSM and HP each agree that their respective liability, in
        the Company's and CSM's case to fulfill the Company Wafer Supply
        Commitment and Bridge Supply Commitment under Clauses 1 and 3,
        respectively, and in HP's case to fulfill the HP Wafer Purchase
        Commitment and monthly HP Forecast commitment under Clause 2, shall be
        limited to the liability expressly specified in Clause 4 and that no
        Party shall be liable for any indirect, special or consequential damages
        even if such Party had or should have had any knowledge, actual or
        constructive, of the possibility of such damages.

                      The Company - CSM - HP Confidential
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REDACTED        CONFIDENTIAL TREATMENT REQUESTED
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                are filed separately with the Securities and Exchange Commission


5.      TERM AND TERMINATION

5.1     This Agreement shall continue for so long as the JV Agreement is
        effective unless earlier terminated in writing in accordance with this
        Clause 5. Notwithstanding the foregoing, if CSM or HP Europe sells or
        otherwise transfers (other than to a Permitted Transferee, as such term
        is defined in the JV Agreement) all of its shares in the Company, then
        this Agreement will terminate as to CSM or HP, respectively. This
        Agreement may be earlier terminated in the following events:

        (a)    At the option of the Company, in the event that the HP Purchase
               Order(s) is in aggregate less than *** of the HP Wafer Purchase
               Commitment for any ************ calendar months commencing after
               the Initial Ramp Period;

        (b)    At the option of HP, in the event that:

               (i)    the Company or CSM fails to deliver to HP in aggregate at
                      least **** of the HP Purchase Order(s) for any
                      ************** calendar months commencing after the
                      Initial Ramp Period; or

               (ii)   any of the Company's processes fails to meet and maintain
                      the written quality specifications as specified by HP in
                      the Manufacturing Agreements or any such process cannot be
                      qualified by HP, and the Company is unable to rectify such
                      failure within a period of **** months from the agreed
                      date of qualification; or

        (iii)  the Company or CSM is in breach under Clause 2.4;

        (c)    At the option of the Company or CSM, in any of the following
               events:

               (i)    the inability of HP to pay its debts in the normal course
                      of business; or

               (ii)   HP ceasing or threatening to cease wholly or substantially
                      to carry on its business, otherwise than for the purpose
                      of a reconstruction or amalgamation without insolvency; or

               (iii)  any encumbrancer taking possession of or a receiver,
                      manager, trustee or judicial manager being appointed over
                      the whole or any substantial part of the undertaking,
                      property or assets of HP; or

               (iv)   the making of an order by a court of competent
                      jurisdiction or the passing of a resolution for the
                      winding-up of HP or any company controlling HP, otherwise
                      than for the purpose of a reconstruction or amalgamation
                      without insolvency;

                      The Company - CSM - HP Confidential
                                       11
<PAGE>   14

        (d)    At the option of HP, in any of the following events:

               (i)    the inability of the Company or CSM to pay its debts in
                      the normal course of business; or

               (ii)   the Company or CSM ceasing or threatening to cease wholly
                      or substantially to carry on its business, otherwise than
                      for the purpose of a reconstruction or amalgamation
                      without insolvency; or

               (iii)  any encumbrancer taking possession of or a receiver,
                      manager, trustee or judicial manager being appointed over
                      the whole or any substantial part of the undertaking,
                      property or assets of the Company or CSM; or

               (iv)   the making of an order by a court of competent
                      jurisdiction or the passing of a resolution for the
                      winding-up of the Company or CSM or any company
                      controlling the Company or CSM, otherwise than for the
                      purpose of a reconstruction or amalgamation without
                      insolvency;

        (e)    upon the mutual agreement of the Parties.

5.2     Termination of the Agreement pursuant to Clause 5.1 shall take effect
        immediately upon receipt of a written notice, issued in accordance with
        Clause 11, to that effect by the Party terminating the Agreement to the
        other Parties. The termination of this Agreement howsoever caused shall
        be without prejudice to any obligations or rights of any Party which
        have accrued prior to such termination and shall not affect any
        provision of this Agreement which is expressly or by implication
        provided to come into effect on or to continue in effect after such
        termination.

6.  FORCE MAJEURE

6.1     The Company's and CSM's obligations to provide the Company Wafer Supply
        Commitment and the Bridge Supply Commitment, respectively, and HP's
        obligation to place HP Purchase Orders in accordance with the terms of
        this Agreement shall be suspended upon the occurrence of a force majeure
        event such as act of God, flood, earthquake, fire, explosion, act of
        government, war, civil commotion, insurrection, embargo, riots,
        lockouts, labor disputes affecting the Company, CSM or HP as the case
        may be, for such period as such force majeure event may subsist. Upon
        the occurrence of a force majeure event, the affected Party shall notify
        the other Parties in writing of the same and shall by subsequent written
        notice after the cessation of such force majeure event inform the other
        Parties of the date on which that Party's obligation under this
        Agreement shall be reinstated.

6.2     Notwithstanding anything in this Clause 6, upon the occurrence of a
        force majeure event affecting any Party, which force majeure event
        continues for a period exceeding six

                      The Company - CSM - HP Confidential
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<PAGE>   15

        consecutive months without a prospect of a cure of such event, the other
        Parties shall have the option, in their sole discretion, to terminate
        this Agreement with respect to such Party. Such termination shall take
        effect immediately upon the written notice to that effect from the other
        Party or Parties to the Party affected by the force majeure event.

7.      WARRANTY AND INDEMNITY

7.1     HP warrants that it has the right or will obtain the right to use and
        license the use of any design provided by HP and processes provided by
        HP pursuant to this Agreement and hereby grants to each of the Company
        and CSM the right only to use such design and processes for the
        performance of their respective obligations under this Agreement and any
        applicable Manufacturing Agreements.

7.2     (a)    HP shall indemnify the Company and hold the Company harmless
               against any and all direct losses, liabilities, damages or
               expenses (including direct losses suffered by the Company and any
               reasonable attorneys fees, whether or not a legal proceeding is
               commenced) resulting from any claim against the Company based
               upon an actual or alleged infringement of a third party's patent,
               mask work right, copyright, trade secrets or other intellectual
               property right by intellectual property provided by HP hereunder
               which arise from the Company's supply of Wafers to HP pursuant to
               this Agreement.

        (b)    The Company shall indemnify HP and hold HP harmless against any
               and all direct losses, liabilities, damages or expenses
               (including direct losses suffered by HP and any reasonable
               attorneys fees, whether or not a legal proceeding is commenced)
               resulting from a claim against HP based upon an actual or alleged
               infringement of a third party's patent, mask work right,
               copyright, trade secrets or other intellectual property right
               arising from the use of any material, techniques or process
               provided by the Company in the performance of its obligations
               under this Agreement.

7.3     (a)    HP shall indemnify CSM and hold CSM harmless against any and all
               direct losses, liabilities, damages or expenses (including direct
               losses suffered by CSM and any reasonable attorneys fees, whether
               or not a legal proceeding is commenced) resulting from any claim
               against CSM based upon an actual or alleged infringement of a
               third party's patent, mask work right, copyright, trade secrets
               or other intellectual property right by intellectual property
               provided by HP hereunder which arise from CSM's supply of Wafers
               to HP pursuant to this Agreement.

        (b)    CSM shall indemnify HP and hold HP harmless against any and all
               direct losses, liabilities, damages or expenses (including direct
               losses suffered by HP and any reasonable attorneys fees, whether
               or not a legal proceeding is commenced) resulting from a claim
               against HP based upon an actual or alleged infringement of a
               third party's patent, mask work right, copyright, trade secrets
               or other intellectual

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                                       13
<PAGE>   16
               property right arising from the use of any material, techniques
               or process provided by CSM in the performance of its obligations
               under this Agreement.

7.4     (a)    An indemnifying Party shall not have any liability under this
               Clause 7 unless it is promptly notified in writing of each notice
               and communication regarding such claim and is offered (at the
               indemnifying Party's expense) the authority, information and
               assistance necessary to present a defense and sole control of the
               defense.

        (b)    The indemnified Party may, at its expense, participate in the
               defense of such claim and in all negotiations for its settlement
               or compromise.

        (c)    Notwithstanding the foregoing, (i) the Parties shall act in good
               faith and (ii) no settlement of any claim may be agreed to
               without the written consent of all the Parties affected, which
               consent shall not be unreasonably withheld. The Party controlling
               the defense shall deliver, or cause to be delivered, to the other
               affected Parties copies of all correspondence, pleadings,
               motions, briefs, appeals or other written statements relating to
               or submitted in connection with the defense of any claim, and
               timely notices of any hearing or other court proceeding relating
               to such claim.

7.5     The foregoing states each Party's entire liability and obligation
        (express, implied, statutory or otherwise) with respect to intellectual
        property infringement or claims therefor regarding any of the products
        or technology manufactured or sold pursuant to this Agreement and any
        applicable Manufacturing Agreement.

8.      CONFIDENTIALITY

8.1     All Confidential Information shall be kept confidential by the recipient
        unless or until the recipient can reasonably demonstrate that any such
        Confidential Information is, or part of it is or becomes, in the public
        domain through no fault of its own, or can be demonstrated to be already
        known by the recipient or is independently developed by the recipient;
        or becomes known to the recipient from a source other than the discloser
        without breach of this Agreement by the recipient and otherwise not in
        violation of the discloser's rights; or is disclosed pursuant to the
        order or requirement of a court, administrative agency, or other
        government body, provided that the recipient shall provide prompt
        advance notice thereof to enable the discloser to seek a protective
        order or otherwise prevent such disclosure; whereupon to the extent that
        it is in the public domain or is required to be disclosed by law this
        obligation shall cease. For the purposes of this Agreement,
        "Confidential Information" shall mean all communications among the
        Parties, and all information and other materials supplied to or received
        by any of them from any other Party in connection with the performance
        of this Agreement which is marked confidential with an appropriate
        legend, marking, stamp or other obvious written identification by the
        disclosing Party.

                      The Company - CSM - HP Confidential
                                       14
<PAGE>   17

8.2     Each Party shall take all reasonable steps to minimize the risk of
        disclosure of Confidential Information, by ensuring that only such of
        their employees and directors whose duties will require them to possess
        any of such information shall have access thereto and shall be
        instructed to treat the same as confidential.

8.3     Except as otherwise expressly set out in Clause 8.1, the obligation
        contained in this Clause shall endure, even after the termination of
        this Agreement, for a period of seven years from the date of receipt of
        the Confidential Information.

8.4     A recipient shall be limited in its use of Confidential Information of
        the other Parties to the fulfillment of the recipient's obligations
        under this Agreement.

8.5     Confidential Information is disclosed "as-is" and no warranty is made by
        the discloser regarding its applicability, sufficiency or accuracy.

8.6     No rights or licenses in Confidential Information are granted to the
        recipient by implication or estoppel except as expressly granted in this
        Agreement.

9       OZONE DEPLETING SUBSTANCES AND UNITED NATIONS CONVENTION ON CONTRACTS

9.1     The Company and CSM hereby warrant, certify, represent and agree that
        neither any of the products nor any components of any products to be
        provided pursuant to this Agreement, will contain or will be
        manufactured contrary to the written provisions of the Montreal Protocol
        on Substances that Deplete the Ozone Layer as adjusted and amended by
        the second meeting of the parties in London 27-29 June 1990.

9.2     The parties hereby specifically exclude the application of the United
        Nations Convention on Contracts for the International Sale of Goods to
        this Agreement.

10      PROSCRIBED COUNTRY LISTING(S)

        All Parties shall adhere to relevant U.S. and Singapore laws,
        regulations, and rules relating to the export of technical data and
        products derived therefrom and shall not export or re-export any
        technical data or products derived therefrom to any proscribed country
        listed in such relevant U.S. or Singapore laws, unless properly
        authorized.

11.     NOTICES

        All notices, demands or other communications required or permitted to be
        given or made hereunder shall be in writing and delivered personally or
        sent by prepaid registered post (by air-mail if to or from an address
        outside Singapore) with recorded delivery, or by facsimile

                      The Company - CSM - HP Confidential
                                       15
<PAGE>   18

        transmission (provided that the receipt of such facsimile transmission
        is confirmed by the dispatch of a hard copy of the facsimile sent
        immediately thereafter by prepaid registered post) addressed to the
        intended recipient thereof at its address or at its facsimile number set
        out in this Agreement (or to such other address or facsimile number as a
        party to this Agreement may from time to time duly notify the others in
        writing). Any such notice, demand or communication shall be deemed to
        have been duly served, if given or made by facsimile, immediately at the
        time of dispatch (provided that the receipt of such facsimile
        transmission is confirmed by the dispatch of a hard copy of the
        facsimile sent immediately thereafter by prepaid registered post) or, if
        given or made by letter, immediately if delivered personally or 48 hours
        after posting or, if given or made by air-mail, ten days after posting
        and in proving the same it shall be sufficient to show that personal
        delivery was made or that the envelope containing such notice was duly
        addressed, stamped and posted. The address and facsimile numbers of the
        parties for the purpose of this Agreement are:

        CHARTERED SILICON PARTNERS PTE LTD
        60 Woodlands Industrial Park D
        Street 2
        Singapore 738406
        Facsimile no: (65) 362 2909
        Attn:  Legal Department

        CHARTERED SEMICONDUCTOR MANUFACTURING LTD
        60 Woodlands Industrial Park D
        Street 2
        Singapore 738406
        Facsimile no: (65) 362 2909
        Attn:  Legal Department

        HEWLETT-PACKARD COMPANY
        1501 Page Mill Road
        Palo Alto, CA 94304
        USA
        Facsimile no: (01) (415) 857-4838
        Attn: General Manager, Integrated Circuit Business Division

12.     WAIVER AND REMEDIES

12.1    No delay or neglect on the part of any Party in enforcing against any
        other Party any term or condition of this Agreement or in exercising any
        right or remedy under this Agreement shall either be or be deemed to be
        a waiver or in any way prejudice any right or remedy of that Party under
        this Agreement except to the extent that such delay or neglect causes
        actual prejudice to the defending Party.

12.2    No remedy conferred by any of the provisions of this Agreement is
        intended to be exclusive of any other remedy which is otherwise
        available at law, in equity, by statute or otherwise

                      The Company - CSM - HP Confidential
                                       16
<PAGE>   19

        and each and every other remedy shall be cumulative and shall be in
        addition to every other remedy given hereunder or now or hereafter
        existing at law, in equity, by statute or otherwise. The election of any
        one or more of such remedies by any of the Parties hereto shall not
        constitute a waiver by such Party of the right to pursue any other
        available remedy.

13.     SEVERANCE

        If any provision or part of this Agreement is rendered void, illegal or
        unenforceable in any respect under any enactment or rule of law, the
        validity, legality and enforceability of the remaining provisions shall
        not in any way be affected or impaired thereby.

14.     GOVERNING LAW

        This Agreement shall be governed by and construed in accordance with the
        laws of Singapore.

15.     DISPUTE RESOLUTION AND ARBITRATION

15.1    In case any dispute or difference shall arise among the Parties as to
        the construction of this Agreement or as to any matter or thing of
        whatsoever nature arising hereunder or in connection herewith, including
        any question regarding its existence, validity or termination, such
        dispute or difference shall be submitted to a committee comprised of one
        senior manager from each of the Parties to the dispute, such senior
        managers being in the case of:

        Company:      the General Manager
        CSM:          the President
        HP:           the General Manager of Integrated Circuit Business
                      Division or its successor division.

        If such senior managers are unable to resolve such dispute, it shall be
        submitted to a committee comprised of one senior officer from each of
        the Parties to the dispute, such senior officers being in the case of:

        Company:      the General Manager
        CSM:          the Chairman of the Board of CSM
        HP:           the General Manager of the Components Group or its
                      successor group.

15.2    If such senior officers are unable to resolve the dispute, it shall be
        submitted to a single arbitrator to be appointed by the parties in
        dispute or, failing agreement within 14 days after any Party has given
        to the other Parties in dispute a written request to concur in the

                      The Company - CSM - HP Confidential
                                       17
<PAGE>   20

        appointment of an arbitrator, a single arbitrator to be appointed on the
        request of any Party by the Chairman of the Singapore International
        Arbitration Centre ("SIAC") and such submission shall be a submission to
        arbitration in accordance with the Rules of the SIAC as presently in
        force by which the Parties in dispute agree to be so bound. The place of
        arbitration shall be Singapore and the arbitration shall be conducted
        wholly in the English language.

16      ENTIRE AGREEMENT

16.1    This Agreement, the Annexes hereto and all applicable Manufacturing
        Agreements, all as amended from time-to-time, constitute the entire
        agreement among the Company, CSM and HP with respect to the subject
        matter hereof and shall supersede all previous agreements and
        undertakings among the Parties. In the event of any inconsistency
        between the terms and conditions of this Agreement and those of any
        applicable Manufacturing Agreement, the terms and conditions of this
        Agreement shall prevail as among the Parties.

16.2    The following Annexes are hereby deemed a part of this Agreement and
        incorporated herein by reference. The term "Agreement" includes the
        following Annexes :

        Annex A     The Company Wafer Supply Commitment
                    HP Wafer Purchase Commitment
        Annex B     Defect Density Ceiling
        Annex C     Information and Compatibilities

                      The Company - CSM - HP Confidential
                                       18
<PAGE>   21



IN WITNESS WHEREOF the Parties hereunto have entered into this Agreement as of
the date first written above.

Signed by Rick Kenneth Hodgman,                    )
General Manager                                    )
CHARTERED SILICON PARTNERS                         )
PTE LTD                                            )  /s/ Rick Kenneth Hodgman
in the presence of :                                  -------------------------

 /s/ Angela Hon
- ---------------------------------------
Name:  Angela Hon, Senior Manager Legal

Signed by Tan Bock Seng, President  & CEO          )
CHARTERED SEMICONDUCTOR                            )
MANUFACTURING LTD                                  )
in the presence of :                               )  /s/ Tan Bock Seng
                                                      -------------------------


 /s/ Angela Hon
- ---------------------------------------
Name:  Angela Hon, Senior Manager Legal

Signed by Alan W. Marty, General Manager,          )
Integrated Circuit Business Division               )
HEWLETT-PACKARD COMPANY                            )
in the presence of :                               ) /s/ Alan W. Marty
                                                     --------------------------


 /s/ Christine Chua
- ---------------------------------------
Name:  Christine Chua


                      The Company - CSM - HP Confidential
                                       19
<PAGE>   22
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                     ANNEX A





                       THE COMPANY WAFER SUPPLY COMMITMENT
                          HP WAFER PURCHASE COMMITMENT

The Company Wafer Supply Commitment is calculated as a number of Wafers
available per quarter to HP. The HP Wafer Purchase Commitment is calculated as a
number of Wafers to be purchased per quarter from the Company.

Summary

The process for determining the Company Wafer Supply Commitment and the HP Wafer
Purchase Commitment shall be as follows:

1.      Determine the Company Layer Capacity (as defined below).

2.      Determine the Company Percentage Commitment (as defined below) and HP
        Percentage Commitment (as defined below).

3.      Calculate the Company Wafer Supply Commitment and the HP Wafer Purchase
        Commitment.

Determining the Company Layer Capacity

Every quarter, the Company, HP and CSM shall agree upon the total planned output
capacity of the Company Fab in mask layers (the "Company Layer Capacity") for
the following ****** ******. The Company Layer Capacity may be determined by
****.

Determining the Company Percentage Commitment and HP Percentage Commitment

The Company commitment to make available to HP certain Wafers and HP's
commitment to purchase a minimum number of Wafers can each be expressed as a
percentage of the Company Layer Capacity (the "Company Percentage Commitment and
the "HP Percentage Commitment," respectively) which is based upon the HP Equity
Holding in the Company. These Percentage Commitments shall be (i) increased in
the event HP Europe increases the HP Equity Holding by purchasing the HP Option
Shares (as defined in the Option Agreement) from EDBI, and (ii) decreased in the
event HP Europe sells or transfers (other than to a Permitted Transferee, as
such term is defined in the JV Agreement) part of its shares in the Company .

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                                       20
<PAGE>   23
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


Initially, based on an *********************, the Company Percentage Commitment
shall be 50% and the HP Percentage Commitment shall ******. The Company
Percentage Commitment and HP Percentage Commitment will increase ***************
********************************************************************************
********************************************************************************
*************************************************************************.
The Company Percentage Commitment and the HP Percentage Commitment will decrease
upon ****.

The following chart is intended to illustrate the principles outlined above:

<TABLE>
<CAPTION>
<S>                         <C>                        <C>
   HP Equity Holding        The Company Percentage     HP Percentage Commitment
                                  Commitment

                                      ****
</TABLE>



In the event the HP Equity Holding decreases below *****************, the
Parties will meet in good faith to determine appropriate levels of the Company
Percentage Commitment and HP Percentage Commitment. Notwithstanding the
foregoing, in the event that **************************************************
*************************************, then the Company Percentage and the HP
Percentage Commitment shall be **.

Company Wafer Supply Commitment and HP Wafer Purchase Commitment

The Company Wafer Supply Commitment and HP Wafer Purchase Commitment shall be
expressed in Wafers purchased per quarter. The Company Wafer Supply Commitment
and HP Wafer Purchase Commitment shall be calculated during the last month of
every quarter for the third quarter following such month. That is, if the last
month of a given quarter is considered Month 0, then the Company Wafer Supply
Commitment and HP Wafer Purchase Commitment shall be calculated for the quarter
beginning with Month Seven (7).

The "Company Wafer Supply Commitment" shall be calculated by multiplying the
then current Company Percentage Commitment by the Company Layer Capacity and
dividing by the HP Average Layers:

Company Wafer
Supply Commitment = Company Layer Capacity X Company Percentage Commitment
                    ------------------------------------------------------
                                      HP Average Layers


                      The Company - CSM - HP Confidential
                                       21
<PAGE>   24
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


The "HP Wafer Purchase Commitment" shall be calculated by multiplying the then
current HP Percentage Commitment by the Company Layer Capacity and dividing by
the HP Average Layers:

HP Wafer
Purchase Commitment =  Company Layer Capacity X HP Percentage Commitment
                       -------------------------------------------------
                                         HP Average Layers

The following example is intended to illustrate the definitions above:

Assuming:
The Company Layer Capacity  = *******
HP Average Layers = **
HP Percentage Commitment = ***
The Company Percentage Commitment = ***

Then:
The Company Wafer Supply Commitment = ****
HP Wafer Purchase Commitment =         ****

                      The Company - CSM - HP Confidential
                                       22
<PAGE>   25
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                     ANNEX B

                             DEFECT DENSITY CEILING
                             (REFERENCE CLAUSE 1.5)

ESTABLISHMENT OF DEFECT DENSITY CEILINGS OR PART YIELD MINIMUMS

A defect density ceiling or alternately a part yield minimum, (or both) will be
mutually agreed upon by the Company and HP for each part produced by the Company
for HP. The Company guarantees that the Wafers produced for this Agreement, and
thereby where pricing has been established, shall have part yields which are the
lower of those achieved on the last *** consecutively processed wafers within
the preceding ******************) by (a) HP in manufacturing the part in HP
internal fabs (b) that achieved by the Company in its fabs or (c) that achieved
by CSM in its fabs. The part minimum yield "Y(simple, minimum)" should be set
and reviewed when pricing is set and reviewed. A copy of the agreed upon minimum
yield for parts should be kept and distributed along with agreed upon pricing.

Yield loss due to part marginality within agreed upon parametric acceptance
criteria is the responsibility of HP.

METHODOLOGY FOR ESTABLISHING A PART YIELD MINIMUM:

The HP test methodology on parts bins yield results into Simple Yield and
Survival Yield. Simple Yield is calculated based on die that have passed
continuity tests (shorts and opens), nominal functional, and post stress* tests.
Simple yield is the yield used to establish the part yield. This is denoted as
"Y(simple)". For reference, Survival Yield is calculated based on the number of
die passing additional margin tests and parametric tests. Margin tests include
all high and low voltage functional and high and low frequency functional tests.
Parametric tests include all circuit level parametric tests as well as static
current tests.

*Post stress tests identify fallout caused by the application of stress voltages
to the IC power supply and input levels Post stress fallout is classified as a
reliability concern with wafer fabrication and, as such, is owned by the
Company.

ADMINISTRATION OF PART YIELD MINIMUMS

After each ********** of production (or after *** wafers if less than *** Wafers
are produced within ********), a calculation for the Company production
shipments Y(simple) is made. This is calculated as the average of all production
shipments during this ******* period and denoted as "Y(simple, actual)".

                      The Company - CSM - HP Confidential
                                       23
<PAGE>   26
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


If Y(simple, actual) is less than Y(simple) established as the minimum
"Y(simple, minimum)," then the Company issues a credit to HP. This calculation
is repeated each ********** based on that *********** production shipments. The
credit is calculated as follows:

Credit = Wafer Price times number of Wafers produced
         times [1-Y(simple, actual)/Y(simple, ceiling)].

It is the responsibility of the Company to produce and report the calculations
and implications above to HP.


                      The Company - CSM - HP Confidential
                                       24
<PAGE>   27



                                     ANNEX C

                         INFORMATION AND COMPATIBILITIES

The information and compatibilities required by HP to utilize the Company source
of supply as if it were one of HP's wholly-owned fabs is given in, but not
limited to, the examples below:

1.  Ability to electronically deliver and receive forecasts, orders, process and
    part mixes of HP demand and of Company supply.

2.  Work-In-Progress quantities along the defined material flow managed by the
    Company. This should be as real time as permitted by dispositioning
    procedures between steps in the flow. This includes any line yield losses
    (quantity out of a step divided by quantity starting the step).

3.  Collect parametric data using the test structures and testing algorithms as
    defined in the License and Technology Transfer Agreement dated the date
    hereof among the Company, CSM and HP on a specified number of sites on each
    wafer processed. The data is to be compatible with and loaded onto an
    appropriate HP system upon completion and disposition of each processed lot.

4.  Collect functional test data using specified testing algorithms for each
    Wafer yielded after parametric test. The data is to be compatible with and
    loaded onto an appropriate HP system upon completion and disposition of each
    processed lot.

5.  Traceability of equipment used and document versions dictating processes
    employed.

6.  The ability to directly ship Wafers, including appropriate yield information
    for the next production step, which have been functionally tested and
    dispositioned to points determined by HP.

                      The Company - CSM - HP Confidential
                                       25

<PAGE>   1
                                                                    EXHIBIT 10.6


                          REDACTED FOR CONFIDENTIALITY


                      DATED THIS 5TH DAY OF NOVEMBER, 1998


                                      AMONG


                       CHARTERED SILICON PARTNERS PTE LTD


                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                       AND


                             HEWLETT-PACKARD COMPANY



- --------------------------------------------------------------------------------

                            AMENDMENT AGREEMENT NO. 1

                                       TO

                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225

- --------------------------------------------------------------------------------



                       The Company - CSM - HP Confidential
<PAGE>   2
                            AMENDMENT AGREEMENT NO. 1

                                       TO

                  ASSURED SUPPLY AND DEMAND AGREEMENT 64-225


THIS AMENDMENT AGREEMENT (NO. 1) is made the 5th day of November 1998 (the
"Effective Date"), by and among:

(1)   CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
      with its registered office at 60 Woodlands Industrial Park D, Street 2,
      Singapore 738406 (hereinafter referred to as the "Company");

(2)   CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
      Singapore with its registered office at 60 Woodlands Industrial Park D,
      Street 2, Singapore 738406 (hereinafter referred to as "CSM"); and

(3)   HEWLETT-PACKARD COMPANY, a company incorporated in California, U.S.A. and
      having its principal place of business at 3000 Hanover Street, Palo Alto,
      California, U.S.A. 94304 (hereinafter referred to as "HP").

The Company, CSM and HP are sometimes collectively referred to herein as
"Parties" and individually referred to herein as a "Party".

WHEREAS

(A)   The Parties had entered into an Assured Supply and Demand Agreement 64-225
      dated 4 July 1997 (the "ASADA 64-225") relating to the provision of Wafer
      manufacturing capacity by the Company and CSM to HP.

(B)   In recognition of the increasing rate of technology migration in the
      semiconductor industry and the prevailing market conditions, the Parties
      have mutually agreed that 0.25um process technology (instead of 0.35um
      process technology) should be the first process technology to be installed
      in the Company Fab. Accordingly, the Parties desire to delay the
      commencement of operations of the Company Fab to such time as 0.25um
      process technology is ready for installation, and CSM has agreed to make
      available to the Company, wafer manufacturing capacity to enable the
      Company to fulfill HP's demand for Wafers manufactured using 0.35um
      process technology. For the avoidance of doubt, the Parties agree that
      Wafers of the 0.35um process technology are not planned to be manufactured
      in the Company Fab. Therefore, the Company, CSM and HP acknowledge HP's
      desire for alternative sourcing of 0.35um Wafers through CSM fabs on the
      terms of this Agreement.

                       The Company - CSM - HP Confidential

<PAGE>   3

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



(C)   The Parties are entering into this Amendment Agreement to vary the ASADA
      64-225 with effect from the date hereof.

IT IS HEREBY AGREED as follows:-

1.    INTERPRETATION

1.1   In this Agreement, unless the subject or context otherwise requires, the
      following words and expressions shall have the following meanings
      respectively ascribed to them:-

      "Company Fab Start-Up Date" shall mean the date on which the Company Fab
      is scheduled to output Wafers ordered by HP, such date to be mutually
      agreed by the Parties in accordance with Clause 4.1 of this Agreement.

      "Suspension Period" shall mean the period commencing from the Effective
      Date and ending on the date immediately preceding the Company Fab Start-Up
      Date.

      "HP-Compatible Equipment Set" shall mean the identical equipment in use by
      an internal HP ICBD facility manufacturing a Wafer technology node (in
      other words, base core technology) or advanced technology nodes beyond the
      Wafer technology node in question. By way of example, the HP-Compatible
      Equipment Set for the C10 Process is the identical equipment in use by an
      internal HP ICBD facility manufacturing C10 Process Wafers or other
      advanced processes such as C07 and C05, etc.

      "HP Standard Products" shall mean application-specific standard products
      that are not customer-specific, or, in other words, are sold to multiple
      customers. For the avoidance of doubt, the spirit and intent of the
      Parties' discussions germane to HP Standard Products emphasized the
      customers' inactive participation in Wafer process qualification
      requirements. HP Standard Products comprise those products whose HP
      customers have very little or no involvement in the Wafer process
      qualification, thereby allowing HP, CSM and the Company to jointly
      determine optimal strategies for the Wafer manufacturing facilities in
      which the HP Standard Products are to be produced and to allow HP to
      determine the appropriate process qualification requirements without
      significant customer intervention.

1.2   All other terms and references used in the ASADA 64-225 and which are
      defined or construed in the ASADA 64-225 but are not defined or construed
      in this Amendment Agreement shall have the same meaning and construction
      in this Amendment Agreement.

2.    CSM SUPPLY COMMITMENT & HP WAFER PURCHASE COMMITMENT

      2.1 CSM hereby agrees to provide to the Company wafer manufacturing
      capacity (the "CSM Supply Commitment") in respect of the ************ and
      ********** processes as well as other process variants mutually agreed by
      the Parties (collectively, the "C10

                                       2

                       The Company - CSM - HP Confidential
<PAGE>   4
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



      Process") out of CSM's Fab 3 and/or other Fab facilities to enable the
      Company to fulfill HP's demand for C10 Process Wafer supply.

2.2   The CSM Supply Commitment shall be expressed as a quantity of Wafers and
      shall be determined in accordance with Appendix A of this Agreement. The
      CSM Supply Commitment shall be available to the Company until such time as
      the C10 Process is obsoleted pursuant to Clause 2.4 of this Agreement.

2.3   HP agrees to place HP Purchase Orders with the Company for semiconductor
      Wafers (the "HP Wafer Purchase Commitment") in respect of the C10 Process.
      The Company in turn agrees to place purchase orders with CSM for such
      quantity of semiconductor Wafers as is equal to the HP Wafer Purchase
      Commitment. Further, the Company agrees to place purchase orders with CSM
      for such delivery requirements and technical specifications of Wafers as
      are identical to the HP Purchase Orders on the Company.

      The HP Wafer Purchase Commitment shall be expressed as a quantity of
      Wafers and shall be determined in accordance with Clause 2 of the ASADA
      64-225 (as retained, amended or suspended in Clause 3.3 of this Agreement)
      and Appendix A of this Agreement. At the time when the Company determines
      the Company Wafer Supply Commitment in accordance with Appendix A, CSM,
      the Company and HP shall also determine the HP Wafer Purchase Commitment
      as set forth in Appendix A.

2.4   CSM is entitled to obsolete the C10 Process in its Fab facilities in the
      following events:-

      (a)   upon CSM providing ******** advanced written notice to HP and the
            Company, such notice shall not be provided prior to
            *****************; or

      (b)   in the event that the aggregate quantity of HP Purchase Orders for
            C10 Process Wafers for a period of * consecutive months is less than
            *** Wafers, CSM shall be entitled to give ********* advanced written
            notice to HP and the Company to obsolete the C10 Process.

2.5   CSM shall provide the CSM Supply Commitment from its Fab 3 facility,
      and/or if mutually agreed by HP and CSM, from any other CSM Fab facility;
      and in respect of the tapeout of each new device, HP and CSM shall by
      mutual agreement determine in which CSM Fab facility such device shall be
      manufactured. The Parties intend that the supply of C10 Process Wafers for
      HP C10 system-level-integration ASIC products from a CSM Fab facility
      other than CSM's Fab 3 should be on a converged equipment set with that of
      CSM Fab 3 or on a HP-Compatible Equipment Set. In the event that either
      CSM or HP wishes to deviate from this intent, CSM and HP shall meet in
      good faith to mutually agree on the equipment set to be installed in the
      relevant CSM Fab facility. However, for the avoidance of doubt, it is the
      Parties' intent to manufacture all HP C10 system-level-integration ASIC
      Wafers in CSM Fab 3 through the Suspension Period and beyond the Company
      Fab Start-Up Date but subject to Clause 2.4. The utilization of CSM fabs
      other than CSM Fab 3 for the manufacture of C10 Process Wafers shall be as
      mutually agreed in writing by the Parties when CSM Fab 3 capacity is
      insufficient and additional C10


                                       3

                       The Company - CSM - HP Confidential
<PAGE>   5
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


      Process Wafer manufacturing capacity is required to fulfill the CSM Supply
      Commitment. It is the Parties' intent to initially manufacture all HP
      Standard Product Wafers in CSM Fab 3. In the eventuality that HP Standard
      Products are considered for manufacture outside CSM Fab 3, the Parties
      shall at the appropriate time meet and mutually agree on the equipment set
      and appropriate fabrication facility for the supply of C10 Process Wafers
      for HP Standard Products. All other terms relating to the CSM Supply
      Commitment and the HP Wafer Purchase Commitment for C10 Process Wafers
      shall be the same irrespective of which facility in which the Wafers are
      manufactured.

2.6   The price of Wafers supplied by CSM to the Company under the CSM Supply
      Commitment shall be *****************************************************
      ********************* of the ASADA 64-225, provided however, that the
      Company shall provide such Wafers to HP on pricing determined in
      accordance with Clause 1.4 of the ASADA 64-225.

2.7   The CSM Supply Commitment shall be included towards fulfilling the Company
      Wafer Supply Commitment as if the Company was actually providing such C10
      Process capacity to HP out of the Company Fab, and the HP Purchase Orders
      for C10 Process Wafers shall be included towards fulfilling the HP Wafer
      Purchase Commitment as if such HP Purchase Orders were actually
      manufactured in the Company Fab.

2.8   The Parties acknowledge that they intend to work together to establish and
      install the C10 Process in CSM's Fab 3 facility. Accordingly, the
      provisions of Clause 4 of the ASADA 64-225 for the payment of liquidated
      damages shall not be effective in respect of the Company Wafer Supply
      Commitment, the HP Wafer Purchase Commitment and HP's compliance with its
      monthly HP Forecast commitments until such time as HP has ordered and
      CSM's Fab 3 facility has produced for HP and shipped to HP ***************
      ************ on C10 Process. All liquidated damages received by the
      Company from HP shall be paid by the Company to CSM, and all liquidated
      damages payable by the Company to HP shall be paid by CSM to the Company
      for payment to HP. For the avoidance of doubt, all liquidated damages
      referenced in this Clause 2.8 have specific and exclusive reference to C10
      Process Wafers.

3.    SUSPENSION OF CERTAIN TERMS OF THE ASADA 64-225

3.1   The Parties agree that the provisions of Clause 3 of the ASADA 64-225
      relating to the Bridge Supply Commitment shall not apply to the CSM Supply
      Commitment for the C10 Process and accordingly, the provisions of Clause 3
      of the ASADA 64-225 shall be suspended for the duration of the Suspension
      Period, and shall take effect on the Company Fab Start-Up Date, unless
      otherwise in accordance with Clause 3.2 of this Agreement.

3.2   It is the current intent of the Parties to install the *********** and
      ********** processes as well as other process variants mutually agreed by
      the Parties (collectively, the "C7 Processes") in the Company Fab on the
      Company Fab Start-Up Date. In the

                                       4

                       The Company - CSM - HP Confidential

<PAGE>   6
      event that the Company fails or is unable to supply C7 Process Wafers from
      the Company Fab on the Company Fab Start-Up Date, then the provisions of
      Clause 3 of the ASADA 64-225 relating to the Bridge Supply Commitment
      shall take effect and CSM shall provide such Bridge Supply Commitment to
      the Company to enable the Company to fulfill HP's demand for C7 Process
      Wafer supply.

3.3   The Parties agree that in respect of the supply and purchase of C10
      Process Wafers, certain provisions of the ASADA 64-225 shall be suspended
      and replaced by provisions of this Agreement, and certain provisions of
      the ASADA 64-225 shall be retained and shall remain in effect, as
      follows:-

<TABLE>
<CAPTION>
      ASADA 64-225                            REPLACED BY THIS
      CLAUSE NO.              STATUS          AGREEMENT CLAUSE NO.
      ------------            ---------       --------------------
<S>                           <C>             <C>
      1.1 and 1.2             Suspended       2.1, 2.2, 2.4 and 2.5
      1.3, 1.4, 1.5, 1.6      Retained        N.A.
      1.7                     Retained        N.A.
      2.1 first paragraph     Suspended       2.3 and 2.7
      2.1 second paragraph    Retained        N.A.
      2.2, 2.3 and 2.4        Retained        N.A.
      2.5                     Suspended       None.  However, this Clause
                                              does not negate the Company's
                                              responsibility to provide Wafer
                                              manufacturing capacity beyond Fab
                                              3 in order to meet the Company
                                              Wafer Supply Commitment, the
                                              spirit of which was defined in
                                              Clause 2.5 of this Agreement.
      3.1, 3.2 and 3.3        Suspended       3.1
      4.1                     Suspended       2.8
      4.2, 4.3, 4.4. 4.5,     Retained        N.A.
        4.6 and 4.7
      5, 6, 7, 8, 9, 10, 11,  Retained        N.A.
        12, 13, 14, 15, 16
      Annex A                 Suspended       Appendix A
      Annex B                 Retained        N.A.
      Annex C                 Retained        N.A.
</TABLE>

      For the avoidance of doubt, the suspension of the above provisions of the
      ASADA 64-225 relate only to the sale and purchase of Wafers manufactured
      using the C10 Process. In respect of all processes that are available in
      the Company Fab after the Company Fab Start-Up Date, the original
      provisions of the ASADA 64-225 shall apply unless otherwise mutually
      agreed by the Parties in writing.


                                       5

                       The Company - CSM - HP Confidential
<PAGE>   7
4.    COMPANY FAB START-UP DATE

4.1   The Parties shall mutually agree on the Company Fab Start-Up Date and the
      ramp rate and capacity level of the Company Fab, based on the then
      prevailing market conditions.

4.2   In consideration of the Company and CSM agreeing to include HP Purchase
      Orders for C10 Process Wafers towards fulfilling the HP Wafer Purchase
      Commitment as if such HP Purchase Orders were actually manufactured/loaded
      in the Company Fab, HP hereby agrees as follows:-

      (a)   in determining the appropriate ramp rate and capacity level for the
            Company Fab after the Company Fab Start-Up Date, due consideration
            shall be given to the demand for capacity from the Company Fab in
            order to ensure that there is not excessive capacity installed, for
            eg. in the event that CSM requires capacity from the Company Fab but
            HP does not, then the capacity to be installed in the Company Fab
            shall be such quantity as is required by CSM, and HP's requirements
            for C10 Process Wafer supply shall be fulfilled under this
            Agreement; and

      (b)   in the event that additional share capital is required in connection
            with the ramp of the Company Fab, then each of HP and CSM shall pay
            its proportionate share of the committed capital contribution in
            accordance with the JV Agreement, irrespective of whether HP or CSM
            (as the case may be) requires capacity from the Company Fab at such
            time.

5.    SAVING AND INCORPORATION

5.1   Save as expressly varied by the terms of this Amendment Agreement (No. 1),
      the terms and conditions of the ASADA 64-225 shall continue to be in full
      force and effect in all other respects.

5.2   The ASADA 64-225 and this Amendment Agreement (No. 1) shall be construed
      as one document and this Amendment Agreement (No. 1) shall be deemed to be
      part of the ASADA 64-225. Where the context so permits, references in the
      ASADA 64-225 and in this Amendment Agreement (No. 1) to the "Agreement"
      shall be read and construed as references to the ASADA 64-225 as amended
      and supplemented by this Amendment Agreement (No. 1).

6.    GOVERNING LAW

      This Amendment Agreement shall be governed by and construed in accordance
      with the laws of Singapore.

                                       6

                       The Company - CSM - HP Confidential
<PAGE>   8
IN WITNESS WHEREOF the Parties have entered into this Amendment Agreement
(No. 1) as of the date first written above.


Signed by                                 )
Rick Kenneth Hodgman                      )
General Manager                           )
CHARTERED SILICON PARTNERS PTE LTD        )    /s/ Rick Kenneth Hodgman
in the presence of                             ---------------------------------

/s/ Angela Hon
- ---------------------------------
Name:  Angela Hon
Title: Senior Manager, Legal


Signed by                                   )
Robert Baxter                               )
Senior Vice President, Business Operations  )
CHARTERED SEMICONDUCTOR                     )
MANUFACTURING LTD                           )  /s/ Robert Baxter
in the presence of                             ---------------------------------

/s/ Angela Hon
- ---------------------------------
Name:  Angela Hon
Title: Senior Manager, Legal


Signed by                                 )
Lance Mills                               )
CSP Program Manager, ICBD                 )
HEWLETT-PACKARD COMPANY                   )    /s/ Lance Mills
in the presence of                             ---------------------------------



/s/ Christine Chua
- ---------------------------------
Name:  Christine Chua
Title: Corporate Counsel


                                       7

                       The Company - CSM - HP Confidential
<PAGE>   9
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                   APPENDIX A

                       THE COMPANY WAFER SUPPLY COMMITMENT
                                       AND
                        THE HP WAFER PURCHASE COMMITMENT

Notwithstanding the delay of production in the Company Fab facility, the Parties
still intend to honor the spirit of the process for determining the Company
Wafer Supply Commitment and the HP Wafer Purchase Commitment as set out in the
ASADA 64-225.

COMPANY WAFER SUPPLY COMMITMENT AND HP WAFER PURCHASE COMMITMENT PROCESSES

The Parties shall meet quarterly to establish the required Company Wafer Supply
Commitment and the corresponding HP Wafer Purchase Commitment. HP shall be
entitled to request that the Company Wafer Supply Commitment quantity be equal
to **** of the *************** of the HP Forecast (for C10 Process Wafers) of
the ************* in the future, or in other words the future
************************************************************************
********* and upon the Company's and CSM's acceptance of such request, such
quantity shall become the Company Wafer Supply Commitment for such period.
By way of example, ****.



The CSM Supply Commitment available to the Company shall be equal to the Company
Wafer Supply Commitment. The Company Wafer Supply Commitment as referenced in
the table below shall be a ceiling of capacity which CSM shall be required to
reserve in its Fab 3 facility for the Company to enable the Company to fulfill
HP's demand for C10 Process Wafers, provided always that the Company Wafer
Supply Commitment reserved under this Appendix A shall not exceed ***** Wafers
out per month commencing in January 1999, unless otherwise agreed by CSM and HP
in writing. In the event that the HP Forecast indicates that HP will require
more than ***** Wafers out per month, HP and CSM shall meet in good faith to
determine if additional capacity is available to meet the HP demand beyond ****
Wafers out per month and to mutually agree on the terms relating to the
provision of such additional capacity. Such meeting shall be conducted during
the quarterly meetings held to establish the required Company Wafer Supply
Commitment.


                                       8

                       The Company - CSM - HP Confidential
<PAGE>   10
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


The Company Wafer Supply Commitment with effect from the date of this Agreement
shall be as set out in the following table :-

<TABLE>
<CAPTION>
MONTH              COMPANY WAFER SUPPLY COMMITMENT
- -----              -------------------------------
<S>                <C>
October 1998       ****
November           ****
December           ****
January 1999       ****
February           ****
March              ****
April              ****
May                ****
June               ****
July               Determined by the Quarter-end Wafer Supply Commitment
                   process held in September 1998.
August             Determined by the Quarter-end Wafer Supply Commitment
                   process held in September 1998.
September          Determined by the Quarter-end Wafer Supply Commitment
                   process held in September 1998.
October            Determined by the Quarter-end Wafer Supply Commitment
                   process held in December 1998.
November           Determined by the Quarter-end Wafer Supply Commitment
                   process held in December 1998.
December           Determined by the Quarter-end Wafer Supply Commitment
                   process held in December 1998.
January 2000       Determined by the Quarter-end Wafer Supply Commitment
                   process held in March 1999.
February           Determined by the Quarter-end Wafer Supply Commitment
                   process held in March 1999.
March              Determined by the Quarter-end Wafer Supply Commitment
                   process held in March 1999.
</TABLE>

                                       9

                       The Company - CSM - HP Confidential
<PAGE>   11
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


The HP Wafer Purchase Commitment with effect from the date of this Agreement
shall be as set out in the following table:-

<TABLE>
<CAPTION>
MONTH                 HP WAFER PURCHASE COMMITMENT
- -----                 ----------------------------
<S>                   <C>
October 1998          ****
November              ****
December              ****
January 1999          ****
February              ****
March                 ****
April                 ****
May                   ****
June                  ****
July                  Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in September 1998.
August                Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in September 1998.
September             Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in September 1998.
October               Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in December 1998.
November              Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in December 1998.
December              Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in December 1998.
January 2000          Determined by the Quarter-end HP Wafer Purchase
                      Commitment process held in March 1999.
February              Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in March 1999.
March                 Determined by the Quarter-end HP Wafer Purchase Commitment
                      process held in March 1999.
</TABLE>

                                       10

                       The Company - CSM - HP Confidential
<PAGE>   12
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


It is the intent of the Parties for HP to order and purchase the HP Wafer
Purchase Commitment quantities defined in the table above. In the event HP does
not order all the Company Wafer Supply Commitment quantities defined above, the
following shall apply:-

(a)   Until such time as HP has ordered and CSM has produced for and shipped to
      HP at least **** Wafers out per month on C10 Process, it is the intent of
      the Parties for CSM to sell the excess in the Company Wafer Supply
      Commitment over the HP Forecast for future ************* of the most
      current HP Forecast. In the event that CSM wishes to sell the excess in
      the Company Wafer Supply Commitment over the HP Forecast for future
      ************* of the most current HP Forecast, CSM shall provide HP the
      first right of refusal to purchase such excess.

(b)   After HP has ordered and CSM has produced for and shipped to HP at least
      **** Wafers out per month on C10 Process, the provisions of Clause 2.8 of
      this Agreement relating to the payment of liquidated damages in respect of
      the HP Wafer Purchase Commitment shall apply.

In the event that the HP Forecast quantity for any period exceeds the then
current Company Wafer Supply Commitment for such period, the Parties shall meet
in good faith to determine if additional capacity is available to meet the HP
demand beyond the Company Wafer Supply Commitment. The HP Wafer Purchase
Commitment shall be modified only to the extent that additional Company Wafer
capacity is provided.


                                       11

                       The Company - CSM - HP Confidential

<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY

                                                                    EXHIBIT 10.7


                        DATED THIS 17TH DAY OF JUNE, 1999

                                      AMONG

                       CHARTERED SILICON PARTNERS PTE LTD

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                                       AND

                             HEWLETT-PACKARD COMPANY


- --------------------------------------------------------------------------------

                            AMENDMENT AGREEMENT NO. 2

                                       TO

                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225

- --------------------------------------------------------------------------------



                            AMENDMENT AGREEMENT NO. 2

                                       TO

                   ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
<PAGE>   2

THIS AMENDMENT AGREEMENT (NO. 2) is made the 17th day of June 1999 (the
"Effective Date"), by and among:

(1)     CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
        with its registered office at 60 Woodlands Industrial Park D, Street 2,
        Singapore 738406 (hereinafter referred to as the "Company")

(2)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
        Singapore with its registered office at 60 Woodlands Industrial Park D,
        Street 2, Singapore 738406 (hereinafter referred to as "CSM"); and

(3)     HEWLETT-PACKARD COMPANY, a company incorporated in Delaware, U.S.A. and
        having its principal place of business at 3000 Hanover Street, Palo
        Alto, California, U.S.A. 94304 (hereinafter referred to as "HP").

The Company, CSM and HP are sometimes collectively referred to herein as
"Parties" and individually referred to herein as a "Party".

WHEREAS

(A)     The Parties had entered into an Assured Supply and Demand Agreement
        64-225 dated 4 July 1997 (the "ASADA 64-225") relating to the provision
        of wafer manufacturing capacity by the Company and CSM to HP and an
        Amendment Agreement (No. 1) to the ASADA 64-225 dated 5 November 1998
        (the " Amendment Agreement (No. 1)").

(B)     In recognition of the increasing rate of technology migration in the
        semiconductor industry and the prevailing market conditions, the Parties
        have mutually agreed that either the 0.18um process technology or the
        0.25um process technology should be the first process technology to be
        installed in the Company Fab. Accordingly, the Parties desire to delay
        the commencement of operations of the Company Fab to such time as 0.18um
        process technology is ready for installation or the Parties mutually
        agree to install the 0.25um process technology in the Company Fab
        whichever is earlier. In the interim, CSM has agreed to make available
        to the Company, wafer manufacturing capacity to enable the Company to
        fulfill HP's demand for Wafers manufactured using 0.25um process
        technology. Notwithstanding installation of the 0.25 um process
        technology in the Company Fab, CSM shall continue to make available to
        the Company wafer manufacturing capacity to enable the Company to meet
        HP's demand for wafers manufactured using said process. The Parties
        further acknowledge that it is the Company's intention to install
        Motorola Inc.'s HIPERMOS process technology as the primary technology in
        the Company Fab.

(C)     The Parties are entering into this Amendment Agreement (No. 2) to vary
        the ASADA 64-225 with effect from the date hereof. Further this
        Amendment Agreement (No. 2) shall replace the Amendment Agreement (No.
        1) in its entirety.



                      The Company - CSM - HP Confidential                      2

<PAGE>   3
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


IT IS HEREBY AGREED as follows: -

1.      INTERPRETATION

1.1     In this Amendment Agreement (No. 2), unless the subject or context
        otherwise requires, the following words and expressions shall have the
        following meanings respectively ascribed to them: -

        C10 Processes shall refer to *****************************************,
        ************************************************** Processes as well as
        other process variants mutually agreed by the Parties.

        C07 Processes shall refer to *******************************************
        ****** Process variants mutually agreed by the Parties.

        "Company Fab Start-Up Date" shall mean the date on which the company Fab
        is scheduled to output Wafers ordered by HP, such date to be mutually
        agreed by the Parties in accordance with Clause 4.1 of this Amendment
        Agreement (No. 2).

        "Suspension Period" shall mean the period commencing from the Effective
        Date and ending on the date immediately preceding the Company Fab
        Start-Up Date.

        "Compatible Equipment Set" shall mean the identical (meaning, vendor,
        model, and configuration) equipment in use by the CSM or Company Fab for
        the C10 or C07 Process in question. In the event that CSM or the Company
        desires to qualify the C10 and/or C07 Process in another Fab or extend
        the manufacturing capacity within the Fab in which the process is
        qualified by using equipment that is not identical to the equipment on
        which the process in question was originally qualified, HP shall have
        the right to determine the risk of and acceptability of using the
        proposed expanded equipment set. Furthermore, HP shall have the right to
        determine in good faith reasonable specifications on what testing must
        be done to prove compatibility of the proposed expanded equipment set
        with the identical equipment set on which the process in question was
        originally qualified.

        "HP Standard Products" shall mean application-specific standard products
        that are not customer-specific, or, in other words, are sold to multiple
        customers. For the avoidance of doubt, the spirit and intent of the
        Parties' discussions germane to HP Standard Products emphasized the
        customers' inactive participation in Wafer process qualification
        requirements. HP Standard Products comprise those products whose HP
        customers have very little or no involvement in the wafer process
        qualification, thereby allowing HP, CSM and the Company to jointly
        determine optimal strategies for the Wafer manufacturing facilities in
        which the HP Standard Products are to be produced and to allow HP to
        determine the appropriate process qualification requirements without
        significant customer intervention.

1.2     All other terms and references used in the ASADA 64-225 and which are
        defined or construed in the ASADA 64-225 but are not defined or
        construed in this Amendment Agreement (No. 2) shall have the same
        meaning and the construction in this Amendment Agreement (No. 2).


                      The Company - CSM - HP Confidential                      3
<PAGE>   4
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


2.      CSM SUPPLY COMMITMENT & HP WAFER PURCHASE COMMITMENT

2.1     CSM hereby agrees to provide to the Company wafer manufacturing capacity
        (the "CSM Supply Commitment") in respect of the ************************
        families of process as well as other process variants mutually agreed by
        the Parties (collectively, the "C10/C07 Process") out of CSM's Fab 3
        and/or other Fab facilities to enable the Company to fulfil HP's demand
        for C10/C07 Process Wafer supply.

2.2     The CSM Supply Commitment shall be expressed as a quantity of Wafers and
        shall be determined in accordance with Appendix A of this Amendment
        Agreement (No. 2). The CSM Supply Commitment shall be available to the
        Company until such time as the C10/C07 Process is made obsolete pursuant
        to Clause 2.5 of this Amendment Agreement (No. 2).

2.3.1   HP agrees to place HP Purchase Orders with the Company for semiconductor
        wafers (the "HP Wafer Purchase Commitment") in respect of the C10/C07
        Process. The Company in turn agrees to place purchase orders with CSM
        for such quantity of semiconductor Wafers as is equal to the HP Wafer
        Purchase Commitment. Further, the Company agrees to place purchase
        orders with CSM for such delivery requirements and technical
        specifications of Wafers as are identical to the HP Purchase Orders on
        the Company.

2.3.2   The HP Wafer Purchase Commitment shall be expressed as quantity of
        Wafers and shall be determined in accordance with Clause 2 of the ASADA
        64-225 (as retained, amended or suspended in Clause 3.3 of this
        Amendment Agreement (No. 2)) and Appendix A of this Amendment Agreement
        (No. 2). At the time when the Company determines the Company Wafer
        Supply Commitment in accordance with Appendix A, CSM, the Company and HP
        shall also determine the HP Wafer Purchase Commitment as set forth in
        Appendix A.

2.3.3   HP shall provide CSP a rolling forecast of its volume requirements as
        referenced in Clause 2.2 of the ASADA 64-225 on or before the 26th of
        each month.

2.4     CSM is entitled to obsolete the C10/C07 Process in its Fab 3 and/or
        other Fab facilities as follows: -

2.4.1   In respect of the C07 Process:

(a)     upon CSM providing ********** advanced written notice to HP and the
        Company, such notice shall not be provided prior to *****************;
        or

(b)     in the event that the aggregate quantity of HP Purchase Orders for C07
        Process Wafers for a period of ** consecutive months is less than ***
        wafers, CSM shall be entitled to give *** ****** advanced written notice
        to HP and the Company to obsolete the C07 Process.

2.4.2   In respect of the C10 Process:

(a)     upon CSM providing ********** advanced written notice to HP and the
        Company, such notice shall not be provided prior to *****************;
        or



                      The Company - CSM - HP Confidential                      4

<PAGE>   5
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

(b)     in the event that the aggregate quantity of HP Purchase Orders for C10
        Process Wafers for a period of ** consecutive months is less than ***
        Wafers, CSM shall be entitled to give *** ****** advanced written notice
        to HP and the Company to obsolete the C10 Process.

2.5     It is HP's intent to work in good faith to qualify the **********
        process in CSM's Fab 2 and the ********** process in the Company Fab so
        that the supply of C10/C07 Process Wafers may be provided out of these
        fabs in addition to or as an alternative to the supply of such wafers
        out of CSM's Fab 3. The utilization of a CSM Fab facility other than CSM
        Fab 3 for the manufacture of C10/C07 Process Wafers shall be mutually
        agreed in writing by the Parties when CSM's Fab 3 capacity is
        insufficient and additional C10/C07 Process Wafer manufacturing capacity
        is required to fulfill the CSM Supply Commitment, or where the Parties
        mutually agree that it would be more appropriate or viable for the CSM
        Supply Commitment to be fulfilled through a CSM Fab facility other than
        CSM Fab 3. In respect of the tapeout of each new device, the Parties
        shall by mutual agreement determine in which CSM Fab facility such
        device shall be manufactured.

2.6     In the event that the supply of C10/C07 Process Wafers for HP C10/C07
        system-level-integration ASIC products will be from a CSM Fab facility
        other than CSM's Fab 3, the supply should be on a converged equipment
        set with that of CSM's Fab 3 or on a Compatible Equipment Set. In the
        event that either CSM or HP wishes to deviate from this intent, the
        Parties shall meet in good faith to mutually agree on the equipment set
        to be installed in the relevant CSM Fab facility.

2.7     In the event that HP Standard Products are considered for manufacture
        outside CSM's Fab 3, the Parties shall at the appropriate time meet in
        good faith to mutually agree on the equipment set and appropriate
        fabrication facility for the supply of C10/C07 Process Wafers for HP
        Standard Products.

2.8     Subject to the foregoing, all other terms relating to the CSM Supply
        Commitment and the HP Wafer Purchase Commitment for C10/C07 Process
        Wafers shall be the same irrespective of the facility the Wafers are
        manufactured in.

2.9     The price of Wafers supplied by CSM to the Company under the CSM Supply
        Commitment shall be ********************************************* of the
        ASADA 64-225, provided however, that the Company shall provide such
        Wafers to HP on Pricing determined in accordance with Clause 1.4 of the
        ASADA 64-225.

2.10    The provisions of Clause 4 of the ASADA 64-225 for the payment of
        liquidated damages shall not be effective in respect of the Company
        Wafer Supply Commitment, the HP Wafer Purchase Commitment and HP's
        compliance with its monthly HP Forecast commitments until such time as
        HP has ordered and CSM or CSP has produced for HP and shipped to HP
        ***************************** on C10/C07 Process. All liquidated damages
        received by the Company from HP shall be paid by the Company to CSM, and
        all liquidated damages payable by the Company to HP shall be paid by CSM
        to the Company for payment to HP. For the avoidance of doubt, all
        liquidated damages referenced in this Clause 2.10 have specific and
        exclusive reference to C10/C07 Process Wafers.

2.11.1  The full HP loading commitment shall be in the C10 and C07 Processes and
        the order mix between these 2 processes shall be as per the following
        guidelines.


                      The Company - CSM - HP Confidential                      5
<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


        a.      Total layer capacity will be based on *************************
                ***************************

        b.      HP has **** capacity utilization flexibility between C10 and C07
                Processes when determining the weekly order mix.

        c.      Notwithstanding Clause 2.11 (b) above, there shall be a
                *************************************************************
                ********************************. Upon completion of the C07
                Process Convergence Plan HP will have 100% capacity utilization
                flexibility between C07 and C10 Processes.

2.11.2  Also, the Parties agree to the following points regarding the C07
        Process Convergence and capacity access.

                a.      The Parties shall effect a C07 Process Convergence Plan
                        checkpoint meeting on or before *************.

                b.      ****

        2.11.3  Notwithstanding the results of the C07 Process Convergence
                checkpoint meeting, CSM commits to a maximum C07 Process Wafer
                capacity available to HP of:

                *********** out per month through **************,

                *********** out in ************,

                *********** out in *************, and

                *********** out in *************.

        2.11.4  In the event HP has unforeseen upside demand, both Parties will
                work together in good faith to provide reasonable additional C07
                Process Wafer capacity to HP. Prior to the end of Calendar year
                2000 both parties will meet in good faith to assure sufficient
                capacity is in place to satisfy the HP demand per the demand
                forecast, demand flexibility model, and capacity access as set
                forth in the Company Wafer Supply Commitment as defined in
                Clause 1 of the ASADA 64-225 and as amended herein, and the HP
                Wafer Purchase Commitment as defined in Clause 2 of the ASADA
                64-225.

3.      SUSPENSION OF CERTAIN TERMS OF THE ASADA 64-255

3.1     The Parties agree that the provisions of Clause 3 of the ASADA 64-225
        relating to the Bridge Supply Commitment shall not apply to the CSM
        Supply Commitment for the C10/C07 Process and accordingly, the
        provisions of Clause 3 of the ASADA 64-225 shall be suspended for the
        duration of the Suspension Period, and shall take effect on the Company
        Fab Start-Up Date.

3.2     The Parties agree that in respect of the supply and purchase of C10/C07
        Process Wafers, certain provisions of the ASADA 64-225 shall be
        suspended and replace by provisions of this Amendment Agreement (No. 2),
        and certain provisions of the ASADA 64-225 shall be retained and shall
        remain in effect, as follows:



                      The Company - CSM - HP Confidential                      6
<PAGE>   7
<TABLE>
<CAPTION>
        ---------------------------------------------------------------------------------------
        ASADA 64-225          STATUS            REPLACED BY THIS Amendment  Agreement (No.
        CLAUSE NO.                              2) CLAUSE NO.
        ---------------------------------------------------------------------------------------
<S>                           <C>                 <C>
        1.1 and 1.2           Suspended          2.1, 2.2, 2.4 and 2.5
        ---------------------------------------------------------------------------------------
        1.3, 1.4, 1.5, 1.6    Retained           N.A.
        ---------------------------------------------------------------------------------------
        1.7                   Retained            N.A.
        ---------------------------------------------------------------------------------------
        2.1 first paragraph   Suspended           2.3 and 2.7
        ---------------------------------------------------------------------------------------
        2.1 second paragraph  Retained            N.A.
        ---------------------------------------------------------------------------------------
        2.2, 2.3, 2.4         Retained            N.A.
        ---------------------------------------------------------------------------------------
        2.5                   Suspended           None. However, this Clause does not negate
                                                  the Company's responsibility to provide
                                                  Wafer manufacturing capacity beyond Fab 3
                                                  in order to meet the Company Wafer Supply
                                                  Commitment, the spirit of which was defined
                                                  in Clause 2.5 of the ASADA 64-225.
        ---------------------------------------------------------------------------------------
        3.1, 3.2 and 3.3      Suspended           3.1
        ---------------------------------------------------------------------------------------
        4.1                   Suspended           2.8
        ---------------------------------------------------------------------------------------
        4.2,  4.3, 4.4, 4.5,  Retained            N.A.
        4.6, and 4.7
        ---------------------------------------------------------------------------------------
</TABLE>

        For the avoidance of doubt, the suspension of the above provisions of
        the ASADA 64-255 relate only to the sale and purchase of Wafers
        manufacturing using the C10/C07 Processes. In respect of all processes
        that are available in the Company Fab after the Company Fab Start-Up
        Date, the original provisions of the ASADA 64-225 shall apply unless
        otherwise mutually agreed by the Parties in writing.

4.      COMPANY FAB START-UP DATE

4.1     The Parties shall mutually agree on the Company Fab Start-Up Date and
        the ramp rate and capacity level of the Company Fab, based on the then
        prevailing market conditions.

4.2     The Parties acknowledge that it is the Company's intention to install
        Motorola Inc.'s HIPERMOS process technology as the primary technology in
        the Company Fab. In connection therewith, the Company and HP agree to
        enter into a separate amendment to ASADA64-225 for the supply of
        HIPERMOS Process Wafers by the Company to HP, on such terms to be
        mutually agreed, including but not limited to, the Company Supply
        Commitment for HIPERMOS Wafers, the HP Wafer Purchase Commitment for
        HIPERMOS Wafers and the payment of liquidated damages in certain events.
        The HP Purchase Orders for C10/C07 Process Wafers and HIPERMOS Process
        Wafers shall be included towards fulfilling the HP Wafer Purchase
        Commitment as if such HP Purchase Orders were actually manufactured in
        the Company Fab.

4.3     In consideration of the Company and CSM agreeing to include HP Purchase
        Orders for C10/C07 Process Wafers towards fulfilling the HP Wafer
        Purchase Commitment as if such HP Purchase Orders were actually
        manufactured/loaded in the Company Fab, HP hereby agrees as follows: -

(a)     in determining the appropriate ramp rate and capacity level for the
        Company Fab after the Company Fab Start-Up Date, due consideration shall
        be given to the demand for capacity from the Company Fab in order to
        ensure that there is not excessive capacity installed, for example; in
        the event that CSM requires capacity from the Company Fab but HP does
        not, then the capacity to be installed in the Company Fab shall be such
        quantity as is required by CSM, and HP's requirements for C10/C07
        Process Wafer supply shall be fulfilled under this Amendment Agreement
        (No. 2); and


                      The Company - CSM - HP Confidential                      7
<PAGE>   8

(b)     in the event that additional share capital is required in connection
        with the ramp of the Company Fab, then each of HP and CSM shall pay its
        proportionate share/of the committed capital contribution in accordance
        with the JV Agreement, irrespective of whether HP or CSM (as the case
        may be) requires capacity from the Company Fab at such time.

5.      SAVING AND INCORPORATION

5.1     Save as expressly varied by the terms of this Amendment Agreement (No.
        2), the terms and conditions of the ASADA 64-225 shall continue to be in
        full force and effect in all other respects.

5.2     The ASADA 64-225 and this Amendment Agreement (No. 2) shall be construed
        as one document and this Amendment Agreement (No. 2) shall be deemed to
        be part of the ASADA 64-225. Where the context so permits, references in
        the ASADA 64-225 and in this Amendment Agreement (No. 2) to the
        "Agreement" shall be read and construed as references to the ASADA
        64-225 as amended and supplemented by this Amendment Agreement (No. 2).

5.3     This Amendment Agreement (No. 2) shall replace Amendment Agreement
        (No. 1) in its entirety.

6.      ASSIGNMENT

Neither Party may assign its rights or obligations unless the other gives
written consent, such consent not to be unreasonably withheld. Any attempted
assignment without such consent will be voidable at the option of the
non-assigning Party. Notwithstanding the foregoing, HP, or its permitted
successive assignees or transferees, may assign or transfer this Amendment
Agreement (No. 2), or delegate any rights or obligations hereunder without
consent to Agilent Technologies, Inc. having a place of business in Palo Alto,
California. Without limiting the foregoing, this Amendment Agreement (No. 2),
will be binding upon and inure to the benefit of the Parties and their permitted
successors and assigns.



                      The Company - CSM - HP Confidential                      8
<PAGE>   9

7.      GOVERNING LAW

        This Amendment Agreement (No. 2) shall be governed by and construed in
        accordance with the laws of Singapore.



                      The Company - CSM - HP Confidential                      9
<PAGE>   10

IN WITNESS WHEREOF the Parties have entered into this Amendment Agreement (No.2)
as of the date first written above.

Signed by                               )
Ang Tang Yong                           )
General Manager                         )
CHARTERED SILICON                       )
PARTNERS PTE LTD                        )           /s/ ANG TANG YONG
in the presence of                      )---------------------------------------

      /s/ GRACE GC LEE
- -----------------------------------
Name:   Grace GC LEE
Title:  Legal Officer

Signed by                               )
Robert Baxter                           )
Senior Vice President,                  )
Business Operations                     )
CHARTERED SEMICONDUCTOR                 )
MANUFACTURING LTD                       )           /s/ ROBERT BAXTER
in the presence of                      )---------------------------------------

      /s/ LEONG KUM HO
- -----------------------------------
Name:   Leong Kum Ho
Title:  Senior Secretary

Signed by                               )
Lance Mills                             )
CSP Program Manager, ICBD               )            /s/ LANCE MILLS
HEWLETT-PACKARD COMPANY                 )---------------------------------------
in the presence of

      /s/  HERBERT R. SCHULZE
- ------------------------------------
Name:   Herbert R. Schulze
Title:  Managing Counsel



                      The Company - CSM - HP Confidential                     10
<PAGE>   11
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                   APPENDIX A

                       THE COMPANY WAFER SUPPLY COMMITMENT

                                       AND

                        THE HP WAFER PURCHASE COMMITMENT

Notwithstanding the delay of production in the Company Fab facility, the Parties
still intend to honor the spirit of the process for determining the Company
Wafer Supply Commitment and the HP Wafer Purchase Commitment as set out in the
ASADA 64-225.

COMPANY WAFER SUPPLY COMMITMENT AND HP WAFER PURCHASE COMMITMENT PROCESSES

The Parties shall meet quarterly to establish the required Company Wafer Supply
Commitment and the corresponding HP Wafer Purchase Commitment. HP shall be
entitled to request that the Company Wafer Supply Commitment quantity be equal
to **** of the *************** of the HP Forecast (for both C10 and C07 Process
Wafers) of the ************** in the future, or in other words the future months
*** *************************************************************************
and upon the Company's and CSM's acceptance of such request, such quantity shall
become the Company Wafer Supply Commitment for such period. By way of example,
********************************************************************************
********************************************************************************
********************************************************************************
******************************.

The CSM Supply Commitment available to the Company shall be equal to the Company
Wafer Supply Commitment. The Company Wafer Supply Commitment as referenced in
the table below shall be a ceiling of capacity which CSM shall be required to
reserve in its Fab 3 or other mutually agreed facility for the Company to enable
the Company to fulfill HP's demand for both C10 and C07 Process Wafers, provided
always that the Company Wafer Supply Commitment reserved under this Appendix A
shall not exceed ****** Wafers out per month commencing in June 1999, unless
otherwise agreed by CSM and HP in writing. In the event that the HP Forecast
indicates that HP will require more than ****** Wafers out per month, HP and CSM
shall meet in good faith to determine if additional capacity is available to
meet the HP demand beyond ****** Wafers out per month and to mutually agree on
the terms relating to the provision of such additional capacity. Such meeting
shall be conducted during the quarterly meetings held to establish the required
Company Wafer Supply Commitment.



                      The Company - CSM - HP Confidential                     11
<PAGE>   12
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


The Company Wafer Supply Commitment with effect from the date of this Amendment
Agreement (No. 2) shall be as set out in the following table :-

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MONTH                         COMPANY WAFER SUPPLY COMMITMENT
- -------------------------------------------------------------------------------------------
<S>                           <C>
April 1999                    ****
- -------------------------------------------------------------------------------------------
May 1999                      ****
- -------------------------------------------------------------------------------------------
June 1999                     ****
- -------------------------------------------------------------------------------------------
July 1999                     ****
- -------------------------------------------------------------------------------------------
August 1999                   ****
- -------------------------------------------------------------------------------------------
September 1999                ****
- -------------------------------------------------------------------------------------------
October 1999                  ****
- -------------------------------------------------------------------------------------------
November 1999                 ****
- -------------------------------------------------------------------------------------------
December 1999                 ****
- -------------------------------------------------------------------------------------------
January 2000                  ****
- -------------------------------------------------------------------------------------------
February 2000                 ****
- -------------------------------------------------------------------------------------------
March 2000                    ****
- -------------------------------------------------------------------------------------------
April 2000                    ****
- -------------------------------------------------------------------------------------------
May 2000                      ****
- -------------------------------------------------------------------------------------------
June 2000                     ****
- -------------------------------------------------------------------------------------------
July 2000                     ****
- -------------------------------------------------------------------------------------------
August 2000                   ****
- -------------------------------------------------------------------------------------------
September 2000                ****
- -------------------------------------------------------------------------------------------
</TABLE>



                      The Company - CSM - HP Confidential                     12
<PAGE>   13
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


The HP Wafer Purchase Commitment with effect from the date of this Amendment
Agreement (No. 2) shall be as set out in the following table:-

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MONTH                        HP WAFER PURCHASE COMMITMENT
- -------------------------------------------------------------------------------------------
<S>                          <C>
April 1999                   ****
- -------------------------------------------------------------------------------------------
May 1999                     ****
- -------------------------------------------------------------------------------------------
June 1999                    ****
- -------------------------------------------------------------------------------------------
July 1999                    ****
- -------------------------------------------------------------------------------------------
August 1999                  ****
- -------------------------------------------------------------------------------------------
September 1999               ****
- -------------------------------------------------------------------------------------------
October 1999                 ****
- -------------------------------------------------------------------------------------------
November 1999                ****
- -------------------------------------------------------------------------------------------
December 1999                ****
- -------------------------------------------------------------------------------------------
January 2000                 ****
- -------------------------------------------------------------------------------------------
February 2000                ****
- -------------------------------------------------------------------------------------------
March 2000                   ****
- -------------------------------------------------------------------------------------------
April 2000                   ****
- -------------------------------------------------------------------------------------------
May 2000                     ****
- -------------------------------------------------------------------------------------------
June 2000                    ****
- -------------------------------------------------------------------------------------------
July 2000                    ****
- -------------------------------------------------------------------------------------------
August 2000                  ****
- -------------------------------------------------------------------------------------------
September 2000               ****
- -------------------------------------------------------------------------------------------
</TABLE>



                      The Company - CSM - HP Confidential                     13
<PAGE>   14
REDACTED                                        CONFIDENTIAL TREATMENT REQUESTED
                  The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



It is the intent of the Parties for HP to order and purchase the HP Wafer
Purchase Commitment quantities defined in the table above. In the event HP does
not order all the Company Wafer Supply Commitment quantities defined above, the
following shall apply: -

(a)     Until such time as HP has ordered and CSM has produced for and shipped
        to HP at least ***** Wafers out per month on C10/C07 Processes, it is
        the intent of the Parties for CSM to sell the excess in the Company
        Wafer Supply Commitment over the HP Forecast for future months 1 and 2
        of the most current HP Forecast. In the event that CSM wishes to sell
        the excess in the Company Wafer Supply Commitment over the HP Forecast
        for future months 1 and 2 of the most current HP Forecast, CSM shall
        provide HP the first right of refusal to purchase such excess.

(b)     After HP has ordered and CSM has produced for and shipped to HP at least
        ***** Wafers out per month on C10/C07 Processes, the provisions of
        Clause 2.10 of this Amendment Agreement (No. 2) relating to the payment
        of liquidated damages in respect of the HP Wafer Purchase Commitment
        shall apply.

In the event that the HP Forecast quantity for any period exceeds the then
current Company Wafer Supply Commitment for such period, the Parties shall meet
in good faith to determine if additional capacity is available to meet the HP
demand beyond the Company Wafer Supply Commitment. The HP Wafer Purchase
Commitment shall be modified only to the extent that additional Company Wafer
capacity is provided.



                      The Company - CSM - HP Confidential                     14


<PAGE>   1
                                                                   EXHIBIT 10.8


                           REDACTED FOR CONFIDENTIALITY



                             Dated December 19, 1997



                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                     - and -


                 LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD.






                        ---------------------------------


                             JOINT VENTURE AGREEMENT


                        ---------------------------------










                     The Company - CSM - Lucent Confidential

<PAGE>   2
                                 C O N T E N T S



<TABLE>
<CAPTION>
CLAUSE            HEADING                                                               PAGE
- ------            -------                                                               ----
<S>               <C>                                                                    <C>
1.                DEFINITIONS AND INTERPRETATION                                          1

2.                FORMATION OF THE COMPANY                                                9

3.                BUSINESS PLAN; SCOPE AND OBJECTIVE                                     10

4.                COMPLETION                                                             13

5.                BOARD OF DIRECTORS                                                     17

6.                BUSINESS OF THE COMPANY                                                25

7.                SHAREHOLDERS' OBLIGATIONS AND RIGHTS                                   26

8.                MANAGEMENT OF THE COMPANY                                              30

9.                GENERAL MEETINGS                                                       31

10.               TRANSFER OF SHARES                                                     31

11.               FINANCE                                                                34

12.               DIVIDEND POLICY                                                        35

13.               WARRANTIES AS TO AUTHORITY                                             35

14.               DEFAULT                                                                36

15.               GENERAL OBLIGATIONS OF SHAREHOLDERS                                    43

16.               PREVALENCE OF AGREEMENT                                                43
</TABLE>



                     The Company - CSM - Lucent Confidential



<PAGE>   3


<TABLE>
<S>               <C>                                                                    <C>
17.               DURATION AND TERMINATION                                               43

18.               CONFIDENTIAL INFORMATION                                               47

19.               NOTICES AND GENERAL                                                    48

                  SCHEDULE A  -  COLLATERAL AGREEMENTS

                  SCHEDULE 5(L)  -  CERTAIN EMPLOYEES

                  SCHEDULE 7(B)(ii)  -  SCHEDULED COMPANIES

                  SCHEDULE 7(C)  -   PARTNERSHIP FEE ADJUSTMENTS

                  SCHEDULE 7(D)  -  INSURANCE PRINCIPALS

                  SCHEDULE 10(E)(ii)  -  RESTRICTED PURCHASERS

                  APPENDIX A  -  COMPANY BUSINESS PLAN

                  APPENDIX B  -  ASSURED SUPPLY AND DEMAND AGREEMENT

                  APPENDIX C  -  LICENSE AND TECHNOLOGY TRANSFER AGREEMENT

                  APPENDIX D  -  CSM SERVICE SUPPORT AGREEMENT

                  APPENDIX E  -  MEMORANDUM AND ARTICLES OF ASSOCIATION

                  APPENDIX F  -  ACKNOWLEDGEMENT LETTER

                  APPENDIX G  -  TAX INDEMNITY AGREEMENT

                  APPENDIX H  -  FORM OF LUCENT CERTIFICATE AND OPINION

                  APPENDIX I  -  FORM OF CSM CERTIFICATE AND CSM
                                 IN-HOUSE OPINION
</TABLE>



                     The Company - CSM - Lucent Confidential

<PAGE>   4

         T H I S  JOINT VENTURE  A G R E E M E N T (this "Agreement") is made on
DECEMBER 19, 1997 BETWEEN:

(1)      CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
         incorporated in Singapore with its registered office at 60, Woodlands
         Industrial Park D Street 2, Singapore 738406; and

(2)      LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD. ("Lucent"), a company
         incorporated in Singapore, with its principal place of business at 3,
         Kallang Sector, Kolam Ayer Industrial Park, Singapore 349278.

         W H E R E A S:-

(A)      CSM and Lucent are desirous of establishing and operating a joint
venture company in Singapore for the purpose of undertaking and carrying on the
Business (as defined below) with the goal of enabling the parties to develop and
have manufactured technologically advanced wafers faster, more efficiently and
at a low cost.

(B)      To give effect to the intention of the parties as hereinbefore recited,
and to regulate their relationship inter se as shareholders in the joint venture
company in the conduct of the Business and affairs of the joint venture company
the parties have agreed to enter into this Agreement on the terms and conditions
hereinafter set out.

         I T   I S   A G R E E D  as follows:-

         1.       DEFINITIONS AND INTERPRETATION.

(A)      Definitions

         In this Agreement and the Schedules, unless the subject or context
otherwise requires, the following words and expressions shall have the following
meanings respectively ascribed to them:-

         "Act" means the Companies Act of Singapore, Chapter 50;
+

         "Affiliate" means, with respect to any Person, any other Person,
directly or indirectly controlled by, controlling or under common control with
such Person. For purposes of this Agreement, the term "control" means the power
to direct the management and policies of a


                     The Company - CSM - Lucent Confidential

<PAGE>   5

Person, whether through the ownership of voting securities, by agreement or
otherwise. An Affiliate shall remain an Affiliate only as long as such control
exists;

         "Articles" means the Articles of Association of the Company as such
Articles may be amended from time to time. The Articles upon incorporation of
the Company shall be in the form attached hereto as Appendix E;

         "Assured Supply and Demand Agreement" has the meaning ascribed thereto
in item 1 of Schedule A and shall be in the form attached hereto as Appendix B;

         "Auditors" means the auditors of the Company selected by the Board of
Directors as provided in Clause 5(I)(e);

         "Board" means the Board of Directors of the Company, as such Board may
be constituted from time to time;

         "Business" has the meaning ascribed thereto in Clause 6(A);

         "Collateral Agreements" means the agreements referred to in Schedule A,
as each such agreement may be amended from time to time;

         "Company" has the meaning ascribed thereto in Clause 2(A);

         "Company Business Plan" has the meaning ascribed thereto in Clause
3(B);

         "Company Fab" means the fab commonly referred to by the parties as "Fab
3B" at Woodlands Industrial Park D, Singapore;

         "Completion" means completion of the subscription for ordinary shares
in the capital of the Company by CSM and Lucent pursuant to Clause 4;

         "Completion Date" means the date falling 30 days after the date of
incorporation of the Company (or such other date as the parties may agree in
writing);

         "CSM Service Support Agreement" has the meaning ascribed thereto in
item 3 of Schedule A and shall be in the form attached hereto as Appendix D;

         "Debt/Equity Ratio" means the ratio of External Borrowings to Total
Shareholder Funds;



                                       2

                     The Company - CSM - Lucent Confidential
<PAGE>   6

         "Director" means any member of the Board ;

         "External Borrowings" means all and any liabilities of, or amounts due
from, the Company to any third party (including, without limitation, banks,
financial institutions or governmental agencies) for borrowed money, excluding
loans from Shareholders;

         "Fair Market Value" means, with respect to the shares in the capital of
the Company held by the selling Shareholder (the "Selling Shareholder"), the
fair market value of such shares that would be obtained in an arms' length
negotiated transaction between an informed and willing purchaser under no
compulsion to purchase and an informed and willing seller under no compulsion to
sell. In determining fair market value, due consideration shall be given to
(without limitation) the following :

         (1)      it shall be assumed that the Company is a going concern;

         (2)      net realizable value of the Company's assets and liabilities;

         (3)      value of the Company's intangible assets;

         (4)      it shall be assumed that the willing buyer is the non-selling
                  Shareholder (the "Buying Shareholder");

         (5)      the prevailing market conditions of the semiconductor industry
                  in general and the subcontract wafer manufacturing sector in
                  particular;

         (6)      effects which the sale will have on contracts/agreements
                  before and after the sale of shares held by the Selling
                  Shareholder;

         (7)      the Company's existing technologies and customer base;

         (8)      the Company's accessibility to existing and future
                  technologies and customers of the Buying Shareholder and its
                  subsidiaries, and the associated true costs of access to such
                  technologies and customers;

         (9)      the level of the Buying Shareholder's ability to support the
                  Company after the sale of shares held by the Selling
                  Shareholder; and



                                       3

                     The Company - CSM - Lucent Confidential
<PAGE>   7

         (10)     the duration and impact of the transition (i.e., the effect
                  (if any) which the withdrawal of technologies, services,
                  guaranteed loading levels, etc. will have on the Company).

         Fair Market Value of the shares in the capital of the Company held by
the Selling Shareholder shall be determined as follows:

         (1)      promptly upon delivery by the applicable Shareholder of a FMV
                  Determination Request pursuant to Clause 10, 14 or 17, the
                  parties shall consult with each other in good faith as to the
                  appropriate Fair Market Value. If the parties determine the
                  Fair Market Value by mutual consent within 21 days of the date
                  of delivery of a FMV Determination Request ("FMV Request
                  Date") or within 21 days of the Termination Date, as
                  applicable, the value so determined shall be Fair Market
                  Value.

         (2)      If the parties fail to determine Fair Market Value by mutual
                  consent within 21 days of the FMV Request Date or within 21
                  days of the Termination Date, as applicable, each Shareholder
                  shall within 30 days of the FMV Request Date or within 30 days
                  of the Termination Date, as applicable, appoint an appraiser.
                  If one Shareholder appoints an appraiser within such 30 day
                  period and the other Shareholder fails to appoint an appraiser
                  within such 30 day period, the sole appraiser so appointed
                  shall in good faith determine Fair Market Value within 45 days
                  of the FMV Request Date or within 45 days of the Termination
                  Date, as applicable, and the value so determined shall be Fair
                  Market Value.

         (3)      If each Shareholder appoints an appraiser within such 30 day
                  period, such two appraisers shall consult with each other in
                  good faith as to Fair Market Value. If the appraisers
                  determine Fair Market Value by mutual consent within 45 days
                  of the FMV Request Date or within 45 days of the Termination
                  Date, as applicable, the value so determined shall be Fair
                  Market Value.

         (4)      If the two appraisers fail to determine Fair Market Value by
                  mutual consent within 45 days of the FMV Request Date or
                  within 45 days of the Termination Date, as applicable, the
                  appraisers shall within 55 days of the FMV Request Date or
                  within 55 days of the Termination Date, as applicable, appoint
                  a third appraiser. If, within such 55 day period, the two
                  appraisers fail to appoint a third appraiser, either
                  Shareholder may, on behalf of other Shareholder, apply to the



                                       4

                     The Company - CSM - Lucent Confidential
<PAGE>   8

                  International Chamber of Commerce (London Office) for
                  appointment of a third appraiser.

         (5)      The third appraiser shall in good faith make a determination
                  of Fair Market Value within 20 days of its appointment. As
                  soon as the third appraiser has delivered its appraisal (the
                  "Third Appraisal"), such Third Appraisal shall be compared
                  with the appraisals given by the other two appraisers and if
                  such Third Appraisal is between the appraisals given by the
                  other two appraisers, such Third Appraisal shall be Fair
                  Market Value. In the event the Third Appraisal is higher than
                  (or the same as) the higher of the first two appraisals, Fair
                  Market Value shall be the higher of the first two appraisals
                  and if the Third Appraisal is lower than (or the same as) the
                  lower of the first two appraisals, Fair Market Value shall be
                  the lower of the first two appraisals.

         Subject to Clause 17, Fair Market Value of the shares of the Company
held by Lucent or CSM shall be determined for the value of such shares as of the
FMV Request Date or the Termination Date, as applicable. If Fair Market Value is
determined pursuant to Clause 10, all costs of determination of Fair Market
Value shall be borne by the Affected Shareholder. If Fair Market Value is
determined pursuant to Clause 14, all costs of determination of Fair Market
Value shall be borne by the Defaulting Shareholder. If the Fair Market Value is
determined pursuant to Clause 17, all costs of determination of Fair Market
Value shall be borne by Lucent or CSM, as specified in Clause 17;

         "FMV Determination Request" means a written request by one of the
Shareholders to determine Fair Market Value for purposes of Clause 10, 14 or 17,
as the case may be;

         "Indebtedness" means, as to any Person, any obligation to pay money to
another Person in the future (except for current accounts payable in exchange
for the receipt of goods or services) which obligations shall become due with
the passage of time and without the performance of any actions by a third party,
including without limitation: (i) indebtedness created, issued or incurred by
any such Person for borrowed money; (ii) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments; (iii) all
indebtedness arising or created under any conditional sale or other title
retention agreement with respect to property acquired by such Person; (iv) all
obligations of such Person as lessee under leases that have been or should be,
in accordance with Singapore GAAP, recorded as capital leases; (v) all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities and (vi) any guarantees of any financial
obligations of any other Person;



                                       5

                     The Company - CSM - Lucent Confidential
<PAGE>   9

         "JTC" means Jurong Town Corporation, a body corporate established under
the Jurong Town Corporation Act of Singapore, Chapter 150;

         "License and Technology Transfer Agreement" has the meaning ascribed
thereto in item 2 of Schedule A and shall be in the form attached hereto as
Appendix C;

         "Lucent Fiscal Month" means the 12 fiscal monthly periods of Lucent
Technologies Inc. as such monthly periods may be determined by Lucent
Technologies Inc. from time to time for each Lucent Fiscal Year which monthly
periods, once determined, shall be conveyed in writing to CSM by Lucent prior to
the commencement of each Lucent Fiscal Year;

         "Lucent Fiscal Quarter" means the four fiscal quarterly periods of
Lucent Technologies Inc. as such quarterly periods may be determined by Lucent
Technologies Inc. from time to time for each Lucent Fiscal Year;

         "Lucent Fiscal Year" means the fiscal year of Lucent Technologies Inc.
which currently ends on September 30 of each calendar year;

         "Memorandum" means the Memorandum of Association of the Company, as
such Memorandum may be amended from time to time. The Memorandum upon
incorporation of the Company shall be in the form attached hereto as Appendix E;

         "Net Book Value" means the net worth (assets less liabilities) of the
Company as of the most recently audited balance sheet date as updated to the Net
Book Value Request Date or the Termination Date, as applicable. The net worth of
the Company is derived by adding the original cost value of the Company's assets
less normal charges for depreciation and other adjustments as prescribed by
Singapore GAAP, and subtracting the liabilities of the Company.

         Net Book Value shall be determined as of the Net Book Value Request
Date or the Termination Date, as applicable. Net Book Value shall be determined
as follows:

         (1)      Promptly upon delivery by the applicable Shareholder of a Net
                  Book Value Determination Request pursuant to Clause 14 or 17,
                  the parties shall consult with each other in good faith as to
                  the appropriate Net Book Value. Net Book Value shall be
                  determined as of the most recent audited balance sheet as
                  updated to the Net Book Value Request Date or the Termination
                  Date, as applicable. If the parties determine Net Book Value
                  by mutual consent within 21 days of the Net Book Value Request
                  Date or within 21 days of the



                                       6

                     The Company - CSM - Lucent Confidential
<PAGE>   10

                  Termination Date, as applicable, the value so determined shall
                  be the Net Book Value.

         (2)      If the parties fail to determine Net Book Value by mutual
                  consent within 21 days of the Net Book Value Request Date or
                  within 21 days of the Termination Date, as applicable, the
                  Auditors shall in good faith determine the Net Book Value
                  within 35 days of the Net Book Value Request Date or within 35
                  days of the Termination Date, as applicable, and the value so
                  determined shall be the Net Book Value.

         If the Net Book Value is determined pursuant to Clause 14, all costs of
determination of the Net Book Value shall be borne by the Defaulting
Shareholder. If the Net Book Value is determined pursuant to Clause 17, all
costs of determination of the Net Book Value shall be borne by Lucent or CSM, as
specified in Clause 17.

         For purposes of Clauses 14 and 17, once Net Book Value is determined,
the parties agree that such Net Book Value shall be multiplied by Lucent's then
Shareholding Percentage in determining the applicable purchase price for the
shares in the capital of the Company then held by Lucent.

         "Net Book Value Determination Request" means a written request by one
of the Shareholders to determine the Net Book Value for purposes of Clause 14 or
17, as the case may be;

         "Net Book Value Request Date" means the date a Net Book Value
Determination Request is delivered by one of the Shareholders for purposes of
Clause 14 or 17, as the case may be;

         "Partnership Fee" means the amount payable by Lucent to CSM in
accordance with Clause 7(C);

         "Person" means any individual, partnership, association, joint venture,
corporation, trust, unincorporated organization or government, or agency or
political subdivision thereof;

         "Schedule of Authorizations" means the schedule of authorizations
enumerating the powers of the General Manager, which may be amended from time to
time. The initial Schedule of Authorizations shall be determined by the Board in
its first Board meeting;



                                       7

                     The Company - CSM - Lucent Confidential
<PAGE>   11

         "Shareholders" means CSM, Lucent and any other Person holding shares in
the capital of the Company who shall have executed a deed of ratification and
accession pursuant to Clause 10(D);

         "Shareholding Percentage" means the percentage of all Ordinary shares
beneficially owned by the relevant Shareholder in the total issued share capital
(comprising Class A and Class B Ordinary shares) of the Company as of an
applicable date;

         "Singapore Dollars" and the sign "S$" mean the lawful currency of
Singapore;

         "Singapore GAAP" means generally accepted accounting principles in
Singapore;

         "Site" means a site in Woodlands, Singapore, designated as private lot
number A12787(a) and (b) as further described in the Sub-Lease Agreement;

         "Sub-Lease Agreement" has the meaning ascribed thereto in Clause
4(B)(x);

         "STPL" means Singapore Technologies Pte Ltd, a company incorporated in
Singapore and the holding company of CSM;

         "Tax Indemnity Agreement" has the meaning ascribed thereto in item 5 of
Schedule A and shall be in the form attached hereto as Appendix G;

         "Termination Date" has the meaning ascribed thereto in Clause 17(A);

         "Total Shareholder Funds" means the share capital of the Company plus
capital reserves and retained earnings of the Company as of an applicable date;
and

         "U.S. GAAP" means generally accepted accounting principles in the
United States of America.

(B)      Interpretation

(i)      Any reference in this Agreement to:-

         (a)      "Clauses", "Schedules" or "Appendices" are to the clauses of,
                  and the schedules and the appendices to, this Agreement;



                                       8

                     The Company - CSM - Lucent Confidential
<PAGE>   12

         (b)      "financial year" means the period beginning on 1 January and
                  ending on 31 December of a given year, except that the first
                  financial year of the Company shall begin on the date of
                  incorporation of the Company and end on 31 December 1998;

         (c)      "fab" means wafer fabrication facility;

         (d)      "loadings" means orders for the supply of wafers;

         (e)      "wafers" means semiconductor wafers; and

         (f)      the headings are for convenience only and shall not affect the
                  interpretation of this Agreement.

(ii)     Unless the context otherwise requires or permits, references to the
singular number shall include references to the plural number and vice versa;
references to natural persons shall include bodies corporate and vice versa; and
words denoting any gender shall include all genders.

(iii)    The expression "holding company" shall bear the meaning ascribed
thereto in Section 5 of the Act.

2.       FORMATION OF THE COMPANY

(A)      Formation

         Prior to the Completion Date, CSM shall procure the formation and
incorporation in Singapore of a private company limited by shares (the
"Company") under the Act and the Company shall be called SILICON MANUFACTURING
PARTNERS PTE LTD.

(B)      Memorandum and Articles

         The Memorandum and the Articles upon incorporation of the Company shall
be in the form attached hereto in Appendix E.

(C)      Initial Subscribers

         The Memorandum shall initially be subscribed by two persons and CSM
shall appoint two persons to act as its nominees for such purpose. Such nominees
will each agree in the



                                       9

                     The Company - CSM - Lucent Confidential
<PAGE>   13

Memorandum to subscribe for one share of S$1 each in the capital of the Company.
The shares to be so subscribed for and to be issued by the Company to the two
nominees shall be transferred to CSM in the manner provided in Clause 3(I).

3.       BUSINESS PLAN; SCOPE AND OBJECTIVES

(A)      Purpose

         Each of CSM and Lucent expressly acknowledges that the Company is being
formed solely for the limited purpose set forth in Clause 6(A). Subject to the
provisions of Clause 7(B), each of CSM and Lucent further agrees that neither
party has any obligation to the other or to the Company to bring business
opportunities to the Company or to the other Shareholder and each is free to
take advantage of such opportunities on its own or with third parties.

(B)      Business Plan

         The business plan of the Company (the "Company Business Plan") which
has been approved by the parties is for a period of five years and is attached
hereto as Appendix A. The Board of Directors shall review and update the Company
Business Plan at least annually, not later than November 1 of each financial
year of the Company commencing November 1, 1998, to ratify or amend plan
information and objectives for the next financial year (the "Annual Plan") and
include plan information and objectives for the financial year next succeeding
the last year then covered by the Company Business Plan so that the Company
Business Plan shall at all times during the term of this Agreement consist of a
rolling five-year plan for the Company. In the event that the Board of Directors
is unable to agree by any such November 1 on the Annual Plan for the financial
year next succeeding the last year then covered by the Company Business Plan,
then the plan information and objectives for the last year then shown in the
Company Business Plan shall be controlling for the next succeeding financial
year. In the case of any inconsistency between this Agreement and the Company
Business Plan, this Agreement, insofar as it is applicable, shall control. The
Shareholders shall take all appropriate actions to cause the Company to
implement and comply with the terms of the Company Business Plan as such Company
Business Plan may be modified or amended by the Board from time to time.

(C)      Authorized Capital

         The parties agree that the authorised share capital of the Company
shall on incorporation be S$1,000,000,000 divided into 490,000,000 Class A
Ordinary shares of S$1 each and



                                       10

                     The Company - CSM - Lucent Confidential
<PAGE>   14

510,000,000 Class B Ordinary shares of S$1 each. The rights, preferences and
privileges of the Class A Ordinary shares and the Class B Ordinary shares shall
be set forth in the Articles.

(D)      Committed Capital Contribution

         Each of the Shareholders agrees and undertakes that it shall, at such
times and in such amounts as are set forth in the Company Business Plan, make
capital contributions by way of subscription, in cash, for shares in the capital
of the Company of up to an aggregate of S$208,250,000 for CSM and S$216,750,000
for Lucent (the "Committed Capital Contribution").

(E)      Share Capital on Completion Date

         The parties agree that the issued and paid-up share capital of the
Company shall on incorporation be S$2 divided into two Class A Ordinary shares
of S$1 each. On the Completion Date and contemporaneously with the execution of
the Collateral Agreements, the issued and paid-up share capital of the Company
shall be increased, in accordance with Clause 4(D), from S$2 divided into two
Class A Ordinary shares of S$1 each to S$15,000,000 divided into 7,350,000 Class
A Ordinary shares of S$1 each and 7,650,000 Class B Ordinary shares of S$1 each
which issued and paid-up share capital shall be held by the parties in the
following Shareholding Percentages:

<TABLE>
<CAPTION>
                          Percentage of
                          Total Issued          Number and Type
                          Ordinary Shares       Ordinary Shares           Paid in Capital
                          ---------------       ---------------           ---------------
<S>                      <C>                   <C>                       <C>
         CSM        :     49 per cent.          7,350,000                 S$7,350,000
                                                Class A Shares

         Lucent     :     51 per cent.          7,650,000                 S$7,650,000
                                                Class B Shares
</TABLE>

(F)      Calls for Capital Contributions

         (i) Each of the Shareholders further severally agrees that, subject to
the aggregate Committed Capital Contribution and as set forth in the Company
Business Plan, it shall make such capital contributions required of it in
proportion to its Shareholding Percentage as at the date of the



                                       11

                     The Company - CSM - Lucent Confidential
<PAGE>   15

call for such capital contributions. If either Shareholder (the
"Non-Contributing Shareholder") fails to subscribe for its Shareholding
Percentage of the call, the other Shareholder who has so subscribed for its
Shareholding Percentage of such call shall, without prejudice to any other
rights and remedies such Shareholder may have, be entitled (but shall not be
obliged) to subscribe for the Non-Contributing Shareholder's Shareholding
Percentage at the applicable subscription price.

         (ii) All calls for capital contributions in accordance with the Company
Business Plan shall be made upon 7 days' written notice to the Shareholders.

(G)      Increases in Capital

         Each of the Shareholders shall exercise its voting rights in the
Company and take such steps as lie within its powers to procure that (save for
the shares to be subscribed for pursuant to the provisions of this Agreement)
the issue of any unissued shares or of any new shares from time to time created
in the capital of the Company shall before issuance be offered for subscription
in the first instance to such Persons as at the date of the offer are registered
as shareholders of the Company in proportion as nearly as practicable to their
respective Shareholding Percentages.

(H)      Additional Capital

         The Shareholders agree that if the Board shall determine that
additional capital is required by the Company in excess of the Committed Capital
Contribution, each Shareholder shall have the right, but not the obligation, to
subscribe for additional shares in proportion (as nearly as practicable) to its
Shareholding Percentage at the relevant time. If a Shareholder fails to
subscribe for its proportion of the additional shares, its additional shares
will be offered to the other Shareholder at the applicable subscription price.

(I)      Nominee Shares

         The restrictions on the transfer of shares contained in Clause 10 and
in the Articles shall not apply to the shares to be subscribed for and
transferred to CSM pursuant to Clause 2(C) and as soon as practicable after the
allotment and issue of such shares, CSM shall cause the nominees appointed by
CSM to transfer their respective shares to CSM. Prior to the Completion, without
the prior consent of Lucent, CSM shall not, and shall not permit any of the
nominees to, incur any liabilities or obligations on behalf of the Company, and
shall not cause the Company to incur any liabilities or obligations.



                                       12

                     The Company - CSM - Lucent Confidential
<PAGE>   16

(J)      Ordinary Shares

         Unless otherwise unanimously agreed by the Shareholders from time to
time, the issued share capital of the Company shall comprise Class A and Class B
Ordinary shares only and no other classes of shares will be issued.

4.       COMPLETION

(A)      Completion

         Completion shall take place at the registered office of the Company (or
at such other place as the parties may agree in writing) on the Completion Date.

(B)      Conditions to Completion of CSM

         The obligation of CSM to consummate the transactions contemplated
hereby are subject to and conditioned upon the fulfillment of each of the
following conditions, any or all of which may be waived in writing in whole or
in part by CSM:

         (i)      The representations and warranties of Lucent contained in
                  Clause 13 shall be true and correct at and as of the
                  Completion Date as though such representations and warranties
                  were made at and as of such Completion Date.

         (ii)     Lucent shall have performed and complied with all agreements,
                  covenants and conditions on its part required by this
                  Agreement to be performed or complied with prior to or at the
                  Completion Date.

         (iii)    On or prior to the Completion Date, neither Lucent nor any of
                  its Affiliates shall have received any notice of any
                  threatened litigation or regulatory proceeding being
                  instituted or contemplated, and no such litigation or
                  proceedings shall be pending, which challenge the legality of
                  this Agreement or the Collateral Agreements or the
                  transactions contemplated hereby or thereby or would have,
                  individually or in the aggregate, a material adverse effect on
                  the transactions contemplated hereby or thereby.

         (iv)     CSM, Lucent and the Company shall have received and/or
                  obtained an indicative letter of approval from the Singapore
                  Economic Development Board stating that the Company will
                  obtain Pioneer status.



                                       13


                    The Company - CSM - Lucent Confidential

<PAGE>   17

         (v)      (A) An indicative offer letter for a loan from the Singapore
                  Economic Development Board equal to or greater than
                  S$240,000,000 and (B) confirmatory letters from other lenders
                  of the availability of loan financing equal to or greater than
                  S$200,000,000 shall have been obtained, each in form and
                  substance reasonably satisfactory to CSM and its counsel.

         (vi)     The members of the Board of Directors, the General Manager,
                  and the Financial Controller shall have been selected in
                  accordance with the provisions of Clauses 5 and 8.

         (vii)    An employee staffing, recruitment, compensation, incentives
                  and benefits plan for the Company shall have been developed
                  and approved by CSM.

         (viii)   There shall have been delivered to CSM an officer's
                  certificate and a secretary's certificate of Lucent and an
                  opinion of counsel to Lucent in the forms attached hereto as
                  Appendix H.

         (ix)     Lucent shall have executed an acknowledgment letter in the
                  form attached hereto as Appendix F.

         (x)      The Company and CSM shall have entered into a sub-lease
                  agreement for CSM to sublease to the Company a portion of the
                  building and facility systems in Fab 3B (the "Sub-Lease
                  Agreement"), which Sub-Lease Agreement (a) shall be in form
                  and substance mutually satisfactory to Lucent, CSM and each of
                  their respective counsel and (b) shall have been approved by
                  the JTC, if such approval is required.

(C)      Conditions to Completion of Lucent

         The obligation of Lucent to consummate the transactions contemplated
hereby are subject to and conditioned upon the fulfillment of each of the
following conditions, any or all of which may be waived in writing in whole or
in part by Lucent:

         (i)      The representations and warranties of CSM contained in Clause
                  13 shall be true and correct at and as of the Completion Date
                  as though such representations and warranties were made at and
                  as of such Completion Date.



                                       14

                     The Company - CSM - Lucent Confidential
<PAGE>   18

         (ii)     CSM shall have performed and complied with all agreements,
                  covenants and conditions on its part required by this
                  Agreement to be performed or complied with prior to or at the
                  Completion Date.

         (iii)    On or prior to the Completion Date, neither CSM nor any of its
                  Affiliates shall have received any notice of any threatened
                  litigation or regulatory proceeding being instituted or
                  contemplated, and no such litigation or proceedings shall be
                  pending, which challenge the legality of this Agreement or the
                  Collateral Agreements or the transactions contemplated hereby
                  or thereby or would have, individually or in the aggregate, a
                  material adverse effect on the transactions contemplated
                  hereby.

         (iv)     Lucent, CSM and the Company shall have received and/or
                  obtained an indicative letter of approval from the Singapore
                  Economic Development Board stating that the Company will
                  obtain Pioneer status

         (v)      (A) An indicative offer letter for a loan from the Singapore
                  Economic Development Board equal to or greater than
                  S$240,000,000 and (B) confirmatory letters from other lenders
                  of the availability of loan financing equal to or greater than
                  S$200,000,000 shall have been obtained, each in form and
                  substance reasonably satisfactory to Lucent and its counsel.

         (vi)     The members of the Board of Directors, the General Manager,
                  and the Financial Controller shall have been selected in
                  accordance with Clauses 5 and 8.

         (vii)    An employee staffing, recruitment, compensation, incentives
                  and benefits plan for the Company shall have been developed
                  and approved by Lucent.

         (viii)   CSM shall have executed an acknowledgment letter in the form
                  attached hereto as Appendix F.

         (ix)     There shall have been delivered to Lucent (a) an officer's
                  certificate and a secretary's certificate of CSM and an
                  opinion of in-house counsel of CSM, in each case in the forms
                  attached hereto as Appendix I and (b) an opinion of Allen &
                  Gledhill in form and substance satisfactory to Lucent.

         (x)      The Company and CSM shall have entered into the Sub-Lease
                  Agreement, which Sub-Lease Agreement (a) shall be in form and
                  substance mutually satisfactory to



                                       15

                     The Company - CSM - Lucent Confidential
<PAGE>   19

                  Lucent, CSM and each of their respective counsel and (b) shall
                  have been approved by the JTC, if such approval is required.

(D)      Application for Shares; Collateral Agreements; Pre-Completion Covenants

         (1)      On the Completion Date:

         (i)      CSM shall make an unconditional application in writing to the
                  Company for the allotment to CSM for cash at par for 7,349,998
                  Class A Ordinary shares of S$1 each in the capital of the
                  Company and CSM shall pay the sum of S$7,349,998 to the
                  Company by way of a cashier's order, or bank draft drawn on a
                  licensed bank in Singapore and made out in favour of the
                  Company, or wire transfer, or such other means acceptable to
                  the parties;

         (ii)     Lucent shall make an unconditional application in writing to
                  the Company for the allotment to Lucent for cash at par for
                  7,650,000 Class B Ordinary shares of S$1 each in the capital
                  of the Company and Lucent shall pay the sum of S$7,650,000 to
                  the Company by way of a cashier's order, or bank draft drawn
                  on a licensed bank in Singapore and made out in favour of the
                  Company, or wire transfer, or such other means acceptable to
                  the parties;

         (iii)    each of the parties shall procure the entry by the Company
                  into, and CSM and Lucent shall enter into, the Assured Supply
                  and Demand Agreement;

         (iv)     each of the parties shall procure the entry by the Company
                  into, and CSM and Lucent shall enter into the License and
                  Technology Transfer Agreement; and

         (v)      each of the parties shall procure the entry by the Company
                  into, and CSM shall enter into, the CSM Service Support
                  Agreement.

         (2) During the period from the date hereof and until the Completion
Date, (a) CSM covenants and agrees to use all commercially reasonable efforts
and take all commercially reasonable actions necessary to obtain the consents,
approvals and authorizations from any third parties, including, without
limitation, those consents, approvals and authorizations identified in Clause
4(B)(iv), required to be obtained or made in connection with the transactions
contemplated by this Agreement and (b) CSM and Lucent shall use commercially
reasonable efforts to (1) agree on a mutually acceptable Sub-Lease



                                       16

                     The Company - CSM - Lucent Confidential
<PAGE>   20

Agreement and (2) cause the JTC to approve such Sub-Lease Agreement to the
extent such approval is required. In addition, CSM agrees to notify and consult
with Lucent to jointly develop and prepare any submissions which may be made to
the Singapore Economic Development Board or any other Singapore governmental
agency or body in connection with this Agreement.

(E)      Allotment of Shares

         Each of the parties shall take such action as may be necessary to
ensure that the Company makes simultaneous allotments of the Class A and Class B
Ordinary shares so applied for pursuant to sub-Clause (D) above on the
Completion Date and, except as specifically contemplated in the Articles, each
of such Class A and Class B Ordinary shares so allotted shall on allotment rank
pari passu in all respects with each other and with the existing issued ordinary
shares of the Company.

5.       BOARD OF DIRECTORS

(A)      Number

         Unless otherwise agreed by CSM and Lucent, the Board shall consist of
five Directors.

(B)      Composition

(i)      Subject to sub-Clauses (5)(B)(ii) and (iii) below, the Board shall
         consist of:

         (a)      two persons appointed by CSM with the approval of Lucent, such
                  approval not to be unreasonably withheld (who shall be
                  designated as "CSM Directors"); and

         (b)      three persons appointed by Lucent with the approval of CSM,
                  such approval not to be unreasonably withheld (who shall be
                  designated as "Lucent Directors").

(ii)     CSM shall be entitled to appoint as Director(s) 2 persons for so long
         as CSM's Shareholding Percentage is equal to or exceeds 25 per cent.,
         and one person for so long as CSM's Shareholding Percentage is equal to
         or exceeds 10 per cent. Notwithstanding the foregoing, in the event
         CSM's Shareholding Percentage is equal to or exceeds 51 per cent, CSM
         shall be entitled to appoint 3 Directors.



                                       17

                     The Company - CSM - Lucent Confidential
<PAGE>   21

(iii)    Lucent shall be entitled to appoint as Director(s) 3 persons for so
         long as Lucent's Shareholding Percentage is equal to or exceeds 51 per
         cent.; 2 persons for so long as Lucent's Shareholding Percentage is
         equal to or exceeds 25 per cent, and one person for so long as Lucent's
         Shareholding Percentage is equal to or exceeds 10 per cent.

(iv)     Upon the written request of the other Shareholders, a Shareholder shall
         forthwith remove the relevant number of Director(s) from office upon a
         reduction in its Shareholding Percentage in the event that the number
         of Director(s) it has appointed exceeds its entitlement under any of
         the foregoing paragraphs of this sub-Clause (B).

(v)      For so long as CSM has the power under this Agreement or otherwise as a
         Shareholder of the Company to appoint at least two Directors, it shall
         ensure that at least one Director appointed by it is ordinarily
         resident in Singapore.

(C)      Right of Appointment and Replacement

         The right of appointment conferred on a Shareholder under sub-Clause
(B) above shall include the right of that Shareholder to remove at any time from
office such person appointed by that Shareholder as a Director.




                                       18

                     The Company - CSM - Lucent Confidential
<PAGE>   22

(D)      Notice in Writing

         Each appointment or removal of a Director pursuant to this Clause shall
be in writing and signed by or on behalf of the Shareholder appointing or
removing such Director and shall be delivered to the then current registered
office of the Company.

(E)      Further Director

         Subject to sub-Clauses 5(B)(i), (ii) and (iii), whenever for any reason
a person appointed by a Shareholder ceases to be a Director, that Shareholder
shall be entitled to appoint forthwith a Director in his stead.

(F)      Alternate Director

         Each Shareholder shall be entitled at any time and from time to time to
appoint a person to act as an alternate director for each Director nominated by
such Shareholder and to terminate the appointment of such alternate director in
compliance with the Articles. Such alternate director shall be appointed with
the consent of the other Shareholder, which consent shall not be unreasonably
withheld. Such alternate director shall be entitled while holding office as such
to receive all notices of meetings of the Board and to attend and vote as a
Director at any such meetings at which the Director for whom such alternate
director is acting as an alternate is not present and generally to exercise all
the powers, rights, duties and authorities and to perform all functions of his
appointment as could have been exercised by such absent Director. Further, such
alternate director shall be entitled to exercise the vote of any such Director
at any meetings of the Board and if such alternate director represents more than
one Director such alternate director shall be counted for quorum purposes by the
number of Directors he represents and shall be entitled to one vote for every
Director he represents. In addition, each Shareholder acknowledges and agrees
that any Director nominated by such Shareholder and approved by the other
Shareholder may be appointed as the alternate director of any one or more of the
other Director or Directors nominated by such Shareholder.







                                       19

                     The Company - CSM - Lucent Confidential
<PAGE>   23

(G)      Chairman

         For so long as CSM's Shareholding Percentage is at least 49 per cent.,
the Chairman of the Board shall be a Director nominated by CSM and approved by
Lucent. Subject to the Articles, the Chairman of the Board shall be responsible
for coordinating the activities of the Board of Directors, such as: (i)
introducing proposals to the Board of Directors on matters which require Board
of Directors' approval; (ii) with the advice and consent of the other Directors,
setting the agenda for the Board of Directors' meetings; (iii) convening and
presiding at the meetings of the Board of Directors; (iv) presiding at general
meetings of shareholders; and (v) circulating minutes for approval by the
Directors. The Chairman of the Board shall not have a second or casting vote and
shall not be empowered to bind the Company. The Board of Directors shall select
from among its members a Vice Chairman of the Board who shall act for the
Chairman of the Board in the event he is absent from or unable to act in any
meeting.

(H)      Meetings of Directors

(i)      Meetings of the Board shall be held at such times as the Board shall
determine. Unless otherwise agreed by the Shareholders, a meeting of the Board
shall be held at least once every month during the first year from the
Completion Date, at least once every three months for the next three years from
the Completion Date and thereafter, at least once every six months.

(ii)     The quorum at a meeting of Directors (including any adjourned meetings)
necessary for the transaction of any business of the Company shall be three
Directors, including at least one CSM Director and at least one Lucent Director.
Not less than 30 days' notice (or such shorter period of notice in respect of
any particular meeting as may be agreed by all Directors) specifying the date,
place and time of the meeting and the business to be transacted thereat shall be
given to all Directors.

(iii)    In the event that a meeting of Directors duly convened cannot be held
for lack of a quorum, the meeting shall be adjourned to the same time and day of
the following week and at the same place or such other agreed upon date (within
30 days of the adjourned meeting date), place and time, and notice specifying
the date, place and time of such adjourned meeting shall be given to all
Directors.


(iv)     The Directors may participate in a meeting of the Directors by means of
a conference telephone or a video conference telephone or similar communications
equipment by which all persons participating in the meeting are able to hear and
be heard by all other participants without



                                       20


                    The Company - CSM - Lucent Confidential
<PAGE>   24

the need for a Director to be in the physical presence of another Director(s)
and participation in the meeting in this manner shall be deemed to constitute
presence in person at such meeting. The Directors participating in any such
meeting shall be counted in the quorum for such meeting and subject to there
being a requisite quorum under paragraphs (ii) or (iii) above (as the case may
be) at all times during such meeting, all resolutions agreed by the Directors in
such meeting shall be deemed to be as effective as a resolution passed at a
meeting in person of the Directors duly convened and held. A meeting conducted
by means of a conference telephone or a video conference telephone or similar
communications equipment as aforesaid is deemed to be held at the place agreed
upon by the Directors attending the meeting, provided that at least one of the
Directors present at the meeting was at that place for the duration of the
meeting.

(v)      In the case of a meeting which is not held in person, the fact that a
Director is taking part in the meeting must be made known to all the other
Directors taking part, and no Director may intentionally disconnect or cease to
take part in the meeting unless he makes known to all other Directors taking
part that he is ceasing to take part in the meeting.

(vi)     Save as provided in sub-Clause (I) below, all resolutions of the
Directors at a meeting or adjourned meeting of the Directors shall be adopted by
a simple majority vote of the Directors present. Save as provided in subClause
(F) above, each Director shall have one vote.

(vii)    All resolutions to be passed by way of circulation among the Directors
(referred to as a "resolution in writing") shall be dispatched to each Director
contemporaneously. A resolution in writing of the Directors shall be as valid
and effectual as if it had been a resolution passed at a meeting of the Board
duly convened and held if the resolution in writing is approved and signed by at
least one CSM Director and at least one Lucent Director and may consist of
several documents in the like form each signed by one or more of the Directors.
The Company Secretary shall notify all the Directors in writing of the effective
date on which such resolution is passed.

(I)      Important Matters Requiring Board's Special Approval

         Subject to any requirements specified by law, by the Act or this
Agreement, none of the following actions shall be taken by the Company unless
such actions are unanimously approved by all of the CSM Directors and the Lucent
Directors duly represented at a meeting which is duly convened and where a
quorum is present:-

         (a)      all amendments to the Company Business Plan and to each Annual
                  Plan thereof ;



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                     The Company - CSM - Lucent Confidential
<PAGE>   25

         (b)      the disposal of the whole or substantially the whole of the
                  property or undertaking of the Company;

         (c)      execution of any agreement involving payments (i) in excess of
                  S$1,000,000 over its term or having a term longer than one
                  year if not approved as part of the Company Business Plan or
                  (ii) in excess of S$70,000,000 if approved as part of the
                  Company Business Plan;

         (d)      initiation or settlement of any claim or suit which is
                  material to the Company or outside the ordinary course of its
                  business;

         (e)      appointment or removal of the Auditors and the fixing of such
                  Auditor's fees;

         (f)      approval of limits of authority for the officers of the
                  Company and the Schedule of Authorizations;

         (g)      any proposal to change the capitalization of the Company or to
                  amend the Memorandum or Articles;

         (h)      the termination by the Company of any of the services
                  identified in Clause 10 (C) of the CSM Service Support
                  Agreement;

         (i)      granting of any loans to Directors or initiating or amending
                  any form of remuneration to Directors (including, without
                  limitation, golden parachute payments);

         (j)      initiation or amendment of any material employee compensation,
                  incentive or benefits plan or any material employee
                  recruitment, disciplinary (as it relates solely to the
                  individuals holding the positions identified on Schedule
                  5(L)), or training policy.

         (k)      participation by employees of the Company in CSM's employee
                  share ownership scheme or the establishment of an employee
                  share option/ownership scheme for the Company;

         (l)      the entry by the Company into new markets outside of the
                  Business unless explicitly set forth in the Company Business
                  Plan;



                                       22

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<PAGE>   26

         (m)      the termination or amendment of the Assured Supply and Demand
                  Agreement or the License and Technology Transfer Agreement;

         (n)      the exercise of any of the Company's borrowing powers unless
                  included in the Company Business Plan;

         (o)      the entry into any alliance unless explicitly set forth in the
                  Company Business Plan. For the purposes of this sub-paragraph
                  (o) the expression "alliance" means any transaction entered
                  into by the Company other than in the ordinary course of
                  business including, but not limited to, transactions (1)
                  pursuant to which the Company acquires, encumbers, transfers
                  or disposes of intellectual property or other technology
                  rights, (2) pursuant to which the Company is restricted as a
                  result of such transaction in the products or services which
                  it may provide to its customers, or (3) which create or grant
                  exclusive rights to another party or parties;

         (p)      the issue by the Company of any guarantee to secure the
                  Indebtedness of any person;

         (q)      approval of the audited annual accounts of the Company;

         (r)      a change in the Debt/Equity Ratio policy specified in Clause
                  11;

         (s)      the change in the authorised, issued or paid-up capital of the
                  Company (unless pursuant to Clauses 2(C), 3(D), 3(E) and 4(D))
                  or the grant of any option over the unissued share capital of
                  the Company;

         (t)      the listing or registration of the shares in the capital of
                  the Company on any stock exchange or with any securities
                  exchange commission;

         (u)      the winding-up, liquidation or dissolution of the Company or
                  the merger, consolidation or reorganisation of the Company
                  with any corporation, firm or other body;

         (v)      any transfer of shares held by a Shareholder in the capital of
                  the Company unless in accordance with Clause 10, Clause 14(B)
                  or Clause 17;



                                       23

                     The Company - CSM - Lucent Confidential
<PAGE>   27

         (w)      the subscription for, or acquisition or disposal of, any
                  shares or interests in any Person;

         (x)      the entry into any joint venture; and

         (y)      the declaration by the Company of any dividends other than in
                  accordance with the dividend policy set out in the Articles
                  and the determination of any reserves.

(J)      Facilitating Shareholder Actions

         In the event that any decision or action that is approved by the Board
of Directors in accordance with Clause 5(I) above (the "Important Matter
Decisions") requires the approval of the Shareholders under the Articles or
under the Act, the Shareholders shall take all necessary and appropriate actions
to procure such approval. In addition, the Shareholders shall take all necessary
and appropriate actions to implement and comply with any decision or action
approved by the Board which are not Important Matter Decisions to the extent
such decision or action does not require the approval of the Shareholders under
the Articles or the Act.

(K)      Interested Party Transactions

(i)      In this Agreement, an "interested party transaction" shall mean a
         transaction or arrangement (other than transactions or arrangements
         contemplated by this Agreement or any of the Collateral Agreements)
         involving the Company or its assets in which one of the Shareholders or
         any of its Affiliates has a direct or indirect interest (whether as
         supplier, purchaser, provider or receiver of information, services,
         goods or financing, employer or otherwise).

(ii)     Notwithstanding the generality of Clause 5(I) or any other provision of
         this Agreement:

         (1)      each Shareholder shall ensure that it shall promptly and
                  timely disclose to the other Shareholder any interested party
                  transaction in which the first Shareholder is or may be
                  involved, together with a reasonably detailed description of
                  its actual or proposed involvement; and

         (2)      the Shareholder to whom such disclosure is required to be made
                  shall have the right to consent to any interested party
                  transaction; provided, such consent shall not be unreasonably
                  withheld.



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                     The Company - CSM - Lucent Confidential
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(L)      Dismissal of Certain Employees

         In the event any Shareholder (the "Dismissing Shareholder") desires,
for any reason or no reason, that the Company dismiss or terminate the services
of any of the individuals holding the positions identified on Schedule 5(L) (the
"Affected Employee"), such Dismissing Shareholder must notify the other
Shareholder and the Company of its desire to dismiss such Affected Employee and
at such time the Dismissing Shareholder shall have a discussion with the other
Shareholder with respect to such proposed dismissal. In such event, the
Shareholders shall cause the Company to provide such Affected Employee with a
three month (six months in the event the Affected Employee is the General
Manager) probation period prior to such dismissal; provided, such three or six
month probation period may be waived if both Shareholders agree to do so. Within
10 days after the end of such three or six month probation period, as
applicable, the Dismissing Shareholder shall determine, in its sole discretion,
whether such Dismissing Shareholder still desires that the Company dismiss such
Affected Employee, and if so, shall notify the other Shareholder and the Company
of its decision. If the Dismissing Shareholder determines that it still desires
that the Company dismiss the Affected Employee, the Shareholders shall promptly
cause the Company to dismiss the Affected Employee. Notwithstanding any
provision contained herein, each Shareholder's right to exercise the dismissal
rights granted under this Clause 5(L) shall be limited to two individuals in any
given quarter.

6.       BUSINESS OF THE COMPANY

(A)      Business

         The Shareholders agree that the business of the Company shall be the
operation and management of the Company Fab as an independent dedicated foundry
(the "Business"). The initial financial and business plans for the Company Fab
provide for an installed wafer manufacturing capacity of up to 26,000 wafers per
month based on 21 mask layers of Lucent's digital 0.25 micron technology.

(B)      Technology License and Development

         (i)      The parties agree that the processes which the Company will
                  run will include, without limitation, 0.25um and 0.18um
                  process flows.

         (ii)     Lucent and CSM shall each license certain intellectual
                  property rights related to the manufacture of semiconductor
                  wafers and integrated circuits to the Company on the terms and
                  conditions of the License and Technology Transfer Agreement.



                                       25

                     The Company - CSM - Lucent Confidential
<PAGE>   29

         (iii)    The Company shall assign certain intellectual property rights
                  related to the manufacture of semiconductor wafers and
                  integrated circuits to CSM and Lucent on the terms and
                  conditions of the License and Technology Transfer Agreement.

(C)      Assured Supply and Demand

         The Company shall make available to Lucent and CSM quantities of wafer
manufacturing capacity from the Company Fab on the terms and conditions of the
Assured Supply and Demand Agreement.

(D)      Services

         CSM shall provide such services to the Company as contemplated in the
CSM Service Support Agreement. Each Shareholder acknowledges that certain rights
and obligations of the parties under the CSM Service Support Agreement shall
survive the termination of the CSM Service Support Agreement.

(E)      Sub-Lease of Company Fab Premises

         The Company shall enter into the Sub-Lease Agreement. The Sub-Lease
Agreement shall be subject to the JTC's approval, if so required by the JTC.

7.       SHAREHOLDERS' OBLIGATIONS AND RIGHTS

(A)      Shareholders' Obligations

         Except as the Shareholders may otherwise agree in writing or save as
otherwise provided or contemplated in this Agreement, each of the Shareholders
shall use commercially reasonable endeavours to exercise its powers in relation
to the Company so as to ensure that:

         (i)      the Company carries on its business and conducts its affairs
                  in a proper and efficient manner;

         (ii)     the Company, and the Directors appointed by that Shareholder,
                  will comply strictly and expeditiously with the provisions of
                  this Agreement and the Articles;



                                       26

                     The Company - CSM - Lucent Confidential
<PAGE>   30

         (iii)    the Business shall be carried on pursuant to the policies set
                  out herein or laid down from time to time by the Board, which
                  shall hold Board meetings in accordance with Clause 5(H) and
                  the Articles;

         (iv)     the Company shall cause to be kept full and proper accounting
                  records relating to the business, undertakings and affairs of
                  the Company, which records shall be made available at all
                  reasonable times for inspection by the Shareholders or their
                  representatives by prior appointment during office hours;

         (v)      for each financial year, the Company shall, at its expense,
                  prepare annual accounts, in each case in accordance with
                  Singapore GAAP and in compliance with all applicable
                  legislation in respect of such financial year and shall
                  procure that such accounts are audited as soon as practicable
                  and shall supply copies of the same, both in draft and final
                  form, to each of the Shareholders within 90 days (in the case
                  of the draft form) and 120 days (in the case of the final
                  form) after the end of the financial year of the Company;

         (vi)     the Company shall, at its expense, (a) prepare interim
                  accounts of the Company covering the period beginning on
                  January 1 and ending on September 30 of each calendar year,
                  (b) procure that such interim accounts are audited within 60
                  days after the end of the Lucent Fiscal Year in accordance
                  with Singapore GAAP and in compliance with all applicable
                  legislation in respect of such interim period and (c) supply
                  copies of such audited interim accounts in final form to
                  Lucent within 60 days after the end of the Lucent Fiscal Year;

         (vii)    for purposes of Lucent's financial reporting and tax reporting
                  purposes, the Company shall prepare financial statements
                  conforming to U.S. GAAP for use by Lucent for such financial
                  periods as may be requested by Lucent. All costs and expenses
                  of an external accounting firm who shall prepare such
                  financial statements to conform to U.S. GAAP for the sole
                  benefit of Lucent shall be borne by Lucent. In addition, the
                  Company shall prepare and timely deliver all financial
                  statements and reports reasonably requested by Lucent,
                  including without limitation, the Financial Accounting
                  Standard 109 package. The Company shall prepare and timely
                  deliver all tax forms and other information returns or reports
                  reasonably requested by Lucent or required by the laws of the
                  United States, including without limitation, U.S. Treasury
                  Form 5471 and supporting schedules. All out-of-pocket costs
                  and expenses incurred by the Company in complying with
                  Lucent's requests under this sub-Clause 7(A)(vii)



                                       27

                     The Company - CSM - Lucent Confidential
<PAGE>   31

                  and which are for the sole benefit of Lucent shall be borne by
                  Lucent; provided, that in the case of fees and expenses of any
                  tax or legal advisors or other professional consultants, such
                  fees and expenses shall be borne by Lucent only if the
                  retention of such advisors or consultants has been
                  pre-approved by Lucent. Lucent shall provide such assistance
                  as is reasonably requested by the Company in order for the
                  Company to comply with this sub-Clause 7(A)(vii).

         (viii)   the Company shall, at its expense, prepare and provide to each
                  of the Directors:-

                  (a)      unaudited and estimated monthly profit and loss
                           statements, cashflow, balance sheet and elimination
                           statements covering such items as requested by Lucent
                           from time to time ("Elimination Statements") by the
                           first Wednesday of the first week after the end of
                           each Lucent Fiscal Month ; unaudited and actual
                           monthly profit and loss statements, cashflow, balance
                           sheet and Elimination Statements within seven
                           calendar days after the end of each calendar month;

                  (b)      updated profit and loss, balance sheet and cashflow
                           forecast for the following 12 month period within
                           seven calendar days after the end of each calendar
                           month;

                  (c)      unaudited and estimated quarterly profit and loss
                           statements, cashflow, balance sheet and Elimination
                           Statements by the first Wednesday of the first week
                           after the end of each Lucent Fiscal Quarter;
                           unaudited and actual quarterly profit and loss
                           statements, cashflow, balance sheet and Elimination
                           Statements within seven calendar days after the end
                           of each Lucent Fiscal Quarter;

                  (d)      Unaudited annual profit and loss statements,
                           cashflow, balance sheet and Elimination Statements
                           covering the Lucent Fiscal Year within three calendar
                           days after the end of the Lucent Fiscal Year;

                  in each case in accordance with Singapore GAAP, and

         (ix)     the Company shall do all that the Auditors may reasonably
                  require by way of keeping records and accounts and provide the
                  Auditors with all such



                                       28

                     The Company - CSM - Lucent Confidential
<PAGE>   32
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                  information and explanation as they may reasonably require and
                  otherwise assist the Auditors in all reasonable ways.

(B)      Undertaking of Non-Competition

(i)      Lucent agrees and undertakes that except as permitted under sub-Clauses
         (B)(ii), (iii) and (iv) below, Lucent's loadings in the Company Fab
         shall be solely for products with Lucent's brand name or for products
         to be sold as a packaged labeled product.

(ii)     Lucent shall first offer its Unutilised Wafer Capacity (as defined
         below) to CSM at prices to be mutually agreed between Lucent and CSM.
         If CSM declines to take all or some of such Unutilised Wafer Capacity
         within 10 days of Lucent's offer, Lucent shall be entitled to sell all
         of such Unutilised Wafer Capacity not purchased by CSM to any third
         party, subject to the restrictions set forth in sub-Clauses (B)(iii)
         and (iv) below. For purposes of this Agreement, the term "Unutilised
         Wafer Capacity" shall mean wafer capacity from the Company Fab which is
         not utilised by Lucent as required under the Assured Supply and Demand
         Agreement. For the avoidance of doubt, the phrase "wafer capacity"
         shall include the physical wafers produced by the Company Fab. Lucent
         and CSM acknowledge and agree that there may be multiple Unutilised
         Wafer Capacities Lucent may offer CSM pursuant to this sub-Clause
         (B)(ii) and accordingly, there may be multiple 24 month periods running
         concurrently for the multiple Unutilised Wafer Capacities offered as
         contemplated under sub-Clause (B)(iv) below.

(iii)    Lucent shall not sell, offer, transfer or otherwise dispose of such
         Unutilised Wafer Capacity to any of the companies or entities set out
         in Schedule 7(B)(ii) attached hereto (collectively, the "Scheduled
         Companies"), as such Schedule 7(B)(ii) may be amended from time to time
         upon mutual agreement between Lucent and CSM. Notwithstanding the
         foregoing, Lucent shall be permitted to sell, offer, transfer or
         otherwise dispose of any Unutilised Wafer Capacity under this Clause
         7(B) to the extent any of the unutilised wafers are sold by the
         Scheduled Companies as a packaged labeled product or to the extent such
         offer, sale, transfers or other disposition involves products with
         Lucent's brand name.

(iv)     With respect to each Unutilised Wafer Capacity offered but not taken by
         CSM under sub-Clause (B)(ii) above, Lucent may, subject to sub-Clause
         (B)(iii) above, sell such Unutilised Wafer Capacity to any third party
         for a period of ********* effective from the date on which CSM first
         declined to take up



                                       29

                     The Company - CSM - Lucent Confidential
<PAGE>   33
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


         such Unutilised Wafer Capacity. Upon the expiration of such ********
         period, Lucent shall have the right to either take up such Unutilised
         Wafer Capacity for Lucent's use in accordance with sub-Clause (B)(i)
         above or re-offer such Unutilised Wafer Capacity to CSM in accordance
         with sub-Clause (B)(ii) above.

(C)      Partnership Fee

         CSM shall be entitled to receive from Lucent a partnership fee
("Partnership Fee") equal to **** in respect of each wafer purchased by Lucent
from the Company which fee shall be adjusted pursuant to the formula set forth
on Schedule 7(C) attached hereto. The Partnership Fee shall accrue upon receipt
of the first accepted wafer by Lucent under the Assured Supply and Demand
Agreement.

(D)      Insurance Coverage

         On and after the Completion Date, Lucent and CSM shall negotiate in
good faith the appropriate type and level of insurance coverage for the Company
in accordance with the principles set forth on Schedule 7(D) attached hereto.

8.       MANAGEMENT OF THE COMPANY

(A)      General Manager; Financial Controller

         The General Manager of the Company shall be appointed by CSM in
consultation with Lucent. The General Manager shall be responsible for the day
to day running and management of the business of the Company within the limits
imposed by the Board, this Agreement, the Company Business Plan and the Schedule
of Authorizations. The Financial Controller of the Company shall be appointed by
Lucent in consultation with CSM. The Financial Controller shall be responsible
for all financial matters of the Company within the limits imposed by the Board,
this Agreement and the Company Business Plan.

(B)      Management Committee

         The Shareholders shall cause the Company to establish a Management
Committee based in Singapore comprising three members with one nominee of CSM,
one nominee of Lucent and the General Manager (the "Management Committee"). The
Management Committee will review and make recommendations to the General
Manager, as appropriate, on capacity and mix of processes and other operational
issues relating to the Company. The Management Committee will also



                                       30

                     The Company - CSM - Lucent Confidential
<PAGE>   34

provide advice to the General Manager in connection with the preparation of the
Company Business Plan.

(C)      Employees

(i)      In addition to the employees of the Company, CSM and Lucent shall each
contribute such manpower resources, either on a contract or secondment basis, as
is contemplated by the Company Business Plan or as may be otherwise required by
the Company on such terms as may be agreed in writing with the Company.

(ii)     The parties presently do not envisage that the Company will establish
an employee share option scheme. However, in the event that the Board approves
of the employees of the Company participating in CSM's employee share ownership
scheme, the Company shall pay to CSM the cost of acquisition, if any (such as,
where applicable, compensation charges pursuant to U.S. GAAP, charges on the
issuance of shares at a discount), of such shares in CSM as may be allocated to
such employees.

9.       GENERAL MEETINGS

         No business shall be transacted at any general meeting of the Company
unless a quorum of Shareholders is present throughout the meeting. The quorum
for all general meetings (including any adjourned meetings) of Shareholders
shall comprise two Shareholders present throughout the meeting, comprising the
proxies or representatives of CSM and Lucent. In the event that a general
meeting duly convened cannot be held for lack of a quorum, the meeting shall be
adjourned to the same time and day of the following week and at the same place
or such other agreed upon date (within 30 days of the adjourned meeting date),
place and time, and notice specifying the date, place and time of such adjourned
meeting shall be given to all Shareholders.

10.      TRANSFER OF SHARES

(A)      Meaning of "Transfer"

         In this Agreement, unless the context otherwise requires, any reference
to a "transfer" of securities or other voting interests of a Person shall
include (i) any transfer or other disposition of such securities or voting
interests or any interest therein, including, without limitation, by operation
of law, by court order, by judicial process, or by foreclosure, levy or
attachment; (ii) any sale, assignment, gift, donation, redemption, conversion or
other disposition of such securities or any interest therein, pursuant to an
agreement, arrangement, instrument or



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                     The Company - CSM - Lucent Confidential
<PAGE>   35

understanding by which legal title to or beneficial ownership of such securities
or any interest therein passes from one Person to another Person or the same
Person in a different legal capacity, whether or not for value; and (iii) the
granting of any security, interest, lien, pledge, mortgage, hypothecation or
charge in or extending or attaching to such securities or interest therein.

(B)      Moratorium on Transfer

         Neither CSM nor Lucent shall transfer all or any part of its shares in
the capital of the Company to any Person during the term of the joint venture as
set out in Clause 17, unless with the prior written consent of the other
Shareholder or as expressly permitted by this Agreement.

(C)      Permitted Transfers

(i)(a)   For the purpose of this paragraph (i), the term "Permitted Transferee"
         in relation to CSM shall mean a wholly-owned subsidiary of CSM and in
         the case of Lucent, a wholly-owned subsidiary of Lucent (a "Lucent
         Sub") or a direct and/or indirect wholly-owned subsidiary of Lucent
         Technologies Inc. (an "LTI Sub"). For purposes of this sub-Clause (C),
         a Lucent Sub shall not be treated as an LTI Sub.

   (b)   Subject to sub-Clause (D) below, each Shareholder (the "Transferor
         Corporation") shall be entitled to transfer all (and not some only) of
         the shares held by it in the capital of the Company to a Permitted
         Transferee; provided, in the event the net worth of a Permitted
         Transferee at the time of the proposed transfer or anytime thereafter
         is less than 95% of the net worth of the Transferor Corporation at the
         time of the completion of the proposed transfer, then prior to the
         completion of such proposed transfer or anytime thereafter, (x) CSM, in
         the case where CSM is the Transferor Corporation, shall execute a
         guarantee in favor of Lucent guaranteeing the payment obligations of
         its Permitted Transferee and (y) Lucent, (i) in the case where Lucent
         is the Transferor Corporation and Lucent Sub is the Permitted
         Transferee, shall execute a guarantee in favor of CSM guaranteeing the
         payment obligations of such Lucent Sub and (ii) in the case where
         Lucent is the Transferor Corporation and an LTI Sub is the Permitted
         Transferee, shall cause Lucent Technologies Inc. to execute a guarantee
         in favor of CSM guaranteeing the payment obligations of such LTI Sub.

   (c)   If however at any time after a transfer of shares is effected by the
         Transferor Corporation to a Permitted Transferee pursuant to
         sub-paragraph (b) above, the Permitted Transferee ceases, in the case
         of CSM, to be a wholly-owned subsidiary of CSM or, in the case of
         Lucent, ceases to be a Lucent Sub or an LTI Sub, as applicable, , it
         shall be the duty of the



                                       32

                    The Company - CSM - Lucent Confidential
<PAGE>   36

         Transferor Corporation and the Permitted Transferee to notify the Board
         in writing that such event has occurred and both the Transferor
         Corporation and the Permitted Transferee shall jointly and severally
         undertake to procure and ensure that all (and not some only) of the
         shares held by the Permitted Transferee in the capital of the Company
         are, subject to the proviso in sub-paragraph (b) above, forthwith
         transferred to, in the case of CSM, a wholly-owned subsidiary of CSM
         or, in the case of Lucent, a Lucent Sub or an LTI Sub, as applicable.

(D)      Supplementary Provision

         It shall be a condition precedent to the right of any Shareholder to
transfer shares in the capital of the Company that the purchaser or transferee
(if not already bound by the provisions of this Agreement) executes in such form
as may be reasonably required by and agreed by the other Shareholder a deed of
ratification and accession under which the transferee shall agree to be bound by
and shall be entitled to the benefit of this Agreement as if an original party
hereto in place of or in addition to the transferring Shareholder (as the case
may be).

(E)      Change in Control of Shareholder

(i)      Prior to the completion of a change in control of any Shareholder, such
Shareholder (the "Affected Shareholder") shall notify the Company and the other
Shareholder (the "Remaining Shareholder") in writing of such change in control.
In the event the Remaining Shareholder objects to such change in control, it
shall, within 30 days after notice from the Affected Shareholder, be entitled by
notice in writing to the Affected Shareholder (the "Objection Notice") to
require, (a) in the event the Affected Shareholder is CSM, CSM to purchase all
of the shares in the capital of the Company held by Lucent at Fair Market Value
and (b) in the event the Affected Shareholder is Lucent, Lucent to sell to CSM
all of the shares in the capital of the Company held by Lucent at Fair Market
Value. To exercise this right, the Remaining Shareholder shall first make a FMV
Determination Request to the Affected Shareholder (and shall provide a copy
thereof to the Company). Within 30 days of determination of Fair Market Value,
the Remaining Shareholder shall either provide notice to the Affected
Shareholder (and shall provide a copy thereof to the Company) that it has
elected to exercise its rights under this sub-Clause (E) or shall be deemed to
have waived such rights. The delivery of the Objection Notice shall for purposes
of determining Fair Market Value be deemed to be a FMV Determination Request. A
copy of the Objection Notice shall be promptly delivered to the Company. Subject
to any U.S., Singapore or other regulatory filings or notifications and/or the
receipt of any U.S., Singapore or other regulatory approvals or consents, if
any, the completion of the purchase and sale transaction contemplated under this
sub-Clause (E) shall occur simultaneously with or as soon as practicable after
the



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                     The Company - CSM - Lucent Confidential
<PAGE>   37

consummation of the change of control transaction of the Affected Shareholder.
Following the completion of the purchase and sale transaction contemplated under
this sub-Clause (E), Lucent and CSM shall be subject to the ramp down provisions
set forth in Clause 14(H) below.

(iii)    At the completion of the purchase and sale transaction contemplated
under this sub-Clause (E), CSM shall pay the purchase price for the shares of
the Company held by Lucent in the form of cash in Singapore Dollars by wire
transfer of immediately available funds to an account designated in writing by
Lucent against delivery by Lucent of certificates representing all such shares,
free and clear of any liens, claims, charges or encumbrances. Stamp duties in
respect of the transfer of such shares shall be paid by the Affected
Shareholder.

         The restriction on transfer of shares contained in sub-Clause (B) above
and in the Articles shall not apply to such disposal.

(ii)     For the purpose of this sub-Clause (E), a change in control of any
Shareholder shall be deemed to have occurred if the voting control of, or more
than 50 percent. of the issued voting shares of, such Shareholder or of any
holding company of such Shareholder shall be acquired by any Person, or by any
two or more Persons acting in concert, other than by an Affiliate of such
Shareholder. However, a change in control of a Shareholder pursuant to or after
a listing on a stock exchange of the shares in the capital of such Shareholder
or of the holding company of such Shareholder or, in the case of Lucent, the
spin-off or sale of substantially all of Lucent Technologies Inc.'s
Microelectronics business ("ME"), shall not be deemed to be a change in control
of such Shareholder for the purposes of this sub-Clause (E); provided, in the
event substantially all of ME is sold to any of the Persons listed on Schedule
10(E)(ii), which Schedule may be amended from time to time as mutually agreed
upon by Lucent and CSM, such sale shall be deemed to be a change in control for
purposes of this sub-Clause (E). Each of the Shareholders undertakes to notify
the other Shareholders in writing of any change in control of such Shareholder
within ten days of it becoming aware of such a change in control or execution of
any agreement by any Person that would effect such change in control.

11.      FINANCE

         The Company shall be managed with a view toward maintenance by it of a
Debt/Equity Ratio of no greater than 1.5 to 1, that is, for every S$1 of Total
Shareholder Funds, there shall not be more than S$1.50 of External Borrowings.
In the event that the Debt/Equity Ratio exceeds 1.5 to 1, then the General
Manager shall immediately inform the Board of Directors and review his proposal
to re-establish such ratio at the next Board meeting.



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<PAGE>   38

12.      DIVIDEND POLICY

         It is not the intent of the Shareholders for the Company to accumulate
excess retained earnings beyond what is required by the Company Business Plan.
Accordingly, and in furtherance of the foregoing, each Shareholder shall take
such action as may be necessary to procure that the Company shall distribute all
available cash to and among the Shareholders during such times and in such
amounts as contemplated in the Articles.

13.      WARRANTIES AS TO AUTHORITY

         Each of the parties hereby represents and warrants to as of the date
hereof and on the Completion Date, and undertakes with the other parties as
follows:-

         (i)      it is a corporation duly organised and validly existing under
                  the laws of its place of incorporation, and has full power and
                  authority to execute and deliver and perform all of its
                  obligations under this Agreement and any other agreements to
                  be executed by it hereunder;

         (ii)     all actions, conditions and things required to be taken,
                  fulfilled and done (including the obtaining of any necessary
                  consents) in order (a) to enable such party lawfully to enter
                  into, exercise its rights and perform and comply with its
                  obligations under, this Agreement and (b) to ensure that those
                  obligations are legally binding and enforceable have been
                  taken, fulfilled and done;

         (iii)    this Agreement is, and all other agreements and instruments of
                  such party contemplated hereby shall be, the legal, valid and
                  binding agreement of such party, enforceable against such
                  party in accordance with their terms subject as to enforcement
                  of remedies to applicable bankruptcy, insolvency,
                  reorganization and other laws affecting generally the
                  enforcement of the rights of creditors and subject to a
                  court's discretionary authority with respect to the granting
                  of a decree ordering specific performance or other equitable
                  remedies; and

         (iv)     the execution, delivery and performance of this Agreement and
                  all other agreements and instruments of such party
                  contemplated hereby by it will not conflict with any law,
                  order, judgement, decree, rule or regulation of any court,
                  arbitral tribunal or government agency, or any agreement,
                  instrument or



                                       35

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<PAGE>   39

                  indenture to which such party or any of its Affiliates is a
                  party or by which any thereof is bound.

         (v)      There are no actions, suits, investigations or other
                  proceedings pending or threatened, no order, judgment or
                  decree of any court or other governmental agency and no facts
                  or circumstances which could reasonably be expected to give
                  rise to a claim, action, suit or proceeding which could
                  materially and adversely affect the Company or the
                  transactions contemplated hereby and by the Collateral
                  Agreements.

14.      DEFAULT

(A)      Defaults

         The following events shall constitute defaults ("Defaults") under this
Agreement:

         (i)      a Shareholder :

                  (1)      is in breach of any of its representations or
                           warranties set forth in Clause 13 (which breach, if
                           under sub-Clause 13(iv) or (v), has a material
                           adverse effect on the Company or on the transactions
                           contemplated hereby or by the Collateral Documents)
                           or any of its covenants set forth in sub-Clauses
                           3(D), 3(F), 3(G), 4(D), 5(J), 7(B), 10(E), 14(D),
                           14(F) and 17(B);

                  (2)      fails to pay the Company such amounts which such
                           Shareholder is required to pay under the Assured
                           Supply and Demand Agreement with respect to any of
                           its loadings;

                  (3)      is in breach of Article 2.01(a) (Delivery of
                           Information)(in the case of Lucent) or Article
                           2.01(b) (Delivery of Information)(in the case of CSM)
                           of the License and Technology Transfer Agreement, or
                           Clause 10(C) or Clause 10(E) (in the case of CSM) of
                           the CSM Service Support Agreement;

                  (4)      has intentionally breached Article 4.07 (Export) or
                           Article 8.04 (Confidentiality) of the License and
                           Technology Transfer Agreement, Section 28
                           (Confidentiality) of the Assured Supply and Demand
                           Agreement, Section 9 (Compliance with Laws) or Clause
                           16 (Confidentiality) of the CSM Services Support
                           Agreement and such



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                           intentional breach may cause injury (whether
                           financial or otherwise) or have a negative impact
                           (whether financial or otherwise) on the non-breaching
                           Shareholder. In addition, the inability of the
                           Company to occupy the Site for any reason (other than
                           as a result of CSM exercising its legal rights after
                           a material breach (which breach is not cured within
                           the applicable cure period) by the Company under the
                           Sub-Lease Agreement) shall also constitute a Default
                           (the "Lease Default"); provided, in the event CSM is
                           prohibited by law or regulation from (a) leasing or
                           subleasing all of the sites located on CSM's campus
                           (including, without limitation, the Company Fab, Fab
                           2, Fab 3A and Fab 4) to any Person, Lucent shall not
                           have the right to exercise the remedy set forth in
                           sub-Clause 14(D)(i)(4) and the purchase price set
                           forth in sub-Clause 14(D)(i)(3) shall be higher of
                           Fair Market Value and Net Book Value multiplied by
                           Lucent's then Shareholding Percentage and (b)
                           occupying all of the sites on CSM's campus
                           (including, without limitation, the Company Fab, Fab
                           2, Fab 3A and Fab 4), Lucent shall not have the right
                           to exercise any of the remedies set forth in
                           sub-Clause 14(D)(i)(2) and 14(D)(i)(3). For the
                           avoidance of doubt, subject to the foregoing
                           sentence, any Lease Default shall entitle Lucent to
                           exercise any of the remedies set forth in sub-Clause
                           14(D)(i)(1),(3),(4) and (5).

         (ii)     a Shareholder becomes bankrupt or insolvent;

         (iii)    a resolution is passed for the winding up of a Shareholder; or

         (iv)     a proceeding has been instituted seeking a declaration that a
                  Shareholder is bankrupt or insolvent or seeking bankruptcy,
                  arrangement or composition with creditors, liquidation or the
                  appointment of a trustee, receiver or liquidator or analogous
                  procedure under any applicable law and such proceedings stay
                  undismissed and unstayed for a period of 60 days or are
                  consented to by the Shareholder.

        For purposes of this Agreement, the term "Defaulting Shareholder" shall
refer to the Shareholder who has caused the occurrence of any of the Defaults
identified in sub-Clause 14(A) and the term "Non-Defaulting Shareholder" shall
refer to the Shareholder who has not caused such Default.

(B)     Defaults with Opportunity to Remedy

        Upon the occurrence of a Default under paragraph (i) of sub-Clause 14(A)
above, the Non-Defaulting Shareholder may give notice to the Defaulting
Shareholder specifying the



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<PAGE>   41

Default and, in the case of a Default that is capable of remedy, stipulating a
period of not less than 60 days (or to the extent the Non-Defaulting Shareholder
elects to exercise the liquidation remedy set forth in sub-Clause 14(D)(i)(4) or
sub-Clause 14(D)(ii)(3), as applicable, not less than 90 days; provided, any
cure periods to which such Default may already be subject under the Collateral
Agreements shall be counted towards, and included in, the 90 day period set
forth in this sub-Clause 14(B)) during which such Default shall be remedied or
steps taken in pursuance thereof. For purposes of this sub-Clause 14(B), a
Default shall be considered capable of remedy if the Defaulting Shareholder can
comply with the term or condition in question in all respects other than as to
the time of performance. In the case of any genuine disagreement between the
Shareholders as to the facts giving rise to the Default, the provisions of
Clause 19(F) shall apply.

(C)      Events of Default

         An event of Default ("Event of Default") shall be deemed to occur (1)
upon issuance of any notice pursuant to sub-clause (B) above and, if applicable,
the passage of any remedial period provided pursuant to sub-clause (B) above,
and (2) upon occurrence of any Default referred to in paragraph (ii), (iii) or
(iv) of sub-clause (A) above.

(D)      Remedies

(i)      Lucent Remedies

         Upon the occurrence and during the continuation of any Event of Default
         caused by CSM, Lucent, as the Non-Defaulting Shareholder, shall,
         subject to the provisions of this Clause 14, have the following
         remedies, rights and options:

         (1)      Lucent may bring an action at a court of law for the specific
                  performance by CSM of the terms of this Agreement or other
                  applicable Collateral Agreement, as the case may be.

         (2)      Only upon the occurrence and during the continuation of any
                  Event of Default referred to in paragraph (ii), (iii) or (iv)
                  of sub-Clause (A) above, Lucent shall have the right and
                  option (the "Default Call Option") to purchase all, but not
                  less than all, the shares in the capital of the Company held
                  by CSM in accordance with the provisions of sub-Clause (F).
                  The purchase price for such shares in respect of this Default
                  Call Option shall be Fair Market Value.

         (3)      Lucent shall have the right and option (the "Default Put
                  Option") to require CSM to purchase all, but not less than
                  all, the shares in the capital of the Company held by



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<PAGE>   42

                  Lucent in accordance with the provisions of sub-Clause (F).
                  The purchase price for such shares in respect of the Default
                  Put Option shall be the higher of (i) 110% of Fair Market
                  Value and (ii) Net Book Value multiplied by Lucent's then
                  Shareholding Percentage; provided, in the event Lucent
                  exercises (subject as to the enforcement of remedies to
                  applicable bankruptcy, insolvency, reorganization and other
                  similar laws affecting generally the rights of creditors) the
                  Default Put Option as a result of any Event of Default
                  referred to in paragraph (ii), (iii) or (iv) of sub-Clause (A)
                  above, the purchase price for such shares shall be Fair Market
                  Value.

         (4)      Lucent shall have the right and option to cause the Company to
                  sell its assets and properties and effect an orderly
                  liquidation pursuant to sub-Clause (G).

         (5)      Subject to the provisions of Clause 19(F), Lucent shall have
                  such other rights and remedies that are available to it under
                  applicable law or under the Collateral Agreements.

         For the avoidance of doubt, upon the completion of the purchase and
         sale transaction as contemplated under sub-Clause 14(D)(i)(3) above,
         Lucent shall not be entitled to exercise the remedy set forth in
         sub-Clause 14(D)(i)(4) above.

(ii)     CSM Remedies

         Upon the occurrence and during the continuation of any Event of Default
         caused by Lucent, CSM, as the Non-Defaulting Shareholder, shall,
         subject to the provisions of this Clause 14, have the following
         remedies, rights and options:

         (1)      CSM may bring an action at a court of law for the specific
                  performance by Lucent of the terms of this Agreement or other
                  applicable Collateral Agreement, as the case may be.

         (2)      CSM shall have the right and option (the "Default Call
                  Option") to purchase all, but not less than all, the shares in
                  the capital of the Company held by Lucent in accordance with
                  the provisions of sub-Clause (F). The purchase price for such
                  shares in respect of this Default Call Option shall be 90% of
                  Fair Market Value; provided, in the event CSM exercises the
                  Default Call Option as a result of the occurrence and during
                  the continuation of any Event of Default referred to in
                  paragraph (ii), (iii) or (iv) of sub-Clause (A) above, the
                  purchase price for such shares shall be Fair Market Value.



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                     The Company - CSM - Lucent Confidential
<PAGE>   43

         (3)      CSM shall have the right and option to cause the Company to
                  sell its assets and properties and effect an orderly
                  liquidation pursuant to sub-Clause (G).

         (4)      Subject to the provisions of Clause 19(F), CSM shall have such
                  other rights and remedies that are available to it under
                  applicable law or under the Collateral Agreements.

(E)      Waiver of Remedies

         The failure of any party hereof to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of any party thereafter to enforce each and every such provision. No waiver of
any Default or Event of Default shall be held to constitute a waiver of any
other or subsequent Default or Event of Default.

(F)      Put and Call Options

(i)      In order to exercise its Default Call Option or Default Put Option the
         Non-Defaulting Shareholder shall deliver to the Defaulting Shareholder,
         a FMV Determination Request and, if applicable, a Net Book Value
         Determination Request. Upon issuance of such request or requests, the
         parties shall determine Fair Market Value and, if applicable, Net Book
         Value in accordance with the provisions of the respective definitions
         thereof. To the extent applicable, the Non-Defaulting Shareholder may
         require a concurrent determination of Fair Market Value and Net Book
         Value for purposes of both the Default Call Option and Default Put
         Option.

(ii)     Within 30 days of determination of both Fair Market Value and Net Book
         Value, the Non-Defaulting Shareholder shall issue a notice to the
         Defaulting Shareholder specifying whether or not it plans to exercise
         the Default Call Option (to the extent applicable) or Default Put
         Option. In the event that the Non-Defaulting Shareholder provides
         notice of exercise of either option, subject to any U.S., Singapore or
         other regulatory filings or notifications and/or the receipt of any
         U.S., Singapore or other regulatory approvals or consents, if any, the
         completion for the purchase and sale of the shares shall take place 30
         days after the date of provision of such election notice. Failure by
         the Non-Defaulting Shareholder to exercise its Default Call Option or
         Default Put Option shall not prejudice its right to make subsequent FMV
         Determination Requests or Net Book Value Determination Requests or
         subsequently exercise its Default Call Option or Default Put Option so
         long as an Event of Default has occurred and is continuing.



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                     The Company - CSM - Lucent Confidential
<PAGE>   44

(iii)    At the completion of the purchase and sale transaction contemplated
         under this sub-Clause (F), the Defaulting Shareholder shall pay the
         purchase price for the shares of the Company held by the Non-Defaulting
         Shareholder in the form of cash in Singapore Dollars by wire transfer
         of immediately available funds to an account designated in writing by
         the Non-Defaulting Shareholder against delivery by the Non-Defaulting
         Shareholder of certificates representing all such shares, free and
         clear of any liens, claims, charges or encumbrances. Stamp duties in
         respect of the transfer of such shares shall be paid by the Defaulting
         Shareholder.

(iv)     If Lucent is the Non-Defaulting Shareholder and it elects to exercise
         the Default Call Option, CSM shall, if requested by Lucent and subject
         as to the enforcement of remedies to applicable bankruptcy, insolvency,
         reorganization and other similar laws affecting generally the rights of
         creditors, extend for a period not exceeding 3 years (the "Extended
         Period") the CSM Service Support Agreement on terms and conditions in
         effect under the then current CSM Service Support Agreement. In
         addition, CSM covenants and agrees that it will use its best efforts to
         extend the Sub-Lease Agreement for the Extended Period; provided, in
         the event CSM is unable to do so, CSM agrees, subject as to the
         enforcement of remedies to applicable bankruptcy, insolvency,
         reorganization and other similar laws affecting generally the rights of
         creditors, to take all actions as requested by Lucent in order to
         provide Lucent the benefit of having 100% ownership of the Company
         during the Extended Period, which requests may include, without
         limitation, having supply of 100% of the wafer output Lucent would have
         been entitled to from the Company had the Sub-Lease Agreement been
         extended for the Extended Period.

(v)      In the event CSM elects to exercise the Default Call Option as a result
         of the occurrence of an Event of Default referred to paragraph (ii),
         (iii) or (iv) of sub-Clause (A) above, Lucent shall, if requested by
         CSM and subject as to the enforcement of remedies to applicable
         bankruptcy, insolvency, reorganization and other similar laws affecting
         generally the rights of creditors, extend for a period not exceeding 3
         years the Assured Supply and Demand Agreement.

(G)      Sale of Assets and Liquidation of the Company

         Promptly upon notice by the Non-Defaulting Shareholder of its option
under sub-Clause (D)(i)(4) or (D)(ii)(3), as applicable, the parties shall take
and cause the Company to take all such actions as may be appropriate or
necessary to conduct an orderly sale of the Company's assets and properties in a
single transaction or series of related transactions. In connection with any
such sale, the parties and their respective Affiliates may not, directly or
indirectly, bid to purchase or otherwise acquire any of the assets and
properties of the Company. The proceeds of such sale shall



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                     The Company - CSM - Lucent Confidential
<PAGE>   45
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


be used to satisfy the liabilities of the Company (including any liabilities to
employees) and, after making appropriate provisions as may be required under
applicable law, shall be distributed to the parties as liquidating distributions
under the Articles and applicable law. Thereafter, the parties shall take and
cause the Company to take all such actions as may be appropriate or necessary
for the winding up and dissolution of the Company.

(H)      Ramp Down Upon Change of Control, Default and Termination

         In the event CSM purchases all of the shares in the capital of the
Company held by Lucent pursuant to Clause 10(E) (Change of Control), Clause
14(D) (Defaults) or Clause 17(A)(ii) (Early Termination), Lucent shall deliver
to CSM a "Ramp Down Notice" (as defined) on or within 45 days prior to the
"Change of Control Closing," the "Default Closing" or the "Termination Closing"
(as defined). For purposes of this Agreement, the terms:

(a)      "Ramp Down Notice" shall mean a written notice setting forth Lucent's
         request to purchase wafers from the Company or CSM over any period
         following the Change of Control Closing, the Default Closing or the
         Termination Closing, as applicable, and the terms and conditions under
         which such wafers shall be purchased; provided, (1) the ramp down may
         be linear (progressive) or non-linear (non-progressive); provided, if
         CSM and Lucent cannot mutually agree, then the ramp down must be
         linear, (2) the number of wafers requested may be any amount; provided,
         if CSM and Lucent cannot mutually agree, the number of wafers requested
         shall be the average loadings of Lucent during the financial quarter
         immediately prior to the occurrence of the change of control, the Event
         of Default or the termination, as applicable, and (3) CSM shall have
         the right to require the ramp down period to be for (x) a minimum of
         ******* from the Change of Control Closing, the Default Closing or the
         Termination Closing in the event the ramp down period selected by
         Lucent is for less than *******, (y) a maximum of ********* from the
         Change of Control Closing or the Default Closing, as applicable, in the
         event the ramp down period selected by Lucent is in excess of *******
         and (z) a maximum of ******** from the Termination Closing in the event
         the ramp down period selected by Lucent is in excess of ********;

(b)      "Change of Control Completion" shall mean the completion of the
         purchase and sale of the shares in the capital of the Company held by
         Lucent pursuant to Clause 10(E) which completion shall take as
         contemplated under Clause 10(E);

(c)      "Default Completion" shall mean the completion of the purchase sale of
         the shares in the capital of the Company held by Lucent pursuant to
         Clause 14(D) which completion shall take place as contemplated under
         Clause 14(F); and



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                     The Company - CSM - Lucent Confidential
<PAGE>   46

(d)      "Termination Completion" shall mean the completion of the purchase sale
         of the shares in the capital of the Company held by Lucent pursuant to
         Clause 17(B) which completion shall take place as contemplated under
         Clause 17(B).

Within 15 days after receipt of the Ramp Down Notice, CSM shall notify Lucent as
to whether CSM accepts all of the terms and conditions set out in the Ramp Down
Notice or respond in writing as to any of its objections. If CSM raises any such
objections, the parties shall negotiate in good faith to either (a) make the
ramp down wafer purchases be subject to, if still effective, the Manufacturing
Agreement, dated as of January 1, 1995, as amended to date between Lucent
Technologies Inc. and CSM (the "Manufacturing Agreement") or (b) agree on a new
mutually acceptable wafer purchase agreement (the "New Purchase Agreement")
which shall be substantially similar to the Manufacturing Agreement and within
the parameters set forth in this Clause 14(H) prior to the Change of Control
Completion, the Default Completion or the Termination Completion; provided, the
parties acknowledge that neither the Change of Control Completion, the Default
Completion nor the Termination Completion may occur without the ramp down wafer
purchases becoming either subject to the Manufacturing Agreement or the parties
entering into a New Purchase Agreement.

15.      GENERAL OBLIGATIONS OF SHAREHOLDERS

         Each Shareholder shall take all commercially reasonable steps necessary
on its part to give full effect to the provisions of this Agreement and to
procure (so far as it is able by the exercise of voting rights or otherwise so
to do) that the Company and the Directors shall perform and observe the
provisions of this Agreement.

16.      PREVALENCE OF AGREEMENT

         In the event of any inconsistency or conflict between the provisions of
this Agreement and the provisions of the Articles, the provisions of this
Agreement shall as between the Shareholders prevail.

17.      DURATION AND TERMINATION

(A)      Duration



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                     The Company - CSM - Lucent Confidential
<PAGE>   47

         This Agreement shall take effect from the date hereof and, unless
otherwise agreed to by the parties, shall not terminate until the earliest of
(i) September 1, 1998 only if the Completion Date has not occurred prior to such
date; and (ii) two years from the date specified in a written termination notice
(the "Termination Notice") from either Shareholder to the Company and to the
other Shareholder provided that such notice shall not be delivered prior to the
eighth anniversary of the Completion Date (the effective date of such
termination shall be referred to as the "Termination Date"). In addition, this
Agreement shall also be deemed terminated upon the completion of the purchase
and sale transactions contemplated under Clause 10(E) and Clause 14(D).

(B)      Rights in Connection With Expiration of the Term

(i)      Within 60 days after receipt by Lucent of the Termination Notice from
CSM or within 45 days after delivery by Lucent of the Termination Notice to CSM,
Lucent shall notify CSM in writing whether Lucent elects to (i) relinquish all
of Lucent's rights set forth in Clause 5(B) and 5(I) and reduce its rights as
shareholder of the Company to the effect that it may elect only a minority of
the members of the Board (notice of such election shall be referred to as a
"Relinquishment Notice"), in which event the parties shall execute an amendment
to this Agreement to effect the foregoing within one week of the Relinquishment
Notice and the parties shall take all commercially reasonable actions to
effectuate such amendment, or (ii) continue to exercise its rights set forth in
Clause 5(B) and 5(I) and all of its rights as shareholder of the Company (notice
of such election shall be referred to as a "Non-Relinquishment Notice"). For
purposes of this Clause 17 and for purposes of determining Fair Market Value and
Net Book Value as of the FMV Request Date or Net Book Value Request Date, the
delivery of the Termination Notice shall be deemed to be the delivery of a FMV
Determination Request and a Net Book Value Determination Request and, for
purposes of determining Fair Market Value and Net Book Value as of the
Termination Date, a FMV Determination Request or Net Book Value Determination
Request, as applicable, shall be deemed to have been issued as of the
Termination Date. Upon delivery of the Termination Notice, the following shall
apply :

         (a)      In the event CSM has delivered the Termination Notice and
                  Lucent has delivered a Relinquishment Notice, CSM shall
                  purchase from Lucent, and Lucent shall sell to CSM, all, but
                  not less than all, of the shares in the capital of the Company
                  held by Lucent at a purchase price equal to the higher of:

                  (i)      Fair Market Value as of the FMV Request Date;




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                     The Company - CSM - Lucent Confidential
<PAGE>   48


                  (ii)     Net Book Value as of the Net Book Value Request Date
                           multiplied by Lucent's then Shareholding Percentage;
                           and

                  (iii)    Fair Market Value as of the FMV Request Date plus 33%
                           of the increase, if any, in Fair Market Value of all
                           of the shares in the capital of the Company as of the
                           Termination Date from Fair Market Value of all of the
                           shares in the capital of the Company as of the FMV
                           Request Date

                  All costs in determining Fair Market Value and Net Book Value
                  pursuant to this sub-Clause 17(B)(i)(a) shall be borne by CSM.
                  Subject to any U.S., Singapore, or other regulatory filings or
                  notifications and/or the receipt of any U.S., Singapore or
                  other regulatory approvals or consents, if any, the completion
                  of the purchase and sale of such shares shall take place 30
                  days after final determination of Fair Market Value and Net
                  Book Value as of the Termination Date.

         (b)      In the event CSM has delivered the Termination Notice and
                  Lucent has delivered to CSM a Non-Relinquishment Notice, CSM
                  shall purchase from Lucent, and Lucent shall sell to CSM, all,
                  but not less than all, of the shares in the capital of the
                  Company held by Lucent at a purchase price equal to the higher
                  of;

                  (i)      Fair Market Value as of the Termination Date; and

                  (ii)     Net Book Value as of the Termination Date multiplied
                           by Lucent's then Shareholding Percentage.

                  All costs in determining Fair Market Value and Net Book Value
                  pursuant to this sub-Clause 17(B)(ii)(b) shall be borne by
                  CSM. Subject to any U.S., Singapore or other regulatory
                  filings or notifications and/or the receipt of any U.S.,
                  Singapore or other regulatory approvals or consents, if any,
                  the completion of the purchase and sale of such shares shall
                  take place 30 days after final determination of Fair Market
                  Value and Net Book Value as of the Termination Date.

         (c)      In the event Lucent has delivered the Termination Notice and
                  Lucent has also delivered a Relinquishment Notice, CSM shall
                  purchase from Lucent, and Lucent shall sell to CSM, all, but
                  not less than all, of the shares in the capital of the Company
                  held by Lucent at a purchase price equal to the higher of:

                  (i)      Fair Market Value as of the FMV Request Date; and



                                       45

                     The Company - CSM - Lucent Confidential
<PAGE>   49

                  (ii)     Fair Market Value as of the FMV Request Date plus 33%
                           of the increase, if any, in Fair Market Value of all
                           of the shares in the capital of the Company as of the
                           Termination Date from Fair Market Value of all of the
                           shares in the capital of the Company as of the FMV
                           Request Date.

         All costs in determining Fair Market Value pursuant to this sub-Clause
         17(B)(ii)(c) shall be borne by Lucent. Subject to any U.S., Singapore
         or other regulatory filings or notifications and/or the receipt of any
         U.S., Singapore or other regulatory approvals or consents, if any, the
         completion of the purchase and sale of such shares shall take place 30
         days after final determination of Fair Market Value as of the
         Termination Date.

         (d)      In the event Lucent has delivered the Termination Notice and
                  Lucent has also delivered a Non-Relinquishment Notice, CSM
                  shall purchase from Lucent, and Lucent shall sell to CSM, all,
                  but not less than all, of the shares in the capital of the
                  Company held by Lucent at Fair Market Value as of the
                  Termination Date. All costs in determining Fair Market Value
                  pursuant to this sub-Clause 17(B)(ii)(d) shall be borne by
                  Lucent. Subject to any U.S., Singapore or other regulatory
                  filings or notifications and/or the receipt of any U.S.,
                  Singapore or other regulatory approvals or consents, if any,
                  the completion of the purchase and sale of such shares shall
                  take place 30 days after final determination of Fair Market
                  Value as of the Termination Date.

(ii)     At any of the applicable completions contemplated under Sub-Clause
17(B)(i) above, CSM shall pay the purchase price for the shares of the Company
held by Lucent in the form of cash in Singapore Dollars by wire transfer of
immediately available funds to an account designated in writing by Lucent
against delivery by Lucent of certificates representing all such shares, free
and clear of any liens, claims, charges or encumbrances. Stamp duties in respect
of the transfer of such shares shall be paid by the Shareholder who bears the
costs of determining Fair Market Value and Net Book Value (as applicable) as set
out above.

(iii)    Following the Termination Date, the parties shall be subject to the
ramp down provisions set forth in Clause 14(H) above.



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                     The Company - CSM - Lucent Confidential
<PAGE>   50

(C)      Effect of Expiration or Termination of Term

         Upon the expiration or earlier termination of this Agreement, the
         parties shall have no further obligations under this Agreement.
         Notwithstanding the generality of the foregoing, (1) the parties shall
         continue to have the liability and the obligation to fulfill their
         obligations under this Agreement that have matured on or prior to the
         date of expiration or termination of this Agreement and (2) the
         provisions of Clauses 6(D), 7(A)(vi), 14(D), 14(F), 14(G), 14(H),
         17(B), 17(C), 18, 19(A), 19(B), 19(F) and 19(G) shall survive any such
         expiration or termination of this Agreement.

18.      CONFIDENTIAL INFORMATION

(A)      Communications Confidential

         All communications between the Company and the Shareholders or any of
them and all information and other material supplied to or received by any of
them from any one or more of the others in connection with the performance of
this Agreement or the Collateral Agreements which is either marked
"confidential" or is by its nature intended to be exclusively for the knowledge
of the recipient alone in connection with this Agreement or the Collateral
Agreements, or to be used by the recipient only for the benefit of the Company,
any information concerning the business transactions or the financial
arrangements, including without limitation, trade secrets, customer lists,
know-how, designs, processes, drawings and specifications, ("Confidential
Information") of the Company or of the Shareholders or any of them, or of any
person with whom any of them is in a confidential relationship with regard to
the matter in question coming to the knowledge of the recipient shall be kept
confidential by the recipient (including to the exclusion of the non-disclosing
party) and shall be used by the recipient solely and exclusively for achieving
the purposes of this Agreement during the terms of this Agreement, and for a
period of five (5) years following the termination thereof. Neither Shareholder
shall disclose to the other competitively sensitive information concerning
either sales, transfer or use of wafers (i.e., pricing, cost, volume, capacity
and customer information) except as reasonably required under this Agreement
relating to any wafer fabrication facility operated, managed or controlled by
such Shareholder or in which such Shareholder has a non-controlling interest or
role. At the expiration or termination of this Agreement, written Confidential
Information will be returned to the party supplying such information or
destroyed immediately upon the request of such party and no copies, extracts or
other reproductions shall be retained by recipient. All documents, memoranda,
notes and other writings whatsoever prepared by recipient which contain the
Confidential Information shall be returned to such party or destroyed at such
party's request. Notwithstanding the foregoing, information shall not be deemed
confidential and the recipient shall have no obligation with respect to any such
information which was in the recipient's possession before receipt from the
discloser; which are rightfully received by the recipient without restriction
from a third party



                                       47

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<PAGE>   51

without a duty of confidentiality on the third party; which are independently
developed by recipient; or which are in the public domain through no act or
default on the part of the recipient, its Affiliates its servants and/or agents,
whereupon, to the extent that it is public, this obligation shall cease. In
addition, in the event a recipient becomes compelled by law or regulatory
authority to disclose any of the Confidential Information, the recipient shall
provide the discloser with prompt written notice so that the discloser may seek
protective order or other appropriate remedy or waive compliance with the
provisions of this Clause 18. In the event that such protective order or other
remedy is not obtained, or that the discloser waives compliance with the
provisions of this Clause 18, the recipient shall furnish only that portion of
the Confidential Information which it is required by law or regulatory authority
to disclose and will exercise its commercially reasonable efforts to assure that
confidential treatment will be accorded the Confidential Information.

(B)      Shareholders' Obligations

         The Shareholders shall procure the observance of the abovementioned
restrictions by the Company and shall take all reasonable steps to minimise the
risk of disclosure of Confidential Information, by ensuring that only their
respective employees with a need to know, and directors and those of the Company
whose duties will require them to possess any of such information shall have
access thereto, and that they shall be instructed to treat the same as
confidential. The Shareholders shall in addition procure that such employees of
the Company whose duties will require them to possess, or have access to,
confidential information, shall sign confidentiality agreements with the Company
respecting the confidentiality of such information.

19.      NOTICES AND GENERAL

(A)      Notices

         All notices, demands or other communications required or permitted to
be given or made hereunder shall be in writing and delivered personally or sent
by prepaid registered post (by air-mail if to or from an address outside
Singapore) with recorded delivery, or by facsimile transmission (provided that
the receipt of such facsimile transmission is confirmed by the dispatch of a
hard copy of the facsimile sent immediately thereafter by prepaid registered
post) addressed to the intended recipient thereof at its address or at its
facsimile number set out in this Agreement (or to such other address or
facsimile number as a party to this Agreement may from time to time duly notify
the others in writing). Any such notice, demand or communication shall be deemed
to have been duly served, if given or made by facsimile, immediately at the time
of dispatch (provided that the receipt of such facsimile transmission is
confirmed by the dispatch of a hard copy of the facsimile sent immediately
thereafter by prepaid registered post) or, if given or made by letter,
immediately if



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delivered personally or 48 hours after posting or, if given or made by air-mail,
ten days after posting and in proving the same it shall be sufficient to show
that personal delivery was made or that the envelope containing such notice was
duly addressed, stamped and posted. The address and facsimile numbers of the
parties for the purpose of this Agreement are:-

         CSM        :     CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No.     :       (65) 362 2909
                          Attention         :       Legal Department



         Lucent     :     LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD
                          3, Kallang Sector, Kolam Ayer Industrial Park
                          Singapore 349278

                          Facsimile No.     :       (65) 840-2560
                          Attention         :       Managing Director



         with a copy to:  LUCENT TECHNOLOGIES INC.

                          Microelectronics Division
                          Two Oak Way
                          Berkeley Heights, NJ 07922-2727

                          Facsimile No.  001 908 508-8398
                          Attention:  Legal Department



         The Company:     SILICON MANUFACTURING PARTNERS PTE LTD

                          c/o Singapore Technologies Pte Ltd
                          89, Science Park Drive
                          #02-09/12
                          The Rutherford
                          Singapore Science Park
                          Singapore 118261

                          Facsimile No. :  (65) 872-6390



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                     The Company - CSM - Lucent Confidential
<PAGE>   53

                          Attention         :   The Company Secretary
                                                Corporate Secretariat Department

(B)      Remedies

         No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise available at
law, in equity, by statute or otherwise, and each and every other remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity, by statute or otherwise. The
election of any one or more of such remedies by any of the Shareholders shall
not constitute a waiver by such Shareholder of the right to pursue any other
available remedies. No failure on the part of any Shareholder to exercise and no
delay on the part of any Shareholder in exercising any right hereunder will
operate as a release or waiver thereof, nor will any single or partial exercise
of any right under this Agreement preclude any other or further exercise of it.

(C)      Severance

         If any provision of this Agreement or part thereof is rendered void,
illegal or unenforceable by any legislation to which it is subject, it shall be
rendered void, illegal or unenforceable to that extent and it shall in no way
affect or prejudice the enforceability of the remainder of such provision or the
other provisions of this Agreement.

(D)      Entire Agreement

         This Agreement embodies all the terms and conditions agreed upon
between the Shareholders as to the subject matter of this Agreement and
supersedes and cancels in all respects all previous agreements and undertakings,
if any, between the Shareholders with respect to the subject matter hereof,
whether such be written or oral. Any amendment to or variation of this Agreement
shall be effective only if it is in writing and duly signed and confirmed in
writing by the authorised representative of each Shareholder.

(E)      Governing Law

         This Agreement shall be governed by, and construed in accordance with,
the laws of Singapore.



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<PAGE>   54

(F)      Dispute Resolution and Arbitration

(i)      In case any dispute or difference shall arise among the Shareholders as
to the construction of this Agreement or as to any matter or thing of whatsoever
nature arising hereunder or in connection herewith, including any question
regarding its existence, validity or termination, such dispute or difference
shall promptly be submitted to a committee comprised of one Board member from
each of the Shareholders. If such committee is unable to resolve such dispute
within 21 days of such submission, it shall submit the dispute to a committee
comprised of one senior manager from each Shareholder, being in the case of:-

         CSM        :    the President

         Lucent     :    the Customer Satisfaction and Business Development
                         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 comprised of one senior
officer from each Shareholder being in the case of:-

         CSM        :    the Chairman of the Board of CSM

         Lucent     :    Vice President, Integrated Circuits Division of
                         Lucent Technologies Inc.

(ii)     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 Shareholders (the "Arbitrator"). If the Shareholders fail to
agree on an Arbitrator within 14 days after one Shareholder has given to the
other Shareholder a written request to concur in the appointment of an
Arbitrator, a single arbitrator (the "ICC Arbitrator") shall be appointed on the
request of any Shareholder 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 Conciliation and Arbitration of the
International Chamber of Commerce as presently in force by which the
Shareholders 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 Lucent, CSM
and the Company. Each of Lucent and CSM shall use its commercially reasonable
efforts to comply with all of such requests for information. Lucent and CSM
shall jointly cause the Company to comply with all of the Arbitrator's and the
ICC Arbitrator's requests for information. The place of arbitration shall be
London, England 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,



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                     The Company - CSM - Lucent Confidential
<PAGE>   55

requires any hearings or proceedings with respect to such arbitration, within 15
days after the completion of such hearings or proceedings.

(G)      Announcements

         None of the parties shall divulge to any third party (except to their
respective professional advisers) any specific terms of this Agreement, or any
other agreement referred to in, or executed in connection with, this Agreement,
without the prior agreement of the other parties in writing except as and to the
extent that any such party shall be so obligated by law or pursuant to the
regulations of a stock exchange or other regulatory body in which case the other
party shall be so advised and the parties shall use their best efforts to cause
a mutually agreeable release or statement to be made. In the event that this
Agreement or any of the Collateral Agreements are proposed to be disclosed to
any such body in whole or in part the parties agree to fully cooperate to limit
the scope of any such disclosure and to obtain an appropriate protective order
if reasonably practicable.

(H)      No Right To Bind Other Shareholders

         No Shareholder has the power or the right to bind, commit or pledge the
credit of the other Shareholders or the Company.

(I)      Costs

         Each Shareholder shall bear its own legal and other professional costs
and expenses incurred by it in the negotiation and preparation of this
Agreement.

(J)      Assignment

         Except to the extent permitted under Clause 10 hereof, the rights and
obligations under this Agreement may not be assigned by any party to any Person.

(K)      No Third Party Beneficiaries

         Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any Person other than the parties hereto, the Company and
their respective successors and permitted assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained.



                                       52

                     The Company - CSM - Lucent Confidential
<PAGE>   56

(L)      US Tax Election

         CSM acknowledges that Lucent may, but shall not be required to, treat
the Company as a partnership for United States income tax purposes. If requested
by Lucent, the parties shall cause the Company to execute Treasury Form 8832 (or
any subsequent form(s) designated by the United States government) to classify
the Company as a partnership for U.S. tax purposes. In no event shall CSM or the
Company be required to take any action or execute any such form(s) if such
action will increase the tax liability of CSM or the Company. CSM and the
Company shall consult with Lucent prior to taking any position or making any
filing which relate to the Company with any United States federal or state
taxing authority. All out of pocket costs and expenses incurred by CSM or the
Company in complying with Lucent's requests under this Clause shall be borne by
Lucent; provided, that in the case of fees and expenses of any tax or legal
advisors or other professional consultants, such fees and expenses shall be
borne by Lucent only if the retention of such advisors or consultants has been
pre-approved by Lucent. In the event Lucent elects to treat the Company as a
partnership for U.S. income tax purposes, Lucent hereby agrees to enter into the
Tax Indemnity Agreement prior to the Company executing Treasury Form 8832 (or
any subsequent form(s) designated by the United States government) .

(M)      Securities Filing by CSM

In the event that, in connection with a registration or listing of its
securities with any securities commission, exchange or other securities
regulatory or monitoring body, CSM is required under any applicable securities
laws or listing rules to provide to or to file with any securities commission,
exchange or other securities regulatory or monitoring body, any information with
respect to the Company, its business, this Agreement or any of the Collateral
Agreements, CSM shall provide prior notice of the same to Lucent. If requested
by Lucent, CSM shall file with the applicable securities authorities a request
for non-disclosure to the public of sensitive information with respect to the
Company or its business or contained in this Agreement or any of the Collateral
Agreements and shall take such steps as may reasonably be requested by Lucent to
obtain such confidential treatment; provided, that if such authorities refuse to
grant such confidential treatment or fail to respond which will delay the
registration statement or the offering document from going effective, CSM shall
be permitted to provide or file only that portion of such information that is
required under applicable securities laws or listing rules.



                                       53

                     The Company - CSM - Lucent Confidential
<PAGE>   57

(N)      Waiver of Immunity

         Each of CSM, Lucent and the Company hereby irrevocably agrees not to
claim and irrevocably waives any claim or right which it has or may hereafter
acquire under any law, regulation, treaty or international agreement to immunity
for itself, or any of its revenues, assets or properties or those of any of its
agencies or instrumentalities from the jurisdiction of any court (including but
not limited to any court of the United States of America or the State of New
Jersey) with respect to the enforcement of an arbitral award rendered pursuant
to Clause 19(F).

(O)      Assignment of Purchase Orders

         Each Shareholder acknowledges and agrees that on or prior to the
Completion Date, such Shareholder shall be required to assign to the Company all
purchase orders placed in support of the Company and contemplated under the
Company Business Plan which are in the name of such Shareholder or any of its
Affiliates.

(P)      Counterparts

         This Agreement may be entered into in any number of counterparts, all
of which taken together shall constitute one and the same instrument. Any party
may enter into this Agreement by signing any such counterpart.

(O)     Settlements

        Notwithstanding any provision contained in this Agreement, prior to the
effectiveness of any termination of this Agreement or the completion of any of
the purchase and sale transactions contemplated in this Agreement, the
Shareholders, in its individual capacity and collectively, shall cause the
Company to take into account the final settlement of all accrued dividends and
loans from the Company to the Shareholders. The amount of loans, if any, from
the Company to a Shareholder and any accrued dividends allocated to such
Shareholder shall be determined and the amount so determined shall be netted
against each other. Any net settlement balance shall be payable by the Company
to a Shareholder or by a Shareholder to the Company, as applicable, to the
extent such amounts (as well as any retained earnings as determined pursuant to
the dividend policy set forth in the Articles) are not already taken into
account in any Fair Market Value or Net Book Value calculation, as applicable,
in connection with such termination or purchase and sale transaction.




                                       54

                     The Company - CSM - Lucent Confidential
<PAGE>   58

S C H E D U L E   A


                              COLLATERAL AGREEMENTS

1.       Agreement to be made between CSM, Lucent and the Company relating to
         the Company's capacity and loading arrangements in the form of Appendix
         B (the "Assured Supply and Demand Agreement").

2.       Agreement to be made between CSM, Lucent and the Company relating to
         the license of certain intellectual property rights related to the
         manufacture of semiconductor wafers and integrated circuits in the form
         of Appendix C (the "License and Technology Transfer Agreement").

3.       Agreement to be made between CSM and the Company relating to the
         provision of certain services by CSM to the Company in the form of
         Appendix D (the "CSM Service Support Agreement").

4.       Agreement to be made between CSM and the Company relating to the
         sub-lease of a portion of the building and facility systems located on
         the Site (the "Sub-Lease Agreement").

5.       Agreement which may be made between CSM and Lucent relating to certain
         tax indemnities in the form of Appendix G (the "Tax Indemnity
         Agreement").







                                       55

                     The Company - CSM - Lucent Confidential
<PAGE>   59

S C H E D U L E  5(L)



                                Certain Employees












                                       56

                     The Company - CSM - Lucent Confidential
<PAGE>   60
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


S C H E D U L E  7(B)(ii)



                               SCHEDULED COMPANIES

                                      ****














THE ABOVE LIST MAY FROM TIME TO TIME BE AMENDED UPON THE MUTUAL AGREEMENT OF CSM
AND LUCENT.



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                     The Company - CSM - Lucent Confidential
<PAGE>   61
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


S C H E D U L E  7(C)


                           PARTNERSHIP FEE ADJUSTMENTS


A)       Cost Reductions/Increases: The Partnership Fee will be increased by ***
for every *** percent reduction of the cost per wafer relative to the latest
approved Company Business Plan. The Partnership Fee will be reduced by *** for
each *** percent that the cost per wafer is higher than the latest approved
Company Business Plan unless the cost per wafer is higher by more than ***
percent in which case the Partnership Fee will be reduced by **** plus an
additional *** for each *** percent beyond the *** percent. These adjustments
will be made for each calendar quarter beginning with the first calendar quarter
whose output is above *** of the planned maximum capacity of the Company. The
costs per wafers will be calculated based on the costs of Lucent wafers as set
out in the latest approved Company Business Plan.

B)       Yield Variations: The Partnership Fee will also be increased (or
reduced, as applicable) by variations in sort yield relative to plan for Lucent
wafers. The cost benefit (or penalty, as applicable) will be calculated by
*******************************************************************************
***************************************************************************. If
the actual weighted average sort yield falls within the range of *********** of
the yield specified in the latest approved Company Business Plan for a given
quarter, there will be no adjustment to the Partnership Fee. If the actual
weighted average sort yield exceeds **** of the yield specified in the latest
approved Company Business Plan for a given quarter, the Partnership Fee will be
increased by *** for each ** increase in the actual weighted average sort yield
exceeding *****. If the actual weighted average sort yield is less than **** of
the yield specified in the latest approved Company Business Plan for a given
quarter, the Partnership Fee will be reduced by *** for each ** decrease in the
actual average sort yield less than ***. These adjustments will be done
quarterly and will begin ***********************************************.

C)       Cycle Time: The Partnership Fee will also be adjusted to reflect cycle
time performance. The Partnership Fee will be increased (decreased) by *** for
each *** day per mask level reduction (increase) weighted average cycle time for
Lucent wafers relative to the latest approved Company Business Plan. This
adjustment will be made quarterly and begin ***********************************
************. The increase due to this adjustment, however, will be limited to a
maximum of **** unless the output in that quarter is greater than *** of the
planned maximum capacity of the Company and also greater than *** of the planned
capacity for that quarter (as per the latest approved Company Business Plan) in
which case the Partnership Fee will not be limited to ****.

D)       Computation of Cost: The cost per wafer shall be calculated by dividing
the total cost incurred by the Company in that quarter in manufacturing the
wafers shipped by the aggregate number of wafers shipped for that quarter
adjusted to take into account deviations in cycle time relative to the latest
approved Company Business Plan irrespective of the technologies used. The



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                     The Company - CSM - Lucent Confidential
<PAGE>   62
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


total cost incurred by the Company in manufacturing the wafers shipped shall
include overheads and costs payable by the Company to CSM under the CSM Service
Support Agreement and any costs payable to any other party, and shall exclude
any currency exchange gain/loss.

E)       The Partnership Fee adjustment set out in sub-Clauses (A), (B) and (C)
above shall not be made (i.e., the Partnership Fee shall remain at ****) where
the deviation of the cost, sort yield or cycle time performance from plan are
due to:

         (i)      circumstances beyond the commercially reasonable control of
                  the Company as determined by the Board (such as, without
                  limitation, there is a fire or accident in the Company Fab);

         (ii)     the occurrence of any Force Majeure Condition (as described in
                  the Assured Supply and Demand Agreement);

         (iii)    approved deviations from the latest approved Company Business
                  Plan made by the parties during the quarter (such as, without
                  limitation, change of technology mix outside of the agreed
                  levels, purchase of additional equipment, etc.).

F)       All references to a "quarter" and "quarterly" above shall mean a
calendar quarter (i.e., a period of three months commencing with January, April,
July and October of each calendar year). CSM shall at the end of each quarter
send an invoice to Lucent for such Partnership Fee for that quarter and Lucent
shall effect payment of such invoice within 30 days of the date of the invoice
to an account designated by CSM.






                                       59

                     The Company - CSM - Lucent Confidential
<PAGE>   63

S C H E D U L E  7(D)


                              INSURANCE PRINCIPLES



1.       It is the current intention of Lucent and/or any of its affiliates
         (collectively, "Lucent") to be responsible for covering under its
         insurance policies the contents (equipment) and all operations
         (including business interruption, transit and general liability) of the
         Company. It is the current intention of CSM to be responsible for
         covering under its insurance policies the "real property" of the
         building and clean room (including the boiler and machinery) to be
         leased to the Company. Notwithstanding the foregoing, the ultimate
         responsibilities of the parties shall be subject to mutual agreement
         between Lucent and CSM.

2.       Until such time when the "real property" and the clean room are leased
         to the Company, CSM shall, at its own cost, insure such "real property"
         and clean room (including the boiler and machinery).

3.       Lucent and CSM shall discuss further defining the division of
         responsibility on the areas of coverage under property and general
         liability policies with respect to common areas.

4.       On and after the Completion Date, Lucent shall, if requested by CSM,
         permit the Company to participate in Lucent's insurance programs.
         Lucent premium allocations will be made based upon the exposed values
         reported as they are added or phased into operation.

5.       Lucent and CSM shall use commercially reasonable efforts to have each
         of their respective insurers waive any "subrogation" rights against
         each other's insurers.

6.       Lucent and CSM shall use commercially reasonable efforts to have each
         of their respective insurers be subject to "binding arbitration" in the
         event of any dispute between each other's insurers.

7.       All premium allocations under CSM's insurance policies and Lucent's
         insurance policies covering the Company shall be mutually agreed.

8.       Lucent and CSM shall mutually agree how employees of the Company will
         be covered for Workers' Compensation.

9.       Lucent and CSM shall require the Company to obtain Automobile Liability
         insurance on any vehicles leased or purchased on and after the
         Completion Date.

10.      Lucent and CSM agree that (a) all insurance policies shall be
         consistent with all applicable insurance laws in Singapore, and (b) the
         CSM Service Support Agreement shall be consistent with and reflect
         Lucent's and CSM's agreements with respect to insurance coverages,
         premium allocations and reimbursement obligations of the Company.




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<PAGE>   64
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

S C H E D U L E  10(E)(ii)



                              RESTRICTED PURCHASERS

                                      ****












THE ABOVE LIST MAY FROM TIME TO TIME BE AMENDED UPON THE MUTUAL AGREEMENT OF CSM
AND LUCENT.




                                       61

                     The Company - CSM - Lucent Confidential
<PAGE>   65
                          JOINT VENTURE BUSINESS PLAN

1.   EXECUTIVE SUMMARY

     LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD. a Singapore Corporation
     ("LUCENT") and Charter Semiconductor Manufacturing Ltd, a Singapore
     Corporation ("CSM") are forming a Joint Venture private company limited by
     shares (the "Company") to conduct manufacturing operations. The production
     facilities will be in Singapore and will consist of an existing building,
     support facilities and clean room ("FAB 3B") owned by CSM, and
     manufacturing equipment owned by the Company. The output of the Company
     will be untested silicon, semiconductor wafers to be distributed between
     LUCENT and CSM in proportion to their ownership interest. Manufacturing
     operations will be conducted using both LUCENT and CSM existing and
     successor process technologies.

2.   STRUCTURE OF THE JOINT VENTURE

     The Company will be structured as a private company limited by shares with
     LUCENT holding 51% of the issued share capital and CSM holding 49% of the
     issued share capital. The Company will manage and operate a semiconductor
     wafer production facility ("FAB 3B") located in Woodlands Industrial Park,
     Singapore. Lucent will invest approximately $217 million Sing in the
     Company and CSM will invest approximately $208 million Sing in the Company
     to purchase new CMOS semiconductor manufacturing equipment for the
     Company. Additional funding for equipment purchases will be funded by
     commercial debt to the Company and reimbursed with Company cash flow
     resulting from wafer sales. The operating costs and output of the Company
     will be in proportion to the shareholding percentage of the shareholders as
     outlined in the Assured Supply and Demand Agreement (the "ASADA").

3.   STRATEGY

     3.1  Background and History

          LUCENT and CSM want to expand manufacturing capacity and take
          advantage of their world class process and manufacturing know-how,
          maximize the use of existing and future manufacturing assets and gain
          the benefits of a high volume semiconductor operation.

     3.2  Mission Statement

          The Partnership will manufacture silicon, semiconductor wafers for the
          benefit of LUCENT and CSM at the lowest possible manufacturing costs,
          utilizing industry competitive process and manufacturing logistics
          technology.

                                                                               1




<PAGE>   66
       REDACTED

                                                CONFIDENTIAL TREATMENT REQUESTED
                                                --------------------------------
                                                The asterisked portions of this
                                                document have been omitted and
                                                are filed separately with the
                                                Securities and Exchange
                                                Commission


       3.3    Short Term Strategy

              CSM will complete construction of FAB 3B, and hire a qualified
              management and operations team. The team will manage the
              installation and qualification of the equipment and process
              technologies. The management team will also hire and train a
              qualified work force and establish an entrepreneurial work
              environment to produce low cost wafers for the benefit of the
              shareholders.

       3.4    Long Term Strategy

              The Company will introduce more advanced process technologies
              developed by LUCENT and CSM, on a timely basis, to meet the
              shareholders' market needs. All elements of spending,
              manufacturing, quality, reliability and process flow within each
              process technology will constantly be examined to achieve
              improvements toward maintaining a world class cost structure.


4.     PRODUCTS

       4.1    Description

              The Company will produce semiconductor wafers utilizing LUCENT and
              CSM CMOS Intellectual Property and process technology as specified
              in the License and Technology Transfer Agreement with LUCENT and
              CSM. The planned technology introduction schedule is:

                                      ****



       4.2    Migration Plan

                                                                               2
<PAGE>   67
           The Company planned capacity will be 26,000 wafer outs per month
           (WPM), of 0.25u LUCENT digital logic equivalent process (21 mask
           levels). Additional equipment may be purchased by the Company to
           increase the capacity of the Company.

     4.3   Dependencies

           LUCENT and CSM will transfer to the Company and install specified
           CMOS process technologies as provided in the License and Technology
           Transfer Agreement Assistance from LUCENT and CSM will be defined in
           the Annual Business Plan.

           As a tenant at CSM's Woodlands Industrial Park: Singapore location,
           the Company may depend on CSM for certain services required for wafer
           manufacture. These services are defined in the Services Agreements,
           and will be negotiated and agreed annually by Company and CSM. The
           Company will depend on both shareholders for production demand as
           defined in the ASADA. Each shareholder is responsible for using its
           capacity allocation as defined in the ASADA or for compensating the
           Company for failing to fulfill its loading obligations as set out in
           the ASADA.

     4.5   Logistics

           The Company will install manufacturing logistics systems compatible
           with those of the shareholders' systems to meet the shareholders'
           needs to deliver product seamlessly with the output from their other
           sources.

     4.4   Product Support

           The Company will be staffed with sufficient technical and engineering
           resources to qualify each new process technology and to maintain
           manufacturing operations. Additional support may be available from
           the shareholders. These items are included as expense line items in
           the Company spending plan in Attachment F-5.

5.   MARKETING AND SALES

     Sales by the Company will be to CSM or CSM's customers and LUCENT or
     LUCENT's customers only. No marketing or sales force will be put in place.

6.   HUMAN RESOURCE PLAN

     6.1.  The Company will have persons (being employees of the Company as well
           as personnel from CSM rendering services pursuant to the CSM Service
           Support Agreement and License and Technology Agreement, as well as
           personnel from Lucent rendering services pursuant to the License and
           Technology Transfer Agreement) working in the following
           areas/capacities:

                                                                               3
<PAGE>   68

      Production and Training
      Technicians
      Engineering and Technology
      Finance and Administration
      Programming and Management Information Systems
      Logistics and Production Control
      Equipment Maintenance
      General Management
      Human Resources
      Quality Assurance and Statistical Process Control
      Purchasing
      Medical


6.2   Management Structure

       The management structure will be evolutionary, with the expected
       organization on the first date of operations shown on Attachment F-1. All
       functions within the Company report to the General Manager. The targeted
       production costs in Attachment F-7 will be an element for determining the
       General Manager's performance pursuant to the Joint Venture Agreement.
       The General Manager will report to the Board of Directors of the Company,
       which has specific authority as defined in the Joint Venture Agreement.

6.3    Staffing Plan

       The staffing plan is shown in Attachment F-2.


6.4    Training

       A training program will be established to certify operators to run one or
       multiple types of equipment. Details of the training program will be
       similar to those employed by CSM in CSM's other sub-micron clean rooms
       In Singapore.

6.5    Personnel Practices

       To be in compliance with CSM's personnel practices and procedures, some
       key focus items include, but are not limited to:

       6.5.1  All aspects of employment will be carried out free of
              discrimination or harassment based on race, color, religion, sex,
              national origin, age, handicap or military status.

       6.5.2  The Company will be sensitive to the needs of all employees and to
              the community in which it operates.




                                                                               4
<PAGE>   69
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              6.5.3  Hiring and advancement will be based on job-related
                     requirements and each individual's qualifications to
                     perform the job.

              6.5.4  The Company will be a nonsmoking workplace.

              6.5.5  Existing CSM personnel policies will remain in effect
                     unless they are modified per Section 10.

       6.6    Compensation

              The Company will maintain base salaries that are competitively
              based compared with other semiconductor and technology companies
              in Singapore.*****************************************************
              ******************************************************************
              ******************************************************************

              Approved salary increases will take into account each employee's
              pay grade, his/her current salary position, his/her performance
              and relevant salary market factors.

              Further details of compensation plans are listed in Attachment
              F-3.**************************************************************
              ******************************************************************
              ******************************************************************
              ******************************************************************

       6.7    Benefits

              The benefits for CSM employees assigned to the Company are
              equivalent to the current CSM-benefit plan as outlined in
              Attachment F-4:

              The CSM payroll system will be used for all payroll deductions and
              check distribution to CSM employees.

              The Board of Directors may establish those personnel policies that
              differ from CSM's policies at a later time as provided for in
              Section 10.

7.    OPERATIONS

       7.1    Physical Location
              The Company will operate the clean room facility currently known
              as CSM FAB 3B.

       7.2    Capital Plan

              The Company may add capacity by leasing, buying or by the
              Shareholders' leasing or buying additional manufacturing equipment
              and facilities. After




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          ramp-up and during the first five years of full capacity
          manufacturing, up to $350M US in additional capital for manufacturing
          equipment and facilities is expected to be funded by the Company. More
          detail is available on the ramp plan in Attachment F-6 and in
          successive Company Business Plans.

     7.3. Intellectual Property

          The Company will be licensed for know-how pursuant to the License and
          Technology Transfer Agreement and patent coverage will be provided by
          the Shareholders on an as needed basis, to the extent that they have
          the right to do so.

     7.4. Production

          7.4.1.    The Company is planned to operate 7 days a week using the
                    Alternate Work Schedule (AWS) (12 hours per shift).
                    Personnel on AWS will include resident maintenance and
                    production employees.

          7.4.2.    Contract workers may staff some of the available jobs.

          7.4.4.    Vendor maintenance and additional support will be contracted
                    for by the Company on an as needed basis.


                                      ****


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                                      ****
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                                      ****

9.   ENVIRONMENTAL PRACTICES

     CSM and LUCENT have reviewed the LUCENT Microelectronics (ME) Environmental
     Management System (EMS) and agreed that the CSM EMS currently under
     development substantially meets the intent of the LUCENT Microelectronics
     EMS Protocol and Platform processes. Furthermore, CSM agrees to amend its
     EMS procedures and therefore gain active membership in the LUCENT
     Environmental Action Team (the ENACT Team). Within 18 months of the
     adoption of this Business Plan, CSM agrees to obtain and maintain IS0 14001
     certification for the company Fab under the auspices of the
     Microelectronics umbrella certification issued by a third party certifier
     as designated by LUCENT ME. LUCENT Microelectronics agrees to support this
     certification effort and to assist CSM in obtaining an overall site
     certification for the Woodlands site.

     The shareholders have reviewed the policies, programs, practices and
     controls (Environmental Practices) applied at LUCENT Microelectronics
     manufacturing locations under the Environmental Management System of
     LUCENT, and agree that the Environmental Practices will be used by the
     Company in its operations, subject to appropriate review from time to time
     by the Board of Directors of the Company.

10.  HUMAN RESOURCE PRACTICES

     The Partners have reviewed the policies, programs, practices and controls
     ("Human Resource Practices") applied at CSM under the Human Resource
     Management System of CSM, and agree that the Human Resource Practices will
     be used by the Company in its operations, subject to appropriate review
     from time to time by the Board of Directors of the Company.

                                      ****


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                             ****

12.  MANAGEMENT TEAM

     12.1. Governing Board

           Dennis M. Hill
           Matthew C. Riley
           Paul J. Mostek
           Tan Bock Song
           Chia Song Kwee

     12.2. Officers and Senior Managers
           See organization chart, Attachment F-1

                             ****



                                                                              10

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                             ****
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Attachment F-5: Spending Summary





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Attachment F-6: Quarterly Factory
                Loading & Output



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Attachment F-6: Annual Factory
                Loading & Output

                                      ****
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Attachment F-7: Price Per Wafer
                (Without Test)




                                      ****
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Attachment F-8: Profit and Loss
                Statement


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Attachment F-9: Balance Sheet
                Statement

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Attachment F-10: Funds Flow Statement


                                      ****

<PAGE>   1

                         REDACTED  FOR CONFIDENTIALITY

                                                                 EXHIBIT 10.9


                       ASSURED SUPPLY AND DEMAND AGREEMENT



   ASSURED SUPPLY AND DEMAND AGREEMENT (this "Agreement"), made as of February
17, 1998, by and among Lucent Technologies Microelectronics Pte. Ltd., a
Singapore corporation ("Lucent"), Chartered Semiconductor Manufacturing Ltd., a
Singapore corporation ("CSM"), and Silicon Manufacturing Partners Pte. Ltd. , a
Singapore corporation (the "Supplier"), Lucent and CSM being sometimes referred
to herein individually as a "Purchaser" and collectively as the "Purchasers".
Terms in capital or with initial capital letters which are not defined herein
shall have the meanings assigned to them in the Joint Venture Agreement
hereinafter referenced.

   WHEREAS, Lucent and CSM have entered into a joint venture agreement, dated
December 19, 1997 (the "Joint Venture Agreement"), which also provides for other
Collateral Agreements including this Agreement (as defined in the Joint Venture
Agreement), for the purpose of supplying silicon wafers ("Wafers") produced by
the Supplier to Lucent and to CSM; and

   WHEREAS, the Purchasers desire to purchase, and the Supplier desires to sell,
the Wafers upon the terms and subject to the conditions set forth herein.

   NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree, subject to the conditions
contained herein, as follows:


1.0  TERM

This Agreement shall be effective on the date hereof and, except as provided in
the Joint Venture Agreement or otherwise mutually agreed upon by the parties,
shall terminate upon termination of the Joint Venture Agreement. The amendment
or termination of this Agreement shall not affect the obligations of the
Supplier or the Purchasers under then existing purchase orders issued pursuant
to this Agreement.

2.0  WAFER PURCHASE

     (a) During the term of this Agreement, the Purchasers shall purchase, and
     the Supplier shall sell to the Purchasers, Wafers upon the terms and
     subject to the conditions set forth in this Agreement, including Exhibit A
     hereto and made a part hereof.

     (b) Any material adverse variance to the Supplier's operations caused by a
     Purchaser not taking its required share of Wafer output shall be
     compensated for by such Purchaser in accordance with Exhibit A hereto.

<PAGE>   2

3.0   ORDER

      For purposes of this Agreement, a purchase order shall mean the form of
      purchase order, contract or document ("order") adopted by the Purchasers
      for the purpose of ordering Wafers. Each order shall reference this
      Agreement, thereby incorporating in such order the terms and conditions
      stated in this Agreement. Terms or conditions contained in any order,
      whether written, typed or printed, shall be without effect should they be
      in conflict with those incorporated by reference to this Agreement.

4.0   PRICE

      Price for Wafers shall be established in accordance with the Pricing
      Principles set forth in Exhibit B hereto.


5.0   BENCHMARKING

      On an annual basis, the Supplier and the Purchasers shall undertake to
      benchmark product quality, and service performance of the Wafers purchased
      by the Purchasers against the then existing standards of the industry. The
      Wafer specifications benchmarked shall be the codes that comprise the top
      eighty percent of the volume purchased by each Purchaser. The Supplier and
      the Purchasers shall review such benchmark information and the Supplier
      shall develop a plan of action for improving Wafer product quality and
      service performance if such benchmark information indicates improvements
      are needed.



6.0   ASSIGNMENT AND SUBCONTRACTING

      Except as set forth in this Section 6.0, the Supplier shall not assign
      this Agreement or any right or interest hereunder (excepting monies due or
      to become due or as otherwise provided in the Joint Venture Agreement or
      any of the other Collateral Agreements) or delegate or subcontract any
      work or other obligation to be performed under this Agreement, without the
      prior written consent of each Purchaser. Any attempted assignment,
      delegation or subcontracting in contravention of the above provisions
      shall be void and ineffective. Any assignment of monies shall be void and
      ineffective to the extent that (1) the Supplier shall not have given each
      Purchaser at least thirty (30) days prior written notice of such
      assignment or (2) such assignment attempts to impose upon the Purchasers
      obligations to the assignee in addition to the payment of such monies, or
      to preclude either of the Purchasers from dealing solely and directly with
      the Supplier in all matters pertaining to this Agreement including the
      negotiation of amendments or settlements of charges due. All work
      performed by the Supplier's subcontractor(s), including but not limited to
      labor services, shall be deemed work performed by the Supplier. Either
      Purchaser may, with the prior written consent of the other Purchaser which
      shall not be unreasonably withheld, assign this Agreement to a subsidiary
      or Affiliate of such Purchaser; provided that such

                                       2
<PAGE>   3


      Purchaser shall not thereby be relieved of any of its obligations
      hereunder or under the Joint Venture Agreement or any other Collateral
      Agreement.



7.0   CHOICE OF LAW

      The construction, interpretation and performance of this Agreement, and
      all transactions hereunder, shall be governed by the laws of Singapore,
      without regard to its choice of laws principles and excluding the
      Convention for the International Sale of Goods.



8.0   COMPLIANCE WITH LAWS

      The Supplier shall comply with all applicable material United States and
      Singapore federal, state, local and foreign laws, ordinances, regulations
      and codes, including those relating to the use of chlorofluorocarbons, and
      including the identification and procurement of required permits,
      certificates, licenses, insurance, approvals and inspections as may be
      required by it to effect this Agreement.



9.0   ENTIRE AGREEMENT

      Except as otherwise set forth in Section 3.0 hereof, the terms and
      conditions set forth in this Agreement shall apply to any orders issued
      pursuant to this Agreement. To the extent in conflict with those
      incorporated by reference to this Agreement, any printed provisions
      contained in either of the Purchaser's orders and any provisions on the
      Supplier's purchase order acknowledgment forms shall be deemed null and
      void. Amendments to this Agreement shall be of no force and effect, unless
      expressly consented to by the parties hereto in writing. Unless otherwise
      stated herein or in any other agreement between the relevant parties,
      estimates or forecasts furnished by the Purchasers shall not constitute
      commitments. This Agreement, the Joint Venture Agreement and the
      Collateral Agreements, together with all Exhibits, Schedules, Appendices
      and attachments hereto and thereto, represent the entire agreement and
      understanding between the parties hereto with respect to the subject
      matter hereof and supersede any prior agreement or understanding, written
      or oral, that the parties hereto may have had.



10.0  FORCE MAJEURE


      No party hereto shall be held responsible for any delay or failure in
      performance of any part of this Agreement to the extent such delay or
      failure is caused by fire, flood, explosion, war, strike, embargo,
      government requirement, civil or military authority, act of God, or other
      similar causes beyond its control and without the fault or negligence of
      the delayed or nonperforming party or its subcontractors (each being
      referred to in this Agreement as a "Force Majeure Condition").
      Notwithstanding the foregoing, the Supplier's liability for loss or damage
      to the

                                       3
<PAGE>   4


      Purchasers' materials in the Supplier's possession or control shall not be
      modified by this clause. If any Force Majeure Condition occurs, the party
      delayed or unable to perform shall give immediate notice to the other
      party, stating the nature of the Force Majeure Condition and any action
      being taken to avoid or minimize its effect. Once the Force Majeure
      Condition ceases, each party shall resume performance under this Agreement
      or any applicable order.


11.0  GOVERNMENT CONTRACT PROVISIONS

      Orders placed under this Agreement containing a notation that the Wafers
      are intended for use under U.S. Government contracts shall be subject to
      such other provisions required by the U.S. Government printed, typed or
      written thereon, or on the reverse side thereof, or in attachments
      thereto. Supplier shall charge the Purchaser for any additional costs
      incurred to comply with such provisions.



12.0  IDENTIFICATION

      (a) The Supplier shall not, without the Purchasers' prior written consent,
      engage in advertising, promotion or publicity related to this Agreement,
      or make public use of any Identification (as hereinafter defined) in any
      circumstances related to this Agreement. As used in this Agreement, the
      term "Identification" means any copy or semblance of any trade name,
      trademark, service mark, insignia, symbol, logo, or any other product,
      service or organization designation, or any specification or drawing of
      Lucent or CSM or their respective affiliates, or evidence of inspection by
      or for any of them.


      (b) To the extent the Supplier is requested by either Purchaser, and
      Supplier has the capability to use such Purchaser's Identification in
      connection with such Purchaser's Wafers, the affected parties shall enter
      into a separate agreement therefor. The Supplier shall remove or
      obliterate any Identification prior to any use or disposition of any
      Wafers rejected or not purchased by either of the Purchasers, and, shall
      indemnify, defend (at a Purchaser's request) and save harmless Lucent or
      CSM and their respective affiliates and each of their officers, directors
      and employees from and against any losses, damages, claims, demands,
      suits, liabilities, fines, penalties and expenses (including reasonable
      attorneys' fees) arising out of the Supplier's failure to so remove or
      obliterate Identification.



13.0  INVOICING

      The Supplier shall: (1) render original invoice, or as otherwise specified
      in this Agreement, showing Agreement number, through routing and weight;
      (2) render separate invoices for each shipment within twenty-four (24)
      hours after shipment; and (3) mail invoices to the address shown on the
      order.



                                       4
<PAGE>   5


14.0  TERMS OF PAYMENT

      The terms of payment are as follows: net thirty (30) days from the date
      of invoice.



15.0  RECORDS

      The Supplier shall aggregate all material records relating to the
      manufacture of wafers for each Purchaser under this Agreement, including a
      physical inventory if applicable, and maintain such records in an accurate
      and complete manner for two (2) years from the date of invoice. These
      records, where applicable, shall be maintained in accordance with
      recognized commercial accounting practices so they may be readily
      available for review and audit by each Purchaser as provided in Section
      28.0. Supplier shall maintain for two (2) years processing IV tests, and
      wafer sort data on each individual lot.



16.0  RIGHT OF ACCESS

      (a) The Supplier shall permit access to its premises by either Purchaser
      in connection with work hereunder for such Purchaser without execution of
      additional agreements. Prior notification will be given when access is
      desired. In addition, each Purchaser shall have the right to access all of
      the Supplier's in-process records related to Wafers produced for such
      Purchaser on its premises on reasonable notice and at reasonable times.


      (b) The Supplier shall prevent access by third parties which manufacture,
      design, repair and/or sell products similar to Wafers to any of the
      manufacturing facilities which are associated with Wafers unless mutually
      agreed to in writing by the Purchasers.



17.0  PROCESS CERTIFICATION AND INSPECTION

      (a) In regard to the Supplier's manufacturing processes, each Purchaser,
      and each Purchaser's customers as designated by such Purchaser, may,
      subject to appropriate confidentiality restrictions and the provisions of
      Section 16.0(b), with respect to those processes identified in the
      manufacture of Wafers for such Purchaser, perform periodic quality
      surveys, evaluations, audits and approvals, including but not limited to
      equipment calibration and operator performance, and evaluation of quality
      control/quality assurance and data collection and analysis procedures.


      (b) The Supplier shall conduct appropriate incoming inspection of raw
      materials in accordance with its standard practices approved by the
      Purchasers and any specific requirements of the Purchasers. Such practices
      may be modified from time to time to address specific conditions as
      requested by the Purchasers.


                                        5
<PAGE>   6

18.0  QUALITY

      The Supplier shall use its reasonable efforts to ensure that all
      manufacturing and design operations which contribute to the design,
      development, production and services of Wafers remain ISO-14001 certified.
      Furthermore, the Supplier will use its reasonable efforts to attain and
      maintain acceptable ratings in any future quality programs as agreed to by
      the parties hereto.



19.0  PURCHASER ACCEPTANCE AND QUALIFICATION TESTS

      Prior to the Supplier initiating volume manufacture of Wafers, each
      Purchaser shall have the right to conduct acceptance or qualification
      tests of Wafers and processes, including but not limited to technical
      acceptance tests to ensure conformity with a Purchaser's specifications.
      This testing shall in no way relieve the Supplier of any other
      responsibilities under this Agreement.



20.   SPECIFICATIONS OR DRAWINGS

      (a) As used in this Agreement, the term "Specifications" means the design
      features, functions, characterization, dimensions, performance
      capabilities, quality specifications and process specifications, and
      samples and drawings associated with any of the foregoing as provided by a
      Purchaser to the Supplier, and any modifications or changes thereto
      pursuant to the terms of this Agreement.


      (b) Prior to implementation of any change proposed to be made by the
      Supplier in the Wafers furnished in accordance with the Specifications
      under this Agreement, the Supplier shall provide the Purchasers with
      written notice thereof in accordance with the procedures mutually agreed
      between the Supplier and the relevant Purchaser. If the Purchasers agree
      to the Supplier's proposed changes, all Wafers affected by such changes
      and shipped after the implementation of such changes shall conform to such
      changed specifications.



21.   MARKING

      All Wafers furnished under this Agreement shall be marked for
      identification purposes in accordance with the specifications set forth in
      this Agreement and at a minimum as follows as shown in Exhibit C attached:
      lot no., wafer no., and K no. (clean room identification). In addition,
      the Supplier agrees to add any other identification which might be
      requested by either Purchaser such as, but not limited to, distinctive
      marks conforming to Purchaser's serialization plan or to a Purchaser's
      bar-coding plan after charges, if any, for such additional identification
      marking have been agreed to by the Supplier and such Purchaser.



22.0  TITLE AND RISK OF LOSS

                                       6

<PAGE>   7

      Title and risk of loss or damage to Wafers purchased by either Purchaser
      under this Agreement shall vest in such Purchaser when the Wafers have
      been delivered Ex Works.



23.0  TRANSPORTATION TERMS

      The completed Wafers shall be delivered Ex Works.



24.0  SERVICE

      (a) Purchasers will establish shipping performance criteria and
      specifications which will be provided to the Supplier.


      (b) The Supplier shall use its reasonable efforts to deliver Wafers in
      accordance with each Purchaser's required delivery schedule as contained
      in such Purchaser's orders, as such delivery schedule may be subsequently
      modified by agreement of the Supplier and such Purchaser. The Supplier
      will promptly notify each Purchaser of an "Acknowledged Delivery
      Schedule", which shall be the schedule upon which the Supplier can deliver
      Wafers to each Purchaser. The Supplier shall use its reasonable efforts to
      communicate to each Purchaser any change to the Acknowledged Delivery
      Schedule. The Supplier's compliance with the foregoing obligation will not
      relieve the Supplier of the shipping performance criteria and
      specifications established pursuant to paragraph (a) of this Section 24.0.



25.0  SUPPLIER INTERVAL

      (a) For the purposes of this Agreement, the terms "Lead Time" or "Supplier
      Interval" shall mean the period of time expressed in days commencing on
      the date an order for Wafers is placed with the Supplier by a Purchaser
      and ending upon delivery of such Wafers to such Purchaser pursuant to
      Section 23.0.


      (b) If, during the course of this Agreement, the Supplier determines
      that it will no longer be the able to deliver Wafers within the then
      existing Lead Times, the Supplier shall immediately notify the ordering
      Purchaser to that effect. The Supplier shall use its reasonable best
      efforts to quote reduced Lead Times when responding to orders placed under
      this Agreement if required to meet a Purchaser's requested delivery date.

26.0  INDEMNIFICATION

      (a) Lucent will defend, indemnify and hold harmless the Supplier against
      all suits, claims, demands or actions alleging that any Wafers purchased
      hereunder by Lucent or the manufacture of such Wafers for Lucent infringes
      any patent or other intellectual property right of any third party solely
      as a result of the use by the



                                       7
<PAGE>   8


      Supplier of any technology, processes or specification furnished to the
      Supplier by Lucent or any of its Affiliates for the purpose of
      manufacturing such Wafers for Lucent and will pay all damages, awards or
      settlements and costs (including reasonable attorneys' fees) which may be
      incurred by or assessed against the Supplier on account of such
      infringement whether or not legal proceedings are commenced; provided that
      Lucent (i) shall have had prompt written notice of all claims of such
      infringement and suits, claims, demands or actions and full opportunity
      and authority to assume the sole defense of and to settle the same, and
      (ii) shall be furnished upon Lucent's request, and at Lucent's expense,
      all information and assistance available to the Supplier for such defense.

      (b) CSM will defend, indemnify and hold harmless the Supplier against all
      suits, claims, demands or actions alleging that any Wafers purchased
      hereunder by CSM or the manufacture of such Wafers for CSM infringes any
      patent or other intellectual property right of any third party solely as a
      result of the use by the Supplier of any technology, processes or
      specification furnished to the Supplier by CSM or any of its Affiliates
      for the purpose of manufacturing such Wafers for CSM and will pay all
      damages, awards or settlements and costs (including reasonable attorneys'
      fees) which may be incurred by or assessed against the Supplier on account
      of such infringement whether or not legal proceedings are commenced;
      provided that CSM (i) shall have had prompt written notice of all claims
      of such infringement and suits, claims, demands or actions and full
      opportunity and authority to assume the sole defense of and to settle the
      same, and (ii) shall be furnished upon CSM's request, and at CSM's
      expense, all information and assistance available to the Supplier for such
      defense.


27.0  CONFIDENTIAL INFORMATION

      All communications between the Supplier and the Purchasers or any of them
      and all information and other material supplied to or received by any of
      them from any one or more of the others in connection with the performance
      of this Agreement which is either marked "confidential" or is by its
      nature intended to be exclusively for the knowledge of the recipient alone
      in connection with this Agreement, or to be used by the recipient only for
      the benefit of the Supplier, any information concerning the business
      transactions or the financial arrangements, including without limitation,
      trade secrets, customer lists, know-how, designs, processes, drawings and
      specifications, ("Confidential Information") of the Supplier or of the
      Purchasers or any of them, or of any person with whom any of them is in a
      confidential relationship with regard to the matter in question coming to
      the knowledge of the recipient shall be kept confidential by the recipient
      (including to the exclusion of the non-disclosing party) and shall be used
      by the recipient solely and exclusively for achieving the purposes of this
      Agreement during the term of this Agreement, and for a period of five (5)
      years following the termination thereof. Neither Purchaser shall disclose
      to the Supplier or to the other Purchaser competitively sensitive
      information concerning either's sale, transfer or use of Wafers (e.g.
      pricing, cost, volume, capacity, customer identification), except as
      reasonably required under this Agreement relating to any wafer fabrication
      facility operated, managed or

                                       8
<PAGE>   9


      controlled by such Purchaser or in which such Purchaser has a
      non-controlling interest or role. At the expiration or termination of this
      Agreement, written Confidential Information will be returned to the party
      supplying such information or destroyed immediately upon the request of
      such party and no copies, extracts or other reproductions shall be
      retained by recipient. All documents, memoranda, notes and other writings
      whatsoever prepared by recipient which contain the Confidential
      Information shall be returned to such party or destroyed at such party's
      request. Notwithstanding the foregoing, information shall not be deemed
      confidential and the recipient shall have no obligation with respect to
      any such information which was in the recipient's possession before
      receipt from the discloser; which are rightfully received by the recipient
      without restriction from a third party without a duty of confidentiality
      on the third party; which are independently developed by recipient; or
      which are in the public domain through no act or default on the part of
      the recipient, its Affiliates, its servants and/or agents, whereupon, to
      the extent that it is public, this obligation shall cease. In addition, in
      the event a recipient becomes compelled by law or regulatory authority to
      disclose any of the Confidential Information, the recipient party shall
      provide the disclosing party with prompt written notice so that the
      discloser may seek protective order or other appropriate remedy or waive
      compliance with the provisions of this Section 27.0. In the event that
      such protective order or other remedy is not obtained, or that the
      discloser waives compliance with the provisions of this Section 27.0, the
      recipient shall furnish only that portion of the Confidential Information
      which it is required by law or regulatory authority to disclose and will
      exercise its commercially reasonable efforts to assure that confidential
      treatment will be accorded the Confidential Information.


28.0  AUDIT

      The Supplier shall permit each Purchaser or the representative of each
      Purchaser to examine and audit the records relating to such Purchaser's
      Wafers as described in Section 15.0 and all supporting records on
      reasonable notice and at reasonable times. Audits shall be made not later
      than two (2) calendar years after the final delivery date of Wafers
      ordered.



29.0  SURVIVAL OF OBLIGATIONS

      The obligations of the parties under this Agreement which by their nature
      would continue beyond the termination, cancellation or expiration of this
      Agreement shall survive such termination, cancellation or expiration.


30.0  CLAUSE HEADINGS

      The headings of the Sections and paragraphs in this Agreement are inserted
      for convenience only and are not intended to affect the meaning or
      interpretation of this Agreement.


                                       9
<PAGE>   10


31.0  DEFAULT

      (a) In the event the Supplier or any Purchaser shall be in material breach
      or default of any of the terms, conditions, or covenants of this Agreement
      or any order and such breach or default shall continue for a period of
      thirty (30) days after the giving of written notice to the breaching party
      by the non-breaching party, then the parties hereto shall proceed to
      resolve such dispute pursuant to the provisions of Section 39.0.

      (b) The failure of any of the parties at any time to enforce any right or
      remedy available under this Agreement or otherwise with respect to any
      breach or failure by any other party shall not be construed to be a waiver
      of such right or remedy with respect to any other breach or failure by the
      breaching party.

32.0  EXPORT CONTROL

      The Supplier acknowledges that any products, software and technical
      information (including, but not limited to, services and training)
      provided by Lucent under this Agreement are subject to U.S. export laws
      and regulations and any use or transfer of such products, software and
      technical information must be authorized under those regulations and that
      products, software and technical information (including, but not limited
      to, services and training) provided by CSM may be subject to U.S. export
      laws and regulations and use or transfer of such products, software and
      technical information may require authorization under those regulations.
      The Supplier agrees that it will not use, distribute, transfer, or
      transmit the products, software or technical information (even if
      incorporated into other products) except in compliance with U.S. export
      regulations. If requested by a Purchaser, the Supplier also agrees to sign
      written assurances and other export-related documents as may be required
      for a Purchaser to comply with U.S. export regulations.



33.0  NOTICES

      All notices, demands or other communications required or permitted to be
      given or made hereunder shall be in writing and delivered personally or
      sent by prepaid registered post (by air-mail if to or from an address
      outside Singapore) with recorded delivery, or by facsimile transmission
      (provided that the receipt of such facsimile transmission is confirmed by
      the dispatch of a hard copy of the facsimile sent immediately thereafter
      by prepaid registered post) addressed to the intended recipient thereof at
      its address or at its facsimile number set out in this Agreement (or to
      such other address or facsimile number as a party to this Agreement may
      from time to time duly notify the others in writing). Any such notice,
      demand or communication shall be deemed to have been duly served, if given
      or made by facsimile, immediately at the time of dispatch (provided that
      the receipt of such


                                       10
<PAGE>   11

      facsimile transmission is confirmed by the dispatch of a hard copy of the
      facsimile sent immediately thereafter by prepaid registered post) or, if
      given or made by letter, immediately if delivered personally or 48 hours
      after posting or, if given or made by air-mail, ten days after posting and
      in proving the same it shall be sufficient to show that personal delivery
      was made or that the envelope containing such notice was duly addressed,
      stamped and posted. The address and facsimile numbers of the parties for
      the purpose of this Agreement are:-

         CSM        :     Chartered Semiconductor Manufacturing Ltd.
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No. : (65) 362 2909
                          Attention : Legal Department

         Lucent     :     Lucent Technologies Microelectronics Pte. Ltd.
                          3, Kallang Sector, Kolam Ayer Industrial Park
                          Singapore 349278
                          Facsimile No. : (65) 840-2560
                          Attention : Managing Director

         With copy to:
                          Lucent Technologies Inc.
                          Microelectronics Division
                          Two Oak Way
                          Berkeley Heights, NJ 07922-2727
                          Facsimile No.  001 908 508-8398
                          Attention:  Legal Department

        Supplier    :     Silicon Manufacturing Partners Pte. Ltd.
                          c/o Singapore Technologies Pte.Ltd.
                          89, Science Park Drive
                          #02-09/12
                          The Rutherford
                          Singapore Science Park
                          Singapore 118261
                          Facsimile No.     :  (65) 872-6390
                          Attention         :   The Company Secretary
                                            Corporate Secretariat Department

             with copies to Lucent and CSM at their above addresses.

                                       11
<PAGE>   12


      Any party hereto may change its address provided above for the purpose
      hereof by giving written notice to the other parties hereto of such change
      in the manner hereinabove provided.

34.0  TAXES AND INSURANCE PAYMENTS

      Each Purchaser shall pay, in addition to the price of the Wafers
      purchased, the amount of any freight, insurance, handling and other duties
      levied on the shipment of the Wafers to such Purchaser. Such Purchaser
      shall also pay for all sales, use, excise or other similar taxes levied on
      the purchase of Wafers.


35.0  REPORTS

      (a) Supplier agrees to maintain the following auditable order and shipment
      reports and provide copies to Purchasers, if requested, on or before the
      fifth working day of each month:

      (1) Order and shipment reports for each shipment, including bill of
      lading information.

      (2) At the request of a Purchaser, monthly summaries of actual shipping
      intervals achieved on Wafers ordered and manufactured hereunder,
      identifying the number of units and such other information as either
      Purchaser may reasonably request.

      (b) Supplier further agrees to maintain and render quality and yield
      data of the type and frequency specified by Purchasers to assure proper
      control of Wafers quality and reliability. This data may include such
      items as in-process daily yields, quality control, and quality assurance
      daily records. Supplier shall furnish and render additional reports as may
      be reasonably requested by Purchasers.

36.0  OZONE DEPLETING SUBSTANCES LABELING

      The Supplier warrants and certifies that all products, including packaging
      and packaging components, provided to the Purchasers under this Agreement
      have been accurately labeled, in accordance with the requirements of 40
      CFR, Part 82 entitled "Protection of Stratospheric Ozone, Subpart E - The
      Labeling of Products Using Ozone Depleting Substances."


37.0  SHIPPING AND BILLING

      For shipments against a purchase order placed pursuant to this Agreement,
      the Supplier shall: (1) ship order complete unless instructed otherwise,
      (2) ship to the destination designated in the order, (3) ship according to
      routing instructions given by the each Purchaser, (4) place order number
      on all subordinate documents, (5) enclose a packing memorandum with each
      shipment and, when more than one package is shipped, identify the package
      containing the memorandum, (6) mark order number on all packages and
      shipping papers, (7) render invoices in duplicate or as otherwise
      specified, showing order number, through routing and

                                       12
<PAGE>   13


      weight, (8) render separate invoices for each shipment within twenty-four
      hours after shipment, (9) mail invoices and notices to the address shown
      in order. Adequate protective packaging shall be furnished at no
      additional charge. Shipping and routing instructions may be altered as
      mutually agreed without a writing.


38.0  SEVERABILITY

      If any of the provisions of this Agreement shall be invalid or
      unenforceable, such invalidity or unenforceability shall not invalidate or
      render unenforceable the entire Agreement, but rather the entire Agreement
      shall be construed as if not containing the particular invalid or
      unenforceable provision or provisions, and the rights and obligations of
      the Supplier and the Purchasers shall be construed and enforced
      accordingly.


39.0  DISPUTE RESOLUTION

      (i) In case any dispute or difference shall arise amongst the parties
      hereto as to the construction of this Agreement or as to any matter or
      thing of whatsoever nature arising hereunder or in connection herewith,
      including any question regarding its existence, validity or termination,
      such dispute or difference shall promptly be submitted to a committee
      comprised of one Board member of the Supplier from each of Lucent and CSM.
      If such committee is unable to resolve such dispute within 21 days of such
      submission, it shall submit the dispute to a committee comprised of one
      senior manager from each of Lucent and CSM, being in the case of:-

         CSM        : the President
         Lucent     : the Customer  Satisfaction  and  Business Development
                      Vice President of Lucent Technologies Inc. ("LTI")

      If such senior managers are unable to resolve such dispute within 14 days
      of such submission, it shall be submitted to a committee comprised of one
      senior officer from each of Lucent and CSM being in the case of:-

         CSM        : the Chairman of the Board of CSM
         Lucent     : Vice President, Integrated Circuits Division of LTI

      (ii) 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 Lucent and CSM (the "Arbitrator"). If Lucent and CSM fail
      to agree on an Arbitrator within 14 days after any of them has given to
      the other a written request to concur in the appointment of an Arbitrator,
      a single arbitrator (the "ICC Arbitrator") shall be

                                       13
<PAGE>   14

      appointed on the request of either Lucent or CSM 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
      Conciliation and Arbitration of the International Chamber of Commerce as
      presently in force by which the parties in dispute agree to be so bound.
      Both the Arbitrator and 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 Lucent, CSM and the
      Supplier. Each of Lucent and CSM shall use its commercially reasonable
      efforts to comply with all of such requests for information. Lucent and
      CSM shall jointly cause the Supplier to comply with all of the
      Arbitrator's and the ICC Arbitrator's requests for information. The place
      of arbitration shall be London, England and the arbitration shall be
      conducted wholly in the English language. The Arbitrator and 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.


40.0  WARRANTY

      EXCEPT FOR THE PROVISIONS OF EXHIBIT A PERTAINING TO WAFER DEFECTS, THE
      SUPPLIER, ITS SUBSIDIARIES AND AFFILIATES, SUBCONTRACTORS AND SUPPLIERS
      MAKE NO WARRANTIES EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIM ANY
      WARRANTY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS WELL AS
      OTHER IMPLIED WARRANTIES, IN LAW OR EQUITY. EACH OF THE PURCHASER'S SOLE
      AND EXCLUSIVE REMEDY SHALL BE THE SUPPLIER'S OBLIGATION TO CREDIT OR
      REIMBURSE AS PROVIDED IN EXHIBIT A.



41.0. WAIVER OF IMMUNITY

      Lucent, CSM and the Supplier hereby irrevocably agree not to claim and
      irrevocably waive any claim or right which it has or may hereafter acquire
      under any law, regulation, treaty or international agreement to immunity
      for itself, or any of its revenues, assets or properties or those of any
      of its agencies or instrumentalities from the jurisdiction of any court
      (including but not limited to any court of the United States of America or
      the State of New Jersey) with respect to the enforcement of an arbitral
      award rendered pursuant hereto.

42.0  COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS

      Supplier shall comply with Purchaser's reasonable instructions relating to
      compliance with United States Customs laws, statutes, or regulations.
      Supplier


                                       14
<PAGE>   15

      agrees to assist Purchaser, at Purchaser's expense, in every reasonable
      way necessary to ensure that Purchaser can import the material into the
      United States in accordance with all applicable customs laws, statutes,
      and regulations.

43.0  COUNTRY OF ORIGIN

      Supplier agrees that, for all Wafers provided under this Agreement, it
      will list the country of origin of the goods, by comcode, or in the event
      that no comcode is provided, by other identifying number or symbol, on the
      invoice.

44.0  IMPORT INVOICE

      At Purchaser's request and expense, Supplier shall include an invoice with
      the shipment of Wafers which includes the following information for every
      Wafer shipped: a complete noun description in Spanish consistent with the
      Harmonized Tariff Schedule; a statement as to the country of origin of the
      Wafers; Purchaser's comcode for each type of Wafer shipped; the value of
      the Wafer; the manufacturer's identification number, or in the absence of
      such number, the full address of the manufacturer; and the terms of sale.


                                       15
<PAGE>   16


IN WITNESS WHEREOF, each of the Supplier and the Purchasers have executed this
Agreement in duplicate on the day and year below written.

Lucent Technologies Microelectronics Pte. Ltd.


      By:  /s/ Dennis M. Hill
         ---------------------------------------
              (Signature)

      Name:  Dennis M. Hill
           -------------------------------------

      Title:  Director
            ------------------------------------

      Date:  17 February 1998


      Chartered Semiconductor Manufacturing Ltd.


      By:  /s/ Tan Bock Seng
         ---------------------------------------
                  (Signature)

      Name:  Tan Bock Seng
           -------------------------------------

      Title:  President and CEO
            ------------------------------------

      Date:  17 February 1998
            ------------------------------------

      Supplier


      By:  /s/ Paul J. Mostek
         ---------------------------------------
              (Signature)

      Name: Paul J. Mostek
           -------------------------------------

      Title:  Director
            ------------------------------------

      Date:  17 February 1998
           -------------------------------------


                                       16
<PAGE>   17

REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

Exhibit A

                            - TAKE OR PAY PRINCIPLES-

The parties agree that the following provisions will govern all purchase
obligations, pricing, and allocation of Wafer production output made under this
Agreement.

(A) Unless otherwise agreed to in writing, Lucent agrees to purchase and the
Supplier agrees to sell to Lucent fifty-one percent (51%) of the Supplier's
production output for Wafers, and CSM agrees to purchase and the Supplier agrees
to sell to CSM forty-nine percent (49%) of the Supplier's production output for
Wafers, based upon forecasts provided by the Supplier. The Supplier's Wafer
production capacity (and output) available to the Purchasers is determined as
follows:

                                      ****


                                       17
<PAGE>   18
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission




                                      ****






























(C) Each Purchaser agrees to pay the Supplier for the costs associated with any
decrease in the Supplier's output of good Wafers which is directly caused by
such Purchaser ("Wrong-doing Costs"). Examples of this situation would include
but are not limited to: underloading the output of the Supplier, requesting that
the Supplier place Wafers on hold, causing the Supplier to generate scrap wafers
that are not a result of the Supplier's normal yield process, requesting
non-standard lot sizes, etc. Wrong-doing Costs clearly identified to a party
will be billed to that party.

                                       18
<PAGE>   19
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


(D) In any given period, there will be variations between the Supplier's planned
and actual Wafer yields. Particularly where the period being measured is short
(e.g. weekly), the impact of those Wafer yield variations may not be exactly
equal for each Purchaser receiving production output from the Supplier. The
Supplier and the Purchasers agree that this is acceptable. The wafer yield
variations (as well as cycle time) will be tracked by the Supplier. However, if
there is any sign that the variations are not impacting each Purchaser equally
on a longer term basis (e.g., semi-annually), action will be taken by the
Supplier to equalize such impact.

(E) The Supplier will provide each Purchaser with a regularly updated (e.g.,
twice per month) view of its capability (including technology mix). That
capability will be stated in terms of base technology equivalent wafer starts.

(F) 1) Loadings - 12-Month - Each Purchaser shall provide the Supplier with an
updated (monthly) view by technology of how each such Purchaser intends to load
its portion of the available production capacity of the JV.

    2) Loadings - Short-Term - Each Purchaser shall provide by technology, by
week, Wafer start instructions to the Supplier on a fixed day(s) of each week.
Such loadings shall cover the next *********. There will be a follow-up
conference call (where necessary) between the Supplier and each Purchaser to
confirm the Supplier's ability (availability of masks, etc.) to handle the
specific requests of the Purchaser. Each Purchaser will provide the Supplier
with code level detail as needed by the Supplier.

(G) The Supplier will provide information to each Purchaser on a daily basis
indicating progress of each lot through the Supplier's production cycle, as well
as the latest view of when each lot will be completed.

(H) Basis for Take-or-Pay Calculation due to underloadings shall be as follows:

      1) Prior to the beginning of each calendar year (and whenever ramp plan is
changed), the parties will mutually agree on the ******************************
************************************ (relative to take or pay obligation) per
quarter, based on the formula shown below.

                                      ****






      2) At the end of each quarter, each Purchaser will be billed for
********************** if the wafers started for them are less than as
determined in accordance with Clauses A and B of this Exhibit A.

(I)  Technology Choices

                                       19
<PAGE>   20


      Each party shall have the right at their sole discretion to modify the
technology type running in their allocated capacity provided that (i) due
allowance is made for equipment line capacity, ordering lead times, and the
current technology mix of both parties, and (ii) there is no "material
deviation" caused by that party from the Supplier's capacity plan then in
effect. In the event of a party's (the "Requesting Party") request for such
modification causes any material deviation from the Supplier's capacity plan,
the Requesting Party shall direct the Supplier to make available to the other
party (the "Affected Party") wafer capacity from the wafer capacity reserved for
the Requesting Party, so as to ensure that the Affected Party's wafer capacity
is not affected by such material deviation.

(J) The Parties agree that the capacity, costs, and technologies forecasts,
criteria etc. of the Supplier referred to in this Exhibit A shall be consistent
with the Company Business Plan as may be updated from time to time.


                                       20
<PAGE>   21
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


Exhibit B

                              -PRICING PRINCIPLES-


The Supplier shall agree with Lucent and CSM on the price of Wafers to be
purchased and sold under this Agreement. The Supplier shall initially issue
price quotations to Lucent and CSM. The price of Wafers supplied to Lucent and
CSM shall be negotiated taking into account volume, starting wafer type (e.g.
epitaxial), number of metal levels, demand and supply in the marketplace, and
other differences, and shall be mutually agreeable to the Supplier, Lucent and
CSM; ****.


                                       21
<PAGE>   22

Exhibit C

                                    -MARKING-














                                       22


<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY

                                                                   EXHIBIT 10.10

                       DATED THE 3RD DAY OF SEPTEMBER 1999

                                     Between

                 LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD.

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                                       And

                     SILICON MANUFACTURING PARTNERS PTE LTD

================================================================================

                                  SUPPLEMENTAL

                       ASSURED SUPPLY AND DEMAND 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
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


THIS SUPPLEMENTAL DEED is dated 3 September 1999 and made by:-


(1)     LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD. of 36 Robinson Road
        #18-01, City House, Singapore 068877 ("Lucent");

(2)     CHARTERED SEMICONDUCTOR MANUFACTURING LTD of 60 Woodlands Industrial
        Park D Street 2, Singapore 738406 ("CSM"); and

(3)     SILICON MANUFACTURING PARTNERS PTE LTD of 60 Woodlands Industrial Park D
        Street 2, Singapore 738406 ("SMP").


WHEREAS:-

(A)     Lucent, CSM and the SMP have entered into an agreement dated 17 February
        1998 ("the Principal Agreement") whereby the SMP agreed to sell and
        Lucent and CSM agreed to purchase silicon wafers ("Wafers") produced by
        the SMP on the terms and conditions set out therein.

(B)     Lucent, CSM and SMP agree to amend the Principal Agreement on the terms
        and conditions set out below.

NOW THIS DEED WITNESSES as follows:-

1.      The parties hereto agree that the Principal Agreement is hereby amended
        and varied as follows:-

        1.1     Delete Section 2.0(b) and re-number "Section 2.0(a)" as "Section
                2.0";

        1.2     Insert the following provision as new Section 45.0:-

                "45.0   DEFINITIONS

                        References in this Agreement to "fixed cost" and
                        "variable cost" shall have the meanings assigned to them
                        in Schedule 1 and Schedule 2 respectively.";

        1.3     Delete the word ******** in paragraph (B)(3) of Exhibit A and
                replace with the word **********;

        1.4     Insert the words **********************************************
                *********** after the words ************** in paragraph (H)(2)
                of Exhibit A;



<PAGE>   3
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                       2


        1.5     Insert Schedule 1 and Schedule 2 hereto as "Schedule 1" and
                "Schedule 2" respectively to the Principal Agreement after
                Exhibit C of the Principal Agreement;

        1.6     The provision at the end of the paragraph in Exhibit B (Pricing
                Principles) ****************************************************
                ***************************************************************
                be deleted and substituted with the following:-

                ****







        1.7     Delete the existing paragraph in Section 34 and insert the
                following sub-paragraphs:-

                (a)     Each Purchaser shall pay, in addition to the price of
                        the Wafers purchased, the amount of any freight,
                        insurance, handling and other duties levied on the
                        shipment of the Wafers to such Purchaser. Such Purchaser
                        shall also pay for all goods and service tax, sales,
                        use, excise or other similar taxes levied on the
                        purchase of Wafers;

                (b)     All payments to be made by a Purchaser to the Supplier
                        shall be made free and clear of and without any
                        deduction or withholding for or on account of tax
                        (except to the extent required by law). In the event
                        that the Purchaser is required to make that payment
                        subject to the deduction or withholding of tax, the sum
                        payable by the Purchaser (in respect of which such
                        deduction or withholding is required to be made) shall
                        be increased to the extent necessary to ensure that the
                        Supplier receives a sum net of any deduction or
                        withholding equal to the sum which it would have
                        received had no such deduction or withholding been made
                        or required to be made.

2.      The parties hereto agree that the Schedules referred to in Clause 1.5
        above shall form an integral part of the Principal Agreement as if
        included in the Principal Agreement as at the date of the Principal
        Agreement;

3.      Each party to this Supplemental Deed represents and warrants to and for
        the benefit of the other party to this Supplemental Deed that:-


<PAGE>   4
                                       3


        3.1     all action, conditions and things required to be taken,
                fulfilled and done (including the obtaining of any necessary
                consents) in order to enable it lawfully to enter into this
                Supplemental Deed have been taken, fulfilled and done; and

        3.2     its entry into and performance of or compliance with its
                obligations under this Supplemental Deed do not and will not
                violate (i) any law to which it is subject, (ii) its Memorandum
                and Articles of Association or (iii) any agreement to which it
                is a party or which is binding on any of them or their
                respective assets.

4.      This Supplemental Deed may be executed in any number of counterparts,
        all of which taken together and when delivered to the parties hereto
        shall constitute one and of the same instrument. Any party may enter
        into this Supplemental Deed by executing any such counterpart.

5.      This Supplemental Deed shall be governed by and construed in accordance
        with the laws of Singapore.


<PAGE>   5
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                       4


                                   SCHEDULE 1

                                   FIXED COST

References to "fixed cost" shall include, inter-alia, ****


<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                       5


                                   SCHEDULE 2

                                  VARIABLE COST

References to "variable costs" shall include, inter-alia,:-

****



<PAGE>   7
                                       6


IN WITNESS WHEREOF this Supplemental Deed has been executed as a deed on the
date stated at the beginning.

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

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

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



<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY

                                                                 EXHIBIT 10.11








                        Dated this 4th day of July, 1997




                                      Among


                       CHARTERED SILICON PARTNERS PTE LTD,


                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD


                                       and


                             HEWLETT-PACKARD COMPANY






                  --------------------------------------------


                LICENSE AND TECHNOLOGY TRANSFER AGREEMENT 64-224

                  --------------------------------------------


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<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<S>                                                                              <C>
RECITALS..........................................................................1

1.   Definitions..................................................................2

2.   License Grants...............................................................5

3.   Improvements and Amendments to Licensed Technology...........................6

4.   HP-Compatible Processes......................................................7

5.   Technology Transfer..........................................................8

6.   Term and Termination.........................................................9

7.   Consulting Employees........................................................11

8.   Warranty and Disclaimer and Defense of Claims...............................11

9.   Confidentiality.............................................................13

10.  General Provisions..........................................................14

ANNEX A..........................................................................19

ANNEX A-1 (C07)..................................................................20

ANNEX B..........................................................................21

ANNEX B-1 (C07)..................................................................22

ANNEX C..........................................................................24

ANNEX C-1........................................................................26

ANNEX C-2 (C07)..................................................................30
</TABLE>

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                                       ii


<PAGE>   3
                LICENSE AND TECHNOLOGY TRANSFER AGREEMENT 64-224


        THIS LICENSE AND TECHNOLOGY TRANSFER AGREEMENT 64-224 (hereafter the
"Agreement") is made this 4th day of July, 1997, (the "Effective Date") by and
among Chartered Silicon Partners Pte Ltd, a Singapore corporation having a
principal place of business at 60 Woodlands Industrial Park D, Street 2,
Singapore 738406 (the "Company"), Chartered Semiconductor Manufacturing Ltd., a
Singapore corporation having a principal place of business at 60 Woodlands
Industrial Park D, Street 2, Singapore 738406 ("CSM") and Hewlett-Packard
Company, a California corporation having a principal place of business at 3000
Hanover Street, Palo Alto, California 94304 ("HP"). The Company, CSM and HP are
collectively referred to herein as "Parties" and individually referred to herein
as a "Party."



                                    RECITALS

        Whereas CSM, Hewlett-Packard Europe B.V., a subsidiary of HP ("HP
Europe"), and EDB Investments Pte Ltd ("EDBI") are parties to a Joint Venture
Agreement dated as of 13 March, 1997 (the "JV Agreement") pursuant to which CSM,
HP Europe and EDBI are shareholders in the Company;

        Whereas CSM and the Company have entered into a CSM Service Support
Agreement dated as of the date hereof (the "CSM Services Agreement") pursuant to
which CSM shall provide certain services to the Company, including research and
development services;

        Whereas the Company and CSM are in the business of manufacturing and
selling semiconductor wafers and integrated circuits;

        Whereas CSM owns or controls certain intellectual property rights
relating to the manufacture of semiconductor wafers and integrated circuits and
is willing to provide the Company and HP a license under such intellectual
property rights;

        Whereas HP owns or controls certain intellectual property rights
relating to the manufacture of semiconductor wafers and integrated circuits and
is willing to provide the Company and CSM a license under such intellectual
property rights;

        Whereas it is anticipated that the Company will develop or control
certain intellectual property rights relating to the manufacture of
semiconductor wafers and integrated circuits and the Company is willing to
provide CSM and HP a license under such intellectual property rights;

        Whereas HP desires a source of semiconductor wafers utilizing processes
compatible with HP's process technologies, such compatible processes to have
architectures similar to those of HP such that layout rules and electrical
design rules of HP are met and appropriate process, qualification, and
reliability data may be conveyed to HP ("HP-Compatible Processes");

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<PAGE>   4
        Whereas the Company and CSM, or with the assistance of CSM, is willing
to undertake and complete the process of development, evaluation, and
implementation of HP-Compatible Processes; and

        Whereas the Company, CSM and HP desire to agree upon and execute
agreements in respect of the manufacture and sale of semiconductor wafers and
integrated circuits by the Company and CSM to HP (the "Manufacturing
Agreements").


        THEREFORE, the Parties agree as follows:


                                    AGREEMENT

1.      Definitions

        1.1 "Affiliates" shall mean any corporation or other business entity in
which a Party owns or controls, directly or indirectly, at least fifty percent
(50%) of the outstanding stock or other voting rights entitled to elect
directors; provided, however, that in any country where the local law does not
permit foreign equity participation of at least 50%, then "Affiliate" shall
include any company in which a Party owns or controls, directly or indirectly,
the maximum percentage of such outstanding stock or voting rights permitted by
local law. Notwithstanding the foregoing, the Company shall not be considered an
"Affiliate" of CSM for purposes of this Agreement.

        1.2 "Company Licensed Technology" shall mean:

               1.2.1 Company Patents, defined as all classes or types of
patents, utility models, and design patents of all countries of the world, which
are issued, published or claiming inventions conceived prior to the date of
termination of this Agreement and which arise out of the inventions made by one
or more employees of the Company or an Affiliate of the Company, or under which
and to the extent to which and subject to the conditions under which the Company
or an Affiliate of the Company may have, as of the Effective Date of this
Agreement, or may thereafter during the term of this Agreement acquire the right
to grant licenses or rights of the same or lesser scope granted herein without
the payment of royalties or other consideration to third parties, except for
payments to third parties for inventions made by said third persons while
engaged by the Company or an Affiliate of the Company.

               1.2.2 Company Technical Information, defined as technical
information developed by the Company which the Company or Affiliates of the
Company are not prevented by any law or existing agreement from disclosing to
CSM or HP for the purposes set forth in this Agreement.


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                                       2
<PAGE>   5
               1.2.3 Company Confidential Information, defined as all
proprietary information relating to the subject matter of this Agreement
disclosed during the term of this Agreement, and designated with an appropriate
legend of confidentiality by the Company or an Affiliate of the Company, and
disclosed by the Company or an Affiliate of the Company to CSM or HP in written,
graphic, or model form, or in the form of a computer program, data base, or
electronically stored document, and any derivation thereof, and designated with
an appropriate legend of confidentiality, where possible in writing, or if
disclosed orally or visually, is identified within thirty (30) days after such
oral or visual disclosure.

        1.3 "CSM Licensed Technology" shall mean:

               1.3.1 CSM Patents, defined as all classes or types of patents,
utility models, and design patents of all countries of the world relating to the
CSM process technology described in Annex A as amended from time to time (the
"CSM Process Technology"), which are issued, published or claiming inventions
conceived prior to the date of termination of this Agreement and which arise out
of the inventions made by one or more employees of CSM or an Affiliate of CSM,
or under which and to the extent to which and subject to the conditions under
which CSM or an Affiliate of CSM may have, as of the Effective Date of this
Agreement, or may thereafter during the term of this Agreement acquire the right
to grant licenses or rights of the same or lesser scope granted herein without
the payment of royalties or other consideration to third parties, except for
payments to third parties for inventions made by said third persons while
engaged by CSM or an Affiliate of CSM.

               1.3.2 CSM Technical Information, defined as the technical
information described in Annex A as amended from time to time and which CSM or
Affiliates of CSM are not prevented by any law or existing agreement from
disclosing to the Company or HP for the purposes set forth in this Agreement.
CSM Technical Information disclosed to the Company or HP shall be substantially
the same information, in substantially the same form as CSM uses for its own
internal purposes with respect to the CSM Process Technology. Notwithstanding
the foregoing, CSM Technical Information shall include technical information
developed by CSM in the course of CSM's research and development activities for
which all or a portion of the expenses are allocated to the Company pursuant to
the CSM Services Agreement regardless of whether such technical information is
described on Annex A.

               1.3.3 CSM Confidential Information, defined as all proprietary
information relating to the subject matter of this Agreement disclosed during
the term of this Agreement, and designated with an appropriate legend of
confidentiality by CSM or an Affiliate of CSM, and disclosed by CSM or an
Affiliate of CSM to the Company or HP in written, graphic, or model form, or in
the form of a computer program, data base, or electronically stored document,
and any derivation thereof, and designated with an appropriate legend of
confidentiality, where possible in writing, or if disclosed orally or visually,
is identified within thirty (30) days after such oral or visual disclosure.

        1.4 "GSS" shall mean General Semiconductor Standards as propagated by HP
from time to time. The GSS is defined in HP document no. A-5951-7600-1.


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                                       3


<PAGE>   6
        1.5 "HP Licensed Technology" shall mean:

               1.5.1 HP Patents, defined as all classes or types of patents,
utility models, and design patents of all countries of the world relating to the
HP process technology described in Annex B as amended from time to time (the "HP
Process Technology"), which are issued, published or claiming inventions
conceived prior to the date of termination of this Agreement and which arise out
of the inventions made by one or more employees of HP or an Affiliate of HP, or
under which and to the extent to which and subject to the conditions under which
HP or an Affiliate of HP may have, as of the Effective Date of this Agreement,
or may thereafter during the term of this Agreement acquire the right to grant
licenses or rights of the same or lesser scope granted herein without the
payment of royalties or other consideration to third parties, except for
payments to third parties for inventions made by said third persons while
engaged by HP or an Affiliate of HP.

               1.5.2 HP Technical Information, defined as the technical
information described in Annex B as amended from time to time and which HP or
Affiliates of HP are not prevented by any law or existing agreement from
disclosing to the Company or CSM for the purposes set forth in this Agreement.
HP Technical Information disclosed to the Company or CSM shall be substantially
the same information, in substantially the same form as HP uses for its own
internal purposes with respect to the HP Process Technology.

               1.5.3 HP Confidential Information, defined as all proprietary
information relating to the subject matter of this Agreement disclosed during
the term of this Agreement, and designated with an appropriate legend of
confidentiality by HP or an Affiliate of HP, and disclosed by HP or an Affiliate
of HP to the Company or CSM in written, graphic, or model form, or in the form
of a computer program, data base, or electronically stored document, and any
derivation thereof, and designated with an appropriate legend of
confidentiality, where possible in writing, or if disclosed orally or visually,
is identified within thirty (30) days after such oral or visual disclosure.

        1.6 "Licensed Technology," "Technical Information" and "Confidential
Information" shall refer individually to the Licensed Technology, Technical
Information and Confidential Information of CSM, HP and the Company or
collectively to the CSM Licensed Technology, HP Licensed Technology and Company
Licensed Technology; CSM Technical Information, HP Technical Information and
Company Technical Information; and CSM Confidential Information, HP Confidential
Information and Company Confidential Information; as the context requires.

        1.7 "Project IP" has the meaning given in Clause 3.1.

        1.8 "Residual Knowledge" shall mean Technical Information or
Confidential Information in intangible form that may be retained in the minds of
a Party's employees who have authorized access to such Technical Information or
Confidential Information.

        1.9 "Subsidiary" has the meaning given in Clause 10.3.


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                                       4


<PAGE>   7
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


        1.10 "Successful GSS Qualification" shall have the meaning defined in
Annex C, as amended from time to time.

        1.11 "Successful Technology Transfer" shall have the meaning defined in
Annex C, as amended from time to time.

        1.12 "Test Vehicle" shall mean the artwork and/or processed silicon
containing a circuit and test structures intended to be used to develop,
qualify, and monitor the HP-Compatible Processes.


2.      License Grants

        2.1 By CSM:

               2.1.1 CSM hereby grants to each of the Company and HP a ********
************************************* right and license without right of
sublicense under CSM Licensed Technology to use the CSM Technical Information,
to import, to make (but not have made), use, sell, or otherwise dispose of
semiconductor wafers and integrated circuits.

               2.1.2 No right or license is granted to the Company, HP or their
respective Affiliates to utilize or reverse engineer CSM Technical Information
to derive or design products or processes except as expressly provided for
herein; however, the Company and HP may modify or prepare derivative works of
CSM Technical Information solely for the purpose of integrated circuit yield,
process compatibility enhancements, and incorporation into Company and HP
processes, respectively.

        2.2 By HP:

               2.2.1 HP hereby grants to each of the Company and CSM a *********
************************************* right and license without right of
sublicense under HP Licensed Technology to use the HP Technical Information, to
import, make (but not have made), use, sell, or otherwise dispose of
semiconductor wafers and integrated circuits.

               2.2.2 No right or license is granted to the Company, CSM or their
respective Affiliates to utilize or reverse engineer HP Technical Information to
derive or design products or processes except as expressly provided for herein;
however, the Company and CSM may modify or prepare derivative works of HP
Technical Information solely for the purpose of integrated circuit yield,
process compatibility enhancements, and incorporation into Company and CSM
processes, respectively.

        2.3 By the Company:


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                                       5


<PAGE>   8
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


        The Company hereby grants to each of CSM and HP a **********************
************************ right and license with right of sublicense under the
Company Licensed Technology to use the Company Technical Information, to import,
make and have made, use, sell or otherwise dispose of semiconductor wafers and
integrated circuits.

        2.4 Ownership:

        Each of the Company, CSM and HP shall retain all right, title, and
interest in their respective Licensed Technology. Other than as specifically
provided in this Clause 2, no right or license under patents or other
intellectual property of such Party is granted, either directly, by implication,
estoppel, or otherwise.


3.      Improvements and Amendments to Licensed Technology

        3.1 Project IP

        "Project IP" means any discovery, improvement, invention, mask work, or
work of authorship which relates to any Licensed Technology and which is
conceived, made or developed during the life of the Agreement solely by any
Party or jointly by any two or more Parties, except any discovery, improvement,
invention, mask work, or work of authorship solely made by one Party and related
solely to the Licensed Technology of that party. Project IP which is solely
developed by one party will be solely owned by such developing party. Jointly
developed Project IP will be jointly owned by the developing Parties. By mutual
agreement of the Parties, Project IP conceived, made or developed by the
personnel of one or two Parties but to a significant portion funded by another
Party may be deemed jointly developed by the developing and funding Parties. In
the absence of such agreement, for the purposes of this Clause 3.1, a Party will
be considered a developing Party of a particular Project IP if that Party
provides a significant contribution either by way of personnel or funding
towards the development of that particular Project IP.

        Notwithstanding the foregoing, any discovery, improvement, invention,
mask work, or work of authorship made by the Company during the life of this
Agreement will be deemed Project IP developed jointly by CSM and HP.

        3.2 License to Project IP

        Each Party grants each other Party a license under any Project IP it
will own - solely or jointly with one or more other Parties - to make derivative
works of such Project IP and to import, make, have made, use, sell, or otherwise
dispose of semiconductor wafers and integrated circuits.

        3.3 Sublicense of Project IP


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                                       6


<PAGE>   9
        A Party who grants to a third party a license under such Party's process
technology may grant sublicenses under the license grant of Clause 3.2 in
respect of Project IP applicable to such licensed process technology.

        3.4 Notification Discovery and Assistance with IP Protection

        Upon making a discovery, improvement, invention, mask work creation, or
work of authorship related to any Licensed Technology, the developing Party
shall promptly notify the other Parties and a decision regarding the obtaining
of formal intellectual property protection shall be made among the Parties on a
case by case basis. If the developing Party of a Project IP elects to not seek
formal intellectual property protection for such Project IP, a non-developing
Party may request consent of the developing Party to file for formal
intellectual property protection for such Project IP in the name of the
developing Party. The Party filing for formal intellectual property protection
shall be given all reasonable and proper support and aid by the non-filing
Parties and shall pay all expenses associated with the filing and maintenance of
the formal intellectual property protection.

        3.5 Amendments to Annexes

        The Parties shall use commercially reasonable efforts to amend Annexes A
and B to this Agreement relating to Licensed Technology as quickly as
practicable upon the recommendations of the Technology Committee (as defined in
the JV Agreement).


4.      HP-Compatible Processes

        4.1 HP-Compatible Process Roadmap

        The Company and CSM hereby agree that, upon HP's request, the Company -
with the assistance of CSM - will undertake and complete the process of
developing, evaluating and implementing HP-Compatible Processes. The Company,
CSM and HP will develop and agree upon a roadmap for each HP-Compatible Process
(a "HP-Compatible Process Roadmap") which shall include but not be limited to
designation of a technology transfer manager, HP specifications for the
applicable technology process, a schedule listing milestones and deliverables
for technology transfer, allocation of expenses, qualification specifications
and reliability monitoring specifications. A template for a HP-Compatible
Process Roadmap is set forth on Annex C. Each HP-Compatible Process Roadmap
shall be attached to this Agreement and shall be successively numbered as
Annexes C-1, C-2, etc.

        4.2 Deliverables on Roadmap

        Each of the Company, CSM (if applicable) and HP shall deliver those
items specified in a HP-Compatible Roadmap to one another as specified no later
than the date specified therein.

        4.3 Test Vehicle Reticle


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                                       7


<PAGE>   10
        The Company - with the assistance of CSM - shall generate the test
vehicle reticle, process development, and qualification lots and shall assume
the cost and effort for process development, qualification, and on-going
monitoring.

        4.4 Completion

        The Company, CSM (if applicable) and HP shall acknowledge the completion
of a Successful Technology Transfer and Successful GSS Qualification by a
written notification duly executed by the Company, CSM (if applicable) and HP.

        4.5 Technology Transfer Managers

        In each HP-Compatible Process Roadmap, the Company, CSM (if applicable)
and HP shall each designate a technology transfer manager (the "Technology
Transfer Manager") who shall have the responsibility to successfully implement
the technology transfer as well as to be the focal point of issue resolution.
Written notice of a change of Technology Transfer Manager shall be provided to
the other Parties not later than 15 days after such change has been implemented.

        4.6 No Technical Assistance

        Except as set forth in a HP-Compatible Process Roadmap or this
Agreement, HP shall have no obligation to provide technical assistance to the
Company or CSM.


5.      Technology Transfer

        5.1 Transfer upon Request by Party

        Upon request by one Party (the "Requesting Party") to another Party (the
"Transferring Party"), the Transferring Party shall transfer its Technical
Information to the Requesting Party and shall provide the Requesting Party with
reasonable assistance in adopting such Technical Information.

        5.2 Technology Transfer Expenses according to Roadmap

        With respect to HP-Compatible Processes, expenses will be borne by the
Parties in accordance with the applicable HP-Compatible Process Roadmap as set
forth in Annex C.

        5.3 Requesting Party bears Expenses

        Except as otherwise provided in this Agreement, a Party requesting a
transfer of and receiving technology hereunder shall pay for all costs and
expenses incurred in such transfer on a time and materials cost basis which will
be mutually agreed between the Requesting Party and


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                                        8


<PAGE>   11
the Transferring Party, on a case by case basis. For the avoidance of doubt,
costs and expenses incurred in such a transfer which are paid or payable under
the CSM Services Agreement shall not be paid or payable under this Agreement.


6.      Term and Termination

        6.1 Term Generally

        The term of this Agreement shall commence as of the Effective Date and
shall continue for so long as the JV Agreement is effective unless earlier
terminated in writing in accordance with this Clause 6. In the event that either
HP's or CSM's Shareholding Percentage (as defined in the JV Agreement) decreases
below 10 percent, the Parties will meet in good faith to determine appropriate
modifications to the rights and obligations of each Party under this Agreement
with respect to further grants of licenses under Project IP (pursuant to Clause
3.2), the development, evaluation and implementation of future HP-Compatible
Processes (pursuant to Clause 4) and the transfer of future Technical
Information (pursuant to Clause 5). Notwithstanding the foregoing, if CSM or HP
sells or otherwise transfers (other than to a Permitted Transferee, as such term
is defined in the JV Agreement) all of its shares in the Company, then this
Agreement will terminate as to such Party.

        6.2 Termination for Breach

        This Agreement may be terminated by a Party with respect to another
Party who materially breaches the terms of this Agreement, if such breaching
Party fails to remedy the breach within thirty (30) days (or such other period
either set forth in a HP-Compatible Process Roadmap or as agreed by the Parties)
after receipt of written notice from the terminating Party specifying the
alleged breach. Thereafter, the non-breaching Party shall give written notice of
termination to the breaching Party and the other non-breaching Party and upon
the giving of such notice of termination, this Agreement shall terminate on the
thirtieth (30th) day (or the day on which any alternate cure period ends) after
such notice is received by the breaching Party.

        6.3 Termination for Breach does not Release Breaching Party

        Any termination for breach pursuant to this Clause 6 shall not relieve
the breaching Party of any obligation or liability accrued hereunder prior to
such termination, and such termination shall not affect in any manner any rights
of a non-breaching Party under this Agreement, or rescind, or give rise to any
right to rescind, anything done by the breaching Party or any payments made or
other consideration given to a non-breaching Party hereunder prior to the time
such termination becomes effective.

        6.4 Termination by Written Notice

        Any Party hereto shall have the right to terminate this Agreement by
giving written notice of termination to the other Parties any time upon or after
(a) the filing by any other Party of a


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                                        9


<PAGE>   12
petition in bankruptcy or insolvency, (b) any adjudication that any other Party
is bankrupt or insolvent, (c) the filing by any other Party under any law
relating to bankruptcy or insolvency, (d) the appointment of a receiver for all
or substantially all of the property of any other Party, (e) the making by any
other Party of any assignment or attempted assignment of this Agreement for the
benefit of creditors, or (f) the institution of any proceedings for the
liquidation or winding up of any other Party's business or for the termination
of its corporate charter. Upon the giving of such notice of termination, this
Agreement shall be terminated.

        6.5 Effect of termination:

               6.5.1 In the event of termination of this Agreement on a date
later than twelve (12) months after the Effective Date of this Agreement:

                      (a) The license grants set forth in Clauses 2, 3.2, and
3.3 and the Warranty provisions contained in Clause 8 of this Agreement survive
such termination; and

                      (b) Upon written request of any Party who has disclosed
Technical Information or Confidential Information under this Agreement
("Disclosing Party") to a Party who has received such information ("Receiving
Party"), the Receiving Party must exercise reasonable efforts to return to the
Disclosing Party or destroy all Technical Information and Confidential
Information of the Disclosing Party, and all copies and derivatives thereof,
unless such Technical Information, Confidential Information, copies or
derivatives are necessary to exercise the license grants set forth in Clauses 2,
3.2, and 3.3.

                      (c) In the event of termination of this Agreement by CSM
or HP:

                           (i) For a period of six (6) months following the date
of termination, CSM and HP shall - unless otherwise mutually agreed - continue
to perform their obligations with respect to the development, evaluation or
implementation of any process or technology provided that the nature and scope
of such development, evaluation, and implementation has been defined by the
Parties; and

                           (ii) The rights and obligations set forth in Clause 5
shall - unless otherwise mutually agreed - continue for a period of twelve (12)
months from the date of termination.

               6.5.2 In the event of termination of this Agreement, prior to or
on the date twelve (12) months following the Effective Date of this Agreement:

                      (a) The license grants set forth in Clause 2, 3.2, and 3.3
and the Warranty provisions contained in Clause 8 shall terminate; and

                      (b) Upon written request of any Party who has disclosed
Technical Information or Confidential Information under this Agreement
("Disclosing Party") to a Party who has received such information ("Receiving
Party"), the Receiving Party must exercise


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                                       10


<PAGE>   13
reasonable efforts to return to the Disclosing Party or destroy all Technical
Information and Confidential Information of the Disclosing Party, and all copies
and derivatives thereof.

               6.5.3 Additionally, in the event of termination of this Agreement
- - whether on, before or after twelve (12) months from the Effective Date of this
Agreement:

                      (a) All other rights and obligations - not explicitly
addressed in Paragraph 6.5.1 and 6.5.2 which by their nature survive the
expiration or termination of this Agreement shall remain in effect, including
the Confidentiality provisions contained in Clause 9 of this Agreement; and

                      (b) All Parties shall be entitled to use, for any purpose,
Residual Knowledge.


7.      Consulting Employees

        Representatives and personnel of the Company, CSM and HP, who are
present on each other's premises in connection with the performance of this
Agreement, shall be subject to all rules and regulations prevailing on such
premises during such time.


8.      Warranty and Disclaimer and Defense of Claims

        8.1 Warranty and Disclaimer

        The Company, CSM and HP, for themselves and their respective Affiliates,
each respectively warrant that it has the right to grant the licenses and rights
set forth in this Agreement. No Party assumes any responsibility for enforcement
of any intellectual property rights against third parties. All items transferred
under this Agreement, including any Technical Information, are provided "AS IS".
The Company, CSM and HP, for themselves and their respective Affiliates, each
respectively represents that it is not aware of any claims of patent
infringement asserted against their respective Licensed Technologies. Neither
the Company, CSM, HP or any of their respective Affiliates make any warranty as
to the accuracy, sufficiency, or suitability of any Technical Information,
Confidential Information or technical assistance provided under this Agreement.
THE COMPANY, CSM, HP AND THEIR RESPECTIVE AFFILIATES DISCLAIM ALL OTHER
WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTY OF NON-INFRINGEMENT OF
PATENT RIGHTS AND IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. Remedies provided in this Agreement are the sole and
exclusive remedies of the Parties. Except as provided in a subsequent commercial
agreement (e.g. any Manufacturing Agreement negotiated or entered into among the
Parties), no Party shall in any event be liable for indirect, special, reliance,
incidental, or consequential loss or damage of any kind arising out of or under
this Agreement, whether in an action for or arising out of alleged breach of
warranty, alleged breach of Agreement, delay, negligence, strict liability, or
otherwise.

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                                       11

<PAGE>   14
        8.2 Defense Of Intellectual Property Infringement Claims And Proceedings

               8.2.1 If a claim or proceeding is brought against the Company
alleging the Company's infringement of a third party's intellectual property
resulting from the Company's exercise of the license and right in HP Licensed
Technology granted in this Agreement, upon the Company's request, HP will use
commercially reasonable efforts to:

                      (a) At the Company's expense, provide the Company with
assistance in the defense of such claims or proceedings including providing the
Company access to HP personnel involved in developing the HP Licensed
Technology, and providing the Company access to relevant information, including
without limitation, technical information of HP; and

                      (b) At the Company's expense, make one or more HP
employees available to testify as expert witnesses as well as witnesses of fact
at depositions and trials.

               8.2.2 If a claim or proceeding is brought against the Company
alleging the Company's infringement of a third party's intellectual property
resulting from the Company's exercise of the license and right in CSM Licensed
Technology granted in this Agreement, upon the Company's request, CSM will use
commercially reasonable efforts to:

                      (a) At the Company's expense, provide the Company with
assistance in the defense of such claims or proceedings including providing the
Company access to CSM personnel involved in developing the CSM Licensed
Technology, and providing the Company access to relevant information, including
without limitation, technical information of CSM; and

                      (b) At the Company's expense, make one or more CSM
employees available to testify as expert witnesses as well as witnesses of fact
at depositions and trials.

               8.2.3 If a claim or proceeding is brought against CSM alleging
CSM's infringement of a third party's intellectual property resulting from CSM's
exercise of the license and right in HP Licensed Technology granted in this
Agreement, upon CSM's request, HP will use commercially reasonable efforts to:

                      (a) at CSM's expense, provide CSM with assistance in the
defense of such claims or proceedings including providing CSM access to HP
personnel involved in developing the HP Licensed Technology, and providing CSM
access to relevant information, including without limitation, technical
information of HP; and

                      (b) at CSM's expense, make one or more HP employees
available to testify as expert witnesses as well as witnesses of fact at
depositions and trials.

               8.2.4 If a claim or proceeding is brought against HP alleging
HP's infringement of a third party's intellectual property resulting from HP's
exercise of the license and right in


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       12
<PAGE>   15
CSM Licensed Technology granted in this Agreement, upon HP's request, CSM will
use commercially reasonable efforts to:

                      (a) at HP's expense, provide HP with assistance in the
defense of such claims or proceedings including providing HP access to CSM
personnel involved in developing the CSM Licensed Technology, and providing HP
access to relevant information, including without limitation, technical
information of CSM; and

                      (b) at HP's expense, make one or more CSM employees
available to testify as expert witnesses as well as witnesses of fact at
depositions and trials.


9.      Confidentiality

        9.1 Standard of Care

        The receiving Party shall not disclose Technical Information or
Confidential Information of any other Party hereto to any third party without
prior written approval from the disclosing Party and any disclosure of Technical
Information or Confidential Information of any other Party hereto to employees
of the receiving Party shall be only on a need to know basis. Use of Technical
Information or Confidential Information by the receiving Party shall be limited
to achieving the purposes of this Agreement. The receiving Party shall protect
Technical Information or Confidential Information of the disclosing Party by
using the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized, use, dissemination, or publication of such Technical
Information or Confidential Information as the receiving Party uses to protect
its own confidential information of a like nature.

        9.2 Test Vehicles

        While the Company and CSM may share data collected from Test Vehicles
with other Company and CSM customers, no physical wafers, or parts of wafers,
that contain parts of any Test Vehicle data may be shared by the Company or CSM
with any third party without HP's prior written consent. Further, HP considers
its artwork to be confidential and proprietary; the Company and CSM shall not
disclose any artwork of HP to any third party without HP's prior written
consent.

        9.3 Exceptions

        No obligation under Clauses 9.1 and 9.2 is imposed upon the receiving
Party with respect to Technical Information or Confidential Information which:
(a) was in the receiving Party's possession before receipt from the disclosing
Party; (b) is or becomes a matter of public knowledge through no fault of the
receiving Party; (c) is rightfully received by the receiving Party from a third
party without a duty of confidentiality; (d) is disclosed by the disclosing
Party to a third party without a duty of confidentiality on the third party; (e)
is independently developed


- --------------------------------------------------------------------------------
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                                       13


<PAGE>   16
by the receiving Party; (f) is disclosed under operation of law; or (g) is
disclosed by the receiving Party with the prior written approval of the
disclosing Party.

        9.4 Adherence to Laws and Regulations

        Each Party shall adhere to all applicable laws, regulations, and rules
relating to the export of technical data, and shall not export or re-export any
technical data, any products received from a disclosing Party, or the direct
product of such technical data to any proscribed country listed in such
applicable laws, regulations, or rules unless properly authorized.


10.     General Provisions

        10.1 Entire Agreement

        This Agreement and the Annexes attached hereto, constitute the entire
agreement among the Parties relating to the subject matter of the Agreement and
supersede all prior proposals, agreements, representations, and other
communications among the Parties with respect to the subject matter of this
Agreement, including, without limitation any Confidential Disclosure Agreement
executed among the Parties or between any two Parties hereto. The Parties agree
that any subsequent commercial agreement among the Parties shall not be affected
by any of the provisions of this Agreement and shall therefore continue in full
force and effect after it is signed by the Parties.

        10.2 Changes in Writing

        No change in the provisions of this Agreement shall be valid unless in
writing and executed by all of the Parties.

        10.3 Subsidiaries

        Except as otherwise specifically provided in this Agreement, the Parties
agree that this Agreement will apply to a Party's Subsidiaries so long as such
Subsidiaries agree to comply fully with the obligations imposed on that Party by
this Agreement. Each Party will remain fully responsible for actions and
omissions of its Subsidiaries relative to rights granted under this Clause 10.3.
A business entity will be deemed a "Subsidiary" of a Party if that Party now or
hereafter owns or controls, directly or indirectly, a majority of the entity's
stock entitled to vote for election of directors, or has an equivalent majority
control in the case of a non-corporate entity such as a partnership. Such a
business entity will be deemed a Subsidiary of the Party for only so long as
such ownership or control actually exists.

        10.4 Governing Law

        This Agreement shall be governed by the substantive laws of Singapore.
The Parties hereby specifically exclude the application to this Agreement of the
United Nations Convention


- --------------------------------------------------------------------------------
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                                       14


<PAGE>   17
on Contracts for the International Sale of Goods. The Parties hereby submit to
the non-exclusive jurisdiction of the courts of Singapore.

        10.5 Transfer or Assignment

        This Agreement may not be assigned, delegated, or subcontracted to any
third party, including without limitation any Affiliate of a Party, without the
prior written consent of the other Parties. A merger, consolidation, sale or
transfer of more than 50 percent of the ownership interests of any Party, or the
sale of all or substantially all the assets of any Party, shall be deemed an
assignment that requires the prior written consent of the other Parties, which
consent will not be unreasonably withheld. Any purported assignment, delegation,
or subcontracting of this Agreement shall be void. Except as specifically
described herein, the licenses and rights granted hereunder may not be
sublicensed by any Party without the prior written consent of the other Parties.
Subject to the foregoing, this Agreement will bind and inure to the benefit of
the Parties and their respective successors and permitted assigns.

        10.6 Force Majeure

        If the performance of this Agreement or any obligations hereunder is
prevented, restricted or interfered with by reason of fire or other casualty or
accident, strikes or labor disputes, war or other violence, any law, order,
proclamation, ordinance, demand or requirement of any government agency, or any
other act or condition beyond the control of the Parties hereto, the Party so
affected upon giving prompt notice to the other Parties shall be excused from
such performance during such prevention, restriction or interference for a
period of up to one hundred twenty (120) days. If the prevention, restriction or
interference continues for more than one hundred twenty (120) days, the Party
whose performance is prevented shall have no liability to the other Parties, but
the other Parties shall have the right to terminate this Agreement with respect
to such Party immediately upon written notice if performance shall not have
resumed within one hundred eighty (180) days after the initial interruption of
performance.

        10.7 No Waiver of Rights by Delay in Action

        The failure or delay of any Party in exercising any of its rights
hereunder, including any rights with respect to a breach or default by any other
Party, shall in no way operate as a waiver of such rights or prevent the
assertion of such rights with respect to any later breach or default by such
other Party.

        10.8 Severability

        Should any provision of this Agreement be held to be unenforceable, such
ruling shall not affect the validity and enforceability of the remaining
provisions of this Agreement.

        10.9 Notices


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                                       15


<PAGE>   18
        Any notice or acceptance provided for in this Agreement shall be in
writing and deposited with the post office or a package courier specifying
"next-day delivery" or equivalent, with appropriate postage applied, receipt
signature required, and shall be deemed to have been given on the date such
communication is received by the Party to whom it is addressed. Any such notice
or acceptance shall be addressed to:


<TABLE>
<S>                                                       <C>
        Chartered Silicon Partners Pte Ltd                Telephone: (65) 362 2838
        Legal Department                                  Facsimile:  (65) 362 2909
        60 Woodlands Industrial Park D
        Street 2, Singapore 738406

        Chartered Semiconductor Manufacturing Ltd         Telephone: (65) 362 2838
        Legal Department                                  Facsimile:  (65) 362 2909
        60 Woodlands Industrial Park D
        Street 2, Singapore 738406

        Hewlett-Packard Company                           Telephone: (01)(415) 857 1501
        Attn: General Counsel                             Facsimile:  (01)(415) 857 4392
        3000 Hanover Street, MS 20BQ
        Palo Alto, CA, U.S.A. 94304
</TABLE>


        10.10 Headings

        The headings used in this Agreement are for reference and convenience
only and shall not be used in interpreting the provisions of this Agreement.

        10.11 Independent Contractors

        None of the provisions of this Agreement shall be construed to make any
Party an agent of or joint venturer with any other Party for any purpose.

        10.12 Trademark Usage

        None of the provisions of this Agreement shall be construed as
conferring any right to use in advertising, publicity, or other promotional
activities the trademarks, tradenames, or other designations of any Party or
their respective Affiliates by any other Party.

        10.13 Confidentiality of Agreement

        The Company, CSM and HP agree not to disclose the existence of this
Agreement or the rights granted under it in any promotional activity without the
other Parties' express written approval. Press releases or other like publicity
or advertising of any Party which mentions any other Party by name shall be
approved in writing by such other Party prior to release. To the extent
required, a Party shall have the right to change or correct such materials at
its own expense prior to the release of such material by the other Parties.


- --------------------------------------------------------------------------------
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                                       16


<PAGE>   19
        10.14 Registration of Agreement

        Each Party shall register this Agreement when required by its local law,
to pay all costs and legal fees connected therewith, and to otherwise ensure
that the applicable laws affecting this Agreement are satisfied.

        10.15 Language

        The language of this Agreement and any notices or acceptances hereunder
shall be English.

        10.16 Annexes

        All Annexes listed in this Clause 10.16 and attached to this Agreement
shall be deemed a part of this Agreement and incorporated herein by reference.


<TABLE>
<S>                 <C>
             A      CSM Licensed Technology
             B      HP Licensed Technology
             C      HP-Compatible Process Roadmap Template
            C-1     HP-Compatible Process Roadmap: C10
</TABLE>


        10.17 Same Terms in Annexes

        Terms which are defined in this Agreement and used in any Annex shall
have the same meaning in the Annex as in this Agreement.


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       17


<PAGE>   20
        IN WITNESS WHEREOF, the Parties have entered into this Agreement as of
the date stated above.




<TABLE>
<S>                                            <C>
  /s/ Rick Kenneth Hodgman                       /s/ Tan Bock Seng
- --------------------------------------         ----------------------------------------
Rick Kenneth Hodgman                           Tan Bock Seng
General Manager                                President & CEO
Chartered Silicon Partners Pte Ltd             Chartered Semiconductor Manufacturing Ltd
60 Woodlands Industrial Park D,                60 Woodlands Industrial Park D,
Street 2, Singapore 738406                     Street 2, Singapore 738406



  /s/ Alan W. Marty
- ----------------------------------------
Alan W. Marty
General Manager, Integrated Circuit
  Business Division
Hewlett-Packard Company
3000 Hanover Street, MS 20BQ
Palo Alto, CA, U.S.A. 94304
</TABLE>


- --------------------------------------------------------------------------------
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                                       18


<PAGE>   21
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                     ANNEX A

                             CSM LICENSED TECHNOLOGY


Listed below are the relevant documentation and specifications that describes
some of CSM's ******* logic technologies.


<TABLE>
<CAPTION>
Description                                               Documentation #
- -----------                                               ---------------
<S>                                                       <C>
****** Process Starting Material Spec                     2ERWF-0100
****** Topological Design Rule Spec                       C-DR-4019
****** Polycide Mask Bias Table Spec                      YI-040-BT002
****** Polycide Process Run Sheet Spec                    3YP-090-RS005
****** Polycide Non-Proprietary Process Flow Spec         3YP-090-RN001
****** Polycide Proprietary Process Flow Spec             YI-042-RP004
****** Polycide Reliability Spec                          YI-042-DR001
****** Polycide Spice Model Spec                          YI-042-SM001
****** Polycide Electrical Parameters Spec                YI-42-ET001
****** Polycide Electrical Test Spec                      YI-42-ET004
****** Salicide Process Run Sheet Spec                    3YP-090-RS010
****** Salicide Proprietary Process Flow Spec             YI-071-RP001
****** Salicide Mask Bias Table Spec                      YI-091-BT003
****** Salicide Reliability Spec                          YI-042-DR001
****** Salicide Spice Model Spec                          YI-075-SM001
****** Salicide Electrical Parameters Spec                3YP-118-ET001
****** Salicide Electrical Test Spec                      3YP-118-ET002
Fab 3 6" Reticle Specification for Steppers               3ML-001-AS001
</TABLE>


- --------------------------------------------------------------------------------
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                                       19


<PAGE>   22
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                 ANNEX A-1 (C07)

                             CSM LICENSED TECHNOLOGY

Listed below are the relevant documentation and specifications that describe
some of CSM's ****** logic technologies.


<TABLE>
<CAPTION>
DESCRIPTION                               DOCUMENTATION #
- -----------                               ---------------
<S>                                       <C>
****                                      YI-079-RS002
****                                      YI-079-SM001
****                                      YI-079-IA001
****                                      YI-079-PT002
****                                      YI-079-SM003
****                                      YI-079-EP001
****                                      YI-079-DC001
****                                      YI-079-DR001
****                                      YI-079-ET003
</TABLE>

Agreed among:



<TABLE>
<S>                                 <C>                                 <C>
/s/ Rick Hodgman                    /s/ John Martin                     /s/ Lance Mills
- -------------------------------     -------------------------------     -------------------------------
Rick Hodgman                        John Martin                         Lance Mills
General Manager                     Vice President                      Division R&D Manager
Chartered Silicon Partners          Technology Development              Integrated Circuit Business
Pte Ltd                             Chartered Semiconductor             Division
Date:   1 April 1999                Manufacturing Ltd                   Hewlett-Packard Company
                                    Date:   12 April 1999               Date:   31 March 1999
</TABLE>


- --------------------------------------------------------------------------------
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                                       20


<PAGE>   23
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                     ANNEX B

                             HP LICENSED TECHNOLOGY



Listed below are the relevant documentation and specifications that describes HP
************************* (referred to as generic C10 process) logic
technologies:


<TABLE>
<CAPTION>
Description                                                                 Document #
- -----------                                                                 ----------
<S>                                                                         <C>
HP C14/C10 200 mm Diameter Silicon Epitaxial Wafer Specification            A-4340-0411-1
HP C10 Design Reference Manual, including:                                  A-5960-7198-1
- - Chapter 1: Introduction                                                   A-5960-7198-3
- - Chapter 2: Device Characteristics                                         A-5960-7198-4
- - Chapter 3: Interconnect Characteristics                                   A-5960-7198-5
- - Chapter 4: Layout Rules                                                   A-5960-7198-6
- - Chapter 5: Reliability Rules                                              A-5960-7198-7
- - Chapter 6: Pad Design Rules                                               A-5960-7198-8
- - Chapter 7: Additional Artwork Requirements                                A-5960-7198-9
- - Chapter 8: Artwork Verification                                           A-5960-7198-10
- - Chapter 9: Mask Generation                                                A-5960-7198-11
- - Chapter 10: Wafer Manufacturing Services                                  A-5960-7198-12
- - Chapter 11: Functional Test Services                                      A-5960-7198-13
- - Chapter 12: Packaging                                                     A-5960-7198-14
- - Chapter 13: Quality                                                       A-5960-7198-15
HP C10  6" Process Flow and Recipe Specification
HP C10  Spice Model Specification
HP C10 CAPT (Computer Automated Parametric Test)  Specification
HP C10 CAPT Test Program and Hardware Specification
HP C10 SAPT (Super Automated Parametric Test) Specification
HP C10 SAPT Test Program and Hardware Specification
HP C10 PDV (Process Development Vehicle) Specification
HP C10 PDV SRAM, Schematic,  Artwork, Functional Description, Test Program
and Hardware Specifications
</TABLE>

- --------------------------------------------------------------------------------
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                                       21


<PAGE>   24
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                 ANNEX B-1 (C07)

                             HP LICENSED TECHNOLOGY

Listed below are the relevant documentation and specifications describing HP
****** logic technologies that have been transferred as part of the startup of
the C07 project:


<TABLE>
<CAPTION>
DESCRIPTION                                                                     DOCUMENT #
- -----------                                                                     ----------
<S>                                                                             <C>
ICBD 200mm Diameter CMOS07 Silicon Epitaxial Wafer Specification

CMOS07 Process Flow

CMOS07 Design Rule Manual                                                       Dwg. #A-5964-2496-1

Bias table

Qualification plan

1QP4 Test Chip
                  -1A reticle set from Corvallis

                  -GDS2 artwork database

                  -track list & description, floorplan and track placement
                  -Mosaid software
                  -Nikon setup file

Module Transfer Specifications
                  -contact etch
                  -dielectric deposition
                  -metal deposition
                  -metal etch
                  -seed deposition
                  -tungsten deposition
                  -STI
                  -FET
                  -salicide

Resist and exposure conditions

Frame Specifications Rev. H

C07 Critical Dimension Control

Dielectric CMP Process Control Methodology


HDP oxide and dielectric CMP integration

C07 ET test code (CAPT/SAPT/libraries)

ICBD Reliability Qualification Test Selection Guideline                         Dwg. #A-5951-8868-59
(note already provided during C10 transfer)
</TABLE>


Note: recipes and engineering reports have been transferred on an as-needed
basis and are tracked of separately by the Technology Transfer Managers. A list
of critical reports will be attached to the above at completion of the transfer
by the Technology Transfer Managers.


- --------------------------------------------------------------------------------
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                                       22


<PAGE>   25
Agreed among:


<TABLE>
<S>                                 <C>                                 <C>
/s/ Rick Hodgman                    /s/ John Martin                     /s/ Lance Mills
- -------------------------------     -------------------------------     -------------------------------
Rick Hodgman                        John Martin                         Lance Mills
General Manager                     Vice President                      Division R&D Manager
Chartered Silicon Partners          Technology Development              Integrated Circuit Business
Pte Ltd                             Chartered Semiconductor             Division
Date:   1 April 1999                Manufacturing Ltd                   Hewlett-Packard Company
                                    Date:   12 April 1999               Date:   31 March 1999
</TABLE>


- --------------------------------------------------------------------------------
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                                       23


<PAGE>   26
                                     ANNEX C

                     HP-COMPATIBLE PROCESS ROADMAP TEMPLATE


HP-Compatible Process Reference Name: _______________ [E.g. "C10"]

Technology Transfer Managers:

- - The Company:           _________________________
- - HP:                    _________________________
- - CSM (if applicable):   _________________________

HP Specifications for the HP-Compatible Process:

        Electrical Design Rules

        Layout Rules

        Circuit Design Models (Device and Interconnect)

        Artwork Generation Guidelines

Schedule for Milestones and Deliverables for Technology Transfer:

- - Company deliverables to HP:


<TABLE>
<CAPTION>
     TASK/ITEM      Completion Date      Company Transfer (Actual)      HP Receipt (Actual)
     ---------      ---------------      -------------------------      -------------------
<S>                 <C>                  <C>                            <C>

1.
2.
3.
etc.
</TABLE>


- - CSM deliverables to HP (if applicable):


<TABLE>
<CAPTION>
     TASK/ITEM      Completion Date      CSM Transfer (Actual)      HP Receipt (Actual)
     ---------      ---------------      ---------------------      -------------------
<S>                 <C>                  <C>                        <C>
1.
2.
3.
etc.
</TABLE>


- - HP deliverables to the Company:


<TABLE>
<CAPTION>
     TASK/ITEM      Completion Date      HP Transfer (Actual)      Company Receipt (Actual)
     ---------      ---------------      --------------------      ------------------------
<S>                 <C>                  <C>                       <C>
1.

</TABLE>


- --------------------------------------------------------------------------------
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                                       24


<PAGE>   27
<TABLE>
<CAPTION>
     TASK/ITEM      Completion Date      HP Transfer (Actual)      Company Receipt (Actual)
     ---------      ---------------      --------------------      ------------------------
<S>                 <C>                  <C>                       <C>
2.
3.
etc.
</TABLE>

- - HP deliverables to CSM (if applicable):


<TABLE>
<CAPTION>
     TASK/ITEM      Completion Date      HP Transfer (Actual)      CSM Receipt (Actual)
     ---------      ---------------      --------------------      --------------------
<S>                 <C>                  <C>                       <C>
1.
2.
3.
etc.
</TABLE>


Completion of all of the Tasks/Items set forth above in a timely manner shall
constitute a "Successful Technology Transfer." A Party to whom Tasks/Items are
to be delivered may agree to a later Completion Date.

Completion of delivery of a qualification report with data in the required
format and meeting the specifications set forth in the Qualification
Specifications in Annex C-2 of the applicable Manufacturing Agreement shall
constitute a "Successful GSS Qualification."

Allocation of Expenses

- - Expenses to be Paid by HP: [E.g. travel time, living expenses, etc. for
certain members of HP team; HP internal expenses for consulting services;
expenses related to preparation of artwork for test vehicle, etc.]

- - Expenses to be Paid by the Company: [E.g. engineering lots used in
development, qualification and process monitoring, reticles and probe card(s)
for test vehicles, Company engineering expenses, etc.]

- - Expenses to be Paid by CSM (if applicable): [Examples to be determined on a
case by case basis.]

Reliability Qualification Specifications

        As governed by "ICBD Reliability Qualification Test Selection
Guideline," HP document HP Dwg. #A-5951-8868-59.


- --------------------------------------------------------------------------------
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                                       25


<PAGE>   28
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

                                    ANNEX C-1

                          HP-COMPATIBLE PROCESS ROADMAP


HP-Compatible Process Reference Name:  ****

Technology Transfer Managers:

- - The Company:           ROGER SZETO

- - HP:                    ED CHEN

- - CSM (if applicable):   RAVI SUNDARESAN

HP Specifications for the HP-Compatible Process:

        Electrical Design Rules
        Layout Rules
        Circuit Design Models (Device and Interconnect)
        Artwork Generation Guidelines

Schedule for Milestones and Deliverables for Technology Transfer:

- - COMPANY/CSM DELIVERABLES TO HP:


<TABLE>
<CAPTION>
Task                                        Completion    CSM Transfer          HP Receipt
                                            Date          Date (actual)         Date(actual)
<S>                                         <C>           <C>                   <C>
1.  Report demonstrating completion         ****
    of ET test programs and functional
    test programs for the test vehicle

2.  Report demonstrating completion         ****
    of SRAM test programs

3.  Report with data on completion          ****
    of C10 process feasibility

4.  Bias tables for C10/G10                 ****
    (same DR, possible different biases)

5.  Design rule specification document,     ****
    HP C10/G10 compatible
</TABLE>


- --------------------------------------------------------------------------------
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                                       26


<PAGE>   29
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
Task                                        Completion    CSM Transfer          HP Receipt
                                            Date          Date (actual)         Date(actual)
<S>                                         <C>           <C>                   <C>
6.   Report with data on completion         ****
     of C10 process development (i.e.
     process freeze)

7.   Final process freeze for SPICE         ****

8.   Qualification report with data         ****
     in the required format and meeting
     specifications

9.   MR report                              ****
</TABLE>


- - HP'S DELIVERABLES TO CSM


<TABLE>
<CAPTION>
Task                                Completion            HP Transfer     CSM Receipt
                                    Date                  Date (actual)   Date (actual)
<S>                                 <C>                   <C>             <C>

1.  LOR and EDR targets             ****                  ****            ****

2.  Device architecture process     ****                  ****            ****
    including data on films,
    implant dosage and energy,
    thermal cycles and gate
    critical dimensions

3.  Standard device performance     ****                  ****            ****
    characterization curves:
    a)IV curves for active
    transistors
    b)Off-state leakage
    characteristics
    for field transistors
    c)rolloff curves vs L
    drawn and W drawn

4.  Artwork data needed for         ****                  ****            ****
    test vehicle's reticle set
    generation

5.  3 golden wafers with test       ****                  ****            ****
    vehicle from HP to be
    returned within 3 months
    from receipt date
</TABLE>


- --------------------------------------------------------------------------------
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                                       27


<PAGE>   30
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
Task                                Completion            HP Transfer     CSM Receipt
                                    Date                  Date (actual)   Date (actual)
<S>                                 <C>                   <C>             <C>
6. Schematic diagram and layout     ****
   of SRAM cell

7. Ring oscillator measurements     ****

8. In-line process monitors
   (partially On request
   processed 6 inch wafers for
   C10 correlation)

9. Required critical parameter
   listing
               -  CAPT              ****                  ****            ****
               -  SAPT              ****

10. CAPT and SAPT
    documentation and
    test programs
               - CAPT               ****                  ****            ****
               - SAPT               ****                  ****            ****

11. Test program listing
    and sample of data
    for SRAM                        ****
</TABLE>


Completion of all of the Tasks/Items set forth above in a timely manner shall
constitute a "Successful Technology Transfer." A Party to whom Tasks/Items are
to be delivered may agree to a later Completion Date.

Completion of delivery of a qualification report with data in the required
format and meeting the specifications set forth in the Qualification
Specifications in Annex C-2 of the applicable Manufacturing Agreement shall
constitute a "Successful GSS Qualification."

Allocation of Expenses

- - Expenses to be Paid by HP: [E.g. travel time, living expenses, etc. for
certain members of HP team; HP internal expenses for consulting services;
expenses related to preparation of artwork for test vehicle, etc.]

- - Expenses to be Paid by the Company: [E.g. engineering lots used in
development, qualification and process monitoring, reticles and probe card(s)
for test vehicles, Company engineering expenses, etc.]

- - Expenses to be Paid by CSM (if applicable): NONE.


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       28


<PAGE>   31
Reliability Qualification Specifications

        As governed by "ICBD Reliability Qualification Test Selection
Guideline," HP document HP Dwg. #A-5951-8868-59.


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.



                                       29


<PAGE>   32
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

                                 ANNEX C-2 (C07)

                          HP-COMPATIBLE PROCESS ROADMAP

HP-Compatible Process Reference Name: ****

Technology Transfer Managers:

- - The Company:           TOM JOY
- - HP:                    PHILIPPE WYNS
- - CSM (if applicable):   RAVI SUNDARESAN

HP Specifications for the HP-Compatible Process:

        Electrical Design Rules
        Layout Rules
        Circuit Design Models (Device and Interconnect)
        Artwork Generation Guidelines
        Module Transfer Specifications
        Parametric Test Specifications


Schedule for Milestones and Deliverables for Technology Transfer:

- - COMPANY DELIVERABLES TO HP:


<TABLE>
<CAPTION>
TASK                                       EXPECTED COMPLETION        ACTUAL TRANSFER
                                           DATE                       DATE
<S>                                        <C>                        <C>
1. Report demonstrating completion         ****
   of ET test programs,  including
   correlation to HP reference

2. Report demonstrating completion         ****
   of SRAM test programs on MOSAID and
   83000, including correlation to
   HP reference

3. Module Certification                    ****                 ****
   (demonstration that the process
   implementation satisfies the "copy
   exact" model and the Module
   Transfer Specifications)
</TABLE>


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       30


<PAGE>   33
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission

<TABLE>
<CAPTION>
TASK                                       EXPECTED COMPLETION        ACTUAL TRANSFER
                                           DATE                       DATE
<S>                                        <C>                        <C>
4. Report demonstrating                    ****
   completion of C07 process feasibility

5. Bias tables for C07                     ****
   (same DR, possible different biases)

6. Report demonstrating                    ****
   completion of C07 process freeze

7. Report demonstrating suitability        ****
   of  C07 for prototyping activities
   (PP checkpoint)

8. Release to manufacturing (MR)  of       ****
   the C07 process

9. Qualification and MR report             ****


CHECKPOINT REQUIREMENTS

                                           ****
</TABLE>


The material used to demonstrate compliance at each checkpoint shall represent
the plan of record process. All yield metrics (defect density, survival yield)
shall be computed using the same lots.

In the case when not all of the requirements are met, CSP and HP will mutually
agree on a resolution to the issue. Such a resolution may include an exception
or conditionality and a plan to rectify the deficiency.


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       31


<PAGE>   34
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


- - HP'S DELIVERABLES TO CSP


<TABLE>
<CAPTION>
TASK                                        EXPECTED COMPLETION       ACTUAL TRANSFER
                                            DATE                      DATE
<S>                                         <C>                       <C>
1. LOR and EDR targets                      ****                      ****

2. Complete process information, including  ****
   device architecture, equipment recipes,
   measurement location, values, sampling
   plans and evaluation methods

3. Standard device performance              ****
   characterization curves:

     -IV curves for active transistors

     -off-state leakage characteristics
      for field transistors

     -rolloff curves vs L and W drawn

4. Artwork data needed for test             ****                        ****
   vehicle's reticle set generation

5. Test vehicle documentation, including    ****
   layout of SRAM cell, test track
   description, schematics, test code,
   specs and hardware description,
   sample of data.

6. Copies of process characterization       ****
   reports as they are generated within
   HP.

7. Golden wafers with test vehicle          ****

8. Ring oscillator measurements             ****

9. In-line process monitors (partially      ****
   processed wafers for C07 process and
   measurement correlation)

10. Required critical parameter listing     ****                      ****

- -  CAPT
- -  SAPT
</TABLE>


- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.


                                       32
<PAGE>   35
<TABLE>
<CAPTION>
TASK                                        EXPECTED COMPLETION       ACTUAL TRANSFER
                                            DATE                      DATE
<S>                                         <C>                       <C>
11. Required test programs                  ****
- -   CAPT
- -   SAPT
</TABLE>

Completion of all of the Tasks/Items set forth above in a timely manner shall
constitute a "Successful Technology Transfer." A Party to whom Tasks/Items are
to be delivered may agree to a later Completion Date. A change of date may be
incorporated by a written agreement by authorized representatives of the parties
without requiring a formal amendment to this agreement.

Completion of delivery of a qualification report with data in the required
format and meeting the specifications set forth in the Qualification
Specifications in Annex C-2 of the applicable Manufacturing Agreement shall
constitute a "Successful GSS Qualification."

Agreed among:


<TABLE>
<S>                                 <C>                                 <C>
/s/ Rick Hodgman                    /s/ John Martin                     /s/ Lance Mills
- -------------------------------     -------------------------------     -------------------------------
Rick Hodgman                        John Martin                         Lance Mills
General Manager                     Vice President                      Division R&D Manager
Chartered Silicon Partners          Technology Development              Integrated Circuit Business
Pte Ltd                             Chartered Semiconductor             Division
Date:   1 April 1999                Manufacturing Ltd                   Hewlett-Packard Company
                                    Date:   12 April 1999               Date:   31 March 1999
</TABLE>

- --------------------------------------------------------------------------------
 This document and its contents are confidential among the Company, CSM and HP.




                                       33



<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY


                                                                   EXHIBIT 10.12



                    LICENSE AND TECHNOLOGY TRANSFER AGREEMENT



                                     BETWEEN



                  LUCENT TECHNOLOGIES MICROELECTRONICS PTE LTD.



                                       AND



                   CHARTERED SEMICONDUCTOR MANUFACTURING LTD.



                                       AND



                     SILICON MANUFACTURING PARTNERS PTE LTD.



               RELATING TO SEMICONDUCTOR MANUFACTURING TECHNOLOGY





<PAGE>   2


                    LICENSE AND TECHNOLOGY TRANSFER AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                   NO.
                                                                                  ----
<S>                                                                               <C>
ARTICLE 1 - DEFINITIONS                                                             1

ARTICLE 2 - INFORMATION FURNISHED                                                   2

ARTICLE 3 - SERVICES TO BE PROVIDED                                                 3

ARTICLE 4 - GRANTS OF RIGHTS                                                        4

ARTICLE 5 - TERMINATION                                                             7

ARTICLE 6 - MISCELLANEOUS PROVISIONS                                                8

ARTICLE 7 - ADMINISTRATION OF AGREEMENT, NOTICES AND                               13
               STATEMENTS

EXHIBIT A - LUCENT'S TECHNICAL INFORMATION                                         17
EXHIBIT B - LUCENT'S RESTRICTED TECHNICAL INFORMATION                              18
EXHIBIT C - CSM'S TECHNICAL INFORMATION                                            19
EXHIBIT D - CSM'S RESTRICTED TECHNICAL INFORMATION                                 20
EXHIBIT E - TECHNICAL INFORMATION THAT MAY BE DISCLOSED                            21
               TO CUSTOMERS
</TABLE>



<PAGE>   3

                    LICENSE AND TECHNOLOGY TRANSFER AGREEMENT

This Agreement is effective upon execution by Lucent Technologies
Microelectronics Pte Ltd. ("Lucent"), a Singapore corporation having an office
at 3, Kallang Sector, Kolam Ayer Industrial Park, Singapore 349278, and
Chartered Semiconductor Manufacturing Ltd. ("CSM"), a company incorporated in
Singapore with its registered office at 60 Woodlands Industrial Park D Street 2,
Singapore 738406, and Silicon Manufacturing Partners Pte Ltd. ("JV COMPANY"), a
company incorporated in Singapore with its registered office at 60 Woodlands
Industrial Park D Street 2, Singapore 738406.

WHEREAS, CSM and Lucent have entered into a Joint Venture Agreement, dated
DECEMBER 19, 1997 (the "Joint Venture Agreement") which provides for the
creation of JV COMPANY for the manufacture of semiconductor wafers and circuits;
and

WHEREAS, Lucent and CSM desire to grant licenses under certain technology of
Lucent and CSM, respectively, to JV COMPANY for use in the operation of the
business of JV COMPANY, and JV COMPANY desires to assign ownership to Lucent and
CSM of certain future technology and patents of JV COMPANY for use in the
operation of the businesses of Lucent and CSM, respectively, in accordance with
the terms of this License and Technology Transfer Agreement.

The parties agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

1.01 For the purpose of this Agreement, the following terms in capital letters
are defined in this Article 1 and shall have the meaning specified herein:

COMPLETION DATE means the date on which the joint venture between Lucent and CSM
is completed, pursuant to the terms of the Joint Venture Agreement.

CSM'S TECHNICAL INFORMATION means the technical information specifically
identified on Exhibit C of this Agreement.

CSM'S RESTRICTED TECHNICAL INFORMATION means the technical information
specifically identified on Exhibit D of this Agreement.

LUCENT'S RESTRICTED TECHNICAL INFORMATION means the technical information
specifically identified on Exhibit B of this Agreement.

LUCENT'S TECHNICAL INFORMATION means the technical information specifically
identified on Exhibit A of this Agreement.



                                       1
<PAGE>   4

JV COMPANY'S PATENTS means every patent owned by JV COMPANY which issues from
any patent application filed in any country of the world claiming an invention
made during the term of the Joint Venture Agreement.

JV COMPANY'S TECHNICAL INFORMATION means all technical information, know-how,
copyrights created by employees of JV COMPANY, or by agents and contractors of
JV COMPANY having a legal obligation to assign ownership interest in such
information to JV COMPANY, at anytime during the term of the Joint Venture
Agreement.

SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a Subsidiary of such
company only as long as such control or ownership and control exists.

TECHNICAL INFORMATION means collectively Lucent's Technical Information,
Lucent's

Restricted Technical Information, CSM's Technical Information, CSM's Restricted
Technical Information and JV COMPANY's Technical information.

                                    ARTICLE 2

                              INFORMATION FURNISHED

2.01(a) Lucent shall, within two (2) weeks after JV COMPANY's written request
(but not prior to the Completion Date), commence furnishing (in the English
language) Lucent's Technical Information listed in Exhibit A and Lucent's
Restricted Technical Information listed in Exhibit B to JV COMPANY, or such
portions thereof as may be necessary to meet an implementation schedule to be
mutually agreed upon by Lucent and CSM. If Lucent cannot so furnish such
information, Lucent shall advise JV COMPANY of the reasons therefor and such
additional reasonable period within which Lucent shall furnish such information
or portions thereof to JV COMPANY.

        (b) CSM shall, within two (2) weeks after JV COMPANY's written request
(but not prior to the Completion Date), commence furnishing (in the English
language) CSM's Technical Information listed in Exhibit C and CSM's Restricted
Technical Information listed in Exhibit D to JV COMPANY, or such portions
thereof as may be necessary to meet an implementation schedule to be mutually
agreed upon by Lucent and CSM. If CSM cannot so furnish such information, CSM
shall advise JV COMPANY of the reasons therefor and such additional reasonable
period within which CSM shall furnish such information or portions thereof to JV
COMPANY.



                                       2
<PAGE>   5

        (c) Delivery of any Technical Information by Lucent or CSM ("the
furnishing party") shall be deemed completed on the date such Technical
Information is delivered by such furnishing party or its representative.

        (d) With the delivery of the information, the furnishing party shall
also furnish to the receiving party a list which completely identifies the
information delivered. The furnishing party and the receiving party shall
promptly notify each other of any inaccuracies in the list. The list shall be
deemed to be a part of the definition of Lucent's Technical Information,
Lucent's Restricted Technical Information, CSM's Technical Information, or CSM's
Restricted Technical Information, as the case may be.

        (e) JV COMPANY shall, on a quarterly basis, furnish JV COMPANY'S
Technical Information (in the English language) to CSM and Lucent. JV COMPANY
shall furnish such information to CSM and Lucent through the individuals
identified in Section 7.01, or in another mutually acceptable manner.

                                    ARTICLE 3

                             SERVICES TO BE PROVIDED

3.01 (a) In order to facilitate use of the Technical Information under this
Agreement, CSM and Lucent shall furnish to JV COMPANY training services, at no
additional cost. CSM shall provide such services in Singapore. Lucent shall
either provide such services in Singapore, or through its affiliates or parent
at the facilities of Lucent Technologies Inc. in Orlando, Florida, United States
of America, or both. The number of man-days of training to be provided by
personnel from each party shall be limited to an amount reasonably necessary to
enable the other party to understand and implement the technology being
transferred to such other party.

        (b) The training by each party shall be conducted at or about the time
such party makes the initial delivery of its Technical Information to JV
COMPANY.

3.02 Lucent and CSM shall at all times retain the administrative supervision of
their respective personnel. Each party shall be solely responsible for its
personnel's remuneration and their travel, living and other expenses.

3.03 A party's personnel shall, while on any location of the other party, comply
with such other party's rules and regulations with regard to safety and
security. Each party agrees to indemnify and save the other party harmless from
any claims or demands arising in connection with this Agreement, including the
costs, expenses and reasonable attorney's fees incurred on account thereof, that
may be made by (i) anyone for injuries to persons or damage to property
resulting from acts or omissions of the indemnifying party's personnel; or (ii)
the indemnifying party's personnel under Worker's Compensation or similar laws.
The indemnifying party agrees to defend the other party against any such claim
or demand.



                                       3
<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                    ARTICLE 4

                                GRANTS OF RIGHTS

4.01 (a) Lucent grants to JV COMPANY a ****************************************
************ (1) right to use Lucent's Technical Information, solely for
manufacture of semiconductor wafers and semiconductor circuits in factories in
Singapore of JV COMPANY, and (2) license under its copyrights on or covering any
of Lucent's Technical Information to create derivative works, and to use, copy,
distribute, display, and perform Lucent's Technical Information and any
derivative works, but only in connection with the design, development,
manufacture, marketing, sale or other disposal of semiconductor wafers or
circuits. The rights granted to JV COMPANY are restricted solely to use of
Lucent's Technical Information in Singapore. Nothing in this Section 4.01(a)
shall convey to JV COMPANY any right to disclose Lucent's Technical Information
to any third party or to any Subsidiary of JV COMPANY.

      (b) Lucent further grants to JV COMPANY a *****************************
*********** (1) right to use Lucent's Restricted Technical Information, solely
for manufacture in factories of JV COMPANY of semiconductor wafers and
semiconductor circuits for sale to Lucent. No right is granted to JV COMPANY to
use Lucent's Restricted Technical Information for any other purpose. No right is
granted to CSM to use Lucent's Restricted Technical Information for any purpose.

4.02 (a) CSM grants to JV COMPANY a *****************************************
***** (1) right to use CSM's Technical Information, solely for manufacture of
semiconductor wafers and semiconductor circuits in factories of JV COMPANY in
Singapore, and (2) license under its copyrights on or covering any of CSM's
Technical Information to create derivative works, and to use, copy, distribute,
display, and perform CSM's Technical Information and any derivative works, but
only in connection with the design, development, manufacture, marketing, sale or
other disposal of semiconductor wafers or circuits. The rights granted to JV
COMPANY are restricted solely to use of CSM's Technical Information in
Singapore. Nothing in this Section 4.02 shall convey to JV COMPANY any right to
disclose CSM's Technical Information to any third party or to any Subsidiary of
JV COMPANY.

        (b) CSM further grants to JV COMPANY a *********************************
************* (1) right to use CSM's Restricted Technical Information, solely
for manufacture in factories of JV COMPANY of semiconductor wafers and
semiconductor circuits for sale to CSM and certain customers of CSM designated
by CSM to JV COMPANY. No right is granted to JV COMPANY to use CSM's Restricted
Technical Information for any other purpose. No right is granted to Lucent to
use CSM's Restricted Technical Information for any purpose.

4.03 (a) JV COMPANY hereby assigns to Lucent and to CSM joint ownership, without
right of accounting to any party by any of the others, in all of JV COMPANY'S
Technical Information



                                       4
<PAGE>   7
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


and copyrights and in JV COMPANY's Patents, subject to JV COMPANY retaining an
******************************************************************:

        (1) right to use JV COMPANY'S Technical Information for the design,
development, manufacture, marketing or maintenance of any and all products;

        (2) license under JV COMPANY'S copyrights on or covering any of JV
COMPANY'S Technical Information to create derivative works, and to use, copy,
distribute, display, and perform JV COMPANY'S Technical Information and any
derivative works;

        (3) right to grant to third party suppliers rights of the scope retained
by JV COMPANY, to the extent reasonably necessary to carry out activities of
supplying JV COMPANY with products and services; and

        (4) license under all of JV COMPANY's Patents to make, have made, use,
sell or otherwise dispose of, offer to sell, and import any and all products.

        (b) There are countries which require the express consent of all
inventors or their assignees to the grant of licenses or rights under patents
issued in such countries for joint inventions. Each party shall give such
consent, or shall obtain such consent from its employees, as required to make
full and effective any grant of such licenses and rights made to a third party
respecting any invention jointly owned pursuant to this Section 4.03.

4.04 The rights granted to JV COMPANY under this Agreement shall include the
right to disclose to third party customers of JV COMPANY Technical Information
of the type specified in Exhibit E, provided that such disclosure is made
pursuant to a written confidentiality agreement between such customer and JV
COMPANY which binds such customer under confidentiality terms no less stringent
that those applicable to JV COMPANY under this Agreement.

4.05 No patent license is granted under this Agreement by either Lucent or CSM,
either expressly or by implication, to Lucent, CSM, or JV COMPANY, regardless of
whether the exercise of any right herein granted necessarily employs an
invention of any existing or later issued patent. Any such patent licenses and
rights, if appropriate, will be the subject of a separate agreement.

4.06 (a) The parties agree that, for the purposes of this Agreement, a "Joint
Invention" shall mean any invention made by one or more of one party's
employees, agents or consultants (where such agents or contractors have a legal
obligation to assign rights to such invention to the party) jointly with one or
more of another party's employees, agents or consultants, which invention is
first conceived or first actually reduced to practice during the term of this
Agreement. Notwithstanding the foregoing, JV COMPANY's interest in Joint
Inventions shall be assigned to Lucent and CSM in accordance with the provisions
of Section 4.03.



                                       5
<PAGE>   8

        (b) The following provisions of this Section shall apply only with
respect to any Joint Invention:

        (i)     As to all Joint Inventions, Lucent and CSM shall meet and
                discuss matters relating to obtaining legal protection for such
                Joint Inventions. If Lucent and CSM determine to file for patent
                protection in any country, such application shall be made on
                behalf of both Lucent and CSM and name Lucent and CSM as joint
                and equal owners of the Joint Invention, including any trade
                secrets and copyrights, and any patent issuing thereon, without
                any right of accounting. All expenses incurred pursuant to the
                filing, prosecution, and maintenance of any patent applications
                and patents shall be divided equally between Lucent and CSM.


        (ii)    With respect to patent applications on the Joint Inventions,
                neither Lucent nor CSM shall permit any such patent application
                to become abandoned without giving the other party the
                opportunity to assume the prosecution of such patent application
                as soon as possible, which shall not be less than sixty (60)
                days prior to the date on which it will become abandoned. Lucent
                and CSM agree to provide each other with timely copies of all
                official papers and correspondence related to the prosecution of
                any such jointly owned patent application.


        (iii)   If, after Lucent and CSM shall meet and discuss matters relating
                to obtaining legal protection for Joint Inventions, either
                Lucent or CSM does not want to pursue filing a patent
                application on the Joint Inventions in any country, the other
                may independently pursue patent protection of the Joint
                Invention in such country on behalf of that party only at that
                party's sole expense. The company who so pursues patent
                protection in such country shall be the sole owner of any and
                all resulting patents, shall pay all filing, prosecution and
                maintenance fees, and shall be entitled to all revenues derived
                by such company relating to the issued patent, provided,
                however, that the other company shall have a worldwide,
                non-terminable, non-exclusive, royalty-free license under such
                patent within such country and for the full term of such patent,
                to make, have made, use, sell, offer for sale, import and market
                products or processes utilizing or embodying the subject matter
                claimed in such patent.

        (c) All inventions, trade secrets, copyrights, and other intellectual
property, whether or not patentable, made or created solely by a party or its
employees, agents or consultants shall be owned by such party.

        (d) All employees of CSM or Lucent who are "on loan" or "seconded" to JV
COMPANY shall be considered employees of CSM or Lucent, respectively, for the
purposes of this Section 4.06.

4.07 (a) Each party hereby assures each other party, with respect to information
of that other party, that it will not without a license or license exception
authorized by the Bureau of Export



                                       6
<PAGE>   9

Administration of the U.S. Department of Commerce, Washington, D.C. 20230,
United States of America, if required

        (i)     export or release the information or software (including source
                code) obtained pursuant to this Agreement to a national of
                Country Groups D:1 or E:2 (15 C.F.R. Part 740, Supp. 1), Iran,
                Iraq, Sudan, or Syria; or

        (ii)    export to Country Groups D:1 or E:2, or to Iran, Iraq, Sudan, or
                Syria, the direct product (including processes and services) of
                the information or software; or

        (iii)   if the direct product of the information is a complete plant or
                any major component of a plant, export to Country Groups D:1 or
                E:2, or to Iran, Iraq, Sudan, or Syria, the direct product of
                the plant or major component.

This assurance will be honored even after the expiration date of this License
and Technology Transfer Agreement.

        (b) Each party shall provide reasonable assistance to the other parties
with respect to obtaining any license required to export or re-export such
party's technical information, to the extent such export or re-export is
permitted under the terms of this Agreement. The obligation to obtain a license,
and any costs associated with obtaining any required export licenses shall be
borne by the party seeking to export or re-export the technical information.

4.08 (a) JV COMPANY agrees that it will not, without the prior written consent
of Lucent, knowingly transmit, directly or indirectly, Lucent's Technical
Information, Lucent's Restricted Technical Information, or any portion thereof
(or any other information obtained pursuant to this Agreement or any portion
thereof) to any country outside of Singapore, unless the recipient can
reasonably demonstrate that it is in the public domain through no act or default
on the part of JV COMPANY or CSM.

        (b) JV COMPANY agrees that it will not, without the prior written
consent of CSM, knowingly transmit, directly or indirectly, CSM's Technical
Information or any portion thereof (or any other information obtained pursuant
to this Agreement or any portion thereof) to any country outside of Singapore,
unless the recipient can reasonably demonstrate that it is in the public domain
through no act or default on the part of JV COMPANY or Lucent.

                                    ARTICLE 5

                                   TERMINATION

5.01 Licenses and rights granted to JV COMPANY under this Agreement shall be
effective during the term commencing on the effective date hereof and continuing
until the termination of the Joint Venture Agreement. Any termination of the
Joint Venture Agreement shall not affect the rights granted to Lucent and CSM
under this Agreement.



                                       7
<PAGE>   10

5.02(a) If JV COMPANY shall fail to fulfill one or more of its material
obligations under this Agreement in relation to Lucent or CSM, respectively, or
if JV COMPANY shall fail to fully comply with all the requirements of United
States law or other law applicable to this Agreement, Lucent or CSM, as the case
may be, may, upon each party's independent election and in addition to any other
remedies that it may have, at any time terminate all of Lucent's or CSM's
obligations hereunder and all of the licenses and rights granted by Lucent or
CSM hereunder by not less than two (2) months prior written notice to JV COMPANY
specifying any such breach of an obligation to that party or failure, unless
within the period of such notice all grounds specified therein for termination
pursuant to this Section 5.02(a) have been remedied.

        (b) The obligations of the parties under Sections 4.07, 4.08, 6.04 and
6.05 shall survive and continue after any such termination of this Agreement or
rights hereunder.

        (c) A breach by a party of its confidentiality obligations under Section
6.04(ii) shall not be grounds for termination under Sections 5.02(a) unless such
breach was intentional and such intentional breach may cause injury (whether
financial or otherwise) or have a negative impact (whether financial or
otherwise) on the party whose Technical Information was disclosed.

        (d) The rights granted by JV COMPANY to Lucent and CSM shall be
irrevocable.

                                    ARTICLE 6

                            MISCELLANEOUS PROVISIONS

6.01 This Agreement shall prevail in the event of any conflicting terms or
legends which may appear on documents or any Technical Information furnished
under this Agreement.

6.02 (a) Each party believes that the Technical Information to be furnished by
it hereunder will be true and accurate. However, no party shall be held to any
liability for errors or omissions in such Technical Information.

        (b) Each party warrants that the Technical Information and copyrights
licensed by such party under this Agreement are the original work of such party
(or such party has a valid right to license such property) and it has the power
to grant the rights described in this Agreement.

        (c) Each party (the "assisting party") shall, upon the other party's
(the "requesting party") request and at the requesting party's expense, furnish
reasonable assistance (including without limitation, providing to the requesting
party, access to employees of the assisting party who were involved in
developing the Technical Information, and making such employees available to
testify as expert witnessess as well as witnesses of fact at depositions and
trials) to facilitate the defense of any claim, action, or proceeding by a third
party alleging an infringement



                                       8
<PAGE>   11

of any patent, where the allegation is based upon the use of Technical
Information of the assisting party.

6.03 (a) Except as provided in Section 6.02, the parties make no representations
or warranties, expressly or impliedly. By way of example but not of limitation,
the parties make no representations or warranties of merchantability or fitness
for any particular purpose with respect to any Technical Information provided or
licensed hereunder to any party, or that the use of any party's Technical
Information or any portion of it will not infringe any patent, copyright,
trademark or other intellectual property rights of any third party, and it shall
be the sole responsibility of the party to make such determination as is
necessary with respect to the acquisition of licenses under patents or other
intellectual property rights of third parties. The parties shall not be held to
any liability with respect to any patent infringement of a patent owned by a
third party on account of, or arising from the use of any Technical Information
provided or licensed hereunder.

        (b) Each party (the "indemnifying party") agrees to indemnify and save
each other party harmless from any claims or demand for personal injury or
property damage (including reasonable expense of litigation and settlement of
such claims) by third persons to the extent that such claims arise out of or in
connection with the use by the indemnifying party of any Technical Information
licensed hereunder to the indemnifying party by such other parties.

6.04    JV COMPANY, Lucent, and CSM each agrees:

        (i)     that it will not use any Technical Information furnished or
                licensed to it hereunder, except as expressly provided herein;

        (ii)    that it shall keep such Technical Information confidential
                (including to the exclusion of CSM in the case of Lucent's
                Restricted Technical Information), except that Technical
                Information or portions thereof, if any, shall not be deemed
                confidential and the recipient shall have no obligation with
                respect to any such Technical Information or portions thereof
                which (a) was in the recipient's possession before receipt from
                the discloser, or (b) are rightfully received by the recipient
                without restriction from a third party without a duty of
                confidentiality on the third party, or (c) are provided by the
                discloser to a third party without a duty of confidentiality on
                such third party, or (d) are independently developed by
                recipient, or (e) are or until the recipient can reasonably
                demonstrate that it is or part of it is, in the public domain
                through no act or default on the part of the recipient, its
                Affiliates, its servants and/or agents, whereupon, to the extent
                that it is public, this obligation shall cease; in addition, in
                the event a recipient becomes compelled by law or regulatory
                authority to disclose any of the Technical Information, the
                recipient shall provide the discloser with prompt written notice
                so that the discloser may seek protective order or other
                appropriate remedy or waive compliance with the provisions of
                this Section 6.04(ii). In the event that such protective order
                or other remedy is not obtained, or that the discloser waives
                compliance with the provisions of this



                                       9
<PAGE>   12

                Section 6.04(ii), the recipient shall furnish only that portion
                of the Technical Information which it is required by law or
                regulatory authority to disclose and will exercise its
                commercially reasonable efforts to assure that confidential
                treatment will be accorded the Technical Information;

        (iii)   that it will not, without the furnishing parties' express
                written permission, make or have made, or permit to be made,
                more copies of any of such Technical Information than are
                necessary for its use hereunder, and that each such copy shall
                contain the same proprietary notices or legends which appear on
                the original of such Technical Information, and that no rights
                are granted under this Agreement expressly or impliedly with
                respect to any copyrights except as provided for in Article 4;

        (iv)    that it will not, without express written permission, (a) use in
                advertising, publicity, or otherwise any trade name, trademark,
                trade device, service mark, symbol or any other identification
                or any abbreviation, contraction or simulation thereof owned or
                used by the other parties, or (b) represent, directly or
                indirectly, that any product or service produced in whole or in
                part with the use of any of the Technical Information licensed
                to it hereunder is a product or service of the other parties or
                is made in accordance with or utilizes any information or
                documentation of the other parties; provided, however, that
                nothing in this Section 6.04(iv) shall be construed as
                prohibiting any party from representing that it is licensed with
                respect to Technical Information with respect to which such
                party is licensed hereunder; and

        (v)     that all Technical Information and all documents furnished or
                licensed hereunder shall remain the property of the party
                furnishing and licensing such Technical Information and
                documents, and that upon termination or expiration of this
                Agreement or of a party's rights hereunder, such party shall
                upon request deliver to the party owning such Technical
                Information and documents, all documents in its possession or
                under its control containing any of such Technical Information
                and all copies thereof (for the purposes of this Section
                6.04(v), documents in the possession or under the control of JV
                COMPANY shall not be considered in the possession or under the
                control of the other parties hereto).

6.05 It is recognized that during the performance of this Agreement, each
party's personnel may unavoidably receive or have access to private or
confidential information of the other parties which is not part of the Technical
Information. Each party agrees that all such information, if subsequently
reduced to writing and identified by the parties as constituting confidential
information, shall be treated for the purposes of the provisions of this Article
7 as if it were Technical Information, provided that any such confidential
information which is non-technical in nature shall be kept confidential for a
period of five years following the termination of this Agreement.



                                       10
<PAGE>   13

6.06 (a) No party shall be liable for any loss, damage, delay or failure of
performance resulting directly or indirectly from any cause which is beyond its
reasonable control, including but not limited to acts of God, riots, civil
disturbances, wars, states of belligerency or acts of the public enemy, strikes,
work stoppages, or the laws, regulations, acts or failure to act of any
governmental authority. In the event that performance under this Agreement is
prevented for a continuous period of two (2) months or longer by any of the
foregoing causes, the parties shall have the right to terminate this Agreement
by giving written notice to the other parties and Article 5 shall be applicable
to such termination.

        (b) No party shall be liable for incidental or consequential loss or
damages of any nature, however caused.

6.07 This Agreement, in the English language, sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and merges
all prior discussions between them, and neither of the parties shall be bound by
any conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein, or in
any prior existing written agreement between the parties, or as duly set forth
on or subsequent to the effective date hereof in writing, in the English
language, and signed by a proper and duly authorized representative of the party
to be bound thereby. Any modification to this Agreement shall be enforceable
only if it is in a writing signed by the party against which the modification is
sought to be enforced.

6.08 This Agreements shall be interpreted in accordance with the laws of the
State of New York, United States of America, without regard to conflicts of laws
provisions.

6.09 Neither party may assign this Agreement or any part thereof, nor transfer
licenses or rights hereunder to anyone other than a Subsidiary without the
written consent of the other party hereto. However, if Lucent or CSM divests all
or a portion of its business and such divested business continues operation as a
separately identifiable business, then the licenses granted hereunder to the
divesting party may be assigned to such divested separate business, but only (i)
for the duration and term of licenses as specified in this Agreement, (ii) to
the extent and for the time the divested business functions as a separately
identifiable business, and (iii) for products and services of the kind provided
by the divested business prior to its divestiture and not to any products or
services of any entity which acquires the divested business. If the party
divesting such business is required to make royalty payments under this
Agreement, it shall continue to be obligated to make such payments for itself
and for the divested business. Any such divestiture or other business
reorganization affecting the ownership or title of any of a party's patents
shall be made subject to the rights and obligations created under this
Agreement.

6.10 (a) In case any dispute or difference shall arise amongst the parties as to
the construction of this Agreement or as to any matter or thing of whatsoever
nature arising hereunder or in connection herewith, including any question
regarding its existence, validity or termination, such dispute or difference
shall be submitted to a committee comprised of one individual from each of the
parties. If such committee is unable to resolve such dispute within 14 days of
such



                                       11
<PAGE>   14

submission, it shall submit the dispute to a committee comprised of one senior
manager from each party, being in the case of:

        CSM:            the President

        Lucent:         the Customer Satisfaction and Business Development Vice
                        President

        JV Company:     the General Manager

If such senior managers are unable to resolve such dispute within 14 days of
such submission, it shall be submitted to a committee comprised of one senior
officer from each party being in the case of: -

        CSM:            the Chairman of the Board of CSM

        Lucent:         the Vice President, Integrated Circuits Division

        JV Company:     the General Manager

        (b) 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 parties in dispute (the "Arbitrator"). If the parties fail to
agree on an Arbitrator within 14 days after one party has given to the other
party a written request to concur in the appointment of an Arbitrator, a single
arbitrator (the "ICC Arbitrator") shall be appointed on the request of any party
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 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 Lucent, CSM and JV COMPANY. Each of Lucent and CSM shall use its
commercially reasonable efforts to comply with all of such requests for
information. Lucent and CSM shall jointly cause JV COMPANY to comply with all of
the Arbitrator's and the ICC Arbitrator's requests for information. The place of
arbitration shall be London, England 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.

6.11 Each of the parties hereto hereby irrevocably agrees not to claim and
irrevocably waives any claim or right (whether or not claimed), which it has or
may hereafter acquire under any law, regulation, treaty or international
agreement to immunity for itself, or any of its revenues, assets or properties
or those of any of its agencies or instrumentalities from the jurisdiction of
any court (including but not limited to any court of the United States of
America or the States of New York or New Jersey) with respect to the enforcement
of an arbitral award rendered pursuant to Section 6.10 against any of them.

6.12 All article headings and the table of contents are for convenience purposes
only and shall in no way affect, or be used in, the interpretation of this
Agreement.



                                       12
<PAGE>   15

6.13 None of the parties shall divulge to any third party (except to their
respective professional advisers) any information regarding the existence or
subject matter of this Agreement, or any other agreement referred to in, or
executed in connection with, this Agreement, without the prior agreement of the
other party in writing except as and to the extent that any such party shall be
so obligated by law or pursuant to the regulations of a stock exchange or other
regulatory body in which case the other party shall be so advised and the
parties shall use their best efforts to cause a mutually agreeable release or
statement to be made. In the event that this Agreement or any other agreement is
proposed to be disclosed to any such body in whole or in part the parties agree
to fully cooperate to limit the scope of any such disclosure and to obtain an
appropriate protective order if reasonably practicable.

                                    ARTICLE 7

                      ADMINISTRATION OF AGREEMENT, NOTICES

                                 AND STATEMENTS

7.01(a) Until further notice in writing, the following individuals or
organizations shall administer activities and performances under this Agreement:

         CSM        :     CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No.     :  (65) 362 2936
                          Attention         :  Director, Logic
                                               Central Integration

         Lucent     :                      LUCENT TECHNOLOGIES INC.

                          Microelectronics Division
                          555 Union Boulevard
                          Allentown, PA 18103-1229

                          Facsimile No.     :  001 610 712-5336
                          Attention         :  Customer Satisfaction
                                               and  Business Development
                                               Vice President



                                       13
<PAGE>   16

         For JV COMPANY:

                          SILICON MANUFACTURING PARTNERS PTE LTD
                          c/o Singapore Technologies Pte Ltd
                          89, Science Park Drive
                          #02-09/12
                          The Rutherford
                          Singapore Science Park
                          Singapore 118261

                          Facsimile No.     :  (65) 872-6390
                          Attention         :  General Manager

        (b) All requests for information and documents by any party shall be
made in writing to the organization designated in Section 7.01(a). The party
receiving a request shall acknowledge the request in writing and shall within
fourteen (14) days after the receipt of the written request indicate whether it
will or will not comply with such request or propose an alternative to such
request.

7.02 All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post (by air-mail if to or from an address outside Singapore)
with recorded delivery, or by facsimile transmission (provided that the receipt
of such facsimile transmission is confirmed by the dispatch of a hard copy of
the facsimile sent immediately thereafter by prepaid registered post) addressed
to the intended recipient thereof at its address or at its facsimile number set
out in this Agreement (or to such other address or facsimile number as a party
to this Agreement may from time to time duly notify the others in writing). Any
such notice, demand or communication shall be deemed to have been duly served,
if given or made by facsimile, immediately at the time of dispatch (provided
that the receipt of such facsimile transmission is confirmed by the dispatch of
a hard copy of the facsimile sent immediately thereafter by prepaid registered
post) or, if given or made by letter, immediately if delivered personally or 48
hours after posting or, if given or made by air-mail, ten days after posting and
in proving the same it shall be sufficient to show that personal delivery was
made or that the envelope containing such notice was duly addressed, stamped and
posted. The address and facsimile numbers of the parties for the purpose of this
Agreement are:

         CSM        :     CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No.     :  (65) 362 2936
                          Attention         :  Legal Department



                                       14
<PAGE>   17

         Lucent     :     LUCENT TECHNOLOGIES MICROELECTRONICS PTE
                                   LTD.

                          3, Kallang Sector, Kolam Ayer Industrial Park
                          Singapore 349278

                          Facsimile No.     :  011-65-8402560
                          Attention         :  Managing Director

         with a copy to:  LUCENT TECHNOLOGIES INC.
                          Microelectronics Division
                          Two Oak Way
                          Berkeley Heights, NJ 07922-2727

                          Facsimile No.        001 908 508-8398
                          Attention:           Legal Department

             For JV COMPANY:

                          SILICON MANUFACTURING PARTNERS PTE LTD
                          c/o Singapore Technologies Pte Ltd
                          89, Science Park Drive
                          #02-09/12
                          The Rutherford
                          Singapore Science Park
                          Singapore 118261

                          Facsimile No.     :  (65) 872-6390
                          Attention         :   The Company Secretary
                                                Corporate Secretariat Department



                                       15
<PAGE>   18
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.

        LUCENT TECHNOLOGIES MICROELECTRONICS PTE LTD.

                    By: /s/ Dennis M. Hill
                       -------------------------------------

                    Name: Dennis M. Hill
                         -----------------------------------

                    Title: Director
                          ----------------------------------

                    Date: 17 February 1998
                         -----------------------------------

        CHARTERED SEMICONDUCTOR MANUFACTURING LTD.

                    By: /s/ Tan Bock Seng
                       -------------------------------------

                    Name: Tan Bock Seng
                         -----------------------------------

                    Title: President and CEO
                          ----------------------------------

                    Date: 17 February 1998
                         -----------------------------------

        SILICON MANUFACTURING PARTNERS PTE LTD.

                    By: /s/ Paul J.V. Mostek
                       -------------------------------------

                    Name: Paul J.V. Mostek
                         -----------------------------------

                    Title: Director
                          ----------------------------------

                    Date: 17 February 1998
                         -----------------------------------


               THIS AGREEMENT DOES NOT BIND OR OBLIGATE ANY PARTY
                IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
                         REPRESENTATIVES OF ALL PARTIES


                                       16
<PAGE>   19
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                    EXHIBIT A

                         LUCENT'S TECHNICAL INFORMATION

Lucent's ****** Digital and Linear Process Modules

1.      Process Flow

2.      Process Log

3.      Process recipes and tool set-ups

4.      Target film thicknesses

5.      Schematic cross-sections

6.      Electrical specifications

7.      Layout rules

8.      Transistor spice files

Lucent's Technical Information shall not include Lucent's ****** BiCMOS, FLASH
and embedded DRAM modules.



                                       17
<PAGE>   20
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                    EXHIBIT B

                    LUCENT'S RESTRICTED TECHNICAL INFORMATION

Lucent's ****** BiCMOS, FLASH and embedded DRAM modules.

1.      Process Flow

2.      Process Log

3.      Process recipes and tool set-ups

4.      Target film thicknesses

5.      Schematic cross-sections

6.      Electrical specifications

7.      Layout rules

8.      Transistor spice files



                                       18
<PAGE>   21
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                    EXHIBIT C

                           CSM'S TECHNICAL INFORMATION

For the following Process Modules,

(1)     CSM's ********************************************************** Process
        Module;

(2)     CSM's ****************************** Process Module; and

(3)     CSM's ************************************
        *************** Process Module,

CSM will provide the following Technical Information:

1.      Process Flow

2.      Process Log

3.      Process recipes and tool set-ups

4.      Target film thicknesses

5.      Schematic cross-sections

6.      Electrical specifications

7.      Layout rules

8.      Transistor spice files



                                       19
<PAGE>   22


                                    EXHIBIT D

                     CSM'S RESTRICTED TECHNICAL INFORMATION

                           (INTENTIONALLY LEFT BLANK)

CSM shall be entitled, from time to time and upon written notice to Lucent and
JV COMPANY, to add to this Exhibit D technology which has not been provided to
or licensed to Lucent or JV COMPANY.



                                       20
<PAGE>   23

                                    EXHIBIT E

            TECHNICAL INFORMATION WHICH MAY BE DISCLOSED TO CUSTOMERS

The following portions of Lucent's Technical Information (Exhibit A) and CSM's
Technical Information (Exhibit C) can be provided to customers under appropriate
confidentiality terms in accordance with the provisions of Article 4:

1.      Process Information

Process Name
Technology
Process Type
Number of Poly Layers
Number of Metal Layers
Poly Type
Voltage Type
Module Addition
Process Description
Starting Material Type(s)
        Non-EPI Layer
        Epitaxial Layer
Process Runsheet Spec
Non-Proprietary Process Flow Spec
Schematic Cross-Sections
Topological Design Rule Spec
Mask Bias Table Spec
Number of Reticles
Number of Masking Layers
Frame Doc #
Frame Table #
Reliability Spec



                                       21
<PAGE>   24


2.      Electrical Test Information

Spice Model Spec
        Level - 13
        Level - 28
        Level - 49
        BSIM1
Electrical Parameters Spec
Electrical Test Spec
Electrical Test Program Spec

3.      Qualification Plan

Reliability Results Report (at QA)
Qual Report

4.      Phase of Process

Engineering/Qualification/Production




                                       22


<PAGE>   1
                          REDACTED FOR CONFIDENTIALITY


                                                                  EXHIBIT 10.13




                          TECHNOLOGY TRANSFER AGREEMENT



                                     BETWEEN



                            LUCENT TECHNOLOGIES INC.



                                       AND



                   CHARTERED SEMICONDUCTOR MANUFACTURING LTD.












               RELATING TO SEMICONDUCTOR MANUFACTURING TECHNOLOGY


<PAGE>   2

                          TECHNOLOGY TRANSFER AGREEMENT

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                    NO.
                                                                                  -----
<S>                                                                               <C>
ARTICLE 1 - DEFINITIONS                                                             1

ARTICLE 2 - INFORMATION FURNISHED                                                   2

ARTICLE 3 - SERVICES TO BE PROVIDED                                                 3

ARTICLE 4 - GRANTS OF RIGHTS                                                        4

ARTICLE 5 - TERMINATION                                                             5

ARTICLE 6 - MISCELLANEOUS PROVISIONS                                                6

ARTICLE 7 - ADMINISTRATION OF AGREEMENT, NOTICES AND STATEMENTS                    11

EXHIBIT A - LUCENT'S TECHNICAL INFORMATION                                         14

EXHIBIT B - CSM'S TECHNICAL INFORMATION                                            15

EXHIBIT C - LIST OF SUBSIDIARIES                                                   16

EXHIBIT D - TECHNICAL INFORMATION THAT MAY BE DISCLOSED TO CUSTOMERS               17
</TABLE>




                                       i

<PAGE>   3

                          TECHNOLOGY TRANSFER AGREEMENT

This Agreement is effective upon execution by Lucent Technologies Inc.
("Lucent"), a Delaware corporation having an office at 600 Mountain Avenue,
Murray Hill, New Jersey 07974, United States of America, and Chartered
Semiconductor Manufacturing Ltd. ("CSM"), a company incorporated in Singapore
with its registered office at 60 Woodlands Industrial Park D Street 2, Singapore
738406.

WHEREAS, Lucent and CSM each have expertise in the manufacture of semiconductor
wafers and circuits; and

WHEREAS, Lucent desires to grant licenses under certain technology of Lucent to
CSM for use in the operation CSM's wafer fabs, and CSM desires to grant licenses
under certain technology of CSM to Lucent for use in the operation Lucent's
wafer fabs, in accordance with the terms of this Technology Transfer Agreement.

The parties agree as follows:


                                    ARTICLE 1

                                   DEFINITIONS

1.01 For the purpose of this Agreement, the following terms in capital letters
are defined in this Article 1 and shall have the meaning specified herein:

COMPLETION DATE means the date on which the joint venture between Lucent
Technologies Microelectronics Pte. Ltd., a Singapore corporation and Subsidiary
of Lucent ("Microelectronics-Singapore"), and CSM is completed, pursuant to the
terms of the Joint Venture Agreement.

CSM'S TECHNICAL INFORMATION means the technical information specifically
identified on Exhibit B of this Agreement.

JOINT VENTURE AGREEMENT means the joint venture agreement between CSM and
Microelectronics-Singapore executed on December 19, 1997.

JOINT VENTURE COMPANY means the company formed pursuant to the Joint Venture
Agreement.

LUCENT'S TECHNICAL INFORMATION means the technical information specifically
identified on Exhibit A of this Agreement.

SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is



                                       1
<PAGE>   4
now or hereafter controlled by such company either directly or indirectly; or
(ii) which does not have outstanding shares or securities but the majority of
whose ownership interest representing the right to manage such corporation or
other legal entity is now or hereafter owned and controlled by such company
either directly or indirectly; but any such corporation or other legal entity
shall be deemed to be a Subsidiary of such company only as long as such control
or ownership and control exists.

TECHNICAL INFORMATION means collectively Lucent's Technical Information and
CSM's Technical Information.

THREE PARTY TTA means the Technology Transfer Agreement concurrently entered
into herewith among CSM, Microelectronics-Singapore and the Joint Venture
Company.

                                    ARTICLE 2

                              INFORMATION FURNISHED

2.01(a) Lucent shall, within two (2) weeks after CSM's written request (but not
prior to the Completion Date), commence furnishing Lucent's Technical
Information (in the English language) listed in Exhibit A to CSM, or such
portions thereof as may be necessary to meet an implementation schedule to be
mutually agreed upon by Lucent and CSM. If Lucent cannot so furnish such
information, Lucent shall advise CSM of the reasons therefor and such additional
reasonable period within which Lucent shall furnish such information or portions
thereof to CSM.

         (b) CSM shall, within two (2) weeks after Lucent's written request (but
not prior to the Completion Date), commence furnishing CSM's Technical
Information (in the English language) listed in Exhibit B to Lucent, or such
portions thereof as may be necessary to meet an implementation schedule to be
mutually agreed upon by Lucent and CSM. If CSM cannot so furnish such
information, CSM shall advise Lucent of the reasons therefor and such additional
reasonable period within which CSM shall furnish such information or portions
thereof to Lucent.

         (c) Delivery of any Technical Information by Lucent or CSM ("the
furnishing party") shall be deemed completed on the date such Technical
Information is shipped by such company or one of its Subsidiaries.

         (d) With the delivery of the information, the furnishing party shall
also furnish to the receiving party a list which completely identifies the
information delivered. The furnishing party and the receiving party shall
promptly notify each other of any inaccuracies in the list. The list shall be
deemed to be a part of the definition of Lucent's Technical Information or CSM's
Technical Information, as the case may be.



                                       2
<PAGE>   5

2.02 All inventions, trade secrets, copyrights, and other intellectual property,
whether or not patentable, made or created solely by a party or its employees
shall be owned by such party. Any improvements to the Technical Information
which are made by a party's employees (and agents or contractors with a legal
obligation to assign rights to such Technical Information to the party) and
licensed by such party to the Joint Venture Company pursuant to the terms of the
Three Party TTA for use by the Joint Venture Company in the manufacture of
products for both Lucent and CSM shall be deemed licensed by such party to the
other party, under the terms and conditions specified in this Agreement. Nothing
in this Section 2.02 shall require any party to make any such improvements or to
license any such improvements to Joint Venture Company for use by Joint Venture
Company in the manufacture of products for both Lucent and CSM.


                                    ARTICLE 3

                             SERVICES TO BE PROVIDED

3.01 (a) In order to facilitate each party's use of the other party's Technical
Information under this Agreement, CSM shall furnish to Lucent, and Lucent shall
furnish to CSM, training services, at no additional cost, at Lucent's facilities
in Orlando, Florida. The number of man-days of training to be provided by
personnel from each party shall be limited to an amount reasonably necessary to
enable the other party to understand and implement the technology being
transferred to such other party.

         (b) The training by CSM shall be conducted at or about the time CSM
makes the initial delivery of CSM's Technical Information to Lucent, or at
Lucent's option, at another time to be specified by Lucent not later than six
(6) months following the final delivery of Technical Information by CSM to
Lucent pursuant to this Agreement. The training by Lucent shall be conducted at
or about the time Lucent makes the initial delivery of Lucent's Technical
Information to CSM, or at CSM's option, at another time to be specified by CSM
not later than six (6) months following the final delivery of Technical
Information by Lucent to CSM pursuant to this Agreement. Each party shall give
the other party thirty (30) days prior notice of the date on which such party
desires such training to begin.

3.02 Lucent and CSM shall at all times retain the administrative supervision of
their respective personnel. Each party shall be solely responsible for its
personnel's remuneration and their travel, living and other expenses.

3.03 A party's personnel shall, while on any location of the other party, comply
with such other party's rules and regulations with regard to safety and
security. Each party agrees to indemnify and save the other party harmless from
any claims or demands arising in connection with this Agreement, including the
costs, expenses and reasonable attorney's fees incurred on account thereof, that
may be made by (i) anyone for injuries to persons or damage to property
resulting from acts or omissions of the indemnifying party's personnel; or (ii)
the indemnifying party's personnel under Worker's Compensation or similar laws.
The indemnifying party agrees to defend the other party against any such claim
or demand.



                                       3
<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


3.04 Lucent does not contemplate the provision of assistance or training
services in any country other than the United States under this Agreement. Any
such assistance or training services to be provided, if required, would be the
subject of a separate agreement. Assistance or training by CSM to Lucent will be
provided in Singapore.


                                    ARTICLE 4

                                GRANTS OF RIGHTS

4.01 Lucent grants to CSM a ********************************************** (1)
right to use Lucent's Technical Information, solely for manufacture of
semiconductor wafers and semiconductor circuits in factories of CSM or
Subsidiaries listed in Exhibit C, and (2) license under its copyrights on or
covering any of Lucent's Technical Information to create derivative works, and
to use, copy, distribute, display, and perform Lucent's Technical Information
and any derivative works, but only in connection with the design, development,
manufacture, marketing, sale or other disposal of semiconductor wafers or
circuits. Nothing in this Section 4.01 shall convey to CSM any right to disclose
Lucent's Technical Information to any third party.

4.02 CSM grants to Lucent a ********************************************** (1)
right to use CSM's Technical Information, solely for manufacture of
semiconductor wafers and semiconductor circuits in factories of Lucent or
Subsidiaries listed in Exhibit C, and (2) license under its copyrights on or
covering any of CSM's Technical Information to create derivative works, and to
use, copy, distribute, display, and perform CSM's Technical Information and any
derivative works, but only in connection with the design, development,
manufacture, marketing, sale or other disposal of semiconductor wafers or
circuits. Nothing in this Section 4.02 shall convey to Lucent any right to
disclose CSM's Technical Information to any third party.

4.03 The licenses granted in Sections 4.01 and 4.02 shall include the right to
grant sublicenses within the scope of such licenses to a party's (1)
wholly-owned Subsidiaries for so long as they remain wholly-owned Subsidiaries,
and (2) Subsidiaries identified on Exhibit C. Each party may, from time to time,
add Subsidiaries to its list of Subsidiaries in Exhibit C with the consent of
the other party, which consent shall not be withheld unreasonably.

4.04 The rights granted to each party under this Agreement shall include the
right to disclose to third party customers of such party Technical Information
of the type specified in Exhibit D, provided that such disclosure is made
pursuant to a written confidentiality agreement between such customer and such
party which binds such customer under confidentiality terms no less stringent
that those applicable to the disclosing party under this Agreement.

4.05 No patent license is granted under this Agreement by either Lucent or CSM,
either expressly or by implication, regardless of whether the exercise of any
right herein granted necessarily employs an invention of any existing or later
issued patent. Any such patent licenses and rights, if appropriate, will be the
subject of a separate agreement.



                                       4
<PAGE>   7

4.06 (a) Each party hereby assures the other party, with respect to information
of that other party, that it will not without a license or license exception
authorized by the Bureau of Export Administration of the U.S. Department of
Commerce, Washington, D.C. 20230, United States of America, if required

         (i)      export or release the information or software (including
                  source code) obtained pursuant to this Agreement to a national
                  of Country Groups D:1 or E:2 (15 C.F.R. Part 740, Supp. 1),
                  Iran, Iraq, Sudan, or Syria; or

         (ii)     export to Country Groups D:1 or E:2, or to Iran, Iraq, Sudan,
                  or Syria, the direct product (including processes and
                  services) of the information or software; or

         (iii)    if the direct product of the information is a complete plant
                  or any major component of a plant, export to Country Groups
                  D:1 or E:2, or to Iran, Iraq, Sudan, or Syria, the direct
                  product of the plant or major component.

This assurance will be honored even after the expiration date of this Technology
Transfer Agreement.

         (b) Each party shall provide reasonable assistance to the other party
with respect to obtaining any license required to export or re-export such
party's technical information, to the extent such export or re-export is
permitted under the terms of this Agreement. The obligation to obtain a license,
and any costs associated with obtaining any required export licenses, shall be
borne by the party seeking to export or re-export the technical information.


                                    ARTICLE 5

                                   TERMINATION

5.01 Licenses and rights granted to Lucent and CSM under this Agreement shall be
effective during the term commencing on the effective date hereof and continuing
until such licenses and rights are terminated pursuant to the provisions hereof.
Any termination of the Joint Venture Agreement shall not affect the rights
granted to Lucent and CSM under this Agreement.

5.02(a) If Lucent shall fail to fulfill one or more of its material obligations
under this Agreement, or if Lucent shall fail to fully comply with all the
requirements of United States law or other law applicable to this Agreement, CSM
may, in addition to any other remedies that it may have, at any time terminate
all of the licenses and rights granted by CSM hereunder by not less than two (2)
months prior written notice to Lucent specifying any such breach or failure,
unless within the period of such notice all grounds specified therein for
termination pursuant to this Section 5.02(a) shall have been remedied.



                                       5
<PAGE>   8

         (b) If CSM shall fail to fulfill one or more of its material
obligations under this Agreement, or if CSM shall fail to fully comply with all
the requirements of United States law or other law applicable to this Agreement,
Lucent may, in addition to any other remedies that it may have, at any time
terminate all of the licenses and rights granted by Lucent hereunder by not less
than two (2) months prior written notice to CSM specifying any such breach or
failure, unless within the period of such notice all grounds specified therein
for termination pursuant to this Section 5.02(b) shall have been remedied.

         (c) A breach by a party of its confidentiality obligations under
Section 6.04(ii) shall not be grounds for termination under Sections 5.02(a) and
(b) of the licenses to such party unless such breach was intentional and such
intentional breach may cause injury (whether financial or otherwise) or have a
negative impact (whether financial or otherwise) on the non-breaching party.

         (d) The obligations of Lucent and CSM under Sections 4.05, 6.04 and
6.05, shall survive and continue after any such termination.


                                    ARTICLE 6

                            MISCELLANEOUS PROVISIONS

6.01 This Agreement shall prevail in the event of any conflicting terms or
legends which may appear on documents or any Technical Information furnished
under this Agreement.

6.02 (a) Each party believes that the Technical Information to be furnished by
it hereunder will be true and accurate. However, no party shall be held to any
liability for errors or omissions in such Technical Information.

         (b) Each party warrants that the Technical Information and copyrights
licensed by such party under this Agreement are the original work of such party
(or such party has a valid right to license such property) and it has the power
to grant the rights described in this Agreement.

6.03 (a) Except as provided in Section 6.02, the parties make no representations
or warranties, expressly or impliedly. By way of example but not of limitation,
the parties make no representations or warranties of merchantability or fitness
for any particular purpose with respect to any Technical Information provided or
licensed hereunder to any party, or that the use of any party's Technical
Information or any portion of it will not infringe any patent, copyright,
trademark or other intellectual property rights of any third party, and it shall
be the sole responsibility of the party to make such determination as is
necessary with respect to the acquisition of licenses under patents or other
intellectual property rights of third parties. The parties shall not be held to
any liability with respect to any patent infringement of a patent owned by a
third party on account of, or arising from the use of any Technical Information
provided or licensed hereunder.



                                       6
<PAGE>   9

         (b) Each party (the "indemnifying party") agrees to indemnify and save
the other party harmless from any claims or demand for personal injury or
property damage (including reasonable expense of litigation and settlement of
such claims) by third persons to the extent that such claims arise out of or in
connection with the use by the indemnifying party of any Technical Information
licensed hereunder to the indemnifying party by such other party.

         (c) Each party (the "assisting party") shall, upon the other party's
(the "requesting party") request and at the requesting party's expense, furnish
reasonable assistance to facilitate the defense of any claim, action, or
proceeding by a third party alleging an infringement of any patent, where the
allegation is based upon the use of Technical Information of the assisting
party.

6.04 Lucent and CSM each agrees:

         (i)      that it will not use any Technical Information furnished and
                  licensed to it hereunder, except as expressly provided herein;

         (ii)     that it shall keep such Technical Information confidential,
                  except that Technical Information or portions thereof, if any,
                  shall not be deemed confidential and the recipient shall have
                  no obligation with respect to any such Technical Information
                  or portions thereof which (a) was in the recipient's
                  possession before receipt from the discloser, or (b) are
                  rightfully received by the recipient without restriction from
                  a third party without a duty of confidentiality on the third
                  party, or (c) are provided by the discloser to a third party
                  without a duty of confidentiality on such third party, or (d)
                  are independently developed by recipient, or (e) are or until
                  the recipient can reasonably demonstrate that it is or part of
                  it is, in the public domain through no act or default on the
                  part of the recipient, its Affiliates, its servants and/or
                  agents, whereupon, to the extent that it is public, this
                  obligation shall cease; In addition, in the event a recipient
                  becomes compelled by law or regulatory authority to disclose
                  any of the Technical Information, the recipient shall provide
                  the discloser with prompt written notice so that the discloser
                  may seek protective order or other appropriate remedy or waive
                  compliance with the provisions of this Section 6.04(ii). In
                  the event that such protective order or other remedy is not
                  obtained, or that the discloser waives compliance with the
                  provisions of this Section 6.04(ii), the recipient shall
                  furnish only that portion of the Technical Information which
                  it is required by law or regulatory authority to disclose and
                  will exercise its commercially reasonable efforts to assure
                  that confidential treatment will be accorded the Technical
                  Information;

         (iii)    that it will not, without the furnishing party's express
                  written permission, make or have made, or permit to be made,
                  more copies of any of such Technical Information than are
                  necessary for its use hereunder, and that each such copy shall
                  contain the same proprietary notices or legends which appear
                  on the original of such Technical Information, and that no
                  rights are granted



                                       7
<PAGE>   10

                  under this Agreement expressly or impliedly with respect to
                  any copyrights except as provided for in Article 4;

         (iv)     that it will not, without express written permission, (a) use
                  in advertising, publicity, or otherwise any trade name,
                  trademark, trade device, service mark, symbol or any other
                  identification or any abbreviation, contraction or simulation
                  thereof owned or used by the other party, or (b) represent,
                  directly or indirectly, that any product or service produced
                  in whole or in part with the use of any of the Technical
                  Information licensed to it hereunder is a product or service
                  of the other party or is made in accordance with or utilizes
                  any information or documentation of the other party; provided,
                  however, that nothing in this Section 6.04(iv) shall be
                  construed as prohibiting any party from representing that it
                  is licensed with respect to Technical Information with respect
                  to which such party is licensed hereunder; and

         (v)      that all Technical Information and all documents furnished or
                  licensed hereunder shall remain the property of the party
                  furnishing and licensing such Technical Information and
                  documents, and that upon termination of a party's rights
                  hereunder, such party shall upon request deliver to the party
                  owning such Technical Information and documents, all documents
                  in its possession or under its control containing any of such
                  Technical Information and all copies thereof (for the purposes
                  of this Section 6.04(v), documents in the possession or under
                  the control of the Joint Venture Company shall not be
                  considered in the possession or under the control of a party
                  hereto).

6.05 It is recognized that during the performance of this Agreement, each
party's personnel may unavoidably receive or have access to private or
confidential information of the other parties which is not part of the Technical
Information. Each party agrees that all such information, if subsequently
reduced to writing and identified in by the parties as constituting confidential
information, shall be treated for the purposes of the provisions of this Article
VI as if it were Technical Information, provided that any such confidential
information which is non-technical in nature shall be kept confidential for a
period of five years following the termination of this Agreement.

6.06 (a) No party shall be liable for any loss, damage, delay or failure of
performance resulting directly or indirectly from any cause which is beyond its
reasonable control, including but not limited to acts of God, riots, civil
disturbances, wars, states of belligerency or acts of the public enemy, strikes,
work stoppages, or the laws, regulations, acts or failure to act of any
governmental authority. In the event that performance under this Agreement is
prevented for a continuous period of two (2) months or longer by any of the
foregoing causes, the parties shall have the right to terminate this Agreement
by giving written notice to the other party and Article 5 shall be applicable to
such termination.

         (b) No party shall not be liable for incidental or consequential loss
or damages of any nature, however caused.





                                       8
<PAGE>   11

6.07 This Agreement, in the English language, sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and merges
all prior discussions between them, and neither of the parties shall be bound by
any conditions, definitions, warranties, understandings or representations with
respect to such subject matter other than as expressly provided herein, or in
any prior existing written agreement between the parties, or as duly set forth
on or subsequent to the effective date hereof in writing, in the English
language, and signed by a proper and duly authorized representative of the party
to be bound thereby. Any modification to this Agreement shall be enforceable
only if it is in a writing signed by the party against which the modification is
sought to be enforced.

6.08 This Agreements shall be interpreted in accordance with the laws of the
State of New York, United States of America, without regard to conflicts of laws
provisions.

6.09 Neither party may assign this Agreement or any part thereof, nor transfer
licenses or rights hereunder to anyone other than a Subsidiary without the
written consent of the other party hereto. However, if either of the parties
divests all or a portion of its business and such divested business continues
operation as a separately identifiable business, then the licenses granted
hereunder to the divesting party may be assigned to such divested separate
business, but only (i) for the duration and term of licenses as specified in
this Agreement, (ii) to the extent and for the time the divested business
functions as a separately identifiable business, and (iii) for products and
services of the kind provided by the divested business prior to its divestiture
and not to any products or services of any entity which acquires the divested
business. If the party divesting such business is required to make royalty
payments under this Agreement; it shall continue to be obligated to make such
payments for itself and for the divested business. Any such divestiture or other
business reorganization affecting the ownership or title of any of a party's
patents shall be made subject to the rights and obligations created under this
Agreement.

6.10 (a) In case any dispute or difference shall arise amongst the parties as to
the construction of this Agreement or as to any matter or thing of whatsoever
nature arising hereunder or in connection herewith, including any question
regarding its existence, validity or termination, such dispute or difference
shall be submitted to a committee comprised of one individual from each of the
parties. If such committee is unable to resolve such dispute within 14 days of
such submission, it shall submit the dispute to a committee comprised of one
senior manager from each party, being in the case of: -

        CSM:          the President
        Lucent:       the Customer Satisfaction and Business Development
                      Vice President

If such senior managers are unable to resolve such dispute within 14 days of
such submission, it shall be submitted to a committee comprised of one senior
officer from each party being in the case of: -

        CSM:          the Chairman of the Board of CSM
        Lucent:       Vice President, Integrated Circuits Division


                                       9
<PAGE>   12


         (b) 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 parties (the "Arbitrator"). If the parties fail to agree on an
Arbitrator within 14 days after one party has given to the other party a written
request to concur in the appointment of an Arbitrator, a single arbitrator (the
"ICC Arbitrator") shall be appointed on the request of any party 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
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 Lucent and CSM. Each of Lucent and CSM shall use its commercially
reasonable efforts to comply with all of such requests for information. The
place of arbitration shall be London, England 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.

6.11 Each party hereby irrevocably agrees not to claim and irrevocably waives
any claim or right (whether or not claimed), which it has or may hereafter
acquire under any law, regulation, treaty or international agreement to immunity
for itself, or any of its revenues, assets or properties or those of any of its
agencies or instrumentalities from the jurisdiction of any court (including but
not limited to any court of the United States of America or the States of New
York or New Jersey) with respect to the enforcement of an arbitral award
rendered pursuant to Section 6.10 against either of the parties.

6.12 All article headings and the table of contents are for convenience purposes
only and shall in no way affect, or be used in, the interpretation of this
Agreement.

6.13 None of the parties shall divulge to any third party (except to their
respective professional advisers) any information regarding the existence or
subject matter of this Agreement, or any other agreement referred to in, or
executed in connection with, this Agreement, without the prior agreement of the
other party in writing except as and to the extent that any such party shall be
so obligated by law or pursuant to the regulations of a stock exchange or other
regulatory body in which case the other party shall be so advised and the
parties shall use their best efforts to cause a mutually agreeable release or
statement to be made. In the event that this Agreement or any other agreement is
proposed to be disclosed to any such body in whole or in part the parties agree
to fully cooperate to limit the scope of any such disclosure and to obtain an
appropriate protective order if reasonably practicable.



                                       10
<PAGE>   13

                                    ARTICLE 7

                      ADMINISTRATION OF AGREEMENT, NOTICES

                                 AND STATEMENTS



7.01 (a) Until further notice in writing, the following individuals or
organizations shall administer activities and performances under this Agreement:

         CSM        :     CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406

                          Facsimile No.     :       (65) 362 2936
                          Attention         :       Director,
                                                    Logic Central Integration

         Lucent     :     LUCENT TECHNOLOGIES INC.

                          Microelectronics Division
                          555 Union Boulevard
                          Allentown, PA 18103-1229

                          Facsimile No.     :       001 610 712-5336
                          Attention         :       Customer Satisfaction and
                                                    Business
                                                    Development Vice President

         (b) All requests for information and documents by any party shall be
made in writing to the organization designated in Section 7.01(a). The party
receiving a request shall acknowledge the request in writing and shall within
fourteen (14) days after the receipt of the written request indicate whether it
will or will not comply with such request or propose an alternative to such
request.

7.02 All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post (by air-mail if to or from an address outside Singapore)
with recorded delivery, or by facsimile transmission (provided that the receipt
of such facsimile transmission is confirmed by the dispatch of a hard copy of
the facsimile sent immediately thereafter by prepaid registered post) addressed
to the intended recipient thereof at its address or at its facsimile number set
out in this Agreement (or to such other address or facsimile number as a party
to this Agreement may from time to time duly notify the others in writing). Any
such notice, demand or communication shall be deemed to have been duly served,
if given or made by facsimile, immediately at the time of dispatch (provided
that the receipt of such facsimile transmission is confirmed by the dispatch of
a hard copy of the facsimile sent immediately thereafter by prepaid registered
post) or, if given or made by letter, immediately if



                                       11
<PAGE>   14

delivered personally or 48 hours after posting or, if given or made by air-mail,
ten days after posting and in proving the same it shall be sufficient to show
that personal delivery was made or that the envelope containing such notice was
duly addressed, stamped and posted. The address and facsimile numbers of the
parties for the purpose of this Agreement are:-


         CSM:             CHARTERED SEMICONDUCTOR MANUFACTURING LTD
                          60, Woodlands Industrial Park D Street 2
                          Singapore 738406
                          Facsimile No.: (65) 362 2909
                          Attention: Legal Department

         Lucent:          Lucent Technologies Inc.
                          Microelectronics Division
                          555 Union Boulevard
                          Allentown, PA 18103-1229
                          Facsimile No.:  001 610 712-7287
                          Attention:  Customer Satisfaction and
                                      Business Development
                                      Vice President

         with a copy to:  Lucent Technologies Inc.
                          Microelectronics Division
                          Two Oak Way
                          Berkeley Heights, NJ 07922-2727
                          Facsimile No.:  001 908 508-8398
                          Attention:  Legal Department




                                       12
<PAGE>   15

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.

         LUCENT TECHNOLOGIES INC.

                  By: /s/ M.R. Greene
                      --------------------------------------
                      M. R. Greene
                      Vice President - Intellectual Property


                  Date: 13 February 1998
                        ------------------------------------








         CHARTERED SEMICONDUCTOR MANUFACTURING LTD.


                  By: /s/ Tan Bock Seng
                      --------------------------------------
                          Tan Bock Seng
                      President and Chief Financial Officer


                  Date: 17 February 1998
                        ------------------------------------


               THIS AGREEMENT DOES NOT BIND OR OBLIGATE ANY PARTY
                IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
                         REPRESENTATIVES OF ALL PARTIES



                                       13
<PAGE>   16
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                    EXHIBIT A

                         LUCENT'S TECHNICAL INFORMATION



Lucent's ****** Digital and Linear Process Modules

1.   Process Flow

2.   Process Log

3.   Process recipes and tool set-ups

4.   Target film thicknesses

5.   Schematic cross-sections

6.   Electrical specifications

7.   Layout rules

8.   Transistor spice files


Lucent's Technical Information shall not include Lucent's ****** BiCMOS, FLASH
and embedded DRAM modules.




                                       14
<PAGE>   17
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                    EXHIBIT B

                           CSM'S TECHNICAL INFORMATION



For the following Process Modules,

(1)  CSM's **************************************************** Process Module;

(2)  CSM's ******************************* Process Module; and

(3)  CSM's *************************************************** Process Module,



CSM will provide the following Technical Information:


1.   Process Flow

2.   Process Log

3.   Process recipes and tool set-ups

4.   Target film thicknesses

5.   Schematic cross-sections

6.   Electrical specifications

7.   Layout rules

8.   Transistor spice files





                                       15
<PAGE>   18

                                    EXHIBIT C

                              LIST OF SUBSIDIARIES



LUCENT'S SUBSIDIARIES

Cirent Semiconductor
Silicon Manufacturing Partners Pte Ltd.





CSM'S SUBSIDIARIES

Chartered Silicon Partners Pte, Ltd.






                                       16
<PAGE>   19

                                    EXHIBIT D

            TECHNICAL INFORMATION WHICH MAY BE DISCLOSED TO CUSTOMERS



The following portions of Lucent's Technical Information (Exhibit A) and CSM's
Technical Information (Exhibit B) can be provided to customers under appropriate
confidentiality terms in accordance with the provisions of Article 4:


1.   Process Information

Process Name
Technology
Process Type

Number of Poly Layers
Number of Metal Layers
Poly Type
Voltage Type
Module Addition
Process Description
Starting Material Type(s)
        Non-EPI Layer
        Epitaxial Layer
Process Runsheet Spec
Non-Proprietary Process Flow Spec
Schematic Cross-Sections
Topological Design Rule Spec
Mask Bias Table Spec
Number of Reticles
Number of Masking Layers

Frame Doc #
Frame Table #
Reliability Spec




                                       17
<PAGE>   20

2.   Electrical Test Information

Spice Model Spec

          Level - 13
          Level - 28
          Level - 49
          BSIM1

Electrical Parameters Spec
Electrical Test Spec
Electrical Test Program Spec

3.   Qualification Plan

Reliability Results Report (at QA)
Qual Report

4.   Phase of Process

Engineering/Qualification/Production









                                       18

<PAGE>   1


                                                                   EXHIBIT 10.14



                          REDACTED FOR CONFIDENTIALITY


                               TECHNOLOGY TRANSFER
                              AND LICENSE AGREEMENT

This Technology Transfer and License Agreement ("Agreement") is entered into as
of May 20, 1999 (the "Effective Date"), by and between Chartered Semiconductor
Manufacturing LTD ("CSM"), a Singapore Corporation, with principal offices
located at 60 Woodlands Industrial Park D, Street 2, Singapore 738406, Chartered
Silicon Partners PTE LTD ("CSP"), a Singapore Corporation, with principal
offices located at 60 Woodlands Industrial Park D, Street 2, Singapore 738406,
and Motorola, Inc. ("Motorola"), a Delaware corporation, with principal offices
located at 1303 East Algonquin Road, Schaumburg, Illinois 60196.

                                    RECITALS

Whereas, Motorola is a manufacturer of silicon semiconductor devices and has
developed and will further develop, independently and with others, state of the
art manufacturing process technologies known as the HiperMOS processes.

Whereas CSM and CSP are manufacturers of silicon semiconductor devices and
desire to license and utilize the HiperMOS processes developed and to be
developed by Motorola independently and with others.

Whereas, the companies believe that entering into this Agreement will provide
value for each company and their respective customers by increasing the
likelihood of acceptance and success of the HiperMOS processes, leveraging the
capital costs required, and increasing the quantity and quality of product
offerings available from each company.

Now, therefore, in consideration of the rights and obligations set forth in this
Agreement, the parties agree as follows:

                                    AGREEMENT

1.    Definitions

      1.1   "Acquired Party" means a party to this Agreement that undergoes a
            Change of Control.

CONFIDENTIAL                                                              Page 1
<PAGE>   2

      1.2   "Acquiring Party" means the person or entity that acquires fifty
            percent (50%) or more of the outstanding voting securities of a
            party to this Agreement, such that the party being acquired
            undergoes a Change of Control.

      1.3   "Change of Control" means the acquisition by a single legal entity
            or natural person of fifty percent (50%) or more of the outstanding
            securities of a party entitled to vote for the board of directors of
            such party.

      1.4   "Confidential Information" means any information disclosed by a
            party (the "Disclosing Party") to the another party (the "Receiving
            Party") pursuant to this Agreement in a context which would cause a
            reasonable person to believe the information is intended to be
            treated as confidential, including but not limited to, documents
            expressly designated as confidential, and information related to any
            party's manufacturing processes, products, employees, facilities,
            equipment, security systems, information systems, finances, product
            plans, marketing plans, suppliers, or distributors; provided,
            however that "Confidential Information" shall not include
            information that: (i) is now available or becomes available to the
            public without breach of this Agreement; (ii) is explicitly approved
            for release by written authorization of the Disclosing Party; (iii)
            is lawfully obtained from a third party or parties without a duty of
            confidentiality; (iv) is disclosed to a third party by the
            Disclosing Party without a duty of confidentiality; (v) is known to
            the Receiving Party prior to disclosure; or (vi) is at any time
            developed by the Receiving Party independently of any such
            disclosure(s) from the Disclosing Party.

      1.5   "CSM Technology" means technology developed solely and/or owned
            solely by CSM and all solely owned intellectual property pertaining
            thereto.

      1.6   "CSP Technology" means technology developed solely and/or owned
            solely by CSP and all solely owned intellectual property pertaining
            thereto.

      1.7   "Derivative Process" means a semiconductor fabrication process,
            other than Logic Process Technologies which incorporates,


CONFIDENTIAL                                                              Page 2
<PAGE>   3

            modifies or uses steps or elements developed for and/or utilized in
            Logic Process Technologies.

      1.8   "Dual Gate Oxide Module" means a Process Module enabling the
            integration of a dual thickness gate oxide layer onto a single
            semiconductor chip.

      1.9   "Improvement" means a change or addition to a process which improves
            or modifies it in some manner, including but not limited to
            increasing manufacturing throughput, increasing the performance,
            quality or yield of devices manufactured using the process,
            decreasing the cost of utilizing the process, or enabling the use of
            different materials; provided, however, that a change or addition
            will constitute an Improvement only if the process after such
            Improvement still fits within the definition for that process (e.g.,
            HIP5L, HIP6L or HIP7L) set forth in this Agreement. For the purposes
            of this Agreement, same generation process shrinks shall be
            considered an Improvement but an Improvement shall not include a
            Process Module.

      1.10  "Intellectual Property" means all intellectual property including
            but not limited to copyrights, trade secrets, and know how but
            specifically excluding patents.

      1.11  "IP Expenses" are fees, costs, or other charges related to securing
            and maintaining intellectual property rights (including patent
            rights) other than IP Fees and Translation Expenses.

      1.12  "IP Fees" are fees or other charges required to be paid to a
            governmental agency, governmental office, or other governmental
            entity to secure and maintain intellectual property rights
            (including patent rights) and include filing fees, registration
            fees, issue fees, maintenance fees, annual taxes, and annuities.

      1.13  "Joint Technology" means: (i) with respect to copyrightable material
            or work subject to protection under Chapter 9 of Title 17 of the
            U.S. Code (Semiconductor Chip Protection Act), such material or work
            qualifies as a "joint work" under 17 U.S.C. Section 101; (ii) with
            respect to inventions subject to patent protection, employees of at
            least two parties to this Agreement were "joint inventors" of such
            invention under 35 U.S.C. Section


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<PAGE>   4

            116; and (iii) with respect to matter subject to trade secret
            protection, at least two parties to this Agreement made substantial
            contributions to such matter. Where a product or process consists of
            multiple parts, elements or steps, each of which is capable of being
            subject to a claim of ownership, each such part, element or step
            will be analyzed separately to determine if it constitutes Joint
            Technology.

      1.14  "Logic Process Technologies" means collectively HIP5L, HIP6L, and
            HIP7L and "Logic Process Technology" means singularly HIP5L, HIP6L,
            and HIP7L, including the Dual Gate Oxide Module (as it becomes
            available) as are defined generally below and are defined more
            specifically in documents for each Logic Process Technology set
            forth in Appendix A1. Appendix A2 is solely for the purpose of
            transfer verification, and shall not be used in the interpretation
            of this Section nor for any purposes other than determining whether
            Motorola has met its obligations to transfer a Logic Process
            Technology. Appendices A1 and A2 will be updated as necessary to
            include documents to specifically describe each new Logic Process
            Technology as it is developed.

            (a)   "HIP5L" means a high performance copper interconnect logic
                  process for manufacturing logic devices based on 0.22 micron
                  general design rules with a nominal Lpoly/Leff of 0.15 micron.

            (b)   "HIP6L" means a high performance copper interconnect logic
                  process for manufacturing logic devices based on 0.18 micron
                  general design rules with a nominal Lpoly/Leff of 0.13 micron.

            (c)   "HIP7L" means a high performance copper interconnect logic
                  process for manufacturing logic devices based on 0.12 micron
                  general design rules with a nominal Lpoly/Leff of 0.10 micron.

      1.15  "Motorola Technology" means technology developed solely and/or owned
            solely by Motorola or by Motorola and others not a party to this
            agreement including the Logic Process Technologies and all solely
            owned intellectual property pertaining thereto.


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<PAGE>   5

      1.16  "Net Revenue" means the gross receipts received by CSP or CSM or the
            full commercial value realized (as if products were sold on the open
            market in an arm's length transaction), whichever is greater, from
            the sale of products in wafer form to customers other than Motorola
            less any taxes, duties, freight charges, insurance, discounts,
            credits, commissions paid to third parties, and returns.

      1.17  "Non-Acquired Party" means a party to this Agreement when the other
            party undergoes a Change of Control.

      1.18  "Power PC Microprocessors" means microprocessors designed for the
            personal computing environment and embedded applications utilizing
            the industry desktop and embedded Power PC architectures and
            instruction sets.

      1.19  "Process Module" means a stand-alone block of process technology
            that is separate from but may be coupled with Logic Process
            Technologies and when coupled with Logic Process Technologies,
            enables the manufacture of products having increased functionality.

      1.20  "Specified Equipment Manufacturer(s)" means a company that is a
            customer of CSP or CSM, whose primary business is not the
            manufacture or sale of semiconductor devices, whose annual sales of
            semiconductor devices to the merchant market are less than one
            percent (1%) of such company's net sales, and whose annual net sales
            to the merchant market of semiconductor devices manufactured using
            the Logic Process Technologies do not exceed twenty five million
            dollars ($25,000,000.00). A company shall cease to be a Specified
            Equipment Manufacturer at any time that the requirements of this
            Section 1.20 are not met.

        1.21 "Subsidiary" means a corporation, company, or other entity:

            (a)   more than fifty percent (50%) of whose outstanding shares or
                  securities (representing the right to vote for the election of
                  directors or other managing authority) are now or hereafter,
                  owned or controlled, directly or indirectly, by a party
                  hereto, but such corporation, company, or other entity


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<PAGE>   6

                  shall be deemed to be a Subsidiary only so long as such
                  ownership or control exists;

            (b)   which does not have outstanding shares or securities, as may
                  be the case in a partnership, joint venture or unincorporated
                  association, but more than fifty percent (50%) of whose
                  ownership interest representing the right to make the
                  decisions for such corporation, company, or other entity is
                  now or hereafter, owned or controlled, directly or indirectly,
                  by a party hereto, but such corporation, company, or other
                  entity shall be deemed to be a Subsidiary only so long as such
                  ownership or control exists.

      1.22  "Transfer Period" means the period of time beginning with the
            initiation of the transfer of a particular Logic Process Technology
            by Motorola into a single CSP fab and ending with the qualification
            of that particular logic Process Technology in the CSP fab.

      1.23  "Translation Expenses" are fees, costs, or other charges related to
            translating patent applications and copyright registrations.

      1.24  "X86 Microprocessors" means microprocessors designed for personal
            computers and servers compatible with X86 versions of Microsoft
            Corporation's Windows(R) operating systems, and utilizing the
            industry standard X86 architecture and instruction sets.

2.    Information Transfer

      2.1   Motorola will provide to CSP and CSM design rules (including I/O and
            pad modules), target library information, tool set lists, and
            process flows for each of the Logic Process Technologies in
            accordance with the schedule set forth in Appendix B or earlier if
            available. Motorola will further provide updates, modifications, and
            corrections to the design rules, target library information, tool
            set lists, and process flows within a reasonable time period after
            their initial availability. Notwithstanding the above, failure to
            meet the schedule set forth in Appendix B shall not be considered a
            breach of this Agreement. Motorola will, however, use reasonable
            commercial efforts to meet such schedule and if Motorola believes
            the schedule will not be met, will promptly


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            notify CSP and CSM and the parties will cooperate to develop a new
            schedule to the satisfaction of all parties and/or confer with CSP
            and CSM regarding possible remedies in the event that any delay
            significantly affects any party hereto. In the event that the tasks
            set forth in Appendix B are not achieved within ********************
            for HIP6L or ******************** for HIP7L, then CSP or CSM may, at
            their option, terminate this Agreement for convenience and Section
            10.3 hereof shall apply.

            2.1.1 CSP and CSM may provide design rules, target library
                  information, and the information set forth in Appendix F to
                  customers and EDA tool vendors subject to the execution of
                  confidentiality agreements having terms substantially similar
                  to those in Appendix D between CSP or CSM and such entities.
                  CSM and CSP may further provide the test and assembly
                  information set forth in Rider F of Appendix F only to ST
                  Assembly Test Services Ltd subject to the execution of a
                  confidentiality agreement having terms substantially similar
                  to those in Appendix D.

      2.2   Motorola, CSP, and CSM agree to discuss the possibility of the joint
            development of libraries for parties not subject to this Agreement.
            The parties hereto further agree to include Hewlett Packard Company
            and its successors having an ownership interest in CSP in such
            discussions upon request of any of the parties.

      2.3   Upon the request of CSP and CSM and reasonable notice to Motorola,
            Motorola will provide detailed information to CSP and CSM regarding
            the development status of any of the Logic Process Technologies
            including when Motorola believes a particular Logic Process
            Technology will be ready to manufacture a product for a first
            commercial shipment and further agrees to confer with CSM and CSP in
            devising methods to accelerate such first commercial shipment.
            Motorola will further, in good faith, consider inputs and requests
            relating to the development of the Logic Process Technologies
            provided by CSP and CSM although Motorola will not be obligated to
            incorporate such input or requests into the Logic Process
            Technologies.

3.    Technology Transfer and Technical Assistance

      3.1   In partial consideration for the amounts payable under Sections


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            7.2, 7.3, and 7.4 of this Agreement and no later than sixty (60)
            days after execution of this Agreement or the completion of a
            transfer of each particular Logic Process Technology from a Motorola
            research and development facility or pilot line to a Motorola
            production fab and qualification of the particular Logic Process
            Technology in that fab, Motorola will initiate the transfer of the
            particular Logic Process Technology to a single CSP production fab.
            It will be the responsibility of CSP to ensure that the CSP
            production fab into which the particular Logic Process Technology is
            being transferred is equipped in such a manner as to be compatible
            with the particular Logic Process Technology. The transfer will
            occur in a reasonable period of time and as set forth in Appendix C.
            The parties understand that there are significant risks associated
            with the transfer of a new technology and will work together to
            enable a smooth transfer. Motorola will have no obligation to
            provide any assistance in the transfer of the Logic Process
            Technologies to CSP or CSM facilities other than to the single CSP
            production fab set forth above.

      3.2   During the Transfer Period for each Logic Process Technology and at
            the request of CSP, Motorola will manufacture for CSP and CSM within
            a commercially reasonable cycle time, ************** prototype wafer
            ******************** wafers per month which meets mutually agreed
            upon electrical testing specifications. This manufacturing of the
            prototype wafer lots will be subject to the parties agreeing on a
            reasonable price therefor. CSP and CSM may use members of their
            transfer team for the particular Logic Process Technology to assist
            Motorola in its facility in the processing of such prototype wafer
            lots. The parties agree that it will be desireable for CSP to employ
            multiple CSP product reticles and/or masks in the manufacturing of
            the prototype wafer lots and will attempt to do so if, in the
            discretion of Motorola, such employ will not unreasonably hinder the
            development or transfer of Logic Process Technologies.


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<PAGE>   9
      3.3   CSP, CSM, and Motorola will provide, without compensation or other
            obligation, Improvements made by them or implemented in a Logic
            Process Technology to each of the other parties hereto. Improvements
            shall be transferred to the other parties within a reasonable time
            after they are made.

4.    Ownership

      4.1   CSP Technology. CSP is the sole and exclusive owner of the CSP
            Technology. Any Improvement, Derivative Process, or Process Module
            developed solely by CSP will be CSP Technology, without affecting
            Motorola's or others' existing ownership of any Logic Process
            Technology or other Motorola Technology from which such Improvement,
            Derivative Process, or Process Module is derived.

      4.2   CSM Technology. CSM is the sole and exclusive owner of the CSM
            Technology. Any Improvement, Derivative Process, or Process Module
            developed solely by CSM will be CSM Technology, without affecting
            Motorola's or others' existing ownership of any Logic Process
            Technology or other Motorola Technology from which such Improvement,
            Derivative Process, or Process Module is derived.

      4.3   Motorola Technology. Motorola is the sole and exclusive owner of the
            Motorola Technology. Any Improvement, Derivative Process, or Process
            Module developed solely by Motorola will be Motorola Technology,
            without affecting CSM's or CSP's existing ownership of any CSM
            Technology, CSP Technology, or Improvements from which such
            Improvement, Derivative Process, or Process Module is derived.

      4.4   Joint Technology. Any Improvement, Derivative Process, or Process
            Module developed jointly by CSP, CSM, and/or Motorola will be deemed
            Joint Technology without affecting Motorola's existing ownership in
            the Logic Process Technologies or other Motorola Technology or CSM's
            or CSP's existing ownership of any CSM Technology, CSP Technology,
            or Improvement from which such Improvement, Derivative Process, or
            Process Module is derived. CSP, CSM, and Motorola will each have an
            undivided ownership interest in Joint Technology and any
            intellectual property obtained thereon to which the particular party
            contributed. The parties shall cooperate in executing and


CONFIDENTIAL                                                              Page 9
<PAGE>   10
            reviewing any documents and taking any actions necessary to obtain
            and maintain intellectual property protection of the Joint
            Technology. In the case of each discovery, improvement, invention,
            program or code that is Joint Technology, the parties shall
            determine whether or not to file patent applications or register
            copyrights in the United States and other countries. IP Expenses for
            preparing each joint application or registration shall be borne by
            the party that prepares and files the application or registration.
            Prior to filing, the non-filing party will be notified and requested
            to pay its equal pro rata share of all IP Fees and Translation
            Expenses. In the event that the non-filing party does not notify the
            requesting party in sixty (60) days in writing that it will pay its
            equal pro rata share of such IP Fees and Translation Expenses or if
            one party desires to obtain intellectual property protection for
            specific Joint Technology (such as filing for patent protection in a
            certain country) and the other party does not wish to obtain such
            protection for such Joint Technology, then the party seeking such
            protection will control and pay the cost of such prosecution, but
            the filing will still reflect both parties as joint owners. In the
            event of an enforcement action for Joint Technology depending on
            intellectual property protection the procurement of which was paid
            for by only one party, any recovery will first go to reimburse the
            party for the cost of obtaining such protection. Whenever the
            parties agree that an infringement action should be brought based on
            Joint Technology, the parties will jointly direct and share in the
            cost of bringing such action. In the event one party wishes to
            pursue an infringement action, and the other party does not, the
            party bearing the cost will control the action and will be allowed
            to retain any sums recovered in bringing such action. The other
            party may, at its option, cooperate in appearing as a plaintiff in
            such action and in providing information and testimony in support of
            such action. In connection with such support and testimony, the
            party bearing the costs of the action will pay out-of-pocket
            expenses of the other party (e.g., travel expenses), but will not be
            required to compensate the other party for the time of its employees
            and other incidental costs (e.g., photo-copying charges).


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      4.5   No Implied Licenses. This Agreement grants no licenses under any
            intellectual property except as expressly provided herein.

5.    Licenses

      5.1   Motorola hereby grants to CSP under Motorola Intellectual Property,
            a *****************************************************************
            license, without the right to sublicense, to:

            (i)   practice the methods and processes of the Logic Process
                  Technologies and Motorola Improvements to the Logic Process
                  Technologies,

            (ii)  make, use, import, sell, offer for sale, or otherwise dispose
                  of devices manufactured using the Logic Process Technologies,
                  Motorola Improvements to the Logic Process Technologies,
                  Derivative Processes, and Process Modules, and

            (iii) make Improvements to the Logic Process Technologies, Motorola
                  Improvements to the Logic Process Technologies, Process
                  Modules, and Derivative Processes using the Logic Process
                  Technologies.

      5.2   Motorola hereby grants to CSM under Motorola Intellectual Property,
            a *****************************************************************
            license, without the right to sublicense, to:

            (i)   practice the methods and processes of the Logic Process
                  Technologies and Motorola Improvements to the Logic Process
                  Technologies,

            (ii)  make, use, import, sell, offer for sale, or otherwise dispose
                  of devices manufactured using the Logic Process Technologies,
                  Motorola Improvements to the Logic Process Technologies,
                  Derivative Processes, and Process Modules, and

            (iii) make Improvements to the Logic Process Technologies, Motorola
                  Improvements to the Logic Process Technologies, Process
                  Modules, and Derivative Processes using the Logic Process
                  Technologies.


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      5.3   CSP hereby grants to Motorola under CSP Intellectual Property, a
            ******************************************************** license,
            including the right to sublicense, to:

            (i)   practice the methods and processes of the Logic Process
                  Technologies and CSP Improvements to the Logic Process
                  Technologies,

            (ii)  make, have made, use, import, sell, offer for sale, or
                  otherwise dispose of devices manufactured using the Logic
                  Process Technologies, CSP Improvements to the Logic Process
                  Technologies, Derivative Processes, and Process Modules, and

            (iii) make further Improvements to the Logic Process Technologies
                  and CSP Improvements to the Logic Process Technologies,
                  Process Modules, and Derivative Processes using the Logic
                  Process Technologies and CSP Improvements to the Logic Process
                  Technologies.

      5.4   CSM hereby grants to Motorola under CSM Intellectual Property, a
            ******************************************************** license,
            including the right to sublicense, to:

            (i)   practice the methods and processes of the Logic Process
                  Technologies and CSM Improvements to the Logic Process
                  Technologies,

            (ii)  make, have made, use, import, sell, offer for sale, or
                  otherwise dispose of devices manufactured using the Logic
                  Process Technologies, CSM Improvements to the Logic Process
                  Technologies, Derivative Processes, and Process Modules, and

            (iii) make further Improvements to the Logic Process Technologies
                  and CSM Improvements to the Logic Process Technologies,
                  Process Modules, and Derivative Processes using the Logic
                  Process Technologies and CSM Improvements to the Logic Process
                  Technologies.

      5.5   Prior to ************* with respect to HIP5L and within ***********
            of the first commercial shipment (regardless of quantity or price)
            by


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            Motorola of a product manufactured using a particular Logic Process
            Technology other than HIP5L, CSP and CSM may sell unlimited
            quantities of products manufactured using the particular Logic
            Process Technology and Improvements thereto ************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            and other companies expressly approved in writing by Motorola. Prior
            to ************ with respect to HIP5L and within *********** of
            the first commercial shipment (regardless of quantity or price) by
            Motorola of a product manufactured using the particular Logic
            Process Technology other than HIP5L, CSP and CSM may sell or
            otherwise dispose of only engineering and prototype sample
            quantities of products manufactured using the particular Logic
            Process Technology and Improvements thereto to companies other than
            those set forth above in this Section 5.5.

      5.6   After ************* with respect to HIP5L and *********** after the
            first commercial shipment by Motorola of a product manufactured
            using a particular Logic Process Technology other than HIP5L, CSM
            and CSP may sell unlimited quantities of products manufactured using
            the particular Logic Process Technology and improvements thereto to
            the merchant market.

      5.7   Prior to ************* with respect to HIP5L and within ***********
            of the first commercial shipment (regardless of quantity or price)
            by Motorola of a product manufactured using a particular Logic
            Process Technology other than HIP5L, the rights and licenses set
            forth in Sections 5.1 and 5.2 above with respect to that particular
            Logic Process Technology are to be exercised only *****************
            ********************************************************************
            **************************.

            5.7.1 Notwithstanding, CSM may install the particular Logic Process
                  Technology in ******************************* but may produce
                  products manufactured using the particular Logic


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                  Process Technology ********************** with respect to
                  HIP5L and within ************* of the first commercial
                  shipment by Motorola of a product manufactured using the
                  particular Logic Process Technology other than HIP5L only in
                  the event that such single CSP production fab fails to produce
                  products.

            5.7.2 Notwithstanding, in the event that *************************
                  *** is unable to produce sufficient quantities of products
                  manufactured using the particular Logic Process Technology
                  for *********************************************************
                  pursuant to Section 5.5 above, CSM shall be entitled to
                  manufacture products using the particular Logic Process
                  Technology in *********************************************
                  ***********************************************************
                  ***********************************************************
                  ***********************************************************
                  with respect to HIP5L and within ************* of the first
                  commercial shipment by Motorola of a product manufactured
                  using the particular Logic Process Technology other than
                  HIP5L.

            After ************* with respect to HIP5L and ************ after the
            first commercial shipment (regardless of quantity or price) by
            Motorola of a product manufactured using a particular Logic Process
            Technology other than HIP5L, CSM and CSP may transfer the particular
            Logic Process Technology into **************************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            ********************************************************************
            ******************* During the term of this Agreement, Motorola will
            further negotiate in good faith with CSM and CSP to expand such
            rights and licenses to include ********************************* nor
            jointly owned as described in this paragraph. After the expiration
            of this Agreement, Motorola shall, at CSM's or CSP's request,
            promptly ***************************** granted in Sections 5.1 and
            5.2 of this Agreement, subject to all other surviving clauses of
            this Agreement, to ***************************. Notwithstanding
            anything to the contrary herein, Motorola may require that CSM


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<PAGE>   15

            or CSP construct appropriate firewalls pursuant to Section 9.4 of
            this Agreement to protect Confidential Information and trade secrets
            of Motorola or others.

      5.8   Prior to July 31, 2002 with respect to HIP5L and within four (4)
            years of the first commercial shipment by Motorola of a product
            manufactured using a particular Logic Process Technology other than
            HIP5L, Motorola agrees that it will not license that particular
            Logic Process Technology solely for cash or other financial
            interest. This does not prohibit Motorola from licensing a
            particular Logic Process Technology for something other than cash or
            other financial interest, for a combination of cash or other
            financial interest and something other than cash or other financial
            interest, or for any other reason whatsoever. Further, this does not
            prohibit any party not subject to this agreement from licensing a
            particular Logic Process Technology solely for cash or other
            financial interest or for any other reason whatsoever.

      5.9   Prior to July 31, 2001 with respect to HIP5L and within three (3)
            years of the first commercial shipment by Motorola of a product
            manufactured using a particular Logic Process Technology other than
            HIP5L, Motorola agrees that it will license no more than one (1)
            entity, in addition to CSP and CSM, having a principal business of
            providing foundry semiconductor manufacturing for others to provide
            products manufactured using that particular Logic Process Technology
            to the merchant market solely to obtain foundry manufacturing
            services for Motorola.

            5.9.1 In the event that Motorola licenses such a foundry entity as
                  set forth above, the license agreement will:

                  5.9.1.1 not allow such entity to provide products manufactured
                          using a particular Logic Process Technology to the
                          merchant market until October 31, 2000 with respect to
                          HIP5L and twenty seven (27) months after the first
                          commercial shipment by Motorola of a product
                          manufactured using that particular Logic Process
                          Technology other than HIP5L;


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<PAGE>   16

                  5.9.1.2 provide that the technology transfer for the
                          particular Logic Process Technology begins no earlier
                          than ninety (90) days following the technology
                          transfers set forth in Section 3.1 above;

                  5.9.1.3 not provide for the provision by Motorola to such
                          entity of prototype wafer lots prior to that entity's
                          internal qualification of a particular Logic Process
                          Technology;

                  5.9.1.4 not allow such entity to provide engineering and
                          prototype sample quantities to merchant market
                          customers until July 31, 2000 with respect to HIP5L
                          and two (2) years after the first commercial shipment
                          by Motorola of a product manufactured using a
                          particular Logic Process Technology other than HIP5L;
                          and

                  5.9.1.5 grant such entity, based on the totality of all terms
                          in the agreement and at the reasonable discretion of
                          Motorola, terms no more favorable than those of this
                          Agreement.

      5.10  Notwithstanding Section 5.9 above, Motorola may license any entity
            having a principal business of providing foundry semiconductor
            manufacturing for others to provide products manufactured using a
            particular Logic Process Technology to the merchant market for any
            reason other than obtaining foundry manufacturing. In the event that
            Motorola grants a license as provided for in this Section 5.10, and
            to the extent not legally prohibited, it will inform CSM of such
            license and reasons why Motorola entered into such license.
            Motorola, CSM and CSP agree to explore areas for mutual cooperation
            in the future and to consider consultation with each other for
            future technology cooperation.

      5.11  Neither CSM nor CSP shall, under any circumstances, manufacture
            products (except for internal development use) with a Derivative
            Process during the term of this Agreement without the express
            written approval of Motorola.


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6.    Limitations on Licenses

      6.1   Notwithstanding anything to the contrary herein, CSM and CSP shall
            not use the Logic Process Technologies nor any Derivative Process
            thereof to manufacture X86 Microprocessors or a processor having an
            AMD proprietary processor architecture for any party other than AMD
            without the express written permission of Motorola.

      6.2   Notwithstanding anything to the contrary herein, CSM and CSP shall
            not use the Logic Process Technologies nor any Derivative Process
            thereof to manufacture Power PC Microprocessors or a processor
            having a Motorola proprietary processor architecture for any party
            other than Motorola without the express written permission of
            Motorola.

      6.3   In the event that CSP or CSM uses the Logic Process Technologies or
            a Derivative Process thereof to unknowingly manufacture X86
            Microprocessors, a processor having an AMD proprietary processor
            architecture, a Power PC Microprocessor, or a processor having a
            Motorola proprietary processor architecture, such manufacture shall
            not be a breach of this Agreement. Notwithstanding, if such
            unauthorized manufacture occurs, CSP and CSM shall cease such
            manufacture as soon as reasonably practicable after the discovery of
            such unauthorized manufacture.

7.    Compensation

      7.1   All payments set forth herein shall be payable in U.S. dollars and
            payable by wire transfer to the below Motorola account:

                                   CITIBANK NY

                                 ABA # 021000089

                             SPS Account # 38491386

      7.2   Upon execution of this Agreement, CSP shall pay Motorola *********
            ***********************.


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      7.3   In addition to the amount set forth in Section 7.2, CSP shall pay
            Motorola ********************************* prior to the initiation
            of the Transfer Period for HIP6L and *******************************
            **************** prior to the initiation of the Transfer Period for
            HIP7L.

      7.4   In addition to the amounts set forth in Sections 7.2 and 7.3, CSP
            shall pay Motorola ************************************************
            ******************************************* within thirty (30) days
            after CSP internal qualification of HIP5L, ************************
            ************************ within thirty (30) days after CSP internal
            qualification of HIP6L, and ******************************* within
            thirty (30) days of CSP internal qualification of HIP7L.

      7.5   HIP5L Royalties

      7.5.1 In addition to the amounts set forth in Sections 7.2, 7.3, and 7.4,
            CSP shall pay Motorola *********************************************
            **** of the Net Revenue of all products manufactured by CSP using
            HIP5L or a Derivative Process thereof.

      7.5.2 Once the aggregate royalties paid under Sections 7.5.1 and 7.5.3 of
            this Agreement total ***********************************************
            *****************, the royalty set forth in Section 7.5.1 shall
            cease and CSP shall pay Motorola ***********************************
            ************ of the Net Revenue of all products manufactured by CSP
            using HIP5L or a Derivative Process thereof.

      7.5.3 In addition to the amounts set forth in Sections 7.2, 7.3, and 7.4
            payable by CSP, CSM shall pay Motorola ****************************
            ******************* of the Net Revenue of all products manufactured
            by CSM using HIP5L or a Derivative Process thereof.

      7.5.4 Once the aggregate royalties paid under Sections 7.5.1 and 7.5.3 of
            this Agreement total ******************************************
            ****************, the royalty set forth in Section 7.5.3 shall cease
            and CSM shall pay Motorola *********************************** of
            the Net Revenue of all products manufactured by CSM using HIP5L or a
            Derivative Process thereof.


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<PAGE>   19
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


      7.6   HIP6L Royalties

            7.6.1 In addition to the amounts set forth in Sections 7.2, 7.3,
                  7.4, and 7.5, CSP shall pay Motorola ************************
                  ************ of the Net Revenue of all products manufactured
                  by CSP using HIP6L or a Derivative Process thereof.

            7.6.2 Once the aggregate royalties paid under Sections 7.6.1 and
                  7.6.3 of this Agreement total ***************************
                  *****************, the royalty set forth in Section 7.6.1
                  shall cease and CSP shall pay Motorola **********************
                  *********** of the Net Revenue of all products manufactured by
                  CSP using HIP6L or a Derivative Process thereof.

            7.6.3 In addition to the amounts set forth in Sections 7.2, 7.3,
                  7.4, and 7.5 payable by CSP, CSM shall pay Motorola *********
                  ************************** of the Net Revenue of all products
                  manufactured by CSM using HIP6L or a Derivative Process
                  thereof.

            7.6.4 Once the aggregate royalties paid under Sections 7.6.1 and
                  7.6.3 of this Agreement total ***************************
                  *****************, the royalty set forth in Section 7.6.3
                  shall cease and CSM shall pay Motorola **********************
                  ************ of the Net Revenue of all products manufactured
                  by CSM using HIP6L or a Derivative Process thereof.

      7.7   HIP7L Royalties

            7.7.1 In addition to the amounts set forth in Sections 7.2, 7.3,
                  7.4, 7.5, and 7.6, CSP shall pay Motorola ******************
                  ************* of the Net Revenue of all products manufactured
                  by CSP using HIP7L or a Derivative Process thereof.

            7.7.2 Once the aggregate royalties paid under Sections 7.7.1 and
                  7.7.3 of this Agreement total ***************************
                  *****************, the royalty set forth in Section 7.7.1
                  shall cease and CSP shall pay Motorola **********************
                  ************ of the Net Revenue of all products manufactured
                  by CSP using HIP7L or a Derivative Process thereof.


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<PAGE>   20
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


            7.7.3 In addition to the amounts set forth in Sections 7.2, 7.3,
                  7.4, 7.5, and 7.6 payable by CSP, CSM shall pay Motorola *****
                  *********************************** of the Net Revenue of all
                  products manufactured by CSM using HIP7L or a Derivative
                  Process thereof.

            7.7.4 Once the aggregate royalties paid under Sections 7.7.1 and
                  7.7.3 of this Agreement total ***************************
                  *****************, the royalty set forth in Section 7.7.3
                  shall cease and CSM shall pay Motorola *********************
                  ************ of the Net Revenue of all products manufactured
                  by CSM using HIP7L or a Derivative Process thereof.

      7.8   Solely for the purposes of this Agreement, ********** percent of the
            royalties received under Sections 7.5, 7.6, and 7.7 above and
            Section 7.9 below are in consideration of the licenses granted in
            Section 5 of this Agreement and the amount of *******************
            ****************************************************************
            payable under Section 7.4 above and ******** percent of the
            royalties received under Sections 7.5, 7.6, and 7.7 above and
            Section 7.9 below are in consideration of the licenses and covenants
            for the technologies that are the subject of this Agreement granted
            in the Patent License Agreement entered into between Motorola and
            CSM on __________.

      7.9   In the event that CSM or CSP develops a Derivative Process of any of
            the Logic Process Technologies and such Derivative Process includes
            less than *********************** of the significant process steps
            set forth in Appendix E as updated for Improvements made to a Logic
            Process Technology and for each subsequent Logic Process Technology,
            then the royalties payable to Motorola by CSM and/or CSP for such
            Derivative Process shall be one half (1/2) of the royalties payable
            under Sections 7.5, 7.6, and 7.7 above.

      7.10  Royalty Payments and Statements. Within thirty (30) days after the
            close of each quarter during which Net Revenue was received by CSP
            or CSM, CSP and/or CSM will pay to Motorola royalty payments in
            accordance with Sections 7.5, 7.6, and 7.7 above. Each payment will
            be accompanied by a statement reflecting the


CONFIDENTIAL                                                             Page 20
<PAGE>   21

            Net Revenue received during the quarter and identify the amount of
            Net Revenue attributable to each Logic Process Technology.

      7.11  Rebate to Motorola. In each quarter during which CSP or CSM
            manufactures products for Motorola using the Logic Process
            Technologies or a Derivative Process developed by CSM or CSP, CSP or
            CSM shall calculate an amount equal to the royalties paid under the
            appropriate Section 7.5, 7.6, 7.7, or 7.9 above on the gross
            receipts received by CSM or CSP or the full commercial value
            realized (as if products were sold on the open market in an arm's
            length transaction), whichever is greater, from the sale of such
            products to Motorola in wafer form less any taxes, duties, freight
            charges, insurance, discounts, credits, commissions, paid to third
            parties, and returns ("Rebate Amount"). The calculation of the
            Rebate Amount will be independent of any pricing provisions or
            agreements contained in this or any other Agreement and such pricing
            provisions will be independent of the Rebate Amount. CSP or CSM
            shall credit the Rebate Amount towards Motorola's purchases of any
            products from CSP or CSM made in the quarter immediately following
            the quarter for which such Rebate Amount was calculated.

      7.12  Rebate Amount Statements. Within thirty (30) days after the close of
            each quarter during which a Rebate Amount was calculated by CSP or
            CSM, CSP and/or CSM will send a statement to Motorola reflecting the
            Rebate Amount calculated during the quarter and identify the amount
            of the Rebate Amount attributable to each Logic Process Technology
            or Derivative Process developed by CSP or CSM. All Rebate Amount
            statements will be separate from royalty statements sent pursuant to
            Section 7.10 above.

      7.13  CSP and CSM will maintain appropriate books and records necessary to
            verify the information contained in the royalty and Rebate Amount
            statements. Motorola may upon reasonable notice and at its expense
            during normal business hours and not more than once each year have a
            mutually agreed upon Big 6 certified public accounting firm review
            CSP's or CSM's ("Audited Party) books and records to verify the
            information contained in the royalty and Rebate Amount statements.
            The Auditor shall issue to the Audited Party and Motorola a report
            of the audit. Such report shall not contain, nor shall the auditor
            provide to Motorola,


CONFIDENTIAL                                                             Page 21
<PAGE>   22

            any information relating to the identity of customers of the Audited
            Party, terms of the Audited Party's customer contracts, or any other
            information which the Audited Party identifies as being of a
            confidential nature except for information necessary to satisfy the
            purpose of the audit. If the audit reveals a deficiency in any
            royalty payment or Rebate Amount credit, the Audited Party will
            promptly pay the amount of that deficiency. If the audit reveals
            that payments or credits were made in excess of the amounts due, the
            Audited Party will be entitled to, at its election, either a prompt
            refund of the excess payment or a credit towards future royalty
            obligations. If the audit reveals a deficiency in excess of 10% of
            the amount of the royalty payments or Rebate Amount credits being
            audited, the Audited Party will pay the reasonable costs of such
            audit.

      7.14  Motorola shall bear all taxes imposed on it with respect to the
            payments and rebates of this Section 7, provided, however, that if
            so required by applicable law, CSM or CSP shall withhold the amount
            of taxes levied by the Government of Singapore on payments and
            rebates to be made by CSM or CSP pursuant to this Agreement, and
            shall promptly make payment of the withheld amount to the
            appropriate tax authorities of the Government of Singapore and shall
            transmit to Motorola official tax receipts or other evidence issued
            by said appropriate tax authorities in respect to such withheld
            taxes so paid by CSM or CSP.

8.    Assumption of Risk, Obligations, and Representations

      8.1   Each party understands and acknowledges that except as expressly
            provided herein, it uses any technology delivered or licensed to it
            "AS IS."

      8.2   Motorola agrees that in the event of an entity, not a party to this
            agreement, making a claim or filing suit against CSM or CSP for
            patent infringement based upon CSM's or CSP's use of the Logic
            Process Technologies or Improvements thereto made by or implemented
            by Motorola, Motorola will provide a commercially reasonable amount
            of technical assistance and legal review and consultation of such
            claim or suit. At the request of CSP or CSM, Motorola will also
            inform CSP or CSM whether or not it has "have made" rights from a
            party making a claim or filing a suit against


CONFIDENTIAL                                                             Page 22
<PAGE>   23

            CSP or CSM for patent infringement. In no event shall this Section
            8.2 be interpreted as a requirement for Motorola to indemnify CSM or
            CSP nor as a requirement for Motorola to financially contribute to
            the defense of such claim or suit. The parties hereto expressly
            disclaim any obligation of indemnity to any other party under this
            Agreement.

      8.3   Motorola, CSM, and CSP each represent and warrant that they have the
            authority to enter into this Agreement.

      8.4   Motorola, CSM, and CSP each represent that no technology or
            information disclosed or to be disclosed under this Agreement was or
            will be wrongfully obtained due to the misappropriation of a trade
            secret or infringement of a copyright.

9.    Confidentiality

      9.1   The Receiving Party will for a period of seven (7) years from the
            date of disclosure (a) not disclose Confidential Information to any
            third party, (b) restrict dissemination of Confidential Information
            to only those employees who need to know such Confidential
            Information, and (c) use the same degree of care as for its own
            information of like importance, but at least use reasonable care, in
            safeguarding against disclosure of Confidential Information of the
            Disclosing Party.

      9.2   It is no party's intent to use the specific information disclosed to
            it under this Agreement in its own product or technology
            development, except as expressly authorized or licensed by this
            Agreement. However, the employees of any party during the term of
            this Agreement may further develop their general knowledge, skills,
            and experience in the technical areas to which the Confidential
            Information relates. The subsequent use by such employees of such
            general knowledge, skills and experience in the ordinary course of
            business does not constitute a breach of this Agreement. Further all
            parties recognize that receipt of Confidential Information under
            this Agreement shall not create any obligation in any way limiting
            or restricting the assignment of employees within the Parties.

      9.3   Notwithstanding Section 9.1 above, the parties agree that certain
            disclosures of Confidential Information to parties not bound by this
            Agreement (Outside Parties) including but not limited to customers,


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<PAGE>   24
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


            foundries, subcontractors, and vendors will be necessary. With the
            written permission of the Disclosing Party, each party hereto may
            make disclosures of the others' Confidential Information provided
            that a confidentiality agreement having terms substantially similar
            to those in Appendix D is entered into between the Outside Party and
            the disclosing party.

      9.4   Notwithstanding anything to the contrary in this Agreement, CSM and
            CSP will construct a firewall between each of them and any joint
            projects between CSM or CSP and parties not subject to this
            Agreement including Lucent and CSM's joint venture fab with Lucent.
            This firewall shall protect the Technical Confidential Information
            provided or disclosed by Motorola to CSM or CSP from disclosure to
            individuals working on or who will be working on such joint projects
            or in such joint venture fab. Such firewall shall include CSM and
            CSP not assigning employees having knowledge of such Technical
            Confidential Information provided or disclosed by Motorola to work
            on such joint projects or in such joint venture fab for a period of
            ******************** from the end of the period such employees were
            exposed to Technical Confidential Information. For the purposes of
            this Section 9.4, "Technical Confidential Information" shall mean
            Confidential Information of a technical nature including but not
            limited to process recipes, detailed sequences of steps in a factory
            control system regarding the manufacture of products, specific
            equipment configurations unique to the Logic Process Technologies.
            "Technical Confidential Information" shall not include information
            of business, marketing, commercial, or financial nature and any
            information which is authorized for disclosure pursuant to Sections
            2.1.1 or 9.3 of this Agreement.

10.   Term and Termination

      10.1  Term. This Agreement will commence on the Effective Date and
            terminate two (2) years after the first commercial shipment
            (regardless of quantity or price) by Motorola of a product
            manufactured using HIP7L unless terminated earlier in accordance
            with this Section 10 or Sections 2.1 and 11.

      10.2  Termination for Cause by Either Party. For the purposes of this
            Section 10.2, CSM and CSP jointly shall be considered a single
            party. Either party will have the right to terminate this Agreement
            at any time if:


CONFIDENTIAL                                                             Page 24

<PAGE>   25

            (a)   The other party is in material breach of any warranty, term,
                  condition or covenant of this Agreement and fails to cure that
                  breach within sixty (60) days after receiving written notice
                  of that breach and the other party's intention to terminate;

            (b)   The other party (i) becomes insolvent; (ii) admits in writing
                  its insolvency or inability to pay its debts or perform its
                  obligations as they mature; or (iii) becomes the subject of
                  any voluntary or involuntary proceeding in bankruptcy,
                  liquidation, dissolution, receivership, attachment or
                  composition or general assignment for the benefit of
                  creditors; provided that if such condition is assumed
                  involuntarily it has not been dismissed with prejudice within
                  thirty (30) days after it begins.

      10.3  Effect of Termination. Upon any termination of this Agreement, each
            party will be released from all obligations and liabilities to the
            other occurring or arising after the date of such termination,
            except that the following will survive any termination of this
            Agreement: (a) the provisions of Sections 1, 4, 6, 8, 9, 10, 11, 12,
            13, and 14; (b) the provisions of Sections 2.1.1, and 5.1-5.10 with
            respect to any technology developed and transferred prior to
            termination; (c) any royalty obligation associated with any
            surviving licenses, including those contained in Section 7; and (d)
            any liability arising from any breach of this Agreement. Neither
            party will be liable to the other for damages of any sort solely as
            a result of terminating this Agreement in accordance with its terms.
            Termination of this Agreement will be without prejudice to any other
            right or remedy of either party.

11.   Change of Control

      11.1  In the event of a Change of Control of a party to this Agreement,
            the following will occur:

            (a)   the Non-Acquired Party will have the right to terminate the
                  Agreement;

            (b)   the Acquired Party may assign to the Acquiring Party the
                  rights and licenses granted to it under Sections 5.1, 5.2,
                  5.3, and/or 5.4 under the Intellectual Property of the
                  Non-Acquired Party but only with respect to the particular
                  Logic Process Technologies and


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<PAGE>   26

                  Improvements thereto that are in use by the Acquired Party at
                  the time of the Change of Control;

            (c)   In the event that CSP or CSM are the Acquired Party, Motorola
                  shall have no obligation to license any Logic Process
                  Technologies other than those that were transferred as of the
                  time of the Change of Control;

            (d)   the Non-Acquired Party will negotiate in good faith with the
                  Acquiring Party for any additional rights sought by the
                  Acquiring Party; and

12.   Right to Develop Independently. Nothing in this Agreement will impair any
      party's right to acquire, use, license, develop, manufacture or distribute
      for itself, jointly develop with others, or have others develop,
      manufacture or distribute for it, technology other than the technology
      being developed and/or licensed under this Agreement.

13.   Disclaimer of Consequential, Etc. Damages. IN NO EVENT SHALL ANY PARTY BE
      LIABLE TO ANOTHER OR ANY OTHER PERSON FOR ANY SPECIAL, INDIRECT,
      INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING BUT
      NOT LIMITED TO, LOSS OF PROFITS OR DAMAGES TO THE OTHER PARTY'S BUSINESS
      REPUTATION HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN AN
      ACTION FOR CONTRACT, STRICT LIABILITY OR TORT (INCLUDING NEGLIGENCE) OR
      OTHERWISE, WHETHER OR NOT THE FIRST PARTY HAS BEEN ADVISED OF THE
      POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
      PURPOSE OF ANY REMEDY.

14.   General

      14.1  Relief from Obligations. No party will be deemed in default of this
            Agreement to the extent that performance of its obligations or
            attempts to cure any breach are delayed or prevented by reason of
            any act of God, fire, natural disaster, accident, act of government,
            shortages of material or supplies or any other cause beyond the
            control of such party ("Force Majeure"), provided that such party
            gives the other parties written notice thereof promptly and, in any
            event, within fifteen (15) days of discovery thereof and uses good
            faith efforts to so perform or cure. In the event of such a Force
            Majeure, the time for performance or cure will be extended for a
            period equal to the duration of the Force Majeure but not in excess


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<PAGE>   27

            of one hundred eighty (180) days. If the party seeking to be excused
            from performance of a substantial obligation cannot recover from the
            Force Majeure situation and resume satisfactory performance within
            one hundred eighty (180) days, of commencement of the Force Majeure
            situation, any other party may at its option, immediately terminate
            this Agreement.

      14.2  Relationship of Parties. No party nor their employees, consultants,
            contractors or agents are agents, employees or joint venturers of
            the other parties, nor do they have any authority whatsoever to bind
            the other parties by contract or otherwise. They will not represent
            to the contrary, either expressly, implicitly, by appearance or
            otherwise.

            14.2.1 Personnel. When present on the site of the other parties,
                   employees of the parties shall comply with all the rules
                   applicable to contractor personnel resident at or visiting
                   the premises of the party controlling the premises. Each
                   party shall provide to the other a set of documents setting
                   forth all such rules applicable to the contractor personnel
                   resident at or visiting their facilities. Any waiver of this
                   obligation must be agreed upon by both parties and must be in
                   writing. Each party must sign an appropriate written resident
                   contractor agreement, make employees aware of the
                   requirement, and ensure compliance.

            14.2.2 Employee Selection. Each party shall be responsible for the
                   selection and screening of its employees who will be assigned
                   to work under this Agreement. Each party shall be responsible
                   for the acts of its employees, and agrees to indemnify,
                   defend, and hold the other party, its officers, agents, and
                   employees, harmless from and against any and all claims,
                   costs, attorney fees, fines, or similar expenses of
                   whatsoever kind or character, including specifically, but not
                   limited to, those resulting from injury or death to persons
                   or damage to property, to the extent due to any fault or
                   negligence of the indemnifying party and/or any officer,
                   employee, or agent acting on the indemnifying party's behalf.

            14.2.3 Solicitation of Employees. To the extent permitted by law,
                   during the term of this Agreement each party agrees neither
                   to solicit directly for employment purposes the employees of
                   the


CONFIDENTIAL                                                             Page 27
<PAGE>   28

                   other party performing services under this Agreement, nor
                   knowingly to solicit such employees via solicitations calling
                   for knowledge and experience predominantly weighted to the
                   subject matter of this Agreement (although this shall not
                   forbid indirect solicitations for employees having the
                   general knowledge necessary for such subject matter). No
                   party shall make any payment or gift of any value to any
                   employee of another party without the employing party's prior
                   concurrence. No party shall make any representation that
                   might cause an employee assigned by one party to believe that
                   an employment relationship exists between such employee and
                   the other party.

            14.2.4 Work Place Safety. The work place safety of employees under
                   this Agreement shall be the sole and full responsibility of
                   the assigning party. If either party should become aware of
                   the existence of any hazardous conditions, property, or
                   equipment which are under the control of another party it
                   shall so advise that party; however, it shall remain the
                   first party's responsibility to take all reasonable
                   precautions against injury to persons or damage to property
                   from such hazards, property, or equipment until corrected by
                   the correcting party. Each party agrees to comply with the
                   applicable federal and state safety and health laws and
                   regulations, any applicable municipal ordinances, and
                   applicable facility safety rules of which the party has
                   notice, regarding the employees it assigns under this
                   Agreement.

      14.3  Employment Taxes and Benefits. It is understood and agreed that
            nothing in this Agreement is intended to, nor will it result in, an
            employee of a party becoming an employee of another party or
            becoming a joint employee of more than one party. Each party remains
            solely responsible for the payment of all withholding taxes, social
            security, unemployment insurance, workers' compensation insurance,
            disability insurance or similar items, including interest and
            penalties thereon, with respect to its employees. Each party will
            provide notice to all employees participating in any activity under
            this Agreement that they will not by virtue of participating in the
            activity, working at another party's facility, interacting with the
            management of another party, or otherwise performing services in
            accordance with this Agreement become an employee of another party.


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<PAGE>   29

      14.4  Assignment. The rights and liabilities of the parties under this
            Agreement will bind and inure to the benefit of the parties'
            respective successors, executors and administrators, as the case may
            be; provided that neither party may assign or delegate its
            obligations under this Agreement, either in whole or in part, except
            as set forth in Section 11 or to a subsidiary or affiliate of that
            party, without the written consent of all other parties. Any
            attempted assignment or delegation without such consent will be
            voidable at the option of the non-assigning party.

      14.5  Notices. All notices, reports, requests, acceptances and other
            communications required or permitted under this Agreement will be in
            writing. They will be deemed given

            (a)   When delivered personally,

            (b)   When sent by confirmed facsimile,

            (c)   One day after having been sent by commercial overnight carrier
                  with written verification of receipt, or

            (d)   Five days after having been sent by registered or certified
                  mail, return receipt requested, postage prepaid, or upon
                  actual receipt thereof, whichever first occurs.

All communications will be sent to the receiving party's address as set forth
below or to such other address that the receiving party may have provided for
purpose of notice as provided in this Section.

    Chartered Silicon Partners Pte Ltd      Chartered Semiconductor
                                               Manufacturing Ltd

    General Manager                         Legal Department

    60 Woodlands Industrial Park D          60 Woodlands Industrial Park D

    Street 2                                Street 2

    Singapore 738406                        Singapore 738406

    Facsimile: (65)3603779                  Facsimile: (65)3622909


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<PAGE>   30


                      Vice President and Associate General

                       Counsel for Patents, Trademarks and

                                    Licensing

                                 Motorola, Inc.

                            1303 East Algonquin Road

                              Schaumburg, IL 60196

                            Facsimile: (847)576-3750

      14.6  Disputes

            (a) Dispute Resolution. In the event of a dispute between the
            parties, the issue will first be escalated to CSM's Vice President
            of Technology, CSP's General Manager, and Motorola's Vice President
            of Strategic Management and Planning for attempted resolution. If
            these individuals cannot resolve the dispute within two (2) weeks of
            notice, the issue will be escalated to the President of Motorola's
            Semiconductor Product Sector and the President of CSM who will have
            two (2) weeks to resolve the issue.

            Each party may initiate dispute resolution by notice to the other
            parties. Such notice will be without prejudice to the invoking
            party's rights to any other remedy permitted hereunder. The parties
            will use commercially reasonable efforts to arrange meetings or
            telephone conferences, as needed at mutually convenient times and
            places, to facilitate negotiations between the parties.

            In the event that the parties fail or are unable to resolve a
            dispute between them after exhausting the escalation process set
            forth above, then any party may declare that a deadlock exists.

            In the event of a deadlock after undertaking the forgoing steps to
            resolve the dispute in good faith, the parties shall attempt to
            resolve the dispute through mediation prior to instituting
            litigation or other adversary proceeding. Notwithstanding the
            previous sentence, no disputes pertaining to the intellectual
            property (including patents) of any party shall be subject to
            mediation.

            (b) Mediation: A party shall initiate a mediation by serving written
            notice on the other parties by facsimile and overnight mail. The
            parties may select any mediator mutually agreeable to them. If the
            parties cannot agree on a mediator within fifteen (15) days, they
            will, within five


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<PAGE>   31

            (5) days thereafter submit a joint request for mediation to the New
            York, New York office of the American Arbitration Association
            ("AAA") and request the AAA to select an appropriate mediator with
            experience in resolving financial and commercial disputes.

            The mediation session shall occur within thirty (30) days of the
            selection of the mediator unless the parties mutually agree to
            extend this time, and shall be scheduled for not less than one day.
            Each party agrees to send a representative with full settlement
            authority to the mediation. The mediation shall be in the English
            language and shall be conducted exclusively in New York, New York,
            unless otherwise agreed by the parties. The parties agree to hold
            the content of the mediation in confidence and further agree that
            the mediator is disqualified as a litigation witness for any party
            to the mediation. The parties further agree that the mediation shall
            be considered to be a form of settlement negotiations, the content
            of which shall not be admissible as evidence of liability in any
            judicial proceeding. Each party shall bear its own expenses and an
            equal share of the expenses of the mediator and, where applicable,
            the AAA. Except as provided in Subsection (e) below, if the party
            who ultimately prevails in any litigation institutes a court action
            or other adversary proceeding without first attempting mediation as
            required hereby, SUCH PREVAILING PARTY SHALL NOT BE ENTITLED TO
            ATTORNEYS' FEES OR COSTS THAT MIGHT OTHERWISE BE AVAILABLE TO IT
            UNDER THIS CONTRACT OR IN COURT ACTION.

            (c) Litigation: In the event a dispute is not resolved by such
            mediation, the parties shall have the right to initiate a suit,
            action or other adversary proceeding before the appropriate court
            exclusively within the jurisdiction of the state and federal courts
            in the state of New York. In the event of such suit, action or other
            adversary proceeding, the Parties hereto (a) submit to the exclusive
            personal jurisdiction of the federal and state courts in the State
            of New York and (b) expressly waive any right they may have to a
            jury trial and agree that any such proceeding shall be tried by a
            judge without a jury. All defenses based on passage of time shall be
            tolled pending mediation, unless otherwise prohibited by law.

            (d) Applicable Law: This Agreement shall be governed by, construed,
            enforced and interpreted in accordance with the internal substantive
            laws of the State of New York applicable to agreements to be made
            and to be performed solely within such State, without giving effect
            to any conflicts or choice of laws principles which otherwise might
            be


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<PAGE>   32

            applicable and excluding the United Nations Convention on Contracts
            for the Sale of Goods.

            (e) Interim Relief: Nothing in this Section 14.6 shall be construed
            to preclude any party from seeking injunctive or other provisional
            relief in order to protect its rights pending mediation, provided
            however that such relief may only be sought within the appropriate
            judicial forum as provided in Subsection (c) above. In the event a
            party seeks interim relief without first attempting mediation, such
            party shall not forfeit its entitlement to legal fees and costs that
            would otherwise be available to it only if such party initiates
            mediation within fifteen (15) days after initiating the action
            seeking interim relief. A request to a court for interim relief
            shall not be deemed a waiver of the obligation to mediate.

            (f) Legal Fees and Costs: Except as otherwise provided herein, the
            substantially prevailing party in any proceeding brought by one
            party against another shall be entitled, in addition to any other
            rights and remedies it may have, to reimbursement for the expenses
            reasonably incurred by it in such proceeding, including but not
            limited to court costs, reasonable attorneys' fees, expenses of
            expert witnesses, costs of appeal, and any other reasonable
            out-of-pocket expenses. For the purposes of this Subsection (f), the
            "substantially prevailing party" means the party whose final
            settlement offer (or other monetary position or claim) prior to the
            completion of the mediation contemplated by this Section 14.6 is
            closest to the judgment awarded by the court, regardless of whether
            such judgment is entered in favor or against such party, or who
            obtains substantially all of the relief sought by it, all as
            determined by the court having jurisdiction over the proceeding.
            Such a prevailing party would include, but is not limited to, a
            party who offers to dismiss a proceeding upon the other party's
            payment of the sums allegedly due or performance of the covenants
            allegedly breached.

      14.7  Compliance With Laws. Each party will comply with all applicable
            laws and regulations governing their activities under this
            Agreement, including but not limited to the export control laws and
            regulations of the United States, with respect to any Confidential
            Information and technical data licensed, delivered, or to which a
            party is provided access under this Agreement. Any party hereto may
            request the other parties hereto to sign written assurances and
            other export-related documents as may be required for the requesting
            party to comply with any applicable export regulations.


CONFIDENTIAL                                                             Page 32
<PAGE>   33

      14.8  Severability. If any provision of this Agreement, or the application
            thereof, shall for any reason and to any extent be determined by a
            court of competent jurisdiction to be invalid or unenforceable under
            applicable law, the remaining provisions of this Agreement shall be
            interpreted so as best to reasonably effect the intent of the
            parties. The parties further agree to replace any such invalid or
            unenforceable provisions with valid and enforceable provisions
            designed to achieve, to the extent possible, the business purposes
            and intent of such invalid and enforceable provisions.

      14.9  Entire Agreement. This Agreement, together with all exhibits and
            schedules hereto, constitutes the entire understanding and agreement
            of the parties with respect to the subject matter of this Agreement,
            and supersedes all prior and contemporaneous understandings and
            agreements, whether written or oral, with respect to such subject
            matter.

      14.10 Amendments, Modifications and Waivers. No delay or failure by any
            party to exercise or enforce at any time any right or provision of
            this Agreement will be considered a waiver thereof or of such
            party's right thereafter to exercise or enforce each and every right
            and provision of this Agreement. No single waiver will constitute a
            continuing or subsequent waiver. No waiver, modification or
            amendment of any provision of this Agreement will be effective
            unless it is in writing and signed by the parties, but it need not
            be supported by consideration.

      14.11 Headings and References. The headings and captions used in this
            Agreement are used for convenience only and are not to be considered
            in construing or interpreting this Agreement. All references in this
            Agreement to sections, paragraphs, exhibits and schedules shall,
            unless otherwise provided, refer to sections and paragraphs hereof
            and exhibits and schedules attached hereto, all of which are
            incorporated herein by this reference.

      14.12 Independent Action. The parties affirm that their respective
            marketing policies or activities, or pricing information, relative
            to the subject matter of this agreement shall not be discussed or
            exchanged between them.

      14.13 Publicity. Nothing contained in this Agreement shall be construed as
            conferring any right to use in advertising, publicity, or other
            promotional activities any name, trade name, trademark, or other
            designation of any party to this Agreement (including any
            contraction, abbreviation, or simulation of any of the forgoing) and
            each party hereto agrees not to


CONFIDENTIAL                                                             Page 33
<PAGE>   34

            disclose to others the terms and conditions of this Agreement,
            except as may be required by law or governmental regulation, without
            the express written consent of the other parties.

      14.14 Construction. This Agreement has been negotiated by the parties and
            their respective counsel. This Agreement will be fairly interpreted
            in accordance with its terms and without any strict construction in
            favor of or against either party. Any ambiguity will not be
            interpreted against the drafting party.


CONFIDENTIAL                                                             Page 34
<PAGE>   35

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
    the Effective Date.


Chartered Silicon Partners Pte Ltd

/s/ Dick Chang
- -----------------------------------------
Dick Chang
- -----------------------------------------
G.M. Hewlett-Packard ICBD
- -----------------------------------------


Chartered Semiconductor Manufacturing Ltd

/s/ Barry Waite
- -----------------------------------------
Barry Waite
- -----------------------------------------
President and CEO
- -----------------------------------------


Motorola, Inc.

/s/ Hector Ruiz
- -----------------------------------------
Hector Ruiz
- -----------------------------------------
Executive Vice President
- -----------------------------------------


CONFIDENTIAL                                                             Page 35
<PAGE>   36
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                   APPENDIX A1

                           LOGIC PROCESS TECHNOLOGIES


                                HiP5L Description


                                      ****


CONFIDENTIAL                                                             Page 36
<PAGE>   37
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission





                                      ****


CONFIDENTIAL                                                             Page 37
<PAGE>   38
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                   APPENDIX A2

<TABLE>
<CAPTION>
                                          HIP5L      HIP6L
<S>                                       <C>        <C>
Leff                                       ****       ****
Vdd                                        ****       ****
No. of metal layers                        ****       ****
No. of masking layers                      ****       ****     (includes ****)
I/O option                                 ****       ****
No. of masking layers(DGO)                 ****       ****     (* additional masks for Dual *****************)

Drawn dimensions:

Active Pitch                               ****       ****
Poly Pitch                                 ****       ****
        Poly Line (over active)            ****       ****
        Poly Space (over active)           ****       ****
        Poly Line (over field)             ****       ****
        Poly Space (over field)            ****       ****
Contact width; length                      ****       ****
Contact Pitch                              ****       ****
Metal 1 Pitch                              ****       ****
Metal 2-5 Pitch                            ****       ****
Metal 6 Pitch                              ****       ****
</TABLE>


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<PAGE>   39
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



<TABLE>
<S>                                       <C>        <C>
Transistor performance:
Ring Oscillator Speed                      ****       ****
P channel (nominal)
     Idsat                                 ****       ****
     Vt                                    ****       ****
     Ioff                                  ****       ****
N Channel (nominal)
     Idsat                                 ****       ****
     Vt                                    ****       ****
     Ioff                                  ****       ****

DGO P channel (poly nominal
  length = *******)
     Leff                                  ****       ****
     Idsat                                 ****       ****
     Vt                                    ****       ****
DGO N channel (poly nominal
  length = ******)
     Leff                                  ****       ****
     Idsat                                 ****       ****
     Vt                                    ****       ****
</TABLE>


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<PAGE>   40
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission




                                   APPENDIX B

                          INFORMATION TRANSFER SCHEDULE

<TABLE>
<CAPTION>
                           AVAILABILITY OF                                                  COMPLETION
                           DESIGN RULES,                                START OF            OF PROCESS         END OF ******
                           EQUIPMENT SET          MOTOROLA'S            PROCESS             TRANSFER           PROHIBITION
PROCESS                    LIST AND PROCESS       XC PRODUCT            TRANSFER            (I.E. XC           AGAINST SALE TO
GENERATION       "FCS"     FLOWS TO CSM/CSP       QUALIFICATION         TO CSP              QUAL AT CSP)       MERCHANT MARKET
<S>              <C>       <C>                    <C>                   <C>                 <C>                <C>
HIP 5             ****           ****                 ****                 ****                ****                 ****

HIP 6             ****           ****                 ****                 ****                ****                 ****

HIP 7             ****           ****                 ****                 ****                ****                 ****
</TABLE>


CONFIDENTIAL                                                             Page 40
<PAGE>   41


                                   APPENDIX C

                    TECHNOLOGY TRANSFER AND ASSOCIATED TERMS

               TRANSFER INFORMATION (per generation of technology)

1.    General Provisions

- -     All information in English

- -     Transfer from Manufacturing Site

- -     8" Transfer

- -     Written Information provided "as is" when transferred

- -     Additional Support beyond what is provided for herein would have to be
      negotiated and made part of a separate agreement.

- -     Transfer based on "Exact Copy" methodology

- -     Motorola to provide single point contact responsible for transfer

- -     All transfer activity to be coordinated through this contact. Transfer
      experts will conduct the transfer and will be coordinated by the Transfer
      Manager.

- -     CSM "Knowledge Experts" responsible for information transfer to CSM

- -     Motorola will transfer process specific knowledge needed to run the
      technology. Generic semiconductor information will be the responsibility
      of CSM/CSP. Example 1: Generic mask manufacturing ability (including phase
      shift expertise) responsibility of CSM/CSP. Any process specific


CONFIDENTIAL                                                             Page 41
<PAGE>   42

      requirements will be transferred. Example 2: Tool Specification and
      Process Recipe detail for technology provided. CSM/CSP must have knowledge
      to install and start up tools, install and run recipes, analyze results,
      etc. Overall, CSM/CSP must staff the transfer with semiconductor experts
      to comprehend transferred info and then successfully communicate
      information to rest of CSM team using the transfer opportunities provided.

2.    Meetings

- -     Management Overview - Generic Review of Technology

           15 people        1 day

- -     Expert Meeting - Integration, modules, processes, key topics

           15 people        2 days        2 sessions

- -     Technology Away Team

            9 people        In factory (4 weeks)

- -     Technology Short Stays

           12 people        In factory (10 days)

- -     Short stays set up on "as needed" basis to address key process or
      integration areas that need more time. Intent is "120 man days" available
      but intended to be accomplished in <2 week duration. Motorola will work w/
      CSM/CSP to tailor stay to meet needs.

- -     CSM Factory Startup

          1-3 Motorolans    1-2 weeks


CONFIDENTIAL                                                             Page 42
<PAGE>   43

- -     (CSM has requested additional visit with Motorolan's travelling to
      Singapore.

This to be negotiated as needed. Additional cost for engineering time and travel
expense will be incurred (details to be negotiated).)

- -     CSM Qual Review

          1-3 Motorolans

- -     Skill set of Motorolans attending to be determined jointly based on where
      "expertise" could best be applied based on results. Meeting could be in
      Singapore if requested (travel expense paid by CSM/CSP)

3.    Telephone Support

          60 hours

Coordinated through Transfer Coordinator.

4.    Quarterly Review -

           6 reviews

- -     Comprised of Motorola Technology Manager and CSM/CSP counterpart and other
      key individuals based on agenda needs. As part of quarterly review,
      Process Improvements and Changes will be reviewed that are Process
      Specific.


CONFIDENTIAL                                                             Page 43
<PAGE>   44
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


5.    Documents

      1.    Design Manual

      2.    Process Recipes

      3.    Module Cross Section SEMS

      4.    Equipment list and Specifications

      5.    Facilities list and specifications pertaining to process

      6.    Test Vehicle Layout

      7.    Test vehicle qual and parametric data

      8.    Chemical and materials specifications pertaining to Process

      9.    Electromigration structure, test methodology and results

      10.   Test Vehicle reticle tape

      11.   Test Vehicle Probe Program

      12.   Process Specific mask generation information

6.    Wafers

Metrology Standards (with data)

      **    Flat Film


CONFIDENTIAL                                                             Page 44
<PAGE>   45
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


      **    CD and Etch Standards

Flat Film Wafers                    **

Patterned Film Wafers (topology)    ***

Module Wafers (<** short flows)     ***

Full Flow Wafers                    **

**    lot processed through complete process. Poly CD matrix available at
      additional cost (engineering time/equipment and material cost).

Flying Start Wafers                **

- -     Wafer matrix to be jointly agreed upon.


CONFIDENTIAL                                                             Page 45
<PAGE>   46

                                   APPENDIX D

                        FORM OF CONFIDENTIALITY AGREEMENT

                            CONFIDENTIALITY AGREEMENT


- --------------------------------------------------------------------------------

In order to protect certain confidential information which may be disclosed by
the Disclosing Party, with offices at __________________________________ to
Recipient, with offices at __________________________, Disclosing Party and
Recipient agree that:

1. The Disclosing Party representative responsible for disclosing the
confidential information is:_____________________________________________
________________________________________________________________________.


2. The Confidential Information (hereinafter Confidential Information) to be
disclosed under this Agreement is described as: ____________________________
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________.

3. Recipient shall use the Confidential Information only for the purpose of:
EVALUATION.

4. This Agreement controls only Confidential information which is disclosed for
a period of ______ YEARS from the date on which the last party executes this
Agreement as shown below.

5. Recipient's duty to protect the Confidential Information under this agreement
shall be for seven (7) years from the end of the period set forth in Section 4
above.

6. Recipient shall protect the disclosed Confidential Information by using the
same degree of care, but no less than a reasonable degree of care, to prevent
the unauthorized use, dissemination or publication of the Confidential
Information as the Recipient uses to protect its own confidential information of
a like nature. Recipient shall not disclose any Confidential Information
disclosed hereunder to any third party and shall limit disclosure of information
to only those of its employees with a need to know.


CONFIDENTIAL                                                             Page 46
<PAGE>   47

7. Recipient shall have a duty to protect only Confidential Information which is
(a) disclosed by Disclosing Party in writing and is marked as confidential at
the time of disclosure, or which is (b) disclosed by Disclosing Party in any
manner, is identified as confidential at the time of disclosure and is also
summarized and designated as confidential in a written memorandum delivered to
the Recipient within thirty (30) days of the disclosure.

8. This Agreement imposes no obligation upon Recipient with respect to
Confidential Information which (a) was in the Recipient's possession on or
before the receipt from Disclosing Party; (b) is or becomes a matter of public
knowledge through no fault of the Recipient; (c) is rightfully received by the
Recipient from a third party without a duty of confidentiality; (d) is
independently developed by the Recipient; (e) is disclosed by the Disclosing
Party without a duty of confidentiality; or (f) is disclosed pursuant to a valid
order of a court or authorized government agency provided that Recipient has
given Disclosing Party an opportunity to defend, limit or protect such
disclosure.

9. All confidential information shall remain the property of Disclosing Party or
________ (CSP, CSM, or Motorola), as applicable, and shall be returned, with all
copies that have been made, upon written request of Disclosing Party or
____________(CSP, CSM, or Motorola), respectively, with the exception of one
copy which may be kept by the Recipient for archival purposes.

10. Disclosing Party warrants that it has the right to make the disclosure of
the Confidential Information contemplated by this Agreement. Recipient does not
acquire any intellectual property rights under this Agreement except the limited
right to use and copy the Confidential Information set out in paragraph 3 above.

11. Neither party has an obligation under this Agreement to purchase any service
or item from the other party.

12. Neither party has an obligation under this Agreement to offer for sale
products using or incorporating the Confidential Information.

13. Recipient shall adhere to all applicable export regulations and shall not
export or re-export or release the technology, software, or any source code to a
national of a country prohibited to receive such technology or export to any
country the direct product of such technology, if such foreign produced direct
product is subject to applicable national security controls unless properly
authorized. These export requirements shall survive any termination of this
Agreement.

14. The parties do not intend that any agency or partnership relationship be
created between them by this Agreement.


CONFIDENTIAL                                                             Page 47
<PAGE>   48

15. All additions or modifications to this Agreement must be made in writing and
must be signed by both parties.

16. In the event of a breach by Recipient of the terms of this Agreement related
to __________(CSM's, CSP's or Motorola's) Confidential Information______(CSM,
CSP, or Motorola) will be a third party beneficiary of any claims Disclosing
Party has against Recipient for such breach.

17. This Agreement is made under and shall be construed according to the laws of
Singapore.

DISCLOSING PARTY                         RECIPIENT

By:                                      By:
      -----------------------------             --------------------------------
Name:                                    Name:
      -----------------------------             --------------------------------
Title:                                   Title:
      -----------------------------             --------------------------------
Date:                                    Date:
      -----------------------------             --------------------------------


CONFIDENTIAL                                                             Page 48
<PAGE>   49
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                   APPENDIX E

                            SIGNIFICANT PROCESS STEPS


                         HiP5L Significant Process Steps

                            (Steps Denoted by Number)



                                      ****


CONFIDENTIAL                                                             Page 49
<PAGE>   50
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission



                                      ****


CONFIDENTIAL                                                             Page 50
<PAGE>   51
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission




                                      ****


CONFIDENTIAL                                                             Page 51
<PAGE>   52
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission




                                      ****


CONFIDENTIAL                                                             Page 52
<PAGE>   53


                                   APPENDIX F

                    INFORMATION FOR RELEASE TO THIRD PARTIES

1.    Design Information-Per Design Manual

      1.1   Design Rules

      1.2   Layout Description

      1.3   ESD, Latch-up, Pad Rules

      1.4   DRC, ERC, LVS, LPE, but only if created by CSP or CSM

2.    Electrical Targets Information-Per Design Manual

      2.1   RAM Cell Transistor

      2.2   MOS Transistors

      2.3   Other Devices (Bipolar Devices, Diode, Resistor, Capacitor)

      2.4   Parasitic Resistor and Capacitor

      2.5   SPICE Models, but only if extracted by CSP or CSM

3.    Process Information-Per Design Manual

      3.1   Simple Process Flow

      3.2   Electrical Test Specification

4.    Mask Generation-Per Specific Mask Generation Information

      4.1   Mask Specification


CONFIDENTIAL                                                             Page 53
<PAGE>   54

      4.2   Bias Table

      4.3   Mask Layer Generation Equation-Per Design Manual

      4.4   Dummy Pattern Algorithm and OPC Procedures


                             RIDER F (TO APPENDIX F)
          INFORMATION FOR RELEASE ONLY TO ST ASSEMBLY TEST SERVICES LTD

<TABLE>
<CAPTION>
        S/N           DESCRIPTIONS
        ---           ------------
<S>                   <C>
         1            Xfer vehicle Program files
        1-1           Main program file for Pre DS
        1-2           Socket file
        1-3           All micro pattern files
        1-4           Insert to pattern file(SDEF File)
        1-5           Probe area file
        1-6           Scramble file

         2            Device Test & Design Documentations
        2-1           Wafer Test Spec
        2-2           Wafer Test Pattern Description
        2-3           Wafer Test Timing Diagram
        2-4           Wafer Test Flow
        2-5           Test Commands description
        2-6           IPL mode description
</TABLE>


CONFIDENTIAL                                                             Page 54
<PAGE>   55
<TABLE>
<S>                   <C>
         3            Probe Card document
        3-1           Pads size
        3-2           Pad to Pad pitch size
        3-3           Pad x,y coordinates table

         4            Final Test
        4-1           Final Test program
        4-2           Final Test Spec
        4-3           Product Test Flow
        4-4           Test board pin connection
        4-5           Test board load circuit
        4-6           Device data Sheet
        4-7           Bonding diagram

         5            Burn-In Test
        5-1           Product level Burn-In criteria
        5-2           Burn-In mode Sequence
        5-3           Burn-In Cycle
        5-4           Burn-in Testing Waveform
        5-5           Burn-In Board Waveform
        5-6           HIFIX wiring,socket file,tray drawing
</TABLE>


CONFIDENTIAL                                                             Page 55

<PAGE>   1


                          REDACTED FOR CONFIDENTIALITY


                                                                   EXHIBIT 10.15

                            PATENT LICENSE AGREEMENT



                                     BETWEEN



                            LUCENT TECHNOLOGIES INC.



                                       AND



                   CHARTERED SEMICONDUCTOR MANUFACTURING, LTD.



                         EFFECTIVE AS OF JANUARY 1, 1998



                       RELATING TO SEMICONDUCTIVE DEVICES


<PAGE>   2

                            PATENT LICENSE AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<S>        <C>
ARTICLE I - GRANTS OF LICENSES

1.01       Grant
1.02       Duration
1.03       Scope
1.04       Ability to Provide Licenses
1.05       Joint Inventions
1.06       Publicity

ARTICLE II - ROYALTY OBLIGATIONS

2.01       Wafer Capacity In Lieu of Royalty Payments
2.02       Royalty Payments During the LIMITED PERIOD
2.03       Accrual
2.04       Records and Adjustments
2.05       Reports and Payments

ARTICLE III - TERMINATION

3.01       Breach
3.02       Survival

ARTICLE IV - MISCELLANEOUS PROVISIONS

4.01       Disclaimer
4.02       Assignment/Divestiture
4.03       Addresses
4.04       Taxes
4.05       Choice of Law
4.06       Integration
4.07       Outside the United States
4.08       Dispute Resolution
4.09       Releases
4.10       Prior Agreement

DEFINITIONS APPENDIX
</TABLE>



                                       i
<PAGE>   3
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                            PATENT LICENSE AGREEMENT

Effective as of January 1, 1998, LUCENT TECHNOLOGIES INC. ("LUCENT"), a Delaware
corporation having an office at 600 Mountain Avenue, Murray Hill, New Jersey
07974, and CHARTERED SEMICONDUCTOR MANUFACTURING, LTD. ("CSM"), a Singapore
corporation having an office at 60 Woodlands Industrial Park D Street 2,
Singapore 738406, agree as follows*:

                                    ARTICLE I

                               GRANTS OF LICENSES

1.01 GRANT

        (a) LUCENT grants to CSM, solely under LUCENT's PATENTS, **************
**************** licenses for SEMICONDUCTIVE DEVICES in accordance with the
license scope set forth in Section 1.03.

        (b) CSM grants to LUCENT, solely under CSM's PATENTS, ***************
*************************** licenses for SEMICONDUCTIVE DEVICES in accordance
with the license scope set forth in Section 1.03.

1.02 DURATION

All licenses granted herein under any patent shall continue only for the LIMITED
PERIOD.

1.03 SCOPE

        (a) The licenses granted herein under LUCENT's PATENTS and CSM's PATENTS
are licenses to (i) make, have made, use, lease, sell and import LICENSED
PRODUCTS; (ii) make, use and import (but not sell or offer for sale) machines,
insofar as such machines are used in or incidental to the manufacture or testing
of LICENSED PRODUCTS; and (iii) convey to any customer of the grantee, with
respect to any LICENSED PRODUCT which is sold or leased by such grantee to such
customer, rights to use and resell such LICENSED PRODUCT as sold or leased by
such grantee (whether or not as part of a larger combination); provided,
however, that no rights may be conveyed to customers with respect to any
invention which is directed to (1) a combination of such LICENSED PRODUCT (as
sold or leased) with any other product, or (2) a method or process involving the
use of a LICENSED PRODUCT to manufacture or to be used as a device in a process
to test any other product. Licensor agrees that its sole recourse for any
infringement of LUCENT's PATENTS or CSM's PATENTS as a result of non-compliance
with



- ----------
*       Any term in capital letters which is defined in the Definitions Appendix
        shall have the meaning specified therein.
<PAGE>   4

provisions (1) and/or (2) shall be against the relevant infringer customers
provided the licensee does not attempt to convey such rights in breach of
provisions (1) and/or (2).

        (b) Licenses granted herein to either party are not to be construed
either (i) as consent by the grantor to any act which may be performed by the
grantee, except to the extent impacted by a patent licensed herein to the
grantee, or (ii) to include licenses to contributorily infringe or induce
infringement under U.S. law or a foreign equivalent thereof.

        (c) The grant of each license hereunder includes the right to grant
sublicenses within the scope of such license to a party's RELATED COMPANIES for
so long as they remain its RELATED COMPANIES, however, such sublicenses may be
granted only to RELATED COMPANIES which grant to the other party licenses of the
same scope and duration as provided in this Agreement. Any such sublicense may
be made effective retroactively, but not prior to the effective date hereof, nor
prior to the sublicensees becoming a RELATED COMPANY of such party.

        (d) The parties recognize that the fees payable by CSM to Lucent
pursuant to Section 2.02 have been calculated to exclude any royalties on
LICENSED PRODUCT produced by RELATED COMPANIES of CSM for Hewlett Packard, in
connection with Hewlett Packard's ownership interest in any such RELATED
COMPANIES. Accordingly, the parties agree that the licenses and rights granted
to CSM or any RELATED COMPANY of CSM under this Agreement shall not extend or
apply to product made for or sold to Hewlett Packard in connection with Hewlett
Packard's ownership interest in a RELATED COMPANY of CSM. Before seeking any
remedies against CSM for infringement of LUCENT's PATENTS licensed hereunder by
such RELATED COMPANY in connection with product made for or sold to Hewlett
Packard, Lucent will first exhaust its remedies against Hewlett Packard.

1.04 ABILITY TO PROVIDE LICENSES

        (a) It is recognized that certain actions of the parties to this
agreement may limit their ability to provide licenses hereunder without
constituting a breach. In particular, (i) prior to the earliest filing of a
patent application disclosing an invention of a party or its RELATED COMPANY,
such party or RELATED COMPANY may assign to a third party the title to patents
on such invention, or (ii) prior to the execution of this agreement, a party or
its RELATED COMPANY may have limited by contract its ability to provide licenses
hereunder with respect to certain patents or technologies.



                                       2
<PAGE>   5

        (b) A party's failure to meet any obligation hereunder, due to the
assignment of title to any invention or patent, or the granting of any licenses,
to the United States Government or any agency or designee thereof pursuant to a
statute or regulation of, or contract with, such Government or agency, shall not
constitute a breach of this agreement.

1.05 JOINT INVENTIONS

        (a) There are countries (not including the United States) which require
the express consent of all inventors or their assignees to the grant of licenses
or rights under patents issued in such countries for joint inventions.

        (b) Each party shall give such consent, or shall obtain such consent
from its RELATED COMPANIES, its employees or employees of any of its RELATED
COMPANIES, as required to make full and effective any such licenses and rights,
with respect to any patent issuing on a joint invention, granted to the grantee
hereunder by such party and by another licensor of such grantee.

        (c) Each party shall take steps which are reasonable under the
circumstances to obtain from third parties whatever other consents are necessary
to make full and effective such licenses and rights respecting any joint
invention within the scope of the grants hereunder. If, in spite of such
reasonable efforts, such party is unable to obtain the requisite consents from
such third parties, the resulting inability of such party to make full and
effective its purported grant of such licenses and rights shall not be
considered to be a breach of this agreement.

1.06 PUBLICITY

        (a) Nothing in this agreement shall be construed as conferring upon
either party or its RELATED COMPANIES any right to include in advertising,
packaging or other commercial activities related to a LICENSED PRODUCT, any
reference to the other party (or any of its RELATED COMPANIES), its trade names,
trademarks or service marks in a manner which would be likely to cause confusion
or to indicate that such LICENSED PRODUCT is in any way certified by the other
party hereto or its RELATED COMPANIES.

        (b) The terms, but not the existence, of this Agreement shall be treated
as confidential information, and neither party shall disclose such terms to any
third party (except to their respective professional advisers) without the prior
written consent of the other party; provided however, that either party may
represent to suppliers and customers that such party is licensed for the
products and patents as provided by this Agreement, to the extent required for a
specific commercial transaction with that supplier or customer.



                                       3
<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                   ARTICLE II

                               ROYALTY OBLIGATIONS

2.01 WAFER CAPACITY IN LIEU OF ROYALTY PAYMENTS

        (a) In consideration of the rights granted to CSM under this Agreement,
CSM shall provide to Lucent certain long-term flexibility and short-term
flexibility in wafer capacity made available by CSM to Lucent, as set forth
below in Sections 2.01(a)(1) and 2.01(a)(2), respectively. This long-term and
short-term flexibility shall offset the cash royalties specified in Section
2.02(b), according to the terms specified in Section 2.01(b) for short-term
flexibility and Section 2.01(c) for long term flexibility.

        (1) Long term flexibility (*** royalty offset weighting)

           (A)  Pursuant to the terms of the Manufacturing Agreement dated 1
                January 1995, as revised by the Novation and Amendment Agreement
                dated 1 October 1996, Lucent provides CSM with an annual Base
                Wafer Start Forecast which Lucent updates quarterly and which is
                confirmed by CSM as the Base Loading Commitment. Both Base Wafer
                Start Forecast and Base Loading Commitment are now defined in
                terms of **************************. By this agreement Lucent
                and CSM agree to use a rolling ******* Base Wafer Start Forecast
                which Lucent will continue to update quarterly and which will be
                confirmed by CSM as the Base Loading Commitment.

           (B)  CSM shall once per *******, at Lucent's request and without
                penalty, accept an increase or decrease of the then current Base
                Loading Commitment of up to *********************** from the
                prior ******* forecast for any ***** more than ************ in
                the future. For example, ************************** ****, but
                prior to commencement of the second quarter, the Base Loading
                Commitment for ****************************** and
                ****************** **************** may be revised by up to plus
                or minus ***************** *****.

           (C)  In no case shall CSM be required to accept, without its
                approval, a Base Loading Commitment in which consecutive
                ******** vary by greater than *********** *************. For
                example, if the average Base Loading Commitment for a given
                ******* is **************************, the following ********
                Base Loading Commitment must fall between ***** and
                ************************ unless approved by CSM in writing.

           (D)  Notwithstanding provisions above, CSM is not, without its
                written approval, required to confirm a Base Wafer Start
                Forecast as a Base Loading Commitment if it exceeds CSM's agreed
                Maximum Capacity. The Maximum Capacity is defined herein as the
                lesser of ****************************************



                                       4
<PAGE>   7
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                ****************************************************************
                ****************************************************************
                *****************. Changes to the Maximum Capacity will be
                administered through the then existing Manufacturing Agreement
                as modified by subsequent Novation and Amendment Agreements. The
                Maximum Capacity will be reconfirmed by CSM to Lucent each
                quarter as part of the Base Wafer Start Forecast to Base Loading
                Commitment confirmation process. Except as limited by the Base
                Loading Commitment uplift calculation above, the Maximum
                Capacity may not be reduced without Lucent's agreement.

        (2)     Short term flexibility (*** royalty offset weighting)

           (A) CSM shall, at Lucent's request, provide additional Flexibility
               Capacity up to the lesser of
               ***************************************** wafer Free Capacity or
               **************************************************************.
               "Free Capacity" is defined as ***********************************
               *****************************************************************
               *******************************.

            (B) Lucent shall request and CSM shall deliver to Lucent the
                requested increase in wafer demand loaded uniformly
                **************** within CSM's then current manufacturing
                interval ************.

            (C) The technology mix of the Flexibility Capacity lots shall be at
                the same or less aggressive technology mix as the prior
                quarter's actual loadings.

            (D) This short term Flexibility Capacity replaces the monthly upside
                variation range referred to in Exhibit C, Section 2 of the
                Novation and Amendment Agreement dated 1 October 1996.

            (E) Committed Capacity Shortfall fees and Delivery Capacity
                Shortfall Fees referred to in Section 3.4 of the Novation and
                Amendment Agreement dated 1 October 1996 revising terms of
                Section 4.3 of the Manufacturing Agreement dated 1 January 1995
                are revised herein whereby such fees are applicable only when
                ****.

            (F) Any requests, loadings, or deliveries under these short term
                Flexibility Capacity provisions shall have no impact on the Base
                Loading Commitment for either party.

        (b) If CSM ******************************* refuses to accept Lucent's
request pursuant to Section 2.01(a)(2) for additional wafer capacity, CSM shall
pay to Lucent a royalty for the licenses and rights granted in this Agreement in
an amount equal to ************** of the royalty specified in Section 2.02(b)
due for such ***************. If **************** CSM fails to deliver
**************************** of the incremental increase in wafers



                                       5
<PAGE>   8
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


requested by Lucent and accepted by CSM pursuant to Section 2.01(a)(2) within
the current manufacturing interval **************, CSM shall pay a royalty for
the licenses and rights granted in this Agreement in an amount equal to
***************** of the royalty specified in Section 2.02(b) due for each such
**************************************. If ***** times within a *************
CSM fails to deliver *********************** of the incremental increase in
wafers requested by Lucent and accepted by CSM pursuant to Section 2.01(a)(2)
within the current manufacturing interval ************, CSM shall pay a royalty
in an amount equal to ****************** of the royalty specified in Section
2.02(b) due for such ******** *******. The total royalty payable by CSM under
this Section 2.01(b) in any given quarter shall not exceed **************** of
the royalty specified in Section 2.02(b) due for such ******** *******.

        (c) If in any quarter CSM fails to confirm or accept as the Base Loading
Commitment Lucent's Base Wafer Start Forecast (to the extent such forecast
complies with the terms of Section 2.01(a)(1)), CSM shall pay to Lucent a
royalty for the licenses and rights granted in this Agreement in an amount equal
to *************** of the royalty specified in Section 2.02(b) due for the
********************************************* in which such request is not
accepted.

2.02 ROYALTY PAYMENTS DURING THE LIMITED PERIOD

        (a) CSM shall pay to LUCENT the sum of
************************************ *************** on January 2, 2000.

        (b) In the event CSM fails to meet the wafer capacity requirements of
Section 2.01, CSM shall make the following annual payments to LUCENT, in
accordance with Sections 2.01(b), 2.01(c) and 2.05:

        (1) For each year from 2000 through 2002, inclusive, CSM shall pay to
LUCENT a fixed sum, in United States dollars, as follows:

<TABLE>
<CAPTION>
     YEAR                                                AMOUNT PAYABLE
     ----                                                --------------
<S>                                                      <C>
     2000                                                 U.S.  ****
     2001                                                 U.S.  ****
     2002                                                 U.S.  ****
</TABLE>

The above sums shall be payable in four equal, quarterly payments due within
thirty (30) days after the end of each quarterly period ending on March 31st,
June 30th, September 30th, or December 31st, commencing on March 31, 2000, in
accordance with the provisions of Section 2.05.



                                       6
<PAGE>   9
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


        (2) For each year from 2003 through the end of the LIMITED PERIOD, CSM
shall pay LUCENT a royalty (in U.S. dollars) calculated at a royalty rate of
****************. For the convenience of the parties, this royalty rate shall be
applied to ****.











        (c) Any conversion to United States dollars shall be at the prevailing
rate for bank cable transfers as quoted for the last day of such semiannual
period by leading United States banks in New York City dealing in the foreign
exchange market.

        (d) Overdue payments hereunder shall be subject to a late payment charge
calculated at an annual rate of three percent (3%) over the prime rate or
successive prime rates (as posted in New York City) during delinquency. If the
amount of such late payment charge exceeds the maximum permitted by law, such
charge shall be reduced to such maximum.

2.03 ACCRUAL

        (a) Obligations to pay accrued royalties shall survive termination of
licenses and rights pursuant to Article III and the expiration of any patent.

        (b) When a company ceases to be a RELATED COMPANY of CSM, royalties
which have accrued with respect to any products of such company, but which have
not been paid, shall become payable with CSM's next scheduled royalty payment.

        (c) Notwithstanding any other provisions hereunder, royalty shall accrue
and be payable only to the extent that enforcement of CSM's obligation to pay
such royalty would not be prohibited by applicable law.

2.04 RECORDS AND ADJUSTMENTS

        (a) LUCENT will credit to CSM the amount of any overpayment of royalties
made in error which is identified and fully explained in a written notice to
LUCENT delivered within twelve (12) months after the due date of the payment
which included such alleged overpayment, provided that LUCENT is able to verify,
to its own satisfaction, the existence and extent of the overpayment.

        (b) No refund, credit or other adjustment of royalty payments shall be
made by LUCENT except as provided in this Section 2.04. Rights conferred by this
Section 2.04 shall not be affected by any statement appearing on any check or
other document, except to the extent that any such right is expressly waived or
surrendered by a party having such right and signing such statement.



                                       7
<PAGE>   10

2.05 REPORTS AND PAYMENTS

        (a) Within thirty (30) days after the end of quarterly period ending on
March 31st, June 30th, September 30th, or December 31st, beginning January 1,
2000, CSM shall furnish to LUCENT at the address specified in Section 4.03 a
statement certified by a responsible official of CSM showing in a manner
acceptable to LUCENT:

        (1) that all of CSM's obligations under Section 2.01 have been satisfied
and that no royalty is due for the applicable quarter; or

        (2) that certain of CSM's obligations under Section 2.01 have not been
satisfied, and showing:

          (i)   CSM's gross revenues for the relevant period (if after January
                1, 2003);

          (ii)  Revenue associated with Lucent's share of capacity through
                Silicon Manufacturing Partners Pte Ltd. and from Hewlett
                Packard's share of capacity through Chartered Silicon Partners
                Pte Ltd.;

          (iii) the amount of royalty payable pursuant to Section 2.02(b); and

          (iv)  a description of any claimed reductions in the royalties due
                pursuant to Section 2.02(b) as a result of partial satisfaction
                of CSM's obligations under Section 2.01.

        (b) Within such thirty (30) days after the end of each quarterly period,
CSM shall pay in United States dollars to LUCENT at the address specified in
Section 4.03 the royalties payable in accordance with such statement required by
Section 2.05(a).

                                   ARTICLE III

                                   TERMINATION

3.01 BREACH

In the event of a material breach of this agreement by either party, the other
party may, in addition to any other remedies that it may have, at any time
terminate all licenses and rights granted by it hereunder by not less than two
(2) months prior written notice specifying such breach, unless within the period
of such notice all breaches specified therein shall have been remedied.



                                       8
<PAGE>   11

3.02 SURVIVAL

        (a) If a company ceases to be a RELATED COMPANY of a party, licenses and
rights granted hereunder with respect to patents of such company shall not be
affected by such cessation.

        (b) Any termination of licenses and rights of a party under the
provisions of this Article III shall not affect such party's licenses, rights
and obligations with respect to any LICENSED PRODUCT made prior to such
termination, and shall not affect the other party's licenses and rights (and
obligations related thereto) hereunder.

                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

4.01 DISCLAIMER

EACH PARTY WARRANTS THAT IT HAS THE RIGHT TO GRANT THE LICENSES GRANTED HEREIN.
NEITHER PARTY NOR ANY OF ITS SUBSIDIARIES MAKES ANY REPRESENTATIONS, EXTENDS ANY
WARRANTIES OF ANY KIND, ASSUMES ANY RESPONSIBILITY OR OBLIGATIONS WHATEVER, OR
CONFERS ANY RIGHT BY IMPLICATION, ESTOPPEL OR OTHERWISE, OTHER THAN THE
LICENSES, RIGHTS AND WARRANTIES HEREIN EXPRESSLY GRANTED.

4.02 ASSIGNMENT/DIVESTITURE

        Neither party may assign this Agreement or any part thereof, nor
transfer licenses or rights hereunder to anyone other than a SUBSIDIARY without
the written consent of the other party hereto. However, if either of the parties
divests all or a portion of its business and such divested business continues
operation as a separately identifiable business, then the licenses granted
hereunder to the divesting party may be sublicensed to such divested separate
business, but only (i) for the duration and term of licenses as specified in
this Agreement, (ii) to the extent and for the time the divested business
functions as a separately identifiable business, and (iii) for products and
services of the kind provided by the divested business prior to its divestiture
and not to any products or services of any entity which acquires the divested
business. If the party divesting such business is required to make royalty
payments under this Agreement, it shall continue to be obligated to make such
payments for itself and for the divested business. Any such divestiture or other
business reorganization affecting the ownership or title of any of a party's
patents shall be made subject to the rights and obligations created under this
Agreement. If such a divestiture occurs, each party shall retain all of its
licenses, rights and obligations that existed under this Agreement prior to any
such divestiture.



                                       9
<PAGE>   12

4.03 ADDRESSES

        (a) Any notice or other communication hereunder shall be sufficiently
given to CSM when sent by certified mail addressed to the Legal Department, 60
Woodlands Industrial Park D Street 2, Singapore 738406, or to LUCENT when sent
by certified mail addressed to Contract Administrator, Intellectual Property,
Suite 105, 14645 N.W. 77th Avenue, Miami Lakes, Florida 33014. Changes in such
addresses may be specified by written notice.

        (b) Payments by CSM shall be made to LUCENT at Sun Trust, P.O. Box
913021, Orlando, Florida, 32891-3021, United States of America. Alternatively,
payments to LUCENT may be made by bank wire transfers to LUCENT's account:
Lucent Technologies Licensing, Account No. 910-2-568475, at Chase Manhattan
Bank, N.A, 55 Water Street, New York, New York 10041, United States of America,
ABA code: 021000021. Changes in such address or account may be specified by
written notice.

4.04 TAXES

CSM shall pay any tax, duty, levy, customs fee, or similar charge ("taxes"),
including interest and penalties thereon, however designated, imposed as a
result of the operation or existence of this Agreement, including taxes which
CSM is required to withhold or deduct from payments to Lucent, except (i) net
income taxes imposed upon Lucent by any governmental entity within the United
States (the fifty (50) states and the District of Columbia), and (ii) net income
taxes imposed upon Lucent by jurisdictions outside the United States which are
allowable as a credit against the United States Federal income tax of Lucent or
any of their Subsidiaries. In order for the exception in (ii) to be effective,
CSM must furnish to Lucent evidence sufficient to satisfy the United States
taxing authorities that such taxes have been paid.

4.05 CHOICE OF LAW

The parties desire and agree that the law of New York shall apply in any dispute
arising with respect to this agreement, without regard to conflicts of laws
provisions.

4.06 INTEGRATION

This agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges all prior discussions between
them. Neither of the parties shall be bound by any warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or in a writing signed with or subsequent to execution hereof by
an authorized representative of the party to be bound thereby. Any modification
to this agreement shall be enforceable only if it is in a writing signed by the
party against which the modification is sought to be enforced.



                                       10
<PAGE>   13

4.07 OUTSIDE THE UNITED STATES

        (a) There are countries in which the owner of an invention is entitled
to compensation, damages or other monetary award for another's unlicensed
manufacture, sale, lease, use or importation involving such invention prior to
the date of issuance of a patent for such invention but on or after a certain
earlier date, hereinafter referred to as the invention's "protection
commencement date" (e.g., the date of publication of allowed claims or the date
of publication or "laying open" of the filed patent application). In some
instances, other conditions precedent must also be fulfilled (e.g., knowledge or
actual notification of the filed patent application). The parties agree that (i)
an invention which has a protection commencement date in any such country may be
used in such country pursuant to the terms of this agreement on and after any
such date, and (ii) all such conditions precedent are deemed satisfied by this
agreement.

        (b) CSM hereby agrees to register or cause to be registered, to the
extent required by applicable law, and without expense to Lucent or any of its
RELATED COMPANIES, any agreements wherein sublicenses are granted by it under
LUCENT's PATENTS. CSM hereby waives any and all claims or defenses, arising by
virtue of the absence of such registration, that might otherwise limit or affect
its obligations to LUCENT.

        (c) LUCENT hereby agrees to register or cause to be registered, to the
extent required by applicable law, and without expense to CSM or any of its
RELATED COMPANIES, any agreements wherein sublicenses are granted by it under
CSM's PATENTS. LUCENT hereby waives any and all claims or defenses, arising by
virtue of the absence of such registration, that might otherwise limit or affect
its obligations to CSM.

4.08 DISPUTE RESOLUTION

        (a) If a dispute arises out of or relates to this agreement, or the
breach, termination or validity thereof, the parties agree to submit the dispute
to a sole mediator selected by the parties or, at any time at the option of a
party, to mediation by the American Arbitration Association ("AAA"). If not thus
resolved, it shall be referred to a sole arbitrator selected by the parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration which shall be governed by the United States Arbitration Act.

        (b) Any award made (i) shall be a bare award limited to a holding for or
against a party and affording such remedy as is deemed equitable, just and
within the scope of the agreement; (ii) shall be without findings as to issues
(including but not limited to patent validity and/or infringement); (iii) may in
appropriate circumstances (other than patent disputes) include injunctive
relief; (iv) shall be made within four (4) months of the appointment of the
arbitrator; and (v) may be entered in any court and shall be final and shall not
be subject to an appeal.

        (c) In a separate statement from the award the arbitrator may give
reasons (except patent validity and/or infringement) on which he relied, but the
parties agree that such statement shall be confidential and will be inadmissible
in any future proceeding or legal action except proceedings or legal actions
between the parties to this Agreement and their RELATED COMPANIES.



                                       11
<PAGE>   14

        (d) The requirement for mediation and arbitration shall not be deemed a
waiver of any right of termination under this agreement and the arbitrator is
not empowered to act or make any award other than based solely on the rights and
obligations of the parties prior to any such termination.

        (e) The arbitrator shall determine issues of arbitrability but may not
limit, expand or otherwise modify the terms of the agreement.

        (f) The place of mediation and arbitration shall be New York City.

        (g) Each party shall bear its own expenses but those related to the
compensation and expenses of the mediator and arbitrator shall be borne equally.

        (h) A request by a party to a court for interim measures shall not be
deemed a waiver of the obligation to mediate and arbitrate.

        (i) The arbitrator shall not have authority to award punitive or other
damages in excess of compensatory damages and each party irrevocably waives any
claim thereto.

        (j) The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation and arbitration in confidence.

4.09 RELEASES

        (a) Subject to receipt by LUCENT of all payments as provided in Article
II, Lucent for itself and acting on behalf of its SUBSIDIARIES hereby releases
CSM and its present SUBSIDIARIES from all claims, demands and rights of action
which LUCENT or its SUBSIDIARIES may have on account of any infringement or
alleged infringement of any patent issued in any country of the world prior to
the date of this Agreement that is owned or controlled by LUCENT or its present
SUBSIDIARIES, by reason of the manufacture, use, lease, sale or importation, all
prior to January 1, 1998, of products of the kind which are LICENSED PRODUCTS
with respect to CSM under this Agreement; provided, however, that nothing in
this Section 4.09(a) shall relieve CSM from any obligation under Article II of
the January 2, 1995 Patent License Agreement between AT&T Corp. and CSM
(hereinafter defined as the "Prior License Agreement").

        (b) CSM for itself and acting on behalf of its SUBSIDIARIES hereby
releases Lucent and its present SUBSIDIARIES from all claims, demands and rights
of action which CSM or its SUBSIDIARIES may have on account of any infringement
or alleged infringement of any patent issued in any country of the world prior
to the date of this Agreement that is owned or controlled by CSM or its present
SUBSIDIARIES, by reason of the manufacture, use, lease, sale or importation, all
prior to January 1, 1998, of products of the kind which are LICENSED PRODUCTS
with respect to Lucent under this Agreement.



                                       12
<PAGE>   15

4.10 PRIOR AGREEMENT

Lucent and CSM are parties to the Prior License Agreement relating to
Semiconductive Devices. The parties agree that (i) all licenses and rights
granted under the Prior License Agreement shall continue in effect, and (ii) all
obligations corresponding to such licenses and rights shall also continue in
effect.



                                       13
<PAGE>   16

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.

           LUCENT TECHNOLOGIES INC.

           By:     /s/ M.R. Greene
              ------------------------------------------------
                                M. R. Greene
                     Vice President -- Intellectual Property

           Date:   13 February 1998
                ----------------------------------------------

           CHARTERED SEMICONDUCTOR MANUFACTURING, LTD.


           By:     /s/ Tan Bock Seng
              ------------------------------------------------
                              Tan Bock Seng
                                President

           Date:   17 February 1998
                ----------------------------------------------



                                       14
<PAGE>   17

                              DEFINITIONS APPENDIX

CSM'S PATENTS means every patent (including utility models but excluding design
patents and design registrations) owned by CSM which:

        (1) issue from any patent application filed in any country of the world
        having an effective or actual filing date, or claiming a filing date,
        prior to January 1, 2003, with respect to which CSM has, as of the
        effective date of this Agreement, the right to grant the licenses
        specified herein; and

        (2) are directed to a process for the manufacture of SEMICONDUCTIVE
        DEVICES, including inventions directed to structures necessarily formed
        by such process such as but not limited to transistors, diodes,
        capacitors, resistors, conductors and dielectrics; and further including
        any invention directed to the housing, sealing, encapsulating or testing
        of the SEMICONDUCTIVE DEVICE manufactured; however, not included are any
        inventions which is directed to (1) the apparatus useful in the
        implementation of the process, or (2) the SEMICONDUCTIVE DEVICE
        manufactured in which more than one structure is interconnected with
        another to give it intended functionality, e.g. electrical or photonic
        systems and circuits, or (3) the functional operation of the
        SEMICONDUCTIVE DEVICE manufactured in which more than one structure is
        interconnected with another structure, or (4) a process for the
        manufacturing of SEMICONDUCTIVE DEVICES utilizing spatially patterned
        masks in conjunction with an electron beam.

LICENSED PRODUCT means a SEMICONDUCTIVE DEVICE.

LIMITED PERIOD means the period commencing on the effective date of this
Agreement and continuing until the termination of the Joint Venture Agreement.

LUCENT'S PATENTS means every patent (including utility models but excluding
design patents and design registrations) owned by LUCENT which:

        (1) issue from any patent application filed in any country of the world
        having an effective or actual filing date, or claiming a filing date,
        prior to January 1, 2003, with respect to which LUCENT has, as of the
        effective date of this Agreement, the right to grant the licenses
        specified herein; and

        (2) are directed to a process for the manufacture of SEMICONDUCTIVE
        DEVICES, including inventions directed to structures necessarily formed
        by such process such as but not limited to transistors, diodes,
        capacitors, resistors, conductors and dielectrics; and further including
        any invention directed to the housing, sealing, encapsulating or testing
        of the SEMICONDUCTIVE DEVICE manufactured; however, not included are any
        inventions which is directed to (1) the apparatus useful in the
        implementation of the process, or (2) the SEMICONDUCTIVE DEVICE
        manufactured in which more than one structure is interconnected with
        another to give it intended functionality, e.g. electrical or



                                       15
<PAGE>   18

        photonic systems and circuits, or (3) the functional operation of the
        SEMICONDUCTIVE DEVICE manufactured in which more than one structure is
        interconnected with another structure, or (4) a process for the
        manufacturing of SEMICONDUCTIVE DEVICES utilizing spatially patterned
        masks in conjunction with an electron beam;

provided, however, that prior to January 1, 2000, the term LUCENT's PATENTS
shall not include any patent included within the definition of "AT&T's PATENTS"
under the Prior License Agreement.

RELATED COMPANIES of a company are SUBSIDIARIES of the company and any other
company so designated in writing signed by LUCENT and CSM.

SEMICONDUCTIVE DEVICE means a unitary electronic device including silicon
semiconductive material as an operable part thereof, such device being (i) in
the form of a separate discrete device or a separate integrated circuit device,
or (ii) integral with a wafer and severable therefrom. Such SEMICONDUCTIVE
DEVICE includes circuits contained therein and, if provided therewith,
supporting means, terminal members, packaging, housing means, and any
environmental controlling means included within such housing means or unitary
therewith. A SEMICONDUCTIVE DEVICE shall not lose its character as such whether
or not it is a part of an assemblage of such electronic devices or other
devices; but the term does not mean or include any such assemblage nor does it
include circuits formed by the assemblage.

SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a SUBSIDIARY of such
company only as long as such control or ownership and control exists.



                                       16

<PAGE>   1
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


                                                                   EXHIBIT 10.16

102495                                         AGREEMENT with an effective date
                                               of January 1, 1995, between
                                               INTERNATIONAL BUSINESS MACHINES
                                               CORPORATION, a New York
REDACTED FOR CONFIDENTIALITY                   corporation (hereinafter called
                                               IBM), and CHARTERED SEMICONDUCTOR
                                               MANUFACTURING PTE., LTD., a
                                               corporation of Singapore
                                               (hereinafter called CSMP).

     Each of the parties has the right (as GRANTOR herein) to grant licenses to
the other party (as GRANTEE herein) under certain patents and desires to acquire
a ************ license under such patents of the other party.

     Each of the parties expects to continue research and development which will
produce further patents and each party may require a ********** license under
such patents of the other party.

     In consideration of the premises and mutual covenants herein contained, IBM
and CSMP agree as follows:

Section 1. DEFINITIONS

1.1 "IBM Licensed Patents" shall mean all patents having claims reciting methods
or apparatus for manufacturing, assembling and packaging Semiconductor
Apparatus:

1.1.1 issued or issuing on patent applications entitled to an effective filing
     date prior to December 31, 2000;

1.1.2 which, but for this Agreement, would be infringed by CSMP's making, using,
     importing, leasing, selling or otherwise transferring a CSMP Licensed
     Product in the country in which such patent exists; and

1.1.3 under which patents or the applications therefor IBM or any of its
     Subsidiaries now has, or hereafter obtains, the right to grant licenses to
     CSMP of or within the scope granted herein without such grant or the
     exercise of rights thereunder resulting in the payment of royalties or
     other consideration by IBM or its Subsidiaries to third parties (except for
     payments between IBM and its Subsidiaries, and payments to third parties
     for inventions made by said third parties while employed by IBM or any of
     its Subsidiaries).

The term "IBM Licensed Patents" shall also include said patent applications and
any patent reissuing on any of the aforesaid patents.

1.2 "IBM Licensed Products" shall mean Semiconductor Apparatus.

1.3 "Integrated Circuit" shall mean an integral unit including a plurality of
active and/or passive circuit elements formed at least in part of Semiconductor
Material and associated on, or
<PAGE>   2
in, one substrate comprising the first level of packaging for such elements;
such unit forming or contributing to the formation of a circuit for performing
electrical or electronic functions.

1.4 "Semiconductor Apparatus" shall mean Semiconductor Material, Semiconductor
Device, Semiconductor Circuit, Integrated Circuit and/or Semiconductor Memories
and any combination of such apparatus with other such apparatus;

1.5 "Semiconductor Circuit" shall mean a circuit in which one or more
Semiconductor Devices are interconnected in one or more paths (including passive
circuit elements, if any) for performing fundamental electrical or electronic
functions and, if provided therewith, housing and/or supporting means therefor.

1.6 "Semiconductor Device" shall mean a device and any material therefor,
comprising a body of one or more Semiconductor Materials and one or more
electrodes associated therewith and, if provided therewith, housing and/or
supporting means therefor.

1.7 "Semiconductor Material" shall mean any material whose conductivity is
intermediate to that of metals and insulators at room temperature and whose
conductivity, over some temperature range, increases with increases in
temperature. Such materials shall include, but not be limited to, refined
products, reaction products, reduced products, mixtures and compounds.

1.8 "Semiconductor Memory" shall mean any instrumentality or aggregate of
instrumentalities, which instrumentality or aggregate is designed only for
storing digital information, intelligence or data by selectively setting or
presetting detectable states in Semiconductor Material forming at least a part
of such instrumentality or aggregate, such instrumentality or aggregate may
include powering means and auxiliary and/or support circuits (such as
regeneration means, true-complement generations means, address decoding means,
sensing means and selection means) to control the flow of such information,
intelligence or data into and out of such Semiconductor Memory.

1.9 "Subsidiary" of a party hereto or of a third party shall mean a corporation,
company or other entity:

1.9.1 more than fifty percent (50%) of whose outstanding shares or securities
     (representing the right to vote for the election of directors or other
     managing authority) are, now or hereafter, owned or controlled, directly or
     indirectly, by a party hereto or such third party, but such corporation,
     company or other entity shall be deemed to be a Subsidiary only so long as
     such ownership or control exists; or

1.9.2 which does not have outstanding shares or securities, as may be the case
     in a partnership, joint venture or unincorporated association, but more
     than fifty percent (50%) of whose ownership interest representing the right
     to make the decisions for such corporation, company or other entity is, now
     or hereafter, owned or controlled, directly or indirectly, by a party
     hereto or such third party, but such corporation, company or other entity
     shall be deemed to be a Subsidiary only so long as such ownership or
     control exists.



                                       2
<PAGE>   3

1.10 "CSMP Licensed Patents" shall mean all patents, including utility models
and including design patents and registrations for type fonts (but not including
any other design patents or registrations):

1.10.1 issued or issuing on patent applications entitled to an effective filing
     date prior to December 31, 2000;

1.10.2 which, but for this Agreement, would be infringed by IBM's making, using,
     importing, leasing, selling or otherwise transferring an IBM Licensed
     Product in the country in which such patent exists; and

1.10.3 under which patents or the applications therefor CSMP or any of its
     Subsidiaries now has, or hereafter obtains, the right to grant licenses to
     IBM of or within the scope granted herein without such grant or the
     exercise of rights thereunder resulting in the payment of royalties or
     other consideration by CSMP or its Subsidiaries to third parties (except
     for payments between CSMP and its Subsidiaries, and payments to third
     parties for inventions made by said third parties while employed by CSMP or
     any of its Subsidiaries). The term "CSMP Licensed Patents" shall also
     include said patent applications and any patent reissuing on any of the
     aforesaid patents.

1.11 "CSMP Licensed Products" shall mean Semiconductor Apparatus.

1.12 "CSMP Elected Country" shall mean one additional country where CSMP owns,
controls or has contracted for its use, physical assets and/or real property for
the manufacture of CSMP Licensed Products during the term of this Agreement.
CSMP shall provide written notice to IBM of the CSMP Elected Country no later
than ninety (90) days after manufacturing begins in such country and no country
shall be deemed to be a CSMP Elected Country in the absence of such notice.

Section 2. LICENSES

2.1 Subject to the provisions of Section 2.4, IBM on behalf of itself and its
Subsidiaries grants to CSMP a nonexclusive license under the IBM Licensed
Patents:

2.1.1 to make CSMP Licensed Products only in Singapore and one CSMP Elected
     Country;

2.1.2 to use, import, and lease, sell and otherwise transfer CSMP Licensed
     Products worldwide;

2.1.3 to use (but not to manufacture) any apparatus in the manufacture of CSMP
     Licensed Products and to practice any method or process in such manufacture
     of CSMP Licensed Products; and

2.1.4 to have CSMP Licensed Products made in whole or in part by another
     manufacturer for the use and/or lease, sale or other transfer by CSMP only
     when the designs and specifications for such CSMP Licensed Products were
     provided by CSMP to the other



                                       3
<PAGE>   4

     manufacturer, whether developed by CSMP or received by CSMP from customers
     to whom the Licensed Products are to be sold; provided, however, the
     license under this section 2.1.4:

2.1.4.1   shall only be under claims of IBM Licensed Patents, the
          infringement of which would be necessitated by compliance with such
          designs and specifications;

2.1.4.2   shall not apply to any CSMP Licensed Products in the form
          manufactured or marketed by said other manufacturer prior to CSMP's
          furnishing of said designs and specifications; and

2.1.4.3   shall be limited to no more than ten percent (10%) of the sales
          volume of CSMP Licensed Products in any twelve month period starting
          on the effective dates and every anniversary thereafter, during the
          term of this Agreement.

Unless CSMP informs IBM to the contrary, CSMP shall be deemed to have authorized
said other manufacturer to make said CSMP Licensed Products under the license
granted to CSMP in this Section 2.1.3 when the conditions specified herein is
fulfilled. Within thirty (30) days of a written request identifying a product
and a manufacturer, CSMP shall inform IBM of the quantity of such product, if
any, manufactured by such manufacturer.

In the event that neither IBM nor any of its Subsidiaries has the right to grant
a license under any particular IBM Licensed Patent of the scope set forth above
in this Section 2.1, then the license granted herein under said IBM Licensed
Patent shall be of the broadest scope which IBM or any of its Subsidiaries has
the right to grant within the scope set forth above.

2.2 Subject to the provisions of Section 2.3, CSMP on behalf of itself and its
Subsidiaries grants to IBM a worldwide, fully paid-up, nonexclusive license
under the CSMP Licensed Patents:

2.2.1 to make, use, import, and lease, sell or otherwise transfer IBM Licensed
     Products;

2.2.2 in the manufacturing of IBM Licensed Products, to use any apparatus and
     practice any method or process; and

2.2.3 to have IBM Licensed Products made by another manufacturer for the use
     and/or lease, sale or other transfer by IBM only when the designs and
     specifications for such IBM Licensed Products were created by IBM (either
     solely or jointly with one or more third parties); provided, however, the
     license under this section 2.2.3:

2.2.3.1   shall only be under claims of CSMP Licensed Patents, the infringement
          of which would be necessitated by compliance with such designs and
          specifications; and

2.2.3.2   shall not apply to any IBM Licensed Products in the form manufactured
          or marketed by said other manufacturer prior to IBM's furnishing of
          said designs and specifications.



                                       4
<PAGE>   5

     Unless IBM informs CSMP to the contrary, IBM shall be deemed to have
     authorized said other manufacturer to make said IBM Licensed Products under
     the license granted to IBM in this Section 2.2.3 when the conditions
     specified herein is fulfilled. Within thirty (30) days of a written request
     identifying a product and a manufacturer, IBM shall inform CSMP of the
     quantity of such product, if any, manufactured by such manufacturer.

In the event that neither CSMP nor any of its Subsidiaries has the right to
grant a license under any particular CSMP Licensed Patent of the scope set forth
above in this Section 2.2, then the license granted herein under said CSMP
Licensed Patent shall be of the broadest scope which CSMP or any of its
Subsidiaries has the right to grant within the scope set forth above.

2.3 No license or immunity is granted by CSMP either directly or by implication,
estoppel or otherwise to any third parties acquiring items from IBM for the
combination of such acquired items with other items (including items acquired
from either party hereto) or for the use of such combination, even if such
acquired items have no substantial use other than as part of such a combination.

2.4 No license or immunity is granted by IBM either directly or by implication,
estoppel or otherwise to any third parties acquiring items from CSMP for the
combination of such acquired items with other items (including items acquired
from either party hereto) or for the use of such combination, even if such
acquired items have no substantial use other than as part of such a combination;
except that IBM shall not make any claim of infringement against third parties
of any IBM Licensed Patents with respect to products acquired by such third
parties from CSMP, even if such products are combined with other products.

2.5 The parties agree that CSMP is not paying under this Agreement for any
rights under any IBM patents claiming the design, structure or operation of
Semiconductor Apparatus and that no rights under any such IBM patents are
granted herein to CSMP or any third parties, either expressly or by implication.
The parties further agree that IBM's sole recourse with respect to past, present
or future claims of infringement of IBM patents not licensed herein to CSMP,
which claims are based upon the design, structure or operation of CSMP Licensed
Products designed by third parties and manufactured, sold, leased or otherwise
transferred by CSMP, shall be against third parties who acquire such CSMP
Licensed Products, and IBM shall have no recourse of any such claims of
infringement against CSMP with respect to such unlicensed IBM patents.

Section 3. EXTENSION OF LICENSE TO SUBSIDIARIES

3.1 The licenses granted herein shall include the right of the parties hereto to
sublicense their respective Subsidiaries and the right of such sublicensed
Subsidiaries to sublicense other Subsidiaries. Each sublicensed Subsidiary shall
be bound by the terms and conditions of this Agreement (other than those of
Section 5) as if it were named herein in the place of the party with whom the
sublicense originated. If a Subsidiary ceases to be a Subsidiary and holds any
patents or patent applications under which a party hereto is licensed, such
licenses shall continue for the term of such party's license. Any sublicense
granted to a Subsidiary shall terminate on the date such Subsidiary ceases to be
a Subsidiary.


                                       5
<PAGE>   6
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


Section 4. RELEASES

4.1 After receipt of the payment specified in Section 5.1.1, IBM, on behalf of
itself and its Subsidiaries which are Subsidiaries as of the date of this
Agreement, shall irrevocably release CSMP, its Subsidiaries which are
Subsidiaries as of the date of this Agreement, and its and their respective
customers, mediate and immediate, from any and all claims of infringement of any
IBM Licensed Patents, which claims have been made or which might be made at any
time, with respect to any item manufactured, used, leased, sold or otherwise
transferred by CSMP or its Subsidiaries before the effective date of this
Agreement, and with respect to any method practiced or Semiconductor Device made
in the manufacture or use of such item, to the extent that such item or method
or Semiconductor Device would have been licensed or the subject of any immunity
hereunder had it been manufactured, used, or leased, sold or otherwise
transferred or practiced by CSMP after the date of this Agreement. The release
contained herein shall not apply to any person other than those specified in
this Section 4.1 and shall not apply to the manufacture of such items by any
person other than CSMP or its Subsidiaries.

4.2 CSMP, on behalf of itself and its Subsidiaries which are Subsidiaries as of
the date of this Agreement, hereby irrevocably releases IBM, its Subsidiaries
which are Subsidiaries as of the date of this Agreement, and its and their
respective customers, mediate and immediate, from any and all claims of
infringement of any CSMP Licensed Patents, which claims have been made or which
might be made at any time, with respect to any item manufactured, used, or
leased, sold or otherwise transferred by IBM or its Subsidiaries before the
effective date of this Agreement, and with respect to any method practiced in
the manufacture or use of such item, to the extent that such item or method
would have been licensed or the subject of any immunity hereunder had it been
manufactured, used, or leased, sold or otherwise transferred or practiced by IBM
after the date of this Agreement. The release contained herein shall not apply
to any person other than those specified in this Section 4.2 and shall not apply
to the manufacture of such items by any person other than IBM or its
Subsidiaries.

Section 5. PAYMENT

5.1 As additional consideration for the license, immunities, release and other
rights granted to CSMP herein, CSMP shall pay to IBM the sum of ****************
**********************************, no portion of which shall be refundable, but
which shall be payable in installments as follows:

5.1.1     ************************************************* on November 3, 1995;

5.1.2     ************************************* on or before December 20, 1996;

5.1.3     ************************************* on or before December 20, 1997;

5.1.4     ************************************* on or before December 20, 1998;

5.1.5     ************************************* on or before December 20, 1999;
          and


                                       6
<PAGE>   7
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


5.1.6     ************************************* on or before December 20, 2000.

     Upon payment of all of the installments specified above in Section 5.1, the
license, immunities and other rights granted to CSMP in this Agreement shall be
fully paid up for the term of said rights.

5.2 CSMP shall be liable for interest on any overdue payment required to be made
pursuant to Section 5, commencing on the date such payment becomes due, at an
annual rate which is the greater of ************* or one *******************
than the prime interest rate as quoted by the head office of Citibank N.A., New
York, at the close of banking on such date, or on the first business day
thereafter if such date falls on a non-business day. If such interest rate
exceeds the maximum legal rate in the jurisdiction where a claim therefor is
being asserted, the interest rate shall be reduced to such maximum legal rate.

5.3 If an installment payments set forth in Section 5.1 is not made by its due
date, and if such payment, plus interest pursuant to Section 5.2, is not made
prior to forty-five (45) days after notice from IBM of the delinquency, then, at
IBM's sole option, either:

5.3.1 all of the above installment payments which were due after such notice
     shall automatically become due and payable in full on the forty-fifth day
     after such notice without presentment, demand or additional notice of any
     kind (all of which are hereby expressly waived); or

5.3.2 all licenses and other rights granted herein to CSMP shall automatically
     terminate on the forty-fifth day after such notice, CSMP shall remain
     obligated to pay all installments which had become due prior to such notice
     (plus interest thereon) and CSMP shall not be obligated to make any other
     payments.

IBM's election of the option set forth in Section 5.3.1 or 5.3.2 shall be stated
in such notice. Such notice shall be given as stated in Section 9 herein.

5.4 CSMP may deduct or withhold, in accordance with applicable law, from the
payments payable to IBM any income or withholding taxes imposed by its national
government, including any political subdivision thereof. CSMP shall furnish IBM
the appropriate documentary proof of any such payment made to the relevant
authorities.

Section 6. OTHER LICENSE RIGHTS

6.1 It is recognized that the parties hereto or their respective Subsidiaries
may now have, or hereafter obtain, the right to grant licenses under one or more
patents of any country, including utility models and including design patents
and registrations for type fonts (but not including any other design patents or
registrations), issuing on patent applications entitled to an effective filing
date prior to December 31, 2000, and under the patent applications therefor, but
that such grant or the exercise of rights thereunder shall result in payment of
royalties or other consideration by GRANTOR or its Subsidiaries to third
parties. Each party (as GRANTOR herein) agrees that, upon written request, it
shall grant to the other party to the extent and subject to the terms and


                                       7
<PAGE>   8

conditions under which it then has the right to do so, a license of the broadest
scope which GRANTOR has the right to grant at any time but of no greater scope
than the scope of the licenses granted herein with respect to any such patent or
patent application. Such license shall be granted under a separate agreement,
upon payment of the same royalty or other consideration as that which GRANTOR or
any of its Subsidiaries is obligated to pay to a third party because of the
grant of such license or the exercise of rights thereunder.

6.2 Upon written request by a party, the other party shall inform the requesting
party of those patents or patent applications coming within the scope of Section

6.1 at the time of such request.

Section 7. TERM OF AGREEMENT

7.1 The term of this Agreement shall be from the effective date of this
Agreement until December 31, 2000.

7.2 If one party (referred to in this Section 7.2 as the Acquired Party) is
acquired by a third party, becoming a Subsidiary of such third party:

7.2.1 said Acquired Party shall promptly give notice of such acquisition to the
     other party;

7.2.2 all rights granted hereunder to said Acquired Party together with any
     sublicenses theretofore granted by said Acquired Party shall terminate on a
     termination date one hundred and eighty (180) days after the date of such
     acquisition;

7.2.3 all licenses and immunities granted herein to said other Party under any
     patents issuing on patent applications having an effective filing date
     subsequent to said termination date and under said patent applications
     shall terminate; and

7.2.4 said Acquired Party shall be entitled, upon request made within one
     hundred and eighty (180) days after the date of such acquisition to a
     nontransferable, nonexclusive, license under said other party's Licensed
     Patents (including the right to sublicense its Subsidiaries) to make, use,
     lease and sell only products identical with those manufactured and marketed
     by said Acquired Party within the licenses granted in this Agreement prior
     to such acquisition. As consideration for such license, said Acquired Party
     shall be required to pay to said other party all payments which said
     Acquired Party would have been obligated to pay after the date of
     acquisition pursuant to Section 5 of this Agreement. Such license shall be
     terminable by said Acquired Party upon any date a payment is due, by giving
     written notice of termination thirty (30) days prior to such due date and
     paying all payments due on such date.

Section 8. WARRANTY

8.1 Each party represents and warrants that it has the full right and power to
grant the license, immunities and release set forth in Sections 2 and 4 and that
there are no outstanding agreements, assignments or encumbrances inconsistent
with the provisions of said Sections or with any other



                                       8
<PAGE>   9

provision of this Agreement. Each party (as a GRANTOR) further represents and
warrants that prior to the execution of this Agreement it has informed the other
party of any patent originating from inventions made by employees of GRANTOR or
its Subsidiaries, which patent is now owned by GRANTOR or its Subsidiaries and
which patent, owing to prior arrangements with third parties, does not, or shall
not, qualify as a GRANTOR Licensed Patent, under which licenses are granted of
the full scope set forth in Section 2.1. Neither party makes any other
representations or warranties, express or implied, nor does either party assume
any liability in respect of any infringement of patents or other rights of third
parties owing to the other party's operation under the license herein granted.

Section 9. COMMUNICATIONS

9.1 Payments shall be made by electronic funds transfer and shall be deemed to
have been made on the date they are credited to IBM's account. Any notice or
other communication required or permitted to be made or given to either party
hereto pursuant to this Agreement shall be sent to such party by registered
airmail (except that registered or certified mail may be used where delivery is
in the same country as mailing), postage prepaid, addressed to it at its address
set forth below, or to such other address as it shall designate by written
notice given to the other party, and shall be deemed to have been made or given
on the date of mailing. The addresses are as follows:

9.1.1 For electronic funds transfers of payments:

          IBM Director of Licensing
          The Bank of New York
          48 Wall Street
          New York, New York 10286
          United States of America
          Credit Account No. 890-0209-674
          ABA No. 0210-0001-8

9.1.2 For mailing to IBM:

          Director of Licensing
          International Business Machines Corporation
          500 Columbus Avenue
          Thornwood, New York 10594
          United States of America

9.1.3 For facsimile transmission to IBM:

          (914) 742-6737



                                       9
<PAGE>   10

9.1.4 For mailing to CSMP:

          Mr. Chris Chi, Sr. Vice President - Operations
          Chartered Semiconductor Manufacturing PTE., Ltd.
          No. 2 Science Park Drive
          Singapore Science Park
          Singapore 0511

9.1.5 For facsimile transmission to CSMP:

          65-775-3233

Section 10. ASSIGNMENTS

10.1 Neither party shall assign, or grant any right under, any of its patents,
or the applications therefor, which qualify as such party's Licensed Patents, or
any of its patents or the applications therefor or rights which are subject to
the other party's rights pursuant to Section 6, unless such assignment or grant
is made subject to the terms and conditions of this Agreement. Subject to the
provisions of Section 3, neither party shall assign any of its rights or
privileges hereunder without the prior written consent of the other party. Any
attempted assignment in derogation of the foregoing shall be void.

Section 11. KNOW-HOW AND TRADE SECRETS

11.1 No license or other right is granted herein to either party, directly or by
implication, estoppel or otherwise, with respect to any trade secrets or
know-how, and no such license or other right shall arise from the consummation
of this Agreement or from any acts, statements or dealings leading to such
consummation. Except as specifically provided herein, neither party is required
hereunder to furnish or disclose to the other any technical or other
information.

Section 12. APPLICABLE LAW

12.1 This Agreement shall be construed, and the legal relations between the
parties hereto shall be determined, in accordance with the law of the State of
New York, United States of America, as such law applies to contracts signed and
fully performed in such State.

Section 13. MISCELLANEOUS

13.1 Nothing contained in this Agreement shall be construed as a warranty or
representation by either party as to the validity or scope of any of its
Licensed Patents and either party is free to contest in any proceeding said
validity or scope.

13.2 Nothing contained in this Agreement shall be construed as conferring any
right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other



                                       10
<PAGE>   11

designation of either party hereto (including any contraction, abbreviation or
simulation of any of the foregoing); and each party hereto agrees not to use or
refer to this Agreement or any provision thereof in any promotional activity
associated with apparatus licensed hereunder, without the express written
approval of the other party.

13.3 Nothing contained in this Agreement shall be construed as conferring on
either party any license or other right to copy the exterior design of the
products of the other party.

13.4 Nothing contained in this Agreement shall be construed as conferring any
rights by implication, estoppel or otherwise, to or under copyrights or mask
work or similar rights, or with respect to computer programs under any form of
statutory protection now existing or hereafter enacted, in any country or
countries, wherein the copying of a computer program is a requisite of
infringement under such form of protection.

13.5 Nothing contained in this Agreement shall be construed as limiting the
rights which the parties have outside the scope of the licenses granted
hereunder, or restricting the right of either party or any of its Subsidiaries
to make, have made, use, lease, sell or otherwise dispose of any particular
product or products not herein licensed.

13.6 Each party shall, upon request from the other party sufficiently
identifying any patent or patent application, inform the other party as to the
extent to which said patent or patent application is subject to the licenses and
rights granted hereunder. If such licenses or rights under said patent or patent
application are restricted in scope, copies of all pertinent provisions of any
contract or other arrangement creating such restrictions shall, upon request, be
furnished to the party making such request, unless such disclosure is prevented
by such contract, and in that event a statement of the nature of such
restriction shall be provided.

13.7 Neither of the parties hereto, nor any of their respective Subsidiaries
shall be required hereunder to file any patent application, or to secure any
patent or patent rights, or to maintain any patent in force, or to provide
copies of patent applications to the other party or its Subsidiaries, or to
disclose any inventions described or claimed in such patent applications.

13.8 Neither party shall have any obligation hereunder to institute any action
or suit against third parties for infringement of any of its Licensed Patents or
to defend any action or suit brought by a third party which challenges or
concerns the validity of any of its Licensed Patents. In addition, neither party
shall have any right to institute any action or suit against third parties for
infringement of any of the other party's Licensed Patents.

13.9 If a third party has the right to grant licenses under a patent to a party
hereto (as a licensee) with the consent of the other party hereto, said other
party shall provide said third party with any consent required to enable said
third party to license said licensee on whatever terms and conditions such third
party may deem appropriate. Each party hereby waives any right it may have to
receive royalties or other consideration from said third party as a result of
said third party's so licensing said licensee within the scope of the license
granted under Section 2 of this Agreement.


                                       11
<PAGE>   12

13.10 Either party's Licensed Products leased, sold or otherwise transferred by
a party hereto or its sublicensed Subsidiary shall be considered to be licensed
under any of the other party's Licensed Patents which at any time covers such
Licensed Products, notwithstanding that the Licensed Product has been re-leased,
resold or re-transferred by any entity in the same or another country.

13.11 This Agreement shall not be binding upon the parties until it has been
signed hereinbelow by or on behalf of each party, in which event it shall be
effective as of the later of:

13.11.1 the date of this Agreement first above written; or

13.11.2 the date on which all necessary Singapore government approvals are
     obtained.

If approvals referred to in Section 13.11.2 are required in order for CSMP to
perform its obligations under this Agreement, and all of such approvals are not
obtained within one hundred and twenty (120) days of the signing of this
Agreement by IBM, IBM, at its sole discretion, may void this Agreement, ab
initio. No amendment or modification hereof shall be valid or binding upon the
parties unless made in writing and signed as aforesaid.

13.12 This Agreement embodies the entire understanding of the parties with
respect to the subject matter hereof and merges all prior discussions between
them, and neither of the parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to the subject matter
hereof other than as expressly provided herein.

13.13 The intent of the parties is to grant limited licenses to each other as
specified in Section 2. If anything in Section 2 is found by competent authority
to be invalid, illegal or unenforceable in any respect for any reason, either
party shall have the right to terminate this Agreement. If anything in any other
Section of this Agreement is found by competent authority to be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of such other Section in every other respect and the remainder of
this Agreement shall continue in effect so long as the Agreement still expresses
the intent of the parties. However, if the intent of the parties cannot be
preserved, this Agreement shall be either renegotiated or terminated.

13.14 The headings of the several Sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.


                                       12
<PAGE>   13

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed as of the date first above written.

                                     INTERNATIONAL BUSINESS
                                     MACHINES CORPORATION

Witness:                             By:          /s/ M.C. PHELPS, JR.
                                        ----------------------------------------
                                                    M. C. Phelps, Jr.
                                                     Vice President
[SIGNATURE ILLEGIBLE]
- ----------------------               CHARTERED SEMICONDUCTOR
                                     MANUFACTURED PTE., LTD.

Witness:                             By:           /s/ TAN BOCK SENG
                                        ----------------------------------------
                                                      Tan Bock Seng
                                                        President
[SIGNATURE ILLEGIBLE]
- ----------------------

                                       13

<PAGE>   1


                          REDACTED FOR CONFIDENTIALITY

                                                                  EXHIBIT 10.17



                         PATENT CROSS LICENSE AGREEMENT



                                     BETWEEN



                               TOSHIBA CORPORATION



                                       AND



                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD






Toshiba/CSM Confidential

<PAGE>   2
                         PATENT CROSS LICENSE AGREEMENT

This Agreement is made and entered into by and between Toshiba Corporation, a
corporation duly organized and existing under the laws of Japan, having its
principal place of business at 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001,
Japan (hereinafter "Toshiba"), and Chartered Semiconductor Manufacturing Ltd., a
limited company duly organized and existing under the laws of the Republic of
Singapore, having its principal place of business at 60 Woodlands Industrial
Park D Street 2, Singapore 738406 (hereinafter "CSM").

WHEREAS, Toshiba and CSM own various patents and patent applications in the
field of semiconductor products throughout the world; and

WHEREAS, Toshiba and CSM each desires to acquire licenses under such other
party's patents and patent applications in accordance with the terms and
conditions hereinafter provided.

NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein, the parties agree as follows:

ARTICLE 1. DEFINITIONS

1.1 "Effective Date" shall mean the date of execution of this Agreement by both
parties.

1.2 "Subsidiary(ies)" shall mean any corporation, company or other legal entity
more than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, now or hereafter, owned or controlled, directly or indirectly,
by either party hereto, but such corporation, company or other entity shall be
deemed to be a Subsidiary only so long as such ownership or control exists.

1.3 "Toshiba Patents" shall mean (a) any patent (including any utility model,
design patent, patent of importation, patent of addition, certificate of
addition), the application for which has the first effective filing date prior
to the date of expiration or termination of this Agreement in any country, (b)
any patent application for such patent, (c) any reissue, continuation, parent,
division, extension, renewal or continuation-in-part of any of the foregoing,
and (d) any counterpart of any of the foregoing anywhere in the world; and which
are now owned or controlled or may hereafter during the term of this Agreement
be owned or controlled by Toshiba or its Subsidiaries, or under which and to the
extent to which and subject to the conditions under which Toshiba or its
Subsidiaries may have, or may hereafter during the term of this Agreement
acquire, the right to grant licenses or rights of the scope granted herein
without paying royalties or any other compensation to a third party (except for
payments to Subsidiaries, payments to a person for his



Toshiba/CSM Confidential               1
<PAGE>   3
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


inventions made while employed by Toshiba or any of its Subsidiaries and
payments necessary for acquiring the right to grant licenses or rights of the
scope granted herein).

1.4 "CSM Patents" shall mean (a) any patent (including any utility model, design
patent, patent of importation, patent of addition, certificate of addition), the
application for which has the first effective filing date prior to the date of
expiration or termination of this Agreement in any country, (b) any patent
application for such patent, (c) any reissue, continuation, parent, division,
extension, renewal or continuation-in-part of any of the foregoing, and (d) any
counterpart of any of the foregoing anywhere in the world; and which are now
owned or controlled or may hereafter during the term of this Agreement be owned
or controlled by CSM or its Subsidiaries, or under which and to the extent to
which and subject to the conditions under which CSM or its Subsidiaries may
have, or may hereafter during the term of this Agreement acquire, the right to
grant licenses or rights of the scope granted herein without paying royalties or
any other compensation to a third party (except for payments to Subsidiaries,
payments to a person for his inventions made while employed by CSM or any of its
Subsidiaries and payments necessary for acquiring the right to grant license or
rights of the scope granted herein).

1.5 "Licensed Products" shall mean any semiconductor devices, including
electronic circuitry, parts, materials, components, packages and circuits
thereof, ********************* *************.

1.6 ****

ARTICLE 2. MUTUAL RELEASES

2.1 Toshiba hereby releases, acquits and forever discharges CSM and its
Subsidiaries from any and all claims or liability for infringement or alleged
infringement of any Toshiba Patents, which may have occurred prior to the
Effective Date to the extent a license is herein granted by Toshiba.

2.2 CSM hereby releases, acquits and forever discharges Toshiba and its
Subsidiaries from any and all claims or liability for infringement or alleged
infringement of any CSM Patents, which may have occurred prior to the Effective
Date to the extent a license is herein granted by CSM.




Toshiba/CSM Confidential               2
<PAGE>   4
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


ARTICLE 3. GRANT OF LICENSE

3.1 Toshiba hereby grants to CSM and CSM's Subsidiaries a *********************
***************************** license, without right to sublicense third
parties, under Toshiba Patents to make, have made, use, import, market, offer
for sale, sell or otherwise dispose of Licensed Products, and to use
manufacturing or testing processes covered by Toshiba Patents to make, have
made, test and have tested Licensed Products, during the term of this Agreement.

3.2 CSM hereby grants to Toshiba and Toshiba's Subsidiaries a
******************************************* license, without right to sublicense
third parties, under CSM Patents to make, have made, use, import, market, offer
for sale, sell or otherwise dispose of Licensed Products, and to use
manufacturing or testing processes covered by CSM Patents to make, have made,
test and have tested Licensed Products, during the term of this Agreement.

3.3 The releases or licenses granted under Articles 2, 3.1 and 3.2 shall not be
extended to any architecture or circuit which are designed by a third party, and
incorporated in Licensed Products manufactured by either party and sold to such
third party by either party for such third party's sale, use or other
disposition of such Licensed Products under the trade name or trademark of such
third party. It is agreed that each party or its Subsidiaries shall not assert
any unlicensed patent rights against the other party or its Subsidiaries that
apply to such architecture or circuit designed by such third party but such
party or its Subsidiaries shall retain the right to assert its patents against
such third party.

3.4 No release or license under any copyrights, mask work rights, trademark or
other intellectual property rights other than Patents of either CSM or Toshiba
or any of their Subsidiaries is granted under this Agreement.

3.5 No release or license is granted by either party or any Subsidiaries, either
directly or by implication, estoppel or otherwise, under any patent licensed
hereunder, to the other party or its Subsidiaries, or third parties acquiring
product from either party or any Subsidiaries, for the combination of any
Licensed Products with any other product which is not a Licensed Product.

ARTICLE 4. PAYMENTS

4.1 In consideration of the releases and licenses herein granted to CSM and its
Subsidiaries by Toshiba under this Agreement, CSM shall pay to Toshiba the sum
of ********************************** in accordance with the following payment
schedule:



Toshiba/CSM Confidential               3
<PAGE>   5
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


<TABLE>
<CAPTION>
       Amount                             Due Date
       ------                             --------
<S>                                      <C>
       ****                               ****
</TABLE>

4.2 All payments required to be made by CSM under Article 4.1 shall be paid in
U.S. dollar by telegraphic transfer to:

       Toshiba Corporation        Account No. 0949155
       The Sakura Bank, Ltd.      Tokyo Main Office
       1-1-2, Yuraku-cho, Chiyoda-ku, Tokyo 100-0006 Japan

Any amount payable by CSM hereunder which remains unpaid after the payment date
thereof shall be subject to a late charge equal to 1.0% per month, or the
maximum amount permitted by law, whichever is less, from the due date until such
amount is paid.

4.3 Any and all payments by CSM under this Agreement shall be made without any
deduction of taxes or charges of any kind and CSM shall bear all such taxes and
charges, if any; provided, however, that in the event any withholding income tax
is imposed on the payment hereunder by Singapore tax authorities under Japan and
Singapore Income Tax Convention, CSM may withhold such income tax from such
payment hereunder. CSM shall, without undue delay, obtain and send to Toshiba
tax certificates evidencing the tax amount withheld and paid to Singapore tax
authorities.

ARTICLE 5. TERM AND TERMINATION

5.1 This Agreement shall become effective on the Effective Date and continue in
full force and effect for a period of ten (10) years thereafter, unless earlier
terminated as hereinafter provided.

5.2 If either party commits a material breach of this Agreement and fails to
remedy such breach within thirty (30) days after written notice complaining
thereof is given to such party, the other party shall have the right to
terminate this Agreement forthwith by giving written notice. In the event of
such termination, the licenses granted hereunder to the party in breach and its
Subsidiaries shall terminate forthwith as of the date of such termination of
this Agreement, but the license granted to the party not in breach and its
Subsidiaries shall survive such termination and shall extend for the full term
of this Agreement.



Toshiba/CSM Confidential               4
<PAGE>   6

5.3 Either party shall have the right to terminate this Agreement by giving
written notice of termination to the other party upon the occurrence of any of
the following:

         (a)      the filing by such other party of a petition in bankruptcy or
                  insolvency; or

         (b)      any adjudication that such other party is bankrupt or
                  insolvent; or

         (c)      the filing by such other party of any legal action or document
                  seeking reorganization, readjustment or arrangement of its
                  business under any law relating to bankruptcy or insolvency;
                  or

         (d)      the appointment of a receiver for all or substantially all of
                  the property of such other party; or

         (e)      the making by such other party of any assignment of whole or
                  substantial assets for the benefit of creditors;

and this Agreement shall terminate on the thirtieth (30) day after such notice
of termination is given.

In the event of such termination, the licenses granted to such terminating party
and its Subsidiaries shall survive such termination and shall extend for the
full term of this Agreement, but the licenses granted to such other party and
its Subsidiaries shall terminate forthwith as of the date of such termination of
this Agreement.

5.4 Upon expiration of this Agreement as provided in Article 5.1, all rights and
licenses granted and obligations undertaken hereunder shall terminate forthwith.

5.5 Upon request of either party at least sixty (60) days prior to the date of
expiration of this Agreement, both parties shall negotiate in good faith the
renewal of this Agreement upon reasonable terms and conditions.

5.6 Notwithstanding any provision of this Agreement, the following rights and
obligations shall survive any termination or expiration of this Agreement:

         (i)      The provisions of Article 6.

         (ii)     CSM's obligations to pay any unpaid amount under this
                  Agreement in the event of termination caused by CSM's material
                  breach. For avoidance of doubt, in the event of termination
                  caused by Toshiba's material breach in accordance with Article
                  5.2, CSM shall not be required to make further payments on any
                  unpaid amount not due and payable as of the date of such
                  termination.



Toshiba/CSM Confidential               5
<PAGE>   7

ARTICLE 6. GENERAL PROVISIONS

6.1 Each of the parties hereto represents and warrants that it has the right to
grant the other party the rights and licenses hereunder.

6.2 Nothing contained in this Agreement shall be construed as:

         (a)      a warranty or representation by any of the parties hereto as
                  to the validity, scope or enforceability or any class or type
                  of patent or utility model; or

         (b)      a warranty or representation that any acts licensed hereunder
                  will be free from infringement of patents, or utility models
                  other than those under which license have been granted
                  hereunder; or

         (c)      an agreement to bring or prosecute actions or suits against
                  third parties for infringement or conferring any right to
                  bring or prosecute actions or suits against third parties for
                  infringement; or

         (d)      conferring any right to use in advertising, publicity, or
                  otherwise, any trademark, trade name or names, or any
                  contraction, abbreviation or simulation thereof, of either
                  party; or

         (e)      conferring upon any party any obligation to file any patent
                  application or to secure any patent or maintain any patent in
                  force; or

         (f)      an obligation to furnish any technical information or
                  know-how.

6.3 All notices required or permitted to be given hereunder shall be in writing
by prepaid air express or registered airmail, postage prepaid or by telefax, if
confirmed or acknowledged, to the following or to such changed address as may
have been previously specified in writing by the addressed party:


If to Toshiba:                           If to CSM

Toshiba Corporation                      Chartered Semiconductor Manufacturing
1-1, Shibaura, 1-chome                   Ltd.
Minato-ku, Tokyo 105-8001                60 Woodlands Industrial Park D
Japan                                    Street 2 Singapore 738406

Attn.: Legal Affairs and Contracts Div.  Attn.: Legal Department
       Semiconductor Company

6.4 This Agreement and the performance of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of New York
of the United States.

6.7 Neither party shall assign this Agreement or any of its rights or privileges
hereunder to any third party without the prior written consent of the other
party, except to a third party which



Toshiba/CSM Confidential               6
<PAGE>   8

such party has merged or which has otherwise succeeded to all or substantially
all of the semiconductor business and assets of such party, and which has
assumed in writing to be bound by the obligations of this Agreement.

6.8 This Agreement sets forth the entire agreement between the parties as to the
subject matter hereof and supersedes all previous negotiations, agreements and
writings in respect thereto, and shall not be extended, supplemented or amended
in any manner, except by an instrument in writing duly executed by authorized
officers or representatives of both parties hereto.







Toshiba/CSM Confidential               7
<PAGE>   9

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, as of the last date written below, by their duly authorized
officers or representatives.



TOSHIBA CORPORATION                          CHARTERED SEMICONDUCTOR
                                             MANUFACTURING LTD

By:    /s/ Yasuo Morimoto                    By: /s/ Barry Waite
   ----------------------------------           -------------------------------

Name: Yasuo Morimoto                         Name: Barry Waite
      -------------------------------              ----------------------------
      Corporate Senior Vice President
      and Director
      President and CEO

Title: Semiconductor Company                 Title: President & CEO
      -------------------------------               ---------------------------

Date: August 12, 1999                        Date:  August 3, 1999
      -------------------------------               ---------------------------






Toshiba/CSM Confidential               8

<PAGE>   1
                           REDACTED FOR CONFIDENTIALITY            EXHIBIT 10.18

                           JOINT DEVELOPMENT AGREEMENT
                            FOR PROCESS TECHNOLOGIES

THIS JOINT DEVELOPMENT AGREEMENT is made and entered into this 18th day of
February 1999 by and between Lucent Technologies Inc., having its principal
place of business at 600 Mountain Avenue, Murray Hill, NJ 07974, U.S.A., acting
through its Microelectronics Group, (hereinafter "Lucent") and Chartered
Semiconductor Manufacturing Ltd., having its principal place of business at 60
Woodlands Industrial Park D Street 2, Singapore 738406 (hereinafter
"Chartered").

                               W I T N E S S E T H

WHEREAS, Lucent and Chartered desire to enter into this Joint Development
Agreement to jointly develop Lucent's 0.16(mu)m / Chartered's 0.18(mu)m CMOS
Logic Back-End-Of-Line ("BEOL") technology.

NOW, THEREFORE, the parties agree as follows:

1.0     DEFINITIONS

        1.1 "Background Information" shall mean certain informative material and
technical information, including any mask work or copyright rights in any of the
foregoing, relating to the manufacture of CMOS semiconductor devices which (i)
is owned or controlled by a Party, (ii) exists as of the Effective Date of this
Joint Development Agreement, and (iii) which is disclosed by one Party to the
other pursuant to the Development Program.

        1.2 "Back-End-Of-Line" ("BEOL") shall mean those Process steps necessary
to connect a transistor and circuit elements together in an integrated circuit,
including metalization, planarization and passivation.

        1.3 "Chartered's Background Information" shall mean Background
Information owned or controlled by Chartered and/or any of its Subsidiaries.

        1.4 "Development Program" shall mean the activities relating to the
development of the Process conducted pursuant to the respective Development
Plan, as defined in Section 2.1.

        1.5 "Effective Date" shall mean the date the last Party signs this Joint
Development Agreement or the date of government approval, if required, whichever
is later.

        1.6 "Foreground Information" shall mean informative material and
technical information, including any mask work or copyright rights in any of the
foregoing, relating to the manufacture of CMOS semiconductor devices which is
created during the Development Program by employees, agents or consultants of
either Party engaged in the development of the Process pursuant to such
Development Program.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -1-
<PAGE>   2

        1.7 "IME" shall mean the Institute of Microelectronics of Singapore.

        1.8 "Joint Invention" shall mean an invention made by one or more
employees, agents or consultants of Chartered in conjunction with one or more
employees, agents or consultants of Lucent.

        1.9 "Licensed Products" shall mean any products, in wafer, die or
packaged form manufactured using the Process.

        1.10 "Lucent's Background Information" shall mean Background Information
owned or controlled by Lucent and/or any of its Subsidiaries.

        1.11 "NSTB" shall mean the National Science and Technology Board of
Singapore.

        1.12 "Party" shall mean Lucent or Chartered.

        1.13 "Process" shall mean Lucent's 0.16(mu)m / Chartered's 0.18(mu)m
CMOS Digital Logic BEOL technology.

        1.14 "Process Specifications" shall mean the specifications for the
Process, as agreed in writing by the Development Committee, as defined in
Section 3.1, pursuant to Section 3.3.

        1.15 "Subsidiary" of a company shall mean a corporation or other legal
entity (i) the majority of whose shares or other securities entitled to vote for
election of directors (or other managing authority) is now or hereafter
controlled by such company either directly or indirectly; or (ii) which does not
have outstanding shares or securities but the majority of whose ownership
interest representing the right to manage such corporation or other legal entity
is now or hereafter owned and controlled by such company either directly or
indirectly; but any such corporation or other legal entity shall be deemed to be
a Subsidiary of such company only as long as such control or ownership and
control exists.

2.0     DEVELOPMENT PROGRAM

        2.1 Chartered and Lucent shall conduct the Development Program for the
development of the Process in accordance with a plan and budget relating to the
Process (the "Development Plan") prepared by the Development Committee. The SMP
Board of Directors is composed of Senior Managers from Chartered and Lucent and
the Process will be installed in SMP. Therefore, the SMP Board will approve the
Development Program and any changes to the Program. The Development Plan shall
establish: (i) the scope of the Process development which will be performed;
(ii) the objectives, work plan activities and time schedules with respect to the
Development Program; (iii) the respective obligations of the Parties with
respect to the Development Program; and (iv) the Process Specifications. The
form of the Development Plan for each Process is set forth in Attachment A.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -2-
<PAGE>   3

        2.2 The initial Development Plan with respect to Lucent's 0.16(mu)m /
Chartered's 0.18(mu)m CMOS Logic BEOL technology shall be attached hereto as
Attachment A-1. The Development Committee shall review the Development Plan on
an on-going basis and may make changes to the Development Plan then in effect.
In order to expedite the development, Chartered may, on terms mutually agreed
between Chartered and Lucent, locate certain engineers at Lucent's facility in
Orlando to commence development activities prior to the approval of the formal
Development Plan by the Development Committee.

        2.3 Chartered and Lucent shall each use commercially reasonable efforts
to conduct the Development Program in accordance with the Development Plan and
within the time schedules contemplated therein. Except as otherwise expressly
set forth in the Development Plan or expressly agreed in writing, each Party
shall bear its own costs incurred in connection with the performance of the
Development Program.

        2.4 The Development Program shall commence on the Effective Date and
shall terminate upon the earlier of (i) the successful qualification, as defined
in the relevant Development Plan, of the Process; or (ii) the termination of
this Joint Development Agreement.

        2.5 During the term of this Joint Development Agreement and for a period
of five (5) years thereafter, each Party shall furnish to the other Party,
without any compensation, technical information relating to corrections,
improvements and modifications to be made by such Party to the qualified Process
in order to keep the compatibility of each other's Process technology utilized
in the manufacture of Licensed Products, provided however, that a Party shall
not be required to furnish to the other Party such technical information, if it
is prohibited or restricted from doing so pursuant to any contractual agreement
entered into by such Party. Notwithstanding the foregoing, in the event of a
termination for breach pursuant to Section 10.0, the non-breaching Party shall
have the right to continue to obtain from the breaching Party the information
set forth above but not vice versa. Nothing contained in this Section 2.5 shall
be construed as conferring by implication, estoppel or otherwise any license or
right under any patent, whether or not the use of any corrections, improvements
or modifications necessarily requires the use of any patent having enforeceable
rights at any time anywhere in the world.

        2.6 The Parties expect significant financial support for the qualifying
costs of the Development Program relating to Lucent's 0.16(mu)m / Chartered's
0.18(mu)m CMOS Logic BEOL Process. The support will be funded by financial
grants from NSTB, and the Parties agree to cooperate and engage in discussions
with NSTB with respect thereto. The Parties also agree that absent financial
support this Joint Development Program may not occur, unless Chartered elects to
provide the financial support to Lucent that was anticipated from NSTB.
Attachment B sets forth the desired financial support from NSTB.

        2.7 The Parties intend to invite the IME to participate in the joint
development activities relating to the copper interconnect phase of Lucent's
0.16(mu)m / Chartered's 0.18(mu)m CMOS Logic BEOL Process, subject to funding
support, as set forth in Attachment B from NSTB, and a mutually agreeable work
program to be included in Attachment A-1, and participation terms and conditions
acceptable to both Chartered and Lucent.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -3-
<PAGE>   4
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


3.0     DEVELOPMENT COMMITTEE

        3.1 Chartered and Lucent shall establish a committee (the "Development
Committee") to oversee, review and recommend the direction of the Development
Program. The responsibilities of the Development Committee shall include: (i)
monitoring and overseeing the progress of the Development Program and ensuring
open and frequent exchanges between the Parties; (ii) preparing revisions to the
initial Development Plan for approval by the SMP Board; and (iii) coordinating
all patent activities resulting from the Development Program.

        3.2 The Development Committee shall consist of two (2) representatives
from each of the Parties. Each Party may replace its Development Committee
representatives at any time, with written notice to the other Party. The
Development Committee shall meet according to a schedule to be mutually agreed
upon and the quorum for each Development Committee meeting shall be three (3)
representatives.

        3.3 Each representative of the Development Committee shall have one (1)
vote, which vote may be cast in person or by proxy. Decisions of the Development
Committee shall be made by simple majority vote. In the event that the
Development Committee is unable to agree on any issue, such issue shall be
submitted to a committee consisting of one (1) senior manager from each Party,
being in the case of Chartered, the President and CEO and being in the case of
Lucent, the Global Manufacturing, Sourcing and Process Development Vice
President in the Lucent Technologies Microelectronics Group.

4.0     BACKGROUND INTELLECTUAL PROPERTY - RIGHTS AND LICENSES

        4.1 Chartered shall grant to Lucent a *********************************
************************* right to use Chartered's Background Information for
(i) performing those acts that are reasonably necessary to enable Lucent to
develop the Process during the Development Program and (ii) to make or have made
semiconductive devices after the conclusion of the Development Program. After
the termination of the Development Program, the grant of the license in Section
4.1 includes the right for Lucent to grant sublicenses, within the scope of its
license and subject to the confidentiality provisions set forth in this
Agreement, to its Subsidiaries, only so long as they remain a Subsidiary, to use
that portion of Chartered's Background Information required for the use of any
Foreground Information to make semiconductive devices.

        4.2 Lucent grants to Chartered a ***************************************
*************************** right to use Lucent's Background Information for (i)
performing those acts that are reasonably necessary to enable Chartered to
develop the Process during the Development Program and (ii) to make or have made
semiconductive devices after the conclusion of the Development Program. After
the termination of the Development Program, the grant of the license in Section
4.2 includes the right for Chartered to grant sublicenses, within the scope of
its license and subject to the confidentiality provisions set forth in this
Agreement, to Subsidiaries, only so long as they remain a Subsidiary, to use
that portion of Lucent's Background Information required for the use of any
Foreground Information to make semiconductive devices.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -4-
<PAGE>   5
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


        4.3 There are no patent licenses being granted in this Joint Development
Agreement. The licensing of patents shall be governed by the existing Patent
License Agreement between Lucent and Chartered effective as of January 1, 1998.

        4.4 The rights granted to Chartered shall include the right to disclose
to third party customers, subcontractors, electronic design automation
providers, and design service providers of Chartered, technical information of
the type specified in Attachment C.

        4.5 The rights granted to Lucent shall include the right to disclose to
third party customers, subcontractors, electronic design automation providers,
and design service providers of Lucent, technical information of the type
specified in Attachment C.

5.0     INTELLECTUAL PROPERTY OWNERSHIP

        5.1 All Foreground Information and any intellectual property rights
therein which are created solely by Lucent's employees, agents or consultants
shall be solely owned by Lucent. All Foreground Information and any intellectual
property rights therein which are created solely by Chartered's employees,
agents or consultants shall be solely owned by Chartered. All Foreground
Information and any intellectual property rights therein created by the
employees, agents or consultants of both Lucent and Chartered shall be jointly
owned by Lucent and Chartered with each Party being free to use and/or license
without accounting to the other. In addition, in those jurisdictions where
consent of all joint owners is required for licensing, each joint owner agrees
to provide such consent.

        5.2 Lucent grants to Chartered a ***************************************
******************************* right to use any Foreground Information which is
solely owned by Lucent for (i) performing those acts that are reasonably
necessary to enable Chartered to conduct the Development Program and (ii) to
make or have made semiconductive devices after the conclusion of the Development
Program. After the termination of the Development Program, the grant of the
license in Section 5.2 includes the right for Chartered to grant sublicenses,
within the scope of its license and subject to the confidentiality provisions
set forth in this Agreement, to Subsidiaries, only so long as they remain a
Subsidiary, to use any Foreground Information which is solely owned by Lucent to
make semiconductive devices.

        5.3 Chartered grants to Lucent a ***************************************
****************************** right to use any Foreground Information which is
solely owned by Chartered for (i) performing those acts that are reasonably
necessary to enable Lucent to conduct the Development Program and (ii) to make
or have made semiconductive devices after the conclusion of the Development
Program. After the termination of the Development Program, the grant of the
license in Section 5.3 includes the right for Lucent to grant sublicenses,
within the scope of its license and subject to the confidentiality provisions
set forth in this Agreement, to Subsidiaries, only so long as they remain a
Subsidiary, to use any Foreground Information which is solely owned by Chartered
to make semiconductive devices.

        5.4 The following provisions of this Section 5.4 shall apply only with
respect to any Joint Inventions. The term Invention shall be as defined by Title
35 of the United States Code and shall

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -5-
<PAGE>   6

include the intellectual property rights which may be granted as a result of the
filing of United States and foreign patent applications, including provisional
patent applications, and further including without limitation, all reissues,
extensions, substitutions, confirmations, registrations, re-validations,
additions, continuations, continuations-in-part, and divisions of any of the
foregoing.

               5.4.1 As to all Joint Inventions, Lucent and Chartered shall meet
and discuss matters relating to obtaining legal protection for such Joint
Inventions. Lucent and Chartered shall be responsible for obtaining the
necessary signatures of their respective employees, agents or consultants.
Lucent shall be responsible for obtaining any approval of the United States
government in connection with the filing of any patent application and Chartered
shall be responsible for obtaining any approval of the Singapore government in
connection with the filing of any patent application. If Lucent and Chartered
determine to file for patent protection in any country, such application shall
be made on behalf of both Lucent and Chartered and name Lucent and Chartered as
joint and equal owners of the Joint Invention. All expenses incurred pursuant to
the filing, prosecution and maintenance, including all reasonable attorney fees
related to the foregoing, of any patent applications and patents shall be
divided equally between Lucent and Chartered. The filing and prosecution of all
jointly-owned patents will be handled by patent counsel selected by Lucent. Such
counsel will be selected from the list of "outside" patent counsel, i.e., patent
counsel who are not employees or agents of Lucent, and who are routinely used by
Lucent for patent prosecution purposes. The bills for services for such patent
counsel expenses will be submitted to a representative of Chartered for
reimbursement by Chartered to Lucent of one-half of the billed charges.

               5.4.2 With respect to patent applications on the Joint
Inventions, including provisional patent applications on such inventions,
neither Lucent nor Chartered shall permit any such patent application to become
abandoned without giving the other Party the opportunity to assume the
prosecution of such patent application as soon as possible, which shall not be
less than sixty (60) days prior to the date on which it will become abandoned.
Lucent and Chartered agree to provide each other with timely copies of all
official papers and correspondence related to the prosecution of any such
jointly owned patent applications.

               5.4.3 If, after Lucent and Chartered shall have met and discussed
matters relating to obtaining legal protection for Joint Inventions, either
Lucent or Chartered does not want to pursue filing a patent application on the
Joint Inventions in any country, the other may independently pursue patent
protection of the Joint Invention in such country on behalf of that Party only
at that Party's sole expense. The Party that so pursues patent protection in
such country shall be the sole owner of any and all resulting patents, shall pay
all filing, prosecution and maintenance fees, and shall be entitled to all
revenues derived by such Party relating to the issued patent, provided, however,
that the other Party shall have a worldwide, non-terminable, non-exclusive,
royalty-free license under such patent within such country and for the full term
of such patent, to make, have made, use, sell, offer for sale, import and market
products or processes utilizing or embodying the subject matter claimed in such
patent. When any Joint Invention becomes solely owned, Lucent and Chartered
through their designated representatives appointed by the Development Committee
shall have the appropriate documents prepared and executed to effectuate the
ownership and rights specified in this Section 5.4.3.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -6-
<PAGE>   7

        5.5 To avoid loss of patent rights as a result of premature public
disclosure of patentable information and in no way limiting Section 6
(Confidentiality), neither Party may publicly disclose or commercialize any
Joint Invention without the prior written consent of the other Party, unless a
corresponding patent application has already been filed in any country where
such patent application will serve as the basis of establishing an effective
filing date for countries that are signatories to the Patent Cooperation Treaty.

               5.5.1 Chartered and Lucent agree that NSTB and IME will be
allowed to license the Foreground Information, in whole or in any part, to third
parties; provided that (i) any such licensed use shall be restricted to
Singapore; and (ii) any such license shall not be effective until the Foreground
Information being licensed has been in commercial use by either Lucent or
Chartered for at least three (3) years.

               5.5.2 Additional conditions may be applied under Section 5.5.1
above upon the mutual agreement of Lucent and Chartered.

6.0     CONFIDENTIALITY

        6.1 Subject to the provisions of Section 5.5, each Party shall keep any
technical information provided or disclosed by the other Party in confidence and
shall not disclose such information to any third party during the term of this
Joint Development Agreement and for a period of five (5) years thereafter.

        6.2 Each Party shall not disclose the terms and conditions of this Joint
Development Agreement to any third party.

        6.3 The confidentiality obligations provided in Sections 6.1 and 6.2
shall not apply to any information which:

               6.3.1 is known by the receiving Party at the time of its receipt
thereof from the other Party;

               6.3.2  is publicly known through no fault of the receiving Party;

               6.3.3 is rightfully provided to the receiving Party without any
restriction on disclosure by a third party;

               6.3.4 is independently developed by the receiving Party without
use of the information furnished by the disclosing Party; or

               6.3.5 is required to be disclosed by laws or regulations of the
Republic of Singapore or the United States of America, as the case may be, or by
court order; provided, however, that the Party so required shall first have made
a good faith effort to obtain a protective order requiring that the information
and documents so disclosed be used only for the purposes for which the order was
issued.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -7-
<PAGE>   8

        6.4 Neither Party shall be liable for any inadvertent or accidental
disclosure of joint information or information received from the other Party
under this Joint Development Agreement, provided such disclosure occurs despite
the exercise of a reasonable degree of care which is at least as great as the
care such Party normally takes to preserve its own proprietary information of a
similar nature; and provided further, however, that the Party permitting any
material unauthorized disclosure shall use its best efforts to stop any material
unauthorized disclosure and to mitigate any damage caused thereby.

7.0     LIMITATION OF LIABILITY

        7.1 Each Party believes that the technical information to be furnished
by it hereunder will be true and accurate. However, neither Party shall be held
to any liability for errors or omissions in such technical information.

        7.2 Each Party warrants that the technical information and copyrights
licensed by such Party under this Joint Development Agreement are the original
work of such Party (or such Party has a valid right to license such property)
and it has the power to grant the rights described in this Joint Development
Agreement.

        7.3 Except as provided in Sections 7.1 and 7.2, the Parties make no
representations or warranties, expressly or impliedly. By way of example but not
of limitation, the Parties make no representations or warranties of
merchantability or fitness for any particular purpose with respect to any
technical information provided or licensed hereunder to any Party, or that the
use of any Party's technical information or any portion of it will not infringe
any patent, copyright, trademark or other intellectual property rights of any
third party, and it shall be the sole responsibility of the Party to make such
determination as is necessary with respect to the acquisition of licenses under
patents or other intellectual property rights of third Parties. The Parties
shall not be held to any liability with respect to any patent infringement of a
patent owned by a third party on account of, or arising from the use of any
technical information provided or licensed hereunder.

        7.4 NEITHER PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL LOSS OR DAMAGE, INCLUDING LOST PROFITS OR LOST REVENUE ARISING OUT
OF THIS AGREEMENT, WHETHER ARISING OUT OF BREACH OF WARRANTY, BREACH OF
CONTRACT, NEGLIGENCE, STRICT TORT LIABILITY OR OTHERWISE.

8.0     COMPLIANCE WITH RULES AND REGULATIONS AND INDEMNIFICATION

        8.1 Chartered's personnel shall, while on any location of Lucent in
connection with the joint development work under this Joint Development
Agreement, comply with Lucent's rules and regulations with regard to safety and
security. Lucent shall inform such personnel of such rules and regulations.
Chartered shall have full control over such personnel and shall be entirely
responsible for their complying with Lucent's rules and regulations. Chartered
agrees to indemnify and save Lucent harmless from any claims or demands,
including the costs, expenses and reasonable attorneys' fees incurred on account
thereof, that may be made by (i) anyone for injuries to persons or damage to
property to the extent they result from the willful misconduct or negligence of

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -8-
<PAGE>   9

Chartered's personnel; or (ii) Chartered's personnel based on Worker's
Compensation or any other similar laws or employment related claims to the
extent such claims are based on acts of Chartered. Chartered agrees to defend
Lucent, at Lucent's request, against any such claim or demand.

        8.2 Lucent's personnel shall, while on any location of Chartered, in
connection with the joint development work under this Joint Development
Agreement, comply with Chartered's rules and regulations with regard to safety
and security. Chartered shall inform such personnel of such rules and
regulations. Lucent shall have full control over such personnel and shall be
entirely responsible for their complying with Chartered's rules and regulations.
Lucent agrees to indemnify and save Chartered harmless from any claims or
demands, including the costs, expenses and reasonable attorneys' fees incurred
on account thereof, that may be made by (i) anyone for injuries to persons or
damage to property to the extent they result from the willful misconduct or
negligence of Lucent's personnel; or (ii) Lucent's personnel based on Worker's
Compensation or any other similar laws or employment related claims to the
extent such claims are based on acts of Lucent. Lucent agrees to defend
Chartered, at Chartered's request, against any such claim or demand.

        8.3 Lucent and Chartered shall, at all times, retain the administrative
supervision of their respective personnel.

9.0     TERM

This Joint Development Agreement is for an initial term of three (3) years
commencing upon the Effective Date, and may be renewed for successive one (1)
year periods upon written mutual agreement of the Parties thirty (30) days prior
to the expiration of the initial term, or any extension thereof, unless earlier
terminated as provided herein.

10.0    TERMINATION FOR BREACH

        10.1 If Chartered fails to fulfill one or more of its obligations under
this Joint Development Agreement, Lucent may, upon its election and in addition
to any other remedies that it may have, at any time terminate this Joint
Development Agreement by not less than thirty (30) days written notice to
Chartered specifying any such breach, unless within the period of such notice
all breaches specified therein shall have been remedied to the non-breaching
Party's reasonable satisfaction. If the breach is not one which is capable of
being cured within thirty (30) days and the breaching Party has commenced to
cure the breach within such time and continues to do so diligently and in good
faith, then the breaching Party shall be granted an extension for a reasonable
period of time at the discretion of the non-breaching Party.

        10.2 If Lucent fails to fulfill one or more of its obligations under
this Joint Development Agreement, Chartered may, upon its election and in
addition to any other remedies that it may have, at any time terminate this
Joint Development Agreement by not less than thirty (30) days written notice to
Lucent specifying any such breach, unless within the period of such notice all
breaches specified therein shall have been remedied to the non-breaching Party's
reasonable satisfaction. If the breach is not one which is capable of being
cured within thirty (30) days and the breaching Party has commenced to cure the
breach within such time and continues to do so diligently and in good

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -9-
<PAGE>   10

faith, then the breaching Party shall be granted an extension for a reasonable
period of time at the discretion of the non-breaching Party.

        10.3 Either Party may terminate this Joint Development Agreement
effective immediately by written notice if or when it is discovered that the
other Party has: (i) intentionally or in a willful, wanton or reckless manner,
made any material, false representation, report or claim relative hereto; (ii)
violated another's copyright or trademark; (iii) become insolvent, invoked as a
debtor any laws relating to the relief of debtors' or creditors' rights, or has
had such laws invoked against it; (iv) become involved in any liquidation or
termination of business; (v) been adjudicated bankrupt; or (vi) been involved in
an assignment for the benefit of its creditors.

        10.4 Upon expiration or termination of this Joint Development Agreement,
each Party shall immediately return all proprietary information originated and
owned solely by the other Party, except for that information specifically needed
for support of the jointly developed Process.

11.0    TERMINATION FOR CONVENIENCE

In the event it becomes likely that the completion of a jointly developed
Process shall extend beyond the time specified therefore in the Development Plan
by more than four (4) months or funding support envisioned under Section 2.6 is
prematurely terminated, then upon sixty (60) days written notice, either Party
may terminate this Joint Development Agreement for its convenience, with or
without any reason given. Upon termination of this Joint Development Agreement
without cause, neither Party shall be liable to the other, either for
compensation or for damages of any kind or character whatsoever, whether on
account of the loss by Lucent or Chartered of present or prospective profits on
sales or anticipated sales, or expenditures, investments or commitments made in
connection therewith, or on account of any other cause or thing whatsoever,
except that termination shall not prejudice or otherwise affect the rights or
liabilities of the parties with respect to any indebtedness then owing by either
Party to the other.

12.0    TRADEMARKS AND TRADENAMES

No right is granted herein to either Party to use any identification (such as,
but not limited to, trade names, trademarks, trade devices, service marks or
symbols, and abbreviations, contractions or simulations thereof) owned by or
used to identify the other Party or any of its Subsidiaries or affiliates or any
of its or their products, services or organizations, and that, with respect to
the subject matter of this Joint Development Agreement, each Party agrees that
it will not, without the prior written permission of the other Party, (i) use
any such identification in advertising, publicity, packaging, labeling or in any
other manner to identify itself or any of its products, services or
organizations or (ii) represent directly or indirectly that any product, service
or organization of it is a product, service or organization of the other Party
or any of its Subsidiaries or affiliates, or that any product or service of it
is made in accordance with or utilizes any information of the other Party or any
of its Subsidiaries or affiliates.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -10-
<PAGE>   11

13.0    NON-ASSIGNABILITY

Neither Party may assign this Joint Development Agreement or any part thereof,
nor transfer licenses or rights hereunder to anyone other than a Subsidiary
without the written consent of the other Party hereto. However, if either of the
Parties divests all or a portion of its business and such divested business
continues operation as a separately identifiable business, then the licenses
granted hereunder to the divesting Party may be assigned to such divested
separate business, but only (i) for the duration and term of licenses as
specified in this Agreement, (ii) to the extent and for the time the divested
business functions as a separately identifiable business, and (iii) for products
and services of the kind provided by the divested business prior to its
divestiture and not to any products or services of any entity which acquires the
divested business. Any such divestiture or other business reorganization
affecting the ownership or title of any of a Party's patents shall be made
subject to the rights and obligations created under this Joint Development
Agreement.

14.0    NOTICES

All notices, demands, orders, acknowledgments or other communications required
or permitted under this Joint Development Agreement shall be in writing and
shall be deemed given: (i) when delivered personally; (ii) when sent by
confirmed telex or facsimile; (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
one (1) day after deposit with a commercial overnight carrier, with written
verification of receipt. All communications will be sent to the addresses set
forth below. Either party may change its address by giving notice pursuant to
this section.

        If sent to Lucent:

                             Lucent Technologies Inc.
                             Microelectronics Group
                             555 Union Boulevard
                             Allentown, PA 18103

                             Attention: Mr. Glenn Schmehl
                             Title:

                             Telephone Number: 610-712-7121
                             Fax Number: 610-712-????

        If sent to Chartered:

                             Chartered Semiconductor Manufacturing Ltd.
                             60 Woodlands Industrial Park D Street 2
                             Singapore 738406

                             Attention: Mr. John Martin
                             Title:  Vice President Technology Development

                             Telephone Number: 65-360-4501
                             Fax Number: 65-362-2936

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -11-
<PAGE>   12

15.0    AGREEMENT PREVAILS

This Joint Development Agreement shall prevail in the event of any conflicting
terms or legends which may appear on Lucent information or Chartered information
or any joint information.

16.0    NOTHING CONSTRUED

Neither the execution of this Joint Development Agreement nor anything in it or
in Lucent information or in Chartered information shall be construed as: (i) an
obligation upon either Party or their Subsidiaries to furnish, except as
provided in Section 2.0, any assistance of any kind whatsoever, or any products
or information other than Chartered information or Lucent information or to
revise, supplement or elaborate upon such information; or (ii) providing or
implying any arrangement or understanding that either party or its Subsidiaries
will make any purchase from the other party or its Subsidiaries; or (iii)
preventing either Party hereunder from pursuing other development activities
either alone or with another company.

17.0    FORCE MAJURE

Neither Party shall be liable for any loss, damage, delay or failure of
performance resulting directly or indirectly from any cause which is beyond its
reasonable control, including but not limited to acts of God, riots, civil
disturbances, wars, states of belligerency or acts of the public enemy, strikes,
work stoppages, or the laws, regulations, acts or failure to act of any
governmental authority. In the event that performance under this Joint
Development Agreement is prevented for a continuous period of two (2) months or
longer by any of the foregoing causes, the Parties shall have the right to
terminate this Joint Development Agreement by giving written notice to the other
Party and Section 11.0 shall be applicable to such termination.

18.0    CHOICE OF LAW

The parties hereto desire and agree that the law of the State of New York shall
apply in any dispute or controversy arising with respect to this Joint
Development Agreement, without regard to conflicts of laws provisions. The
United Nations Convention on Contracts for the International Sales of Goods
shall not apply to this Joint Development Agreement.

19.0    HEADINGS

All section headings, including those in the Attachments are for convenience
purposes only and shall in no way affect, or be used, in interpretation of this
Agreement.

20.0    WAIVER

No failure, delay, relaxation or indulgence on the part of either Party in
exercising any power or right conferred upon such Party under the terms of this
Joint Development Agreement will operate as a waiver of such power or right nor
will any single or partial exercise of any such power or right

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -12-
<PAGE>   13

preclude any other or further exercise thereof or the exercise of any other
power or right under this Joint Development Agreement.

21.0    RELEASES VOID

Neither Party shall require waivers or releases of any personal rights from
representatives of the other in connection with visits to its premises and both
Parties agree that no such releases or waivers shall be pleaded by them or third
persons in any action or proceeding.

22.0    POWER TO SIGN

Chartered and Lucent covenant, warrant and represent that their respective
representatives signing this Joint Development Agreement have full power and
proper authority to sign this Joint Development Agreement and so bind the
Parties, and that there are no outstanding assignments, grants, licenses,
encumbrances, obligations or agreements, either written, oral or implied,
inconsistent with any provision of this Joint Development Agreement.

23.0    SURVIVAL OF OBLIGATIONS

The obligations of the Parties in sections 1.0, 2.5, 5.1, 5.4, 5.5, 6.0, 7.0,
8.0, 12.0, 14.0, 18.0, 24.0, and 25.0 of this Joint Development Agreement shall
survive termination or cancellation of this Joint Development Agreement. In
addition to the foregoing, in the event of termination for breach where Lucent
is the breaching Party, sections 4.2, 4.4 and 5.2 shall survive and in the event
of termination for breach where Chartered is the breaching Party, sections 4.1,
4.5 and 5.3 shall survive. In the event that this Joint Development Agreement
shall expire upon the successful completion of the Process, then all obligations
of the Parties set forth herein shall survive.

24.0    EXPORT CONTROL

The Parties acknowledge that the technical information (including, but not
limited to, services and training) provided under this Joint Development
Agreement are subject to U.S. export laws and regulations and any use or
transfer of such technical information must be authorized under those laws and
regulations. The Parties agree that they will not use, distribute, transfer, or
transmit the technical information (even if incorporated into products) except
in compliance with U.S. export regulations. If necessary, Lucent may request
Chartered to sign written assurances and other export-related documents as may
be required for Lucent to comply with U.S. export regulations.

25.0    DISPUTE RESOLUTION

        25.1 If a dispute arises out of or relates to this Joint Development
Agreement, or the breach, termination or validity thereof, the Parties agree to
submit the dispute to a sole mediator selected by the Parties or, at any time at
the option of a Party, to mediation by the International Chamber of Commerce
("ICC"). If not thus resolved, it shall be referred to a sole arbitrator
selected by the Parties within thirty (30) days of the mediation, or in the
absence of such selection, to ICC arbitration which shall be governed by the
United States Arbitration Act.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -13-
<PAGE>   14

        25.2 Any award made (i) shall be a bare award limited to a holding for
or against a Party and affording such remedy as is deemed equitable, just and
within the scope of this Joint Development Agreement; (ii) shall be without
findings as to issues (including but not limited to patent validity and/or
infringement) or a statement of the reasoning on which the award rests; (iii)
may in appropriate circumstances (other than patent disputes) include injunctive
relief; (iv) shall be made within four (4) months of the appointment of the
arbitrator; and (v) may be entered in any court of competent jurisdiction.

        25.3 The requirement for mediation and arbitration shall not be deemed a
waiver of any right of termination under this Joint Development Agreement and
the arbitrator is not empowered to act or make any award other than based solely
on the rights and obligations of the parties prior to any such termination.

        25.4 The arbitrator shall be knowledgeable in the legal and technical
aspects of this Joint Development Agreement and shall determine issues of
arbitrability but may not limit, expand or otherwise modify the terms of this
Joint Development Agreement.

        25.5 The place of mediation and arbitration shall be New York City.

        25.6 Each Party shall bear its own expenses but those related to the
compensation and expenses of the mediator and arbitrator shall be borne equally.

        25.7 A request by a Party to a court for interim measures shall not be
deemed a waiver of the obligation to mediate and arbitrate.

        25.8 The arbitrator shall not have authority to award punitive or other
damages in excess of compensatory damages and each Party irrevocably waives any
claim thereto.

        25.9 The Parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of
mediation and arbitration in confidence.

26.0    PARTIAL INVALIDITY

If any paragraph, provision, or section thereof in this Joint Development
Agreement shall be found or be held to be invalid or unenforceable in any
jurisdiction in which this Joint Development Agreement is being performed, the
remainder of this Joint Development Agreement shall be valid and enforceable and
the Parties shall negotiate, in good faith, a substitute, valid and enforceable
provision which most nearly effects the Parties' intent in entering into this
Joint Development Agreement.

27.0    COUNTERPARTS

This Joint Development Agreement may be executed in two or more counterparts,
all of which, taken together, shall be regarded as one and the same instrument.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -14-
<PAGE>   15

28.0    RELATIONSHIP OF PARTIES

The Parties to this Joint Development Agreement are independent contractors.
There is no relationship of agency, partnership, joint venture, employment or
franchise between the Parties. Neither Party has the authority to bind the other
or to incur any obligation on its behalf.

29.0    INTEGRATION

This Joint Development Agreement sets forth the entire agreement and
understanding between the Parties as to the subject matter hereof and merges all
prior discussions and agreements between them. Neither of the Parties shall be
bound by any warranties, modifications, understandings or representations with
respect to the subject matter hereof other than as expressly provided herein, or
in a writing signed with or subsequent to the execution hereof by an authorized
representative of the Party to be bound thereby.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -15-
<PAGE>   16

IN WITNESS WHEREOF the Parties hereunto have entered into this Joint Development
Agreement as of the Effective Date.

CHARTERED SEMICONDUCTOR MANUFACTURING LTD.


By: /s/ Barry Waite
   -------------------------------------------
Name: Barry Waite

Title: President and Chief Executive Officer

Date: February 19, 1999


LUCENT TECHNOLOGIES INC.

By: /s/ John Dickson
   -------------------------------------------
Name: John Dickson

Title: Group President, Microelectronics Group

Date: February 19, 1999

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -16-
<PAGE>   17

                                  ATTACHMENT A

                    FORM OF DEVELOPMENT PLAN FOR EACH PROCESS

Each Development Plan in respect of each Process must contain the following:-
<TABLE>
<S>     <C>

1.      Preliminary information relating to the Process, such as PCM and
        Electrical Specifications.
2.      Timeline for the development activities, including key milestones.
3.      Definition of successful qualification of the Process and target date to
        achieve the same.
4.      Process Specifications as determined by the Development Committee.
5.      Description of the activities to be performed by Lucent and the
        deliverables.
6.      Description of the activities to be performed by Chartered and the
        deliverables.
7.      Engineering resources required from Lucent (including number of
        engineers to be located in Singapore, length of stay etc., if
        applicable).
8.      Engineering resources required from Chartered (including number of
        engineers to be located in Orlando, length of stay etc.).
9.      Allocation of development costs such as capital, wafers, costs and
        expenses.
</TABLE>

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -17-
<PAGE>   18

                                 ATTACHMENT A-1

                            INITIAL DEVELOPMENT PLAN

Insert the Initial Development Plan relating to Lucent 0.16(mu)m / Chartered
0.18(mu)m CMOS Logic BEOL Process

                         CHARTERED-LUCENT CONFIDENTIAL



                                      -18-
<PAGE>   19

                                  ATTACHMENT B

                 DESIRED FINANCIAL SUPPORT FROM EDB AND/OR NSTB

Insert description of the types of grants, incentives etc.

                         CHARTERED-LUCENT CONFIDENTIAL


                                      -19-
<PAGE>   20
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


Chartered Semiconductor Manufacturing Limited
- --------------------------------------------------------------------------------
Joint Development Program
Estimated Project Costs - US$

<TABLE>
<CAPTION>
                    CSM Front  End Day & Back End Xfer                        Joint Back End Day In Orlando
                    ----------------------------------                        -----------------------------
                                                        Total-                                                 Total-          Grand
                        Units          Unit Cost        24 mths           Units            Unit Cost          24 mths          Total
                        -----          ---------        -------           -----            ---------          -------          -----
<S>                     <C>            <C>               <C>                <C>              <C>                <C>             <C>
MANPOWER
CSM-Salary (Incl.
 CPF, Bonus & Other
 payroll costs)
Overseas Allow.
Lodging Costs
Transportation
Air fare

Lucent - Salary                                         ****
Travel


MATERIALS
Short Loop Wafers
Processed wafers*
Consummables
Reticles


MISCELLANEOUS
Fabhire analysis
Packaging
Test chips
Offices, supplies, etc.
  etc.

CAPEX
Non Cu equipment
Cu equipment
Others (workstations)
- -----------------------
Total Project Funding
</TABLE>

CSM CONFIDENTIAL


<PAGE>   21
REDACTED        CONFIDENTIAL TREATMENT REQUESTED
                The asterisked portions of this document have been omitted and
                are filed separately with the Securities and Exchange Commission


Chartered Semiconductor Manufacturing Ltd
- --------------------------------------------------------------------------------
                           Joint Development Program
                    NSTB Grant Proposal and Grant Allocation

<TABLE>
<CAPTION>
                        Qual Costs         %             Grant          Qual Costs             %              Grants           Total
                        ----------     ---------         ------         ----------         ---------          -------          -----
<S>                     <C>            <C>               <C>                <C>              <C>                <C>             <C>
MANPOWER
MATERIALS
MISCELLANEOUS
CAPEX


Split:                                                    ****
Lucent
CSM

- -----------------------

Additional costs in
  Lucent
Office costs
Travel
Comp for 7 additional
  staff
                                       ****

Depreciation for 2 yrs

Total grant

Balance to be shared           ****
</TABLE>

CSM CONFIDENTIAL



<PAGE>   22

                                  ATTACHMENT C

           INFORMATION REQUIRED BY CUSTOMERS, DESIGN SERVICE COMPANIES
                         AND/OR TEST SERVICE COMPANIES

                      1.  DESIGN INFORMATION
                          1.1 Design rule
                          1.2 Layout Description
                          1.3 ESD, Latch-up, Pad  Rules
                          1.4 DRC,ERC,LVS,LPE
                          1.5 Dummy pattern Rules
                          1.6 PSM, OPC Rules

                      2.  DEVICE INFORMATION
                          2.1 Spice and Device model / Characterization
                            2.1.1 RAM Cell Tr.
                            2.1.2 MOS Transistor
                            2.1.3 Other Devices (BJT, Diode, R, C)
                            2.1.4 Parasitic Resistor and Capacitor

                      3.  PROCESS INFORMATION
                          3.1 Simple Process flow/parameters
                          3.2 Electrical test specification

                      4.  MEMORY DESIGN INFORMATION
                          4.1 Bit Cell  information
                            4.1.1 GDSII File
                            4.1.2 Spice Netlist File

                      5.  MASK GENERATION
                          5.1 Mask Specification
                          5.2 Bias table
                          5.3 Mask Layer generation equation
                          5.4 Dummy pattern algorithm



                         CHARTERED-LUCENT CONFIDENTIAL


                                      -20-
<PAGE>   23

                    S/N   DESCRIPTIONS
                    ---   ------------
                    6.  TRANSFER VEHICLE PROGRAM FILES
                        6.1   Main program file for Pre DS
                        6.2   Socket file
                        6.3   All micro pattern files
                        6.4   Insert to pattern file(SDEF File)
                        6.5   Probe area file
                        6.6   Scramble file

                    7.  DEVICE TEST & DESIGN DOCUMENTATION
                        7.1   Wafer Test Spec
                        7.2   Wafer Test Pattern Description
                        7.3   Wafer Test Timing Diagram
                        7.4   Wafer Test Flow
                        7.5   Test Commands description
                        7.6   IPL mode description

                    8.  PROBE CARD DOCUMENT
                        8.1   Pads size
                        8.2   Pad to Pad pitch size
                        8.3   Pad x,y coordinates table

                    9.  FINAL TEST
                        9.1   Final Test program
                        9.2   Final Test Spec
                        9.3   Product Test Flow
                        9.4   Test board pin connection
                        9.5   Test board load circuit
                        9.6   Device data Sheet



                         CHARTERED-LUCENT CONFIDENTIAL

                                      -21-

<PAGE>   1
                                                                   EXHIBIT 10.19

                ST GROUP MANAGEMENT & SUPPORT SERVICES AGREEMENT

THIS AGREEMENT is made the 3rd day of March 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 ("ST"), And

(2)  CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
     Singapore and having its registered office at 60 Woodlands Industrial Park
     Street 2, Singapore 732406 ("the Company").

WHEREAS

(A)  ST is the holding company of the Company, and the corporate headquarters
     for the Singapore Technologies group of companies and provides headquarters
     administrative and support services to its related companies within and
     outside Singapore.

(B)  ST has invaluable experience in the fields of finance, treasury, investment
     risk review, governmental relations, business development, management
     information systems, human resources management and development, legal and
     corporate secretarial matters and internal audit. ST is also able to offer
     the Company the benefits of a global network, Further, the "Singapore
     Technologies" name and ST's wide spectrum of industries provide the Company
     with operational and financial leverages in its dealings with other
     external parties.

(C)  ST and the Company acknowledge that the centralisation of support staff in
     ST enables them to share the cost of business services, enhance
     communication and eliminate duplication of efforts.

NOW IT IS HEREBY AGREED as follows:

1. CORPORATE SERVICES & SUPPORT

1.1  ST shall maintain throughout the duration of this Agreement a staff of
     personnel with acknowledged proficiency in their respective fields who
     shall render Services (as defined in Clause 1.2 below) to the Company. ST
     shall also continue to work on strengthening and improving its global
     network and reputation for the benefit of the ST group of companies.

1.2  "Services" shall refer to services in the areas specified in the Recitals
     above.

1.3  In addition to the Services mentioned in Clause 1.1 above, the Company may
     request ST to render certain additional specific services relating to
     specific projects, or require


                                       1
<PAGE>   2

     personnel from ST to be seconded or assigned to the Company or its
     subsidiaries for an agreed period of time. In such events, the said
     additional services shall be invoiced on a case by case basis at terms and
     conditions to be mutually agreed between the parties.

2. CONSIDERATION

2.1  In consideration of the costs incurred by ST in providing the management
     and support services to the ST group of companies, the Company agrees to
     pay ST such amount (the "Corporate Cost Recovery") to be computed at the
     beginning of each year in accordance with Appendix A. The method and basis
     of computation of the Corporate Cost Recovery shall be reviewed by the
     parties periodically. Any variation shall be subject to the written
     agreement of both parties.

2.2  The Company shall pay to ST the Corporate Cost Recovery in four equal
     advance instalments upon presentation by ST of its invoices at the
     beginning of each financial quarter.

2.3  All payments by the Company to ST shall be made in full in Singapore
     Dollars within thirty (30) days of the date of invoice, without set-off or
     deduction of taxes, duties, assessments or other charges of any land or
     description. The Company shall bear all goods and services tax payable on
     the supply of the Services.

2.4  Where such Corporate Cost Recovery exceeds the cost incurred by ST in
     providing such management and support services, ST shall refund to the
     Company such excess amounts as soon as practicable.

3. TERM AND TERMINATION

3.1  This Agreement shall take effect on 1 January 1996 and shall, remain valid
     until terminated pursuant to Clauses 3.2 and 3.3 below.

3.2  If the Company fails to effect payment of the Corporate Cost Recovery in
     accordance with Clause 2, and such default shall not be remedied within
     fourteen (14) days after written notice of such default is given by ST to
     the Company, then at any time after the expiration of such period of
     fourteen (14) days, ST may give written notice to the Company of its desire
     to terminate this Agreement, whereupon this Agreement shall terminate on
     the date specified in such notice.

3.3  The parties agree that this Agreement shall terminate forthwith in the
     event the Company ceases to be a subsidiary of ST.

3.4  The termination of this Agreement howsoever caused shall be without
     prejudice to any obligations, rights or remedy which have accrued prior to
     such termination and shall not affect any provision of this Agreement which
     is expressly or by implication provided to come into effect on or continue
     in effect after such termination.


                                       2
<PAGE>   3

4.   CONFIDENTIALITY

     Except as authorised in writing by the respective party, each party shall
     keep secret and shall not at any time, whether during or after this
     Agreement, use for its own or any other person's advantage or reveal to any
     person any of the trade secrets, secret or confidential operations,
     processes or dealings, or any secret or confidential information concerning
     the organisation, business or undertaking of the other party or any of its
     subsidiaries or associated companies.

5.   SEVERABILITY

     If any provision in this Agreement at any time shall be deemed invalid,
     illegal or unenforceable in any respect under Singapore law, such
     invalidity, illegality or unenforceability shall not in any way affect or
     impair any other provision of this Agreement and this Agreement shall be
     construed as if such invalid or illegal or unenforceable provision had been
     severed from the Agreement.

6.   GENERAL

6.1  This Agreement contains the entire agreement between the parties in respect
     to the subject matter hereof and supersedes and cancels any and all
     previous negotiations, offers, agreements (whether written or oral) in
     respect thereto.

6.2  This Agreement or any rights and liabilities hereunder may not be assigned
     or transferred by either party hereto without the prior written consent of
     the other party hereto.

6.3  No failure or delay on the part of either party hereto in exercising any
     power or right hereunder shall operate as a waiver thereof nor shall any
     single or partial exercise of such right or power preclude any other or
     further exercise of any right or power hereunder.

7.   GOVERNING LAW

7.1  This Agreement shall be governed by and construed in all respects in
     accordance with the laws of Singapore.

7.2  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.


                                       3
<PAGE>   4

IN WITNESS WHEREOF the parties have caused their duly authorised representatives
to set their hands.

Signed by BASIL CHAN                   )
for and on behalf of                   )
SINGAPORE TECHNOLOGIES PTE LTD         )
in the presence of:-                   ) /s/ BASIL CHAN
                                         ------------------------------
/s/ YING SOH
- --------------------------------
Name:-   Ying Soh

Signed by TAN BOCK SENG                )
for and on behalf of                   )
CHARTERED SEMICONDUCTOR                )
MANUFACTURING LTD                      )
in the presence of:-                   ) /s/ TAN BOCK SENG
                                         ------------------------------
/s/ ANGELA HON
- --------------------------------
Name:  Angela Hon


                                       4
<PAGE>   5

                                   APPENDIX A

                       CORPORATE COST RECOVERY COMPUTATION

The Corporate Cost Recovery payable to ST shall be the total of (1) Capital
Employed, (2) Sales; and (3) Manpower calculated on the following basis:

(1) % of Capital Employed

- ------------------------------ ----------------------------
            Tiers                     Capital Employed
- ------------------------------ ----------------------------
     $0 - $1 bil                          0.60%
- -----------------------------------------------------------
     > $1 bil - $5 bil                    0.30%
- -----------------------------------------------------------
     Above $5 bil                         0.10%
- -----------------------------------------------------------

(2) % of Sales

- ------------------------------ ----------------------------
            Tiers                         Sales
- ------------------------------ ----------------------------
     $0 - $1 bil                          0.60%
- -----------------------------------------------------------
     > $1 bil - $5 bil                    0.30%
- -----------------------------------------------------------
     Above $5 bil                         0.10%
- -----------------------------------------------------------

(3) Manpower

(a) $ per Headcount

- ------------------------------ ----------------------------
            Tiers                       Per Head
- ------------------------------ ----------------------------
     0 - 1,000                            $400
- -----------------------------------------------------------
     1,001 - 5,000                        $200
- -----------------------------------------------------------
     Above 5,000                          $100
- -----------------------------------------------------------

(4) % of Payroll

- ------------------------------ ----------------------------
            Tiers                        Payroll
- ------------------------------ ----------------------------
     $0 - $50M                            1.00%
- -----------------------------------------------------------
     > $50M - $150M                       0.60%
- -----------------------------------------------------------
     Above $150M                          0.40%
- -----------------------------------------------------------


                                       5
<PAGE>   6

Where:

Capital Employed       =   Shareholders equity + minority interest + all loans
                           as at 31st December of preceding year end;

Sales                  =   The Company and its subsidiaries' worldwide planned
                           or actual sales, whichever is higher;

Manpower               =   Headcount plus Payroll

                           Headcount = all permanent employees as at 31st
                                       December preceding year; and

                           Payroll = total annual wage cost including overtime,
                                     CPF, Skill Development Fund and Foreign
                                     Workers Levy but excluding bonus for the
                                     preceding year.

* Provided always that in the event that any subsidiary of the Company has
entered into an agreement or arrangement with ST pursuant to which such
subsidiary undertakes to pay any Corporate Cost Recovery or other service fees
directly to ST, then the Capital Employed, Sales and Manpower amounts
attributable to such subsidiary shall be excluded from the computation of the
Corporate Cost Recovery payable by the Company to ST.



                                       6

<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 25, 1999


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