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EXHIBIT 10.19
Dated December 19, 1997
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
- and -
LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD.
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JOINT VENTURE AGREEMENT
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C O N T E N T S
CLAUSE HEADING PAGE
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1. DEFINITIONS AND INTERPRETATION 1
2. FORMATION OF THE COMPANY 10
3. BUSINESS PLAN; SCOPE AND OBJECTIVE 11
4. COMPLETION 14
5. BOARD OF DIRECTORS 19
6. BUSINESS OF THE COMPANY 28
7. SHAREHOLDERS' OBLIGATIONS AND RIGHTS 29
8. MANAGEMENT OF THE COMPANY 34
9. GENERAL MEETINGS 19
10. TRANSFER OF SHARES 19
11. FINANCE 39
12. DIVIDEND POLICY 39
13. WARRANTIES AS TO AUTHORITY 39
14. DEFAULT 40
15. GENERAL OBLIGATIONS OF ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. PREVALENCE OF AGREEMENT 49
17. DURATION AND TERMINATION 49
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18. CONFIDENTIAL INFORMATION 53
19. NOTICES AND GENERAL 55
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 PRINCIPLES
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
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APPENDIX I - FORM OF CSM CERTIFICATE AND CSM IN-HOUSE
OPINION
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THIS JOINT VENTURE AGREEMENT (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 ▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and
(2) LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD. ("Lucent"), a company
incorporated in Singapore, with its principal place of business at ▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Ayer ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
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;
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"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 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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇;
"Completion" means completion of the subscription for ordinary shares in
the capital of the Company by CSM and Lucent pursuant to Clause 4;
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"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;
"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;
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(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
(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.
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(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 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;
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"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;
"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;
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"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 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.
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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;
"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;
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"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;
(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
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(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 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
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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 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.
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(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:
Percentage of
Total Issued Number and Type
Ordinary Shares Ordinary Shares Paid in Capital
--------------- --------------- ---------------
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
(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
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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 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
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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.
(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
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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.
(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
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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.
(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.
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(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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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 Lucent, CSM and each of their respective counsel and (b)
shall have been approved by the JTC, if such approval is required.
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(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
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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 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
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(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.
(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.
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(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.
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(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.
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(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 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
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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;
(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);
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(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;
(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;
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30
(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;
(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.
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(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.
(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,
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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.
(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.
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(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;
(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
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34
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) and which
are for the sole benefit of Lucent
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35
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;
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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 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
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37
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 24 months effective from the date on which CSM first
declined to take up such Unutilised Wafer Capacity. Upon the expiration
of such 24 month 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 S$65 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
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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 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
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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 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.
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(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 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
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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 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
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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.
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
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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 indenture to which such party or any of its
Affiliates is a party or by which any thereof is bound.
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(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,
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Section 9 (Compliance with Laws) or Clause 16 (Confidentiality)
of the CSM Services Support Agreement and such 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-
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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 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:
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(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 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
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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.
(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
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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.
(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
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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 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
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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 one year 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 one year,
(y) a maximum of two years 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 two years and (z) a maximum of one year from the
Termination Closing in the event the ramp down period selected by Lucent
is in excess of one year;
(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
(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).
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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
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
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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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(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.
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(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
(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
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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.
(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
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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 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
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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 delivered personally or 48 hours after posting or, if given or
made by air-mail, ten days after posting and in proving the same it shall be
sufficient to show that personal delivery was made or that the envelope
containing such notice was duly addressed, stamped and posted. The address and
facsimile numbers of the parties for the purpose of this Agreement are:-
CSM : CHARTERED SEMICONDUCTOR MANUFACTURING LTD
▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. : (▇▇) ▇▇▇ ▇▇▇▇
Attention : Legal Department
Lucent : LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD
▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Ayer Industrial Park
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. : (▇▇) ▇▇▇-▇▇▇▇
Attention : Managing Director
with a copy to: LUCENT TECHNOLOGIES INC.
Microelectronics Division
▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. ▇▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
Attention: Legal Department
The Company: SILICON MANUFACTURING PARTNERS PTE LTD
c/o Singapore Technologies Pte Ltd
▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
#02-09/12
The ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. : (▇▇) ▇▇▇-▇▇▇▇
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
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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.
(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
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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, 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
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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.
(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
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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.
(N) Waiver of Immunity
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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.
(Q) 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.
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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 ▇▇▇▇ ▇▇▇▇ )
President & CEO )
for and on behalf of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD )
in the presence of:- )_________________________________
________________________________
Name:
Lucent
------
SIGNED by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ )
for and on behalf of )
LUCENT TECHNOLOGIES )
MICROELECTRONICS PTE. LTD. )
in the presence of:- )__________________________________
________________________________
Name:
The Company - CSM - Lucent Confidential