-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J60+/7pd8dTKED1/yB6z4Kff0P75AJXF9mMet98jseutzxej3dwAB30kr5pMZd0m wDvS3kXhuUKwdnHWH89WYA== 0001145549-02-000044.txt : 20020414 0001145549-02-000044.hdr.sgml : 20020414 ACCESSION NUMBER: 0001145549-02-000044 CONFORMED SUBMISSION TYPE: 20-F PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST ASSEMBLY TEST SERVICES LTD CENTRAL INDEX KEY: 0001101873 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 20-F SEC ACT: 1934 Act SEC FILE NUMBER: 333-75080 FILM NUMBER: 02561553 BUSINESS ADDRESS: STREET 1: 5 YISHUN ST 23 CITY: SINGAPORE STATE: U0 ZIP: 768442 BUSINESS PHONE: 657555885 MAIL ADDRESS: STREET 1: 5 YISHUN ST 23 CITY: SINGAPORE STATE: U0 ZIP: 768442 20-F 1 u91877e20-f.txt ST ASSEMBLY TEST SERVICES LTD ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 20-F (Mark One) [ ] Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 or [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2001 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 333-93661 ST ASSEMBLY TEST SERVICES LTD (Exact Name of Registrant as Specified in Its Charter) REPUBLIC OF SINGAPORE 5 YISHUN STREET 23, SINGAPORE 768442 (Jurisdiction of Incorporation or Organization) (Address of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act: NONE Securities registered or to be registered pursuant to Section 12(g) of the Act: ORDINARY SHARES, PAR VALUE S$0.25 PER SHARE, INCLUDING ORDINARY SHARES REPRESENTED BY AMERICAN DEPOSITARY SHARES (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 989,683,485 ORDINARY SHARES (PAR VALUE S$0.25 PER ORDINARY SHARE) OF REGISTRANT OUTSTANDING AS OF DECEMBER 31, 2001. Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 [ ] Item 18 [X] ================================================================================ 1 TABLE OF CONTENTS
PAGE ---- Item 1. Identity of Directors, Senior Management and Advisers 3 Item 2. Offer Statistics and Expected Timetable 3 Item 3. Key Information 3 Item 4. Information on Our Company 16 Item 5. Operating and Financial Review and Prospects 33 Item 6. Directors, Senior Management and Employees 47 Item 7. Major Shareholders and Related Party Transactions 56 Item 8. Financial Information 58 Item 9. The Offer and Listing 59 Item 10. Additional Information 60 Item 11. Quantitative and Qualitative Disclosures about Market Risk 67 Item 12. Description of Securities other than Equity Securities 68 Item 13. Defaults, Dividend Arrearages and Delinquencies 68 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 68 Item 15. Not applicable 69 Item 16. Not applicable 69 Item 17. Financial Statements 69 Item 18. Financial Statements 69 Item 19. Exhibits 70 Signatures 71
When we refer to "Singapore dollars" and "S$" in this Annual Report, we are referring to Singapore dollars, the legal currency of Singapore. When we refer to "U.S. dollars," "dollars," "$" and "US$" in this Annual Report, we are referring to United States dollars, the legal currency of the United States. For your convenience, the noon buying rate in the City of New York on December 31, 2001 for cable transfers in Singapore dollars as certified for customs purposes by the Federal Reserve Bank of New York was S$1.85 per $1.00. No representation is made that the Singapore dollar or U.S. dollar amounts shown in this Annual Report could have been or could be converted at such rate or at any other rate. 2 Certain of the statements in this Annual Report on Form 20-F, including statements regarding industry growth, are forward-looking statements that involve a number of risks and uncertainties which could cause actual results to differ materially. Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry; demand for end-use applications products such as communications equipment and personal computers; reliance on a small group of principal customers; decisions by customers to discontinue outsourcing of test and assembly services; changes in customer order patterns; rescheduling or canceling of customer orders; changes in product mix; capacity utilization; level of competition; pricing pressures including declines in average selling prices; continued success in technological innovations; delays in acquiring or installing new equipment; shortages in supply of key components; availability of financing; exchange rate fluctuations; litigation and other risks described in "Item 3. Key Information -- D. Risk Factors." ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable ITEM 3. KEY INFORMATION A. SELECTED FINANCIAL DATA You should read the following selected consolidated financial data in conjunction with our consolidated financial statements and the related notes, and "Item 5. Operating and Financial Review and Prospects" included elsewhere in this Annual Report. The selected consolidated financial data are derived from our consolidated financial statements. Our consolidated financial statements as of December 31, 2000 and 2001 and for the fiscal years ended December 31, 1999, 2000 and 2001, which have been audited by KPMG, independent auditors, are included in "Item 18. Financial Statements." The selected consolidated financial data as of December 31, 1997, 1998 and 1999 and for the fiscal years ended December 31, 1997 and 1998 are derived from our audited consolidated financial statements. However, we have not included our audited consolidated financial statements for these periods in this Annual Report. Our consolidated financial statements are prepared in accordance with U.S. GAAP. 3
YEAR ENDED DECEMBER 31 ------------------------------------------------------------------- 1997 1998(1) 1999 2000 2001 -------- -------- -------- -------- --------- (in thousands, except per ordinary share and per ADS data) INCOME STATEMENT DATA: Net revenues $ 88,373 $113,920 $201,098 $331,271 $ 145,866 Cost of revenues 67,848 87,066 132,889 231,944 217,789 -------- -------- -------- -------- --------- Gross profit (loss) 20,525 26,854 68,209 99,327 (71,923) -------- -------- -------- -------- --------- Operating expenses: Selling, general and administrative 13,858 16,772 28,437 40,798 36,041 Research and development 2,157 3,482 7,283 14,636 15,160 Asset impairments(2) -- -- -- -- 23,735 Prepaid leases written off(3) -- -- -- -- 3,145 Stock-based compensation -- 384 25,327 448 1,024 Other general expenses (income), net 17 (582) 37 (22) 101 -------- -------- -------- -------- --------- Total operating expenses 16,032 20,056 61,084 55,860 79,206 -------- -------- -------- -------- --------- Operating income (loss) 4,493 6,798 7,125 43,467 (151,129) Other income (expense): Interest income (expense), net (3,307) (8,244) (5,534) 8,214 5,222 Foreign currency exchange gain (loss) (1,258) 857 1,385 2,018 775 Other non-operating income (expense), net 62 2,103 2,379 3,525 1,990 -------- -------- -------- -------- --------- Total other income (expense) (4,503) (5,284) (1,770) 13,757 7,987 -------- -------- -------- -------- --------- Income (loss) before income taxes (10) 1,514 5,355 57,224 (143,142) Income tax benefit (expense) (159) (390) (500) (2,865) 8,810 -------- -------- -------- -------- --------- Net income (loss) before minority interest $ (169) $ 1,124 $ 4,855 $ 54,359 $(134,332) Minority interest -- -- -- -- $ 313 Net income (loss) $ (169) $ 1,124 $ 4,855 $ 54,359 $(134,019) Other comprehensive income: Unrealized gain (loss) on available-for-sale marketable securities -- -- -- -- $ (303) Translation adjustment $ (8,839) $ (1,636) -- -- $ 93 Comprehensive income (loss) $ (9,008) $ (512) $ 4,855 $ 54,359 $(134,229) Net income (loss) per ordinary share: Basic $ -- $ -- $ 0.01 $ 0.06 $ (0.14) Diluted $ -- $ -- $ 0.01 $ 0.06 $ (0.14) Net income (loss) per ADS: Basic $ -- $ 0.02 $ 0.06 $ 0.56 $ (1.36) Diluted $ -- $ 0.02 $ 0.06 $ 0.56 $ (1.36) Ordinary shares (in thousands) used in per Ordinary share calculation: Basic 368,000 669,671 770,259 962,828 989,083 Diluted 368,000 670,976 786,725 970,631 989,083 ADSs (in thousands) used in per ADS calculation: Basic 36,800 66,967 77,026 96,283 98,908 Diluted 36,800 67,098 78,672 97,063 98,908
4
YEAR ENDED DECEMBER 31 -------------------------------------------------------------------- 1997 1998(1) 1999 2000 2001 --------- -------- -------- -------- -------- (in thousands) BALANCE SHEET DATA: Cash and cash equivalents $ 1,051 $ 12,692 $ 16,568 $141,733 $115,214 Working capital (deficit) (140,474) (24,606) (74,030) 188,521 109,447 Total assets 225,477 236,720 351,965 711,758 576,578 Current installments of obligations under capital leases -- -- -- -- 2,564 Short-term debt and current installments of long-term debt 130,165 50,000 67,420 14,799 14,045 Obligation under capital leases, excluding current installments -- -- -- -- 7,689 Long-term debt, excluding current installments -- 54,282 46,360 29,599 14,045 Shareholders' equity 45,706 108,038 141,184 585,197 452,795 Share capital 64,900 129,042 129,827 159,461 159,961 Ordinary shares outstanding 92,000 780,174 785,428 986,172 989,683
- ------------ (1) Effective July 1, 1998, we changed our functional currency from the Singapore dollar to the U.S. dollar. (2) Due to the poor operating results and continued weakness in the semiconductor industry, we initiated a review in the fourth quarter of 2001 to identify long-lived assets whose carrying amounts might not be recoverable. As a result of the review, we recorded asset impairment charges totaling $23,735. (3) We recorded an impairment charge of $3,145 to write off prepaid leases for testers for which we do not expect to use in the future. B. CAPITALIZATION AND INDEBTEDNESS Not applicable C. REASONS FOR THE OFFER AND USE OF PROCEEDS Not applicable D. RISK FACTORS In addition to the other information and risks described elsewhere in this Annual Report, our business is subject to the following risks: WE EXPERIENCED SUBSTANTIAL LOSSES IN 2001 AND MAY CONTINUE TO DO SO IN THE FUTURE. We suffered substantial operating losses and net losses in 2001 amounting to $151.1 million and $134.0 million, respectively, compared to operating income of $43.5 million and net income of $54.3 million in 2000. In 2001, our cost of revenues exceeded our net revenues resulting in negative gross margins and a gross loss of $71.9 million. We expect to continue incurring operating and net losses in 2002. We may incur operating losses and net losses in the future due to a variety of factors, including if the semiconductor industry does not recover from the current downturn or only makes a partial recovery. 5 DOWNTURNS IN THE SEMICONDUCTOR INDUSTRY HAVE ADVERSELY AFFECTED, AND MAY CONTINUE TO ADVERSELY AFFECT, OUR OPERATING RESULTS. Our results from operations are significantly affected by conditions in the semiconductor industry. The market for semiconductors is characterized by: - rapid technological change; - evolving industry standards; - intense competition; and - fluctuations in end-user demand. In addition, the semiconductor industry is cyclical and, at various times, has experienced significant downturns because of production over-capacity and reduced unit demand causing rapid erosion of average selling prices and low capacity utilization. If demand for semiconductor capacity does not keep pace with the growth of supply, or further declines, our business would be subject to more intense competition and our results of operations may suffer as a result of the resulting downward pricing pressure and capacity underutilization. The industry began experiencing such a downturn in the fourth quarter of 2000 which continued through 2001. The length and severity of the downturn resulted in continued weakness in our customers' demand and significantly adversely affected our financial results for 2001. If this downturn continues or if there is any future downturn in the semiconductor industry, our business, financial condition and results of operations are likely to be materially adversely affected. IF WE ARE UNABLE TO INCREASE OUR CAPACITY UTILIZATION RATES, OUR PROFITABILITY WILL BE ADVERSELY AFFECTED. As a result of the capital intensive nature of our business, our operations are characterized by high fixed costs. Consequently, high capacity utilization allows us to maintain higher gross margins because it allows us to allocate fixed costs over a greater number of units we test and assemble. Insufficient utilization of installed capacity can have a material adverse effect on our profitability. In 2001, our capacity utilization rates declined substantially from prior levels, primarily as a result of a decrease in demand for our test and assembly services resulting from a downturn in the overall semiconductor industry, particularly for communications applications. Due to our high level of fixed costs, we suffered negative margins and substantial operating losses and net losses in 2001. Our ability to restore or increase our profitability and enhance our gross margins will continue to be dependent, in large part, upon our ability to restore high capacity utilization rates. Capacity utilization rates may be affected by a number of factors and circumstances, including: - overall industry conditions; - installation of new equipment in anticipation of future business; - the level of customer orders; - operating efficiencies; - mechanical failure; - disruption of operations due to expansion of operations, introduction of new packages or relocation of equipment; 6 - disruption in supply of raw materials; - changes in product mix; and - fire or other natural disasters. We cannot assure you that our capacity utilization rates will be able to return to their former high levels or that we will not be materially adversely affected by a continued decline or future declines in the semiconductor industry, declines in industries that purchase semiconductors or other factors. Any inability on our part to increase our capacity utilization rates could have a material adverse effect on our business, financial condition and results of operations. A DECREASE IN DEMAND FOR COMMUNICATIONS EQUIPMENT AND PERSONAL COMPUTERS WOULD SIGNIFICANTLY DECREASE THE DEMAND OF OUR SERVICES. Substantially all of our net revenues are derived from customers who use our test or assembly services for semiconductors used in communications equipment and personal computers. In 2001, 96.2% of our net revenues was derived from testing and assembly of semiconductors used in such applications. Any significant decrease in the demand for communications equipment or personal computers may decrease the demand for our services and could seriously harm our company. In 2001, our financial and operating results were substantially affected by a decrease in demand for communications equipment. In addition, the declining average selling price of communications equipment and personal computers places significant pressure on the prices of the components that are used in this equipment. If the average selling prices of communications equipment and personal computers continue to decrease, the pricing pressure on services provided by us may reduce our net revenues and therefore significantly reduce our gross profit margin. OUR RESULTS FLUCTUATE FROM QUARTER TO QUARTER. Our operating results have fluctuated and may continue to fluctuate substantially from quarter to quarter due to a wide variety of factors, including: - general economic conditions in the semiconductor industry; - a shift by integrated device manufacturers or IDMs between internal and outsourced test and assembly services; - general economic conditions in the markets addressed by end-users of semiconductors; - the seasonality of the semiconductor industry; - the short-term nature of our customers' commitments; - the rescheduling or cancellation of large orders; - the timing and volume of orders relative to our capacity; - changes in capacity utilization; - the rapid erosion of the selling prices of packages; - changes in our product mix; - the rescheduling, cancellation and timing of expenditures in anticipation of future orders; 7 - possible disruptions caused by the installation of new equipment; - the ability to obtain adequate equipment on a timely basis; - any exposure to currency and interest rate fluctuations that may not be adequately covered under our hedging policy; and - weakness in the supply of wafers. As a result of all of these factors, we believe that period-to-period comparisons of our operating results are not meaningful, and you should not rely on such comparisons to predict our future performance. Unfavorable changes in any of the above factors may adversely affect our business, financial condition and results of operations. In addition, such unfavorable changes could cause volatility in the price of our ordinary shares and American Depositary Shares or ADSs. For example, during the second quarter of 1998 and again in the fourth quarter of 2000 and throughout 2001, the average selling prices of many of our test and assembly services decreased because of an excess of worldwide capacity relative to demand which resulted in intense competition among independent test and assembly service providers. This resulted in decreased demand for our test and assembly services which adversely impacted our financial results. We expect intense competitive conditions to continue. If we cannot offset declines in selling prices by reducing our costs of delivering those services, increasing the number of units tested or assembled, or shifting our focus to higher margin test and assembly services, our business, financial condition and results of operations could be adversely affected. See "Item 5. Operating and Financial Review and Prospects - Quarterly Results." OUR PROFITABILITY IS AFFECTED BY AVERAGE SELLING PRICES WHICH TEND TO DECLINE. Decreases in the average selling prices of our test and assembly services can have a material adverse effect on our profitability. The average selling prices of test and assembly services have declined historically, with assembly services in particular experiencing severe pricing pressure. This pricing pressure for test and assembly services is likely to continue. Our ability to maintain or increase our profitability will continue to be dependent, in large part, upon our ability to offset decreases in average selling prices by improving production efficiency, increasing unit volumes tested or assembled, or by shifting to higher margin test and assembly services. If we are unable to do so, our business, financial condition and results of operations could be materially adversely affected. DECISIONS BY OUR INTEGRATED DEVICE MANUFACTURER OR IDM CUSTOMERS TO CURTAIL OUTSOURCING MAY ADVERSELY AFFECT OUR COMPANY. Historically, we have been dependent on the trend in outsourcing of test and assembly services by IDMs. Our IDM customers continually evaluate our services against their own in-house test and assembly services. As a result, at any time, IDMs may decide to shift some or all of their outsourced test and assembly services to internally sourced capacity. Any such shift or a slowdown in this trend of outsourcing test and assembly services is likely to adversely affect our business, financial condition and results of operations. In a downturn in the semiconductor industry, IDMs may respond by shifting some outsourced test and assembly services to internally serviced capacity on a short term basis. This would have a material adverse effect on our business, financial condition and results of operations, especially during a prolonged industry downturn. 8 WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES. We are dependent on a small group of customers for substantially all of our net revenues. Our ten largest customers accounted for 89.5%, 88.3% and 85.6% of our net revenues in 1999, 2000 and 2001, respectively. In the year ended December 31, 2001, our three largest customers, Analog Devices, Broadcom and Marvell, each represented in excess of 10% of our net revenues and in the aggregate represented 51.9% of our net revenues. In 1999, 2000 and 2001, 76.0%, 78.0% and 78.4% of our net revenues came from customers based in the United States. We anticipate that for the foreseeable future our ten largest customers, which includes our affiliate, Chartered Semiconductor, will continue to account for most of our net revenues and that we will continue to be significantly dependent on net revenues from customers based in the United States. Our ability to retain these customers, as well as other customers, and to add new customers is important to the ongoing success of our company. The loss of one or more of our key customers, or reduced orders from any of our key customers, could have a material adverse effect on our business, financial condition and results of operations. See "Item 4. Information on the Company - Customers." OUR CUSTOMERS ARE NOT CONTRACTUALLY OBLIGATED TO BUY OUR SERVICES OR PRODUCTS AND DO NOT PLACE ORDERS IN ADVANCE. WE DO NOT HAVE SIGNIFICANT BACKLOG. Almost none of our customers are obligated, pursuant to any contractual commitment or otherwise, to purchase any minimum amount of our test or assembly services or to place orders far in advance or to provide us with binding forecasts for any period. As a result, we have no significant backlog. The lack of significant backlog makes it difficult for us to forecast our net revenues for any future period. We expect that in the future, net revenues in any quarter will continue to be substantially dependent on orders placed within that quarter. Moreover, all of our customers operate in the cyclical semiconductor industry and have varied, and may continue to vary, order levels significantly from period to period. In addition, our customers are generally not responsible for any unused raw materials that result from a forecast exceeding actual orders. Accordingly, we cannot assure you that any of our customers will continue to place orders with us in the future at the same levels as they had in prior periods. THE TESTING PROCESS IS COMPLEX AND THEREFORE MORE PRONE TO "BUGS" AND OPERATOR ERROR. Semiconductor testing is a complex process involving sophisticated testing equipment and computer software. We develop computer software which is used to test our customers' semiconductors. We also develop conversion software programs which enable us to test semiconductors on different types of testers. Similar to most software programs, these software programs are complex and may contain programming errors or "bugs." In addition, the testing process is subject to operator error by our employees who operate our testing equipment and related software. Any significant defect in our testing or conversion software, malfunction in our testing equipment or operator error could reduce our production yields, damage our customer relationships and materially harm our business. WE MAY NOT BE ABLE TO DEVELOP OR ACCESS LEADING TECHNOLOGY WHICH MAY AFFECT OUR ABILITY TO COMPETE EFFECTIVELY. The semiconductor test and assembly market is characterized by rapid technological change. We must be able to offer our customers test and assembly services based upon the most advanced technology. This requirement could result in significant capital expenditures in the future. Advances in technology typically lead to rapid and significant price declines and decreased margins for older package types and may also affect demand for test services. Technology advances could also cause our test or assembly capabilities to be less competitive with new technologies and, in certain cases, to be obsolete. If we fail to develop advanced test and assembly services or to access those developed by others in a timely manner, we could lose existing customers or miss potential customers demanding these advanced services. Also, we would miss the opportunity to benefit from the higher average selling prices which are derived from newer and emerging test and assembly services. In addition, the choice of test equipment is important to us because obtaining the wrong test equipment or failing to understand market requirements will make us less competitive and will lower our asset utilization. In order to remain competitive, we must be able to upgrade or migrate our test equipment to respond to changing technological requirements. 9 THE ASSEMBLY PROCESS IS COMPLEX AND OUR PRODUCTION YIELDS MAY SUFFER FROM DEFECTIVE PACKAGES AND THE INTRODUCTION OF NEW PACKAGES. The assembly process is complex and involves a number of precise steps. Defective packages primarily result from: - contaminants in the manufacturing environment; - human error; - equipment malfunction; - defective raw materials; or - defective plating services. These and other factors have, from time to time, contributed to lower production yields. They may do so in the future, particularly as we expand our capacity or change our processing steps. In addition, to be competitive, we must continue to expand our offering of packages. Our production yields on new packages typically are significantly lower than our production yields on our more established packages. Our failure to maintain high standards or acceptable production yields, if significant and prolonged, could result in lost customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto. Any of these problems could have a material adverse effect on our business, financial condition and results of operations. WE MAY BE UNABLE TO OBTAIN TESTING OR ASSEMBLY EQUIPMENT WHEN WE REQUIRE IT. The semiconductor test and assembly business is capital intensive and requires investment in expensive capital equipment manufactured by a limited number of suppliers, which are located principally in the United States, Europe and Japan. The market for capital equipment used in semiconductor testing is characterized, from time to time, by intense demand, limited supply and long delivery cycles. Our operations and expansion plans are highly dependent upon our ability to obtain a significant amount of such capital equipment from a limited number of suppliers. If we are unable to obtain certain equipment, including testers and wire bonders, in a timely manner, we may be unable to fulfill our customers' orders which would negatively impact our business, financial condition and results of operations. Generally, we have no binding supply agreements with any of our suppliers and we acquire our equipment on a purchase order basis, which exposes us to substantial risks. For example, increased levels of demand for the type of capital equipment required in our business may cause an increase in the price of such equipment and may lengthen delivery cycles, which could have a material adverse effect on our business, financial condition and results of operations. In addition, adverse fluctuations in foreign currency exchange rates, particularly the Japanese yen, could result in increased prices for certain equipment purchased by us, which could have a material adverse effect on our business, financial condition and results of operations. 10 WE EXPECT TO INCUR SIGNIFICANT CAPITAL EXPENDITURES IN THE FUTURE AND THEREFORE MAY REQUIRE ADDITIONAL FINANCING IN THE FUTURE. Our capital expenditures are largely driven by the demand for our services. Our capital expenditures declined from $276.9 million in 2000 to $62.4 million in 2001 primarily as a result of the substantial drop in demand for our services. To grow our business, we will need to increase our test and assembly capacity as well as replace existing equipment from time to time. This will require substantial capital expenditures for additional equipment and further expenditure to recruit and train new employees. These expenditures will likely be made in advance of increased sales. We cannot assure you that our net revenues will increase after these expenditures. Our failure to increase our net revenues after these expenditures could have a material adverse effect on our business, financial condition and results of operations. In addition, we may need to obtain additional debt or equity financing to fund our capital expenditures. Additional equity financing may result in dilution to the holders of ADSs and ordinary shares. Additional debt financing may be required which, if obtained, may: - limit our ability to pay dividends or require us to seek consents for the payment of dividends; - increase our vulnerability to general adverse economic and industry conditions; - limit our ability to pursue our growth plan; - require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and - limit our flexibility in planning for, or reacting to, changes in our business and our industry. We cannot assure you that we will be able to obtain the additional financing on terms that are acceptable to us or at all. WE MAY NOT BE SUCCESSFUL IN OUR ACQUISITIONS AND INVESTMENTS IN OTHER COMPANIES AND BUSINESSES. As part of our growth strategy, from time to time, we may make acquisitions and investments in companies or businesses. For example, in 2001, we acquired a majority interest in Winstek Semiconductor Corporation, or Winstek, to enhance our position in the Taiwanese market. The success of our acquisitions and investments depends on a number of factors, including: - our ability to identify suitable opportunities for investment or acquisition; - whether we are able to reach an acquisition or investment agreement on terms that are satisfactory to us or at all; - the extent to which we are able to exercise control over the acquired company; - the economic, business or other strategic objectives and goals of the acquired company compared to those of our company; and - our ability to successfully integrate the acquired company or business with our company. If we are unsuccessful in our acquisitions and investments, our financial condition may be materially adversely affected. 11 WE HAVE ENTERED INTO A NUMBER OF FINANCING ARRANGEMENTS THAT IMPOSE LIMITATIONS ON OUR ACTIONS. Our loan agreement with the Economic Development Board restricts us from paying dividends, from incurring further indebtedness or creating any security interests, from making equity investments and from undertaking any form of reconstruction, including amalgamation with another company, which would result in a change in the control of our company, in each case without prior lender consent. Our medium term note program, or MTN Program, limits our ability to pay dividends while the interest on the notes is unpaid and to create security interests to secure our indebtedness. As a result of these limitations, we may encounter difficulties obtaining the required consents from our existing lenders to conduct our business, in particular, to obtain the necessary financing to maintain or grow our business, on a timely basis or at all. This could have a material adverse effect on our business, financial condition and results of operations. WE ARE DEPENDENT ON RAW MATERIAL SUPPLIERS AND DO NOT HAVE ANY LONG-TERM SUPPLY CONTRACTS WITH THEM. We obtain the materials we need for our assembly services from outside suppliers. We purchase all of our materials on a purchase order basis. We have no long-term contracts with any of our suppliers. If we cannot obtain sufficient quantities of materials at reasonable prices or if we are not able to pass on higher materials costs to our customers, this could have a material adverse effect on our business, financial condition and results of operations. WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY IN OUR INDUSTRY. The independent semiconductor test and assembly service industry is very competitive and diverse and requires us to be capable of testing increasingly complex semiconductors as well as bringing the most technologically advanced packages to market as quickly as our competitors. The industry comprises both large multi-national companies and small niche market competitors. We face substantial competition from a number of competitors that are much larger in size than us. These competitors include Advanced Semiconductor Engineering, Inc., Amkor Technology, Inc., ASE Test Limited, ASAT Holdings Limited, ChipPAC Incorporated and Siliconware Precision Industries Co., Ltd. Their facilities are primarily located in Asia. Each of these companies has significant manufacturing capacity, financial resources, research and development operations, marketing and other capabilities and has been in operation for some time. Such companies have also established relationships with many of our current or potential customers. Some of our competitors have established testing facilities in North America and may commence independent testing operations in Asia. These activities would compete directly with us. We also face competition from the internal capabilities and capacity of many of our current and potential IDM customers. Many IDMs have greater financial and other resources than we do and may rely on internal sources for test and assembly services due to: - their desire to realize higher utilization of their existing test and assembly capacity; - their unwillingness to disclose proprietary technology; - their possession of more advanced testing or assembly technologies; and - the guaranteed availability of their own test and assembly capacity. We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors or that our customers will not rely on internal sources for test and assembly services, or that our business, financial condition and results of operations will not be adversely affected by such increased competition. 12 OUR INTELLECTUAL PROPERTY IS IMPORTANT TO OUR ABILITY TO SUCCEED IN OUR BUSINESS BUT MAY BE DIFFICULT TO PROTECT. Our ability to compete successfully and achieve future growth in net revenues will depend, in part, on our ability to protect our intellectual property and the intellectual property of our customers. We seek to protect proprietary information and know-how through the use of confidentiality and non-disclosure agreements and limited access to and distribution of proprietary information. We currently have 13 issued patents and we have applied for 30 additional patents in the United States and certain other countries. We cannot assure you that any of our filed applications for patents will be granted, or, if granted, will not be challenged, invalidated or circumvented or will offer us any meaningful protection. Further, we cannot assure you that the Asian countries in which we market our products will protect our intellectual property rights to the same extent as the United States. Additionally, we cannot assure you that our competitors will not develop, patent or gain access to similar know-how and technology, or reverse engineer our assembly services, or that any confidentiality and non-disclosure agreements upon which we rely to protect our trade secrets and other proprietary information will be adequate protection. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations. WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES. Our ability to compete successfully will depend, in part, on our ability to operate without infringing the proprietary rights of others. When we are aware of intellectual property of others that may pertain to or affect our business, we will attempt to either avoid such processes, cross-license, or otherwise obtain certain process or package technologies that we feel are required. However, we have no means of ascertaining what patent applications have been filed in the United States until they are granted. In addition, we may not be aware of the intellectual property rights of others or be familiar with the laws governing such rights in certain countries in which our products are or may be sold. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights increases, we believe that companies in our industry will face more frequent patent infringement claims. On February 20, 2001, a lawsuit was filed by Amkor Technology, Inc. against us and our subsidiary, ST Assembly Test Services, Inc., or STATS Inc., alleging patent infringement in respect of certain integrated circuit packages. On September 7, 2001, we announced that we had settled the lawsuit. We cannot assure you that we will be able to settle any future claims against us on terms that are acceptable to us or at all. In the event that any valid claim is made against us, we could be required to: - stop using certain processes; - cease manufacturing, using, importing or selling infringing packages; - pay substantial damages; - develop non-infringing technologies; or - attempt to acquire licenses to use the infringed technology. It is the nature of the semiconductor industry that, from time to time, we may receive communications alleging that we have infringed intellectual property rights of others. We may also, from time to time, receive from customers requests for indemnification against pending or threatened infringement claims. Recently, we received two requests for indemnification from one of our major customers. We do not believe that the resolution of these requests for indemnification will have a material adverse effect on our business or financial condition. However, we cannot assure you that the resolution of these requests or any future allegations or requests for indemnification will not have a material adverse effect on our business or financial condition. 13 Although, in the above instances and in the future we may seek licenses from or enter into agreements with third parties covering the intellectual property that we are allegedly infringing, we cannot guarantee that any such licenses could be obtained on acceptable terms, if at all. We may also have to commence lawsuits against companies who infringe our intellectual property rights. Such claims could result in substantial costs and diversion of our resources. Should any of the disputes described above occur, our business, financial condition and results of operations could be materially adversely affected. SINGAPORE TECHNOLOGIES PTE LTD CONTROLS OUR COMPANY AND THEREBY MAY DELAY, DETER OR PREVENT ACTS THAT WOULD RESULT IN A CHANGE OF CONTROL. As of January 31, 2002, Singapore Technologies Pte Ltd beneficially owned approximately 71.9% of our ordinary shares. As of January 31, 2002, Temasek Holdings (Private) Limited directly owns 78.6% of Singapore Technologies Pte Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd, which is in turn 100% owned by Temasek Holdings (Private) Limited, the principal holding company through which the corporate investments of the Government of Singapore are held. As a result, Singapore Technologies Pte Ltd is able to exercise direct or indirect control over matters requiring shareholder approval. Matters that typically require shareholder approval include, among other things: - the election of directors; - our merger or consolidation with any other entity; - any sale of all or substantially all of our assets; and - the timing and payment of dividends. This concentration of ownership may delay, deter or prevent acts that would result in a change of control, which may be against the interests of holders of our ADSs and ordinary shares. A CHANGE IN CONTROL OF OUR COMPANY COULD RESULT IN A BREACH OF CERTAIN OF OUR AGREEMENTS. The provisions of our loan agreement with the Economic Development Board restrict us from, among others, undertaking any form of reconstruction which would result in a change in control of our company. Our MTN Program provides that noteholders may require us to redeem the notes if Singapore Technologies Pte Ltd ceases to hold, directly or indirectly, at least 51% of our issued share capital. From time to time, we may agree to similar terms in our financing or other arrangements. We cannot assure you that Singapore Technologies Pte Ltd will not directly or indirectly reduce its shareholding in our company to an extent that would result in a breach of these agreements, or any future agreements we may enter into. If this were to occur, our financial condition may be materially adversely affected. This restriction may also limit our ability to raise funds through the issuance of equity or equity-linked securities. WE MAY HAVE CONFLICTS OF INTEREST WITH OUR AFFILIATES. In the past, a substantial portion of our financing, as well as our net revenues, have come from our affiliates, and we have paid a management fee to Singapore Technologies Pte Ltd for certain services. We will continue to have certain contractual and other business relationships and may engage in material transactions with the Government of Singapore, companies within the Singapore Technologies Group (including Chartered Semiconductor which is one of our key customers) and EDB Investments Pte Ltd or EDBI. Sales to our affiliate, Chartered Semiconductor, in 1999, 2000 and 2001 were approximately 16.4%, 7.3% and 5.6%, respectively, of our net revenues. Although all new material related party transactions generally require the approval of the Audit Committee and in certain circumstances may also require separate approval of a majority of our Board of Directors, circumstances may arise in which the interests of our affiliates may conflict with the interests of our other 14 shareholders. In addition, both EDBI and Singapore Technologies Pte Ltd make investments in various companies. They have invested in the past, and may invest in the future, in entities that compete with us. For example, affiliates of Singapore Technologies Pte Ltd have investments in United Test Assembly Center (S) Pte Ltd, a Singapore-based provider of semiconductor assembly and testing services for semiconductor logic/ASIC and memory products. In the context of negotiating commercial arrangements with affiliates, conflicts of interest have arisen in the past and may arise, in this or other contexts, in the future. We cannot assure you that any conflicts of interest will be resolved in our favor. See "Item 7. Major Shareholders and Related Party Transactions." WE DEPEND ON CERTAIN KEY EMPLOYEES, LOSS OF CERTAIN OF THEM COULD ADVERSELY AFFECT OUR BUSINESS. Our future performance will largely depend on our ability to attract and retain key technical, customer support, sales and management personnel. The loss of certain of such persons could have a material adverse effect on our business, financial condition and results of operations. We do not maintain "key man" life insurance. WE NEED A CLEAN ROOM ENVIRONMENT FOR OUR OPERATIONS. Our testing and assembly operations take place in areas where air purity, temperature and humidity are controlled. If we are unable to control our testing or assembly environment, our test or assembly equipment may become nonfunctional or the semiconductors we test and assemble may be defective. See "Item 4. Information on the Company - B. Business Overview - Quality Control." If we experience prolonged interruption in our operations due to problems in the clean room environment, this could have a material adverse effect on our business, financial condition and results of operations. OUR FAILURE TO COMPLY WITH CERTAIN ENVIRONMENTAL REGULATIONS COULD REQUIRE US TO SPEND ADDITIONAL FUNDS AND COULD SERIOUSLY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATION. We are subject to a variety of laws and regulations in Singapore relating to the use, storage, discharge and disposals of chemical by-products of, and water used in, our packaging process. While we believe that we are currently in compliance with such laws and regulations, failure to comply with such laws and regulations in the future could subject us to liabilities that may have an adverse effect on our financial condition and results of operations. A FIRE OR OTHER CALAMITY AT ONE OF OUR FACILITIES COULD ADVERSELY AFFECT OUR COMPANY. We conduct our testing and assembly operations at a limited number of facilities. A fire or other calamity resulting in significant damage at any of these facilities would have a material adverse effect on our business, financial conditions and results of operations. While we maintain insurance policies covering losses, including losses due to fire, which we consider to be adequate, we cannot assure you that it would be sufficient to cover all of our potential losses. Our insurance policies cover our buildings, machinery and equipment. OUR RESEARCH AND DEVELOPMENT INVESTMENTS MAY NOT YIELD PROFITABLE AND COMMERCIALLY VIABLE PACKAGES OR TEST SERVICES AND THUS WILL NOT NECESSARILY RESULT IN INCREASES IN REVENUES FOR OUR COMPANY. We invest significant resources in research and development. Our research and development expenses were approximately $7.3 million in 1999, $14.6 million in 2000 and $15.2 million in 2001. However, our research and development efforts may not yield commercially viable packages or test services. The qualification process for new packages and test services is conducted in various stages which may take one or more years to complete, and during each stage there is a substantial risk that we will have to abandon a potential package or test service which is no longer marketable and in which we have invested significant resources. In the event we are able to qualify new packages or test services, a significant amount of time will have elapsed between our investment in new packages or test services and the receipt of any related revenues. 15 WE MAY BE AFFECTED BY SIGNIFICANT FLUCTUATIONS IN EXCHANGE RATE. Our financial statements are prepared in U.S. dollars. Our net revenues are generally denominated in U.S. dollars and our operating expenses are generally incurred in U.S. dollars and Singapore dollars. Our capital expenditures are generally denominated in U.S. dollars, Japanese yen, Singapore dollars and other currencies. As a result, we are affected by fluctuations in foreign currency exchange rates among the U.S. dollar, the Japanese yen, the Singapore dollar and other currencies. For example, substantially all of our revenues and the majority of our cost of revenues are denominated in U.S. dollars. In 2001, if the Singapore dollar had strengthened against the U.S. dollar by 2.0%, our cost of revenues would have increased by approximately 0.8%. Likewise, if the Singapore dollar had weakened against the U.S. dollar by 2.0%, our cost of revenues would have decreased by approximately 0.8%. We are particularly affected by fluctuations in the exchange rate between the U.S. dollar and the Singapore dollar. Any significant fluctuation in currency exchange rates may harm our company. TERRORIST ATTACKS, SUCH AS THE ATTACKS THAT OCCURRED IN THE UNITED STATES IN NEW YORK AND WASHINGTON, D.C. ON SEPTEMBER 11, 2001, AND OTHER ACTS OF VIOLENCE OR WAR MAY AFFECT THE MARKETS ON WHICH OUR SECURITIES TRADE, THE MARKETS IN WHICH WE OPERATE, OUR OPERATIONS AND OUR PROFITABILITY. Terrorist attacks may negatively affect our operations. There can be no assurance that there will not be further terrorist attacks against the United States or United States businesses and these attacks or armed conflicts may directly impact our physical facilities or those of our suppliers or customers. Furthermore, these attacks may make travel and the transportation of our supplies and products more difficult and expensive. Political and economic instability in some regions of the world may also result and could negatively impact our business. The consequences of any of these armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business. ITEM 4. INFORMATION ON OUR COMPANY A. HISTORY AND DEVELOPMENT OF OUR COMPANY ST Assembly Test Services Ltd was incorporated in Singapore as a limited liability company on October 31, 1994 and began operations in January 1995. In February 2000, we completed our initial public offering. Our ordinary shares are listed on the Singapore Exchange Securities Trading Limited or SGX-ST (SGX-ST: ST Assembly) and our ADSs are quoted on the Nasdaq National Market or Nasdaq (NASDAQ: STTS). Our registered office is at No. 5, Yishun Street 23, Singapore 768442, Republic of Singapore, Telephone:(65) 6824 5885, Facsimile: (65) 6824 9006, Website: www.stts.com, and our agent for service in the United States is the current Company Secretary of ST Assembly Test Services, Inc., 1768 McCandless Drive, Milpitas, CA. 95035, United States of America, Telephone: (1 408) 586-0600 Fax: (1 408) 586-0601. Our principal place of operations is in Singapore and our global operations are mainly carried out in the United States, United Kingdom, Japan, Germany and Taiwan. B. BUSINESS OVERVIEW We are a leading independent provider of a full range of semiconductor test and assembly services, including: - TEST SERVICES: including final testing and wafer probe, on a diverse selection of test platforms, as well as test-related services such as burn-in process support, reliability testing, thermal and electrical characterization, dry pack and tape and reel; - ASSEMBLY SERVICES: for leaded and array packages, as well as assembly related services such as package design and leadframe and substrate design; and 16 - PRE-PRODUCTION AND POST-PRODUCTION SERVICES: such as package, test software and related hardware development and drop shipment services. We are a leader in testing mixed-signal semiconductors, while offering our customers a full range of test and assembly services for most types of semiconductors, including high performance digital semiconductors. We provide these test and assembly services to semiconductor companies which do not have their own manufacturing facilities (fabless companies), vertically integrated device manufacturers (IDMs), and independent semiconductor wafer foundries (foundries). In the year ended December 31, 2001, 46.2% of our net revenues were from test services and 53.8% of our net revenues were from assembly services. Most of our test and assembly services are provided at our headquarter facility in Singapore. We believe that our Singapore location provides us with an ideal stable base. However, we have built, and will continue to consider building or developing, additional facilities in other locations in order to provide our customers with more access to our services. Through our 51% owned subsidiary, Winstek, we provide test services in Taiwan. Our two wholly-owned subsidiaries in the United States, STATS Inc. and FastRamp Test Services, Inc., or FastRamp, provide sales and marketing, design support, research and development, high-end engineering and pre-production test services and tester rental services to customers in the United States. We also have two assembly design centers in Arizona and California, in the United States and two test development centers in California and in Surrey, in the United Kingdom. SEMICONDUCTOR INDUSTRY BACKGROUND Semiconductors are critical components used in an increasingly wide variety of applications such as computer systems, communications equipment and systems, automobiles, consumer products and industrial automation and control systems. As performance has increased and size and cost have decreased, the use of semiconductors in these applications has grown significantly. According to a November 2001 report by the Semiconductor Industry Association, or SIA, total worldwide semiconductor device market revenue dropped from $204.4 billion in 2000 to $140.7 billion in 2001 as the industry experienced a cyclical downturn due to inventory overhang and an overall decline in semiconductor demand. However, in its November 2001 report, SIA predicts that worldwide semiconductor revenues will grow at a compounded annual growth rate of 15.8% between 2001 and 2004, reaching a total market size of $218.3 billion in 2004. As a consequence of the cyclical nature of the semiconductor industry, SIA may announce revised forecasts from time to time. We do not have any obligation to announce or otherwise make publicly available updates or revisions to these forecasts. SEMICONDUCTOR MANUFACTURING PROCESS The production of a semiconductor is a complex process that requires increasingly sophisticated engineering and manufacturing expertise. The production process can be broadly divided into three primary stages: - wafer fabrication, including wafer probe; - assembly of bare semiconductors, or die, into finished semiconductors (referred to as "assembly" or "packaging"); and - final testing of assembled semiconductors. Wafer Fabrication. The wafer fabrication process begins with the generation of a mask that defines the circuit patterns for the transistors and interconnect layers that will be formed on the raw silicon wafer. The transistors and other circuit elements are formed by repeating a series of process steps where photosensitive material is deposited onto the wafer. The material is 17 then exposed to light through the mask in a photolithography process and the unwanted material is removed through an etching process, leaving only the desired circuit pattern on the wafer. Wafer Probe. Wafer probe is a process whereby each individual die on the wafer is electrically tested in order to identify the operable semiconductors for assembly. Assembly. Assembly protects the semiconductor, facilitates its integration into electronic systems and enables the dissipation of heat. In the assembly process, the wafer is diced into individual dies that are then attached to a substrate with an epoxy adhesive. Leads on the substrate typically are then connected by extremely fine gold wires to the input/output, or I/O, terminals on the die through the use of automated equipment known as "wire bonders." Each die is then encapsulated in a molding compound, thus forming the package. Final Testing. Final testing is the last step in semiconductor production. It is a highly complex process that uses sophisticated testing equipment and customized software programs to electrically test a number of attributes of assembled semiconductors, including functionality, speed, predicted endurance, power consumption and electrical characteristics. After final testing, the semiconductors are shipped as directed by the customer for integration into the end-products. TRENDS TOWARD OUTSOURCING Historically, IDMs conducted most of the manufacturing process in their own facilities, outsourcing only the lower-technology aspects of the process and keeping advanced or proprietary technology in-house. Fabless semiconductor companies, which concentrated their efforts and resources on the design, marketing and sale of semiconductors, emerged in the mid-1980s. Fabless companies outsource virtually every step of the production process - fabrication, packaging and testing - to independent companies, allowing them to utilize the latest test and assembly technology without committing significant amounts of capital and other resources to manufacturing. In response to competition from fabless companies, IDMs began utilizing outsourcing as a means of cost-effective access to state-of-the-art technology, faster time to market and lower unit costs. This has enabled IDMs to streamline their operations and consider divestment of existing facilities. Given the IDMs' significant market share in the semiconductor market and increasing comfort with outsourcing advanced technology, this trend presents a significant opportunity for independent test and assembly providers. Several benefits of outsourced test and assembly services continue to drive growth in the industry: Technological sophistication and complexity. The increasing technological complexity of semiconductors, including systems-level semiconductors which integrate multiple functions onto a single semiconductor, has driven the need for increasingly complex test and assembly services able to support these devices. More sophisticated semiconductors require an increasing number of I/Os, higher operating speed, higher thermal dissipation and smaller form-factors. As a result, testing and assembly is increasingly being seen as an enabling technology critical to the overall advancement of semiconductor designs. Independent providers of test and assembly services have now developed extensive and advanced expertise in the area and have dedicated substantial resources toward technological innovation. They are able to spread the cost of development efforts over a broad range of customers and products and offer leading technologies below the internal costs of IDMs. As IDMs have found it difficult to keep pace with test and assembly technology while maintaining a leading position in the general semiconductor industry, they are increasingly relying on independent test and assembly service providers. Time to market. As the semiconductor market becomes increasingly competitive and product life cycles decrease, semiconductor companies are seeking to shorten their time to market. Semiconductor companies frequently do not have the time to optimally develop the necessary in-house test and assembly capabilities to implement these solutions for rapid product 18 rollouts in volume. Instead, semiconductor companies are turning to independent test and assembly service providers to quickly deliver new products to the market. To further accelerate the process, semiconductor companies are also increasingly requiring that test and assembly functions be performed at the same location. Asset utilization. The testing and assembly of semiconductors is a complex process that requires substantial capital investment in specialized equipment and facilities. Faced with shorter product life cycles and more frequent new product introductions, it is becoming more difficult for IDMs to sustain high levels of capacity utilization of their test equipment. Therefore, to maximize allocation of limited resources, reduce capital expenditures and control research and development costs, IDMs are increasingly turning to the outsourcing of test and assembly services. By comparison, independent test and assembly companies can allocate their fixed cost investments across a wider portfolio of customers and products to maximize capacity utilization and extend the useful life of equipment. Additionally, independent providers are able to reduce costs through the realization of economies of scale in their purchasing activities. OUR SERVICES We are in the semiconductor backend outsource business. We offer full backend turnkey services from wafer probe to final test and drop ship. The services we offer are customized to the needs of our individual customers. In 2001, 46.2% of our net revenues were from test services and 53.8% of our net revenues were from assembly services. TEST SERVICES We offer wafer probe and final testing on many different platforms, covering at least 15 of the major test platforms in the industry. Final testing is the last stage in semiconductor production which involves using sophisticated test equipment and customized software programs to electronically test a number of attributes of packaged semiconductors for functionality. Wafer probe is the step immediately prior to the assembly of semiconductors and involves electrical testing of the processed wafer for defects. Wafer probe services require similar expertise and testing equipment to that used in final testing, and several of our testers (with the substitution of different handlers or probers) are used for wafer probe services. To date, substantially all wafer probe has been performed for customers whose wafers are then assembled by us. We have invested in state-of-the-art testing equipment that allows us to test a broad variety of semiconductors, especially mixed-signal and high performance digital devices. Mixed-signal Testing. We test a variety of mixed-signal semiconductors, including those used in communications applications such as network routers, switches and interface cards; broadband products such as cable set-top boxes; and wireless telecommunications products such as cellular phones, base stations and Bluetooth(TM) devices. Bluetooth(TM) is a technology that enables short range wireless communication between different electronic appliances. We are a member of the Bluetooth(TM) Special Interest Group (SIG). We also test mixed-signal semiconductors for computer and consumer components including audio devices, CD-ROM, hard disk drive controllers, DVD drives and game consoles. Digital Testing. We test a variety of digital semiconductors, including high performance semiconductors used in PCs, disk drives, modems and networking systems. Specific digital semiconductors tested include digital signal processors, or DSPs, field programmable gate arrays, or FPGAs, microcontrollers, central processing units, bus interfaces, and digital application specific integrated circuits, or ASICs, and application specific standard products, or ASSPs. Memory Testing. We provide wafer probe services covering a variety of memory devices including static and non-volatile memories. 19 The following table sets forth, for the periods indicated, the percentage of our net revenues from testing services by type of semiconductor.
YEAR ENDED DECEMBER 31 ------------------------------- 1999 2000 2001 ----- ----- ----- Mixed-signal 72.4% 76.0% 84.3% Digital 26.8 23.5 15.1 Memory 0.8 0.5 0.6 ----- ----- ----- 100.0% 100.0% 100.0% ===== ===== =====
Test-Related Services. We offer a variety of additional test-related services, including: - "Burn-in process support." Burn-in is the process of electrically stressing semiconductors, usually at high temperature and voltage, for a period of time long enough to cause the failure of marginal semiconductors. During burn-in process support, we perform an analysis of burn-in rejects in order to determine the cause of failure. - "Reliability testing." Reliability testing is the process of testing a semiconductor to evaluate its life span. It is performed on a sample of devices that have passed final testing. - "Thermal and electrical characterization." Thermal and electrical characterization is the process of testing a semiconductor for performance consistency under thermal and electrical stress. - "Dry pack." Dry pack is the process of baking the semiconductors in order to remove moisture before packing and shipment to customers. - "Tape and reel." Tape and reel is the process of transferring semiconductors from tray or tube into a tape-like carrier on reel format for shipment to customers. Tape and reel is desired for high throughput pick and placement of components. ASSEMBLY SERVICES We offer a broad range of array and leaded packages designed to provide customers with a full range of packaging solutions and full backend turnkey services. Packaging serves to protect the die and facilitate electrical connection and heat dissipation. As part of customer support on assembly services, we also offer complete package design, electrical and thermal simulation, measurement and design of leadframes and substrates. Our current and ongoing investment is in line with our packaging development focus which has primarily been on high-pin count surface mount technology, or SMT, packages. SMT packages typically incorporate leads or interconnects which are soldered to the surface of the printed circuit board rather than inserted into holes, as is the case in older plated-through-hole, or PTH, technology packages. SMT packages accommodate a substantially higher number of leads than PTH packages, enabling greater package integration, and a reduction in the area dimensions of the printed circuit board. Because SMT enables higher pin counts on a semiconductor device, SMT is typically the preferred technology for most advanced semiconductors. 20 Our SMT packages are divided into three families: standard leadframe, enhanced leadframe and array. The differentiating characteristics of our packages include the size of the package, the number of electrical connections or interconnects the package can support, the means of connection to the printed circuit board and the thermal and electrical characteristics of the package. Standard Leadframe Packages. Standard leadframe packages, which are the most widely recognized package types, are characterized by a semiconductor die encapsulated in a plastic mold compound with metal leads surrounding the perimeter of the package. The semiconductor die is connected to the metal leads by extremely fine gold wires in a process known as wire bonding. We focus on high performance, thin profile and near chip scale leadframe packages. Our standard leadframe packages are used in a variety of applications, including mobile phones, notebook computers and networking systems. The following table summarizes our standard leadframe packages.
NUMBER OF PACKAGE FORMAT LEADS DESCRIPTION TYPICAL APPLICATIONS - -------------- --------- ----------- -------------------- Thin Shrink Small Outline 14-38 Traditional leadframe package with Mobile phone, mass storage, Package or TSSOP thickness below 1.0mm designed for multimedia and PDA logic, analog and memory devices, such as Flash, SRAM, EPROM, EEPROM, and DRAM Thin Quad Flat Package 32-128 Advanced QFP with thickness of 1.0mm Mobile phone, mass storage or TQFP for use in low profile, space and multimedia constrained applications Low Quad Flat Package 32-208 Advanced QFP with thickness of 1.4mm Mobile phone, mass storage or LQFP for use in low profile, space and multimedia constrained applications Metric Quad Flat Package 64-240 Traditional QFP designed for ASICs, Access/LAN equipment, or MQFP FPGAs and DSPs multimedia and mass storage Plastic Leaded Chip 44-84 Traditional leadframe package designed PC, access equipment and Carrier or PLCC for applications that do not have space multimedia constraints and do not require a high number of interconnects
21 Enhanced Leadframe Packages. Our enhanced leadframe packages are similar in design to our standard leadframe packages but are generally thinner and smaller and have advanced thermal and electrical characteristics which are necessary for many of the leading-edge semiconductors designed for communications applications. The following table summarizes our enhanced leadframe packages.
NUMBER OF PACKAGE FORMAT LEADS DESCRIPTION TYPICAL APPLICATIONS - -------------- --------- ----------- -------------------- Quad Leadless Package or QLP 8-64 Lead frame based near chip scale Mobile phone, PDA, GPS and package multimedia Exposed Pad Quad Flat Package 48-208 Thermally enhanced QFP with 30% Access/WAN/LAN equipment and or EPQFP greater thermal dissipation than MQFP PC/graphics Exposed Drop-in Heat Sink 44-208 Thermally enhanced QFP with 60% Access/WAN/LAN equipment and Quad Flat Package or EDQFP greater thermal dissipation than MQFP PC/graphics Drop-in Heat Sink Quad Flat 64-208 Thermally enhanced QFP with 30% Access/WAN/LAN equipment and Package or DQFP greater thermal dissipation than MQFP PC/graphics Die Pad Heat Sink Quad Flat 100-208 Thermally enhanced QFP with 60% Mass storage and multimedia Package or DPHQFP greater thermal dissipation than MQFP Heat Sink Quad Flat Package 100-240 Thermally enhanced QFP with 80% Base station, PC/graphics and or HQFP greater thermal dissipation than MQFP multimedia Exposed Pad Thin Shrink Small 14-38 Thermally enhanced TSSOP with 30% Mobile Phone, mass storage Outline Package or EPTSSOP greater thermal dissipation than TSSOP multimedia and PDA Stacked Die Quad Flat Package 64-176 Compact multiple die designed for Mobile phone, PDA, GPS, Disk or SDQFP space constrained applications drive and multimedia
22 Array Packages. Our array packages include Ball Grid Array or BGA packages which employ leads, also known as interconnects, on the bottom of the package in the form of small bumps, or balls, in a matrix or array pattern. These BGA packages utilize a plastic laminate or film tape based substrate rather than a leadframe substrate. The BGA format enables a higher density of interconnects within a smaller surface area. BGA packaging was designed to address the need for higher lead counts and smaller package size required by advanced semiconductors used in applications such as portable computers and wireless telecommunications. As the required number of leads on the peripheral sides of the package increased, the lead pitch (which is the distance between leads) decreased. The nearness of one lead to another at very fine pitches resulted in potential electrical shorting problems during the SMT process. This necessitated the development of sophisticated and expensive techniques for producing circuit boards to accommodate the high number of leads at fine pitches. The BGA format solved this problem by employing lead terminals on the bottom of the package in the form of small bumps or balls. These balls can be evenly distributed across the entire bottom surface of the package, allowing greater distance between the individual leads. For the highest lead count devices, the BGA format can be manufactured less expensively and requires less delicate handling. Our BGA packages are typically used in semiconductors that require enhanced performance, including digital signal processors or DSPs, microprocessors and microcontrollers, application-specific integrated circuits or ASICs, FPGAs, memory and PC chip sets. Our BGA packages typically have between 16 and 900 balls. Several of these packages have been developed as Chip Scale Packages or CSPs. The emphasis of these packages is on low profile, small footprint and lightweight characteristics. These are ideal for medium pin- count applications which require dense arrays in very small package sizes such as hand-held wireless equipment, mobile base stations and digital photography. In its January 2002 report, Electronic Trends predicts that from 2001 to 2005, BGA packaging revenues will grow at a rate of 16.3% to a total market size of around $8,877 million. Chip scale packaging revenues are predicted to grow at a rate of 26.4% to reach a total market size of $4,297 million in 2005. This is compared to forecasted revenue growth for all packages of 12.6% over the same time period. As a consequence of the cyclical nature of the semiconductor industry, Electronic Trends may announce revised forecasts from time to time. We do not have any obligation to announce or otherwise make publicly available updates or revisions to these forecasts. 23 Our BGA packages (including CSPs) are described below:
NUMBER OF PACKAGE FORMAT BALLS DESCRIPTION TYPICAL APPLICATIONS - -------------- --------- ----------- -------------------- Tape Chip Scale Package 72-256 CSP BGA characterized by flex-tape Mobile phone, PDA and or TCSP substrate for high density circuits multimedia Stacked Die BGA or SDBGA 80-160 Compact multiple die designed for Mobile phone, PDA and space constrained applications multimedia Tape Enhanced Plastic 256-600 BGA characterized by a flex-tape WAN/LAN equipment and base BGA or TBGA substrate replacing the laminate station substrate Enhanced BGA or EBGA 256-600 High pin count, thermally enhanced WAN/LAN equipment and base BGA package suitable for high power station applications which utilize heat sinks for thermal dissipation Small Thin Plastic BGA 16-324 Smaller and thinner BGA designed Mobile phone, PDA, GPS and or STPBGA for applications which are space multimedia constrained and require electrical performance Plastic Ball Grid Array 208-492 Electrically enhanced BGA package Access/ LAN equipment, or PBGA designed for high I/O replacement PC/graphics and base station Matrix Tape Chip Scale Package 16-180 Thin (<1.0mm) and highly dense CSP Mobile phone, PDA and multimedia BGA or TCSP-M BGA using a flexible tape substrate Low Profile Small Thin Plastic 16-324 CSP BGA characterized by a thin Mobile phone, PDA and multimedia BGA or STPBGA-L core laminate substrate Exposed Drop-in Heat Spreader 208-600 Thermally Enhanced PBGA with 20% Access/LAN/PC/graphics and base Plastic BGA or XDPBGA greater thermal dissipation than station equipment PBGA Multi Chip Module Plastic BGA 80-600 BGA integrated with two or more Access/LAN/PC graphics and base or MCMBGA multiple die within a PBGA or STPBGA station equipment
In response to certain governmental and industry trends toward environmentally friendly products, our assembly operations introduced a green molding compound and set up a dedicated lead-free line. This line processes lead-free packaging for our leaded packages using a pure tin solder alternative. We introduced lead-free array packaging in 2001. A waste treatment system that detoxifies waste materials is now in place to support the grinding and sawing of gallium arsenide or GaAs wafers. This is an important development as it demonstrates our commitment to develop packages and 24 services in response to the specialized needs of our customers. We believe GaAs semiconductors currently play and will continue to play an important role in high-speed networking and high-speed transmission equipment with data rates exceeding 10 Gbps or OC192. We have improved our fine pitch wire bonding capability to handle up to 50(mu)m in-line bond pad pitch and 80/40 (mu)m staggered bond pitch in response to industry trends toward fine line and space wafer fabrication technology. We have also established complete handling and packaging processes for GaAs semiconductors. PRE-PRODUCTION AND POST-PRODUCTION SERVICES We have developed and enhanced our pre-production and post-production services to provide a total solution for our customers. Our pre-production services for assembly include package development, and for testing include software and hardware development. In addition, we have recently established FastRamp, which provides an extended range of pre-production volume testing services. We also provide post-production drop shipment services for our customers. Package Development. Our package development group interacts with customers early in the design process to optimize package design and manufacturability. For each project, our engineers create a design strategy in consultation with each customer to address the customer's requirements, package attributes, design guidelines and previous experience with similar products. After a design is finished, we provide quick-turn prototype services. By offering package design and prototype services, we can reduce our customer's development costs, accelerate time-to-volume production and ensure that new designs can be properly packaged at a reasonable cost. We offer these services at our facilities in Singapore, Arizona and California. Test Software and Hardware Development. We work closely with our customers to provide sophisticated software engineering services, including test program development, conversion and optimization. Generally, testing requires customized software to be developed for each particular semiconductor device. Software is typically provided by the customer and may be converted by us for use on one or more of our tester platforms. Once a conversion test program has been developed, we correlate the test software through "test program verification." During this test program verification process, which typically takes from two days to two weeks, the customer provides us with sample semiconductors to be tested and either provides us with the test program or requests that we develop a conversion program. Customer feedback on the test results enables us to adjust the conversion test programs accordingly prior to actual production testing. We then assist our customers in collecting and analyzing the test results and develop engineering solutions to improve their design and production process. We also provide customers with test development services where we will create a test plan based on their specifications. Once the test plan is approved by the customer, we design the test fixtures, or parameters, and develop the test program. Once the test programs are developed, we perform the device characterization to enable our customer to determine the optimum conditions for their device performance. We offer these services at our facilities in Singapore, California and Surrey, United Kingdom. FastRamp. In October 2001, we established our wholly-owned subsidiary, FastRamp in Silicon Valley, to deliver an extended range of high-end pre-production test services to new and existing customers. FastRamp commenced operations in January 2002, providing test hardware and software development, pre-production volume testing services, tester rentals and a unique customer-to-lab-to-factory relay for fast production offloads and capacity coordination. At our customers' request, certain finished and piloted test programs are then transferred to our facility in Singapore for full production. As FastRamp offers a similarly configured and substantial range of tester platforms, handlers, probers, interface hardware and manufacturing processes as our Singapore facility, this transfer is relatively seamless. Drop Shipment Services. We provide full drop shipment services including the delivery of final tested semiconductors to our customers' end-customers in any part of the world. We either directly bill our customers for the cost of drop shipment or incorporate this into the price of our services. 25 RESEARCH AND DEVELOPMENT Our research and development efforts are focused on developing test and assembly services required by our existing customers and that are necessary to attract new customers. We spent approximately $7.3 million in 1999, $14.6 million in 2000 and $15.2 million in 2001 on research and development. We currently employ 154 dedicated professionals for packaging and test development. We consider this as a core element of our total service offering and expect to continue to invest significant resources in research and development. Test Services. We focus on developing new technologies, software and processes to enhance efficiency and reliability and to shorten test times. These include multi-site testing, strip testing, test program optimization and hardware improvements designed to permit improved utilization of existing test equipment. When necessary we also design and build specialized equipment that is not available from outside vendors. Our test development centers are an important part of our research and development efforts and are utilized to develop and debug test software prior to production, complete test software conversions and offer our customers continuous access to our development capabilities. We currently have test development centers located in Singapore, California and Surrey, United Kingdom. Assembly Services. We have established a dedicated group of engineers whose primary focus is the development and improvement of materials and process technology as well as development of new and advanced packages. Because we typically offer our assembly services to our existing test customers, we are in a position to better understand their packaging needs. As a result, we focus our assembly research and development efforts in part on developing packages tailored to their individual requirements. These efforts take place at our assembly development centers located in Singapore, California and Arizona. We have a number of advanced packages under development to support our customers' need for high performance packages. Our development roadmap includes flip chip technology and comprises build-up substrate, wafer bumping and passive integration technology components. Flip chip technology can be used in both low pin count as well as high pin count packages. It is a particularly ideal solution for devices that require more than 1,000 interconnects in a relatively small package. Build-up substrates deliver even higher interconnect density without compromising thermal and electrical performance. We believe flip chip packages will find increasing application in high-end communications equipment such as switches and routers as well as high-end PCs. We also have next generation CSPs both under development and in qualification which incorporate lead-frame, laminate and tape technologies. The emphasis in the development of such packages is on low-profile, small footprint and light weight characteristics. These packages are used particularly in hand-held wireless communications equipment. These products are extremely useful for all hand-held devices including mobile station modems, base-band circuits and memories. In addition, we continue to increase our support functions for thermal, electrical, stress and package to board level reliability characterization. We offer a full range of thermal simulation and actual testing for all of our existing packages and packages under development. We have a full service reliability laboratory that can stress test assembled semiconductors. In conjunction with local institutes and laboratories, we can also perform board level reliability testing of surface mount assembled packages. In 2001, we developed and introduced a number of new packages, including: - Quad Leadless Package or QLP - Exposed Pad Thin Shrink Small Outline or EPTSSOP - Exposed Pad Quad Flat Package or EPQFP - Tape Ball Grid Array or TBGA - Tape Chip Scale Package or TCSP - Matrix Tape Chip Scale Package BGA or TCSP-M - Stacked Die Quad Flat Package or SDQFP 26 We will continue to develop and introduce advanced packaging that meets the requirements of our customers. SALES AND MARKETING We believe we are industry leaders in the testing of mixed-signal semiconductors. The goal of our marketing strategy is to expand our customer base by extending our mixed-signal expertise into new customer and product segments. In particular, as mixed-signal devices become more prevalent, we intend to increase our share of high-end digital consumer end-markets. We also aim to provide our customers with a total solution built around our mixed-signal testing core competency. This involves a full backend turnkey offering including wafer sort, assembly and test. We have been, and continue to be, active in developing an advanced range of packages to match our advanced testing capability. Our close working relationship with multiple foundries means we can also provide full turnkey services from wafer fabrication to drop shipment. We believe the Singapore government's long term plan of making Singapore a foundries hub is an added advantage to our full turnkey strategy. We market our services through direct sales forces strategically located in Singapore, Taiwan, Japan, Germany, the United Kingdom and the United States. Pricing Policy. We price our test services principally on the length of tester CPU time used, typically referred to as test time on per-second basis. The price of test time is a function of tester platform and hardware configuration, which are usually determined by our customers based on the function and complexity of a particular semiconductor device. In general, the test time for a complex semiconductor device will be longer than a less complex semiconductor device. Wafer probe pricing is determined by similar factors. Any reduction in test time by optimization of test program or optimum hardware configuration will mean savings for our customer. Assembly services are priced competitively against the market and vary depending on such factors as package complexity and material cost. Design costs are not material but when incurred may be charged to a customer separately or built into the unit price. CUSTOMERS We provide test and assembly services to a growing number of customers worldwide consisting primarily of fabless companies, IDMs and foundries. Our ten largest customers accounted for 89.5%, 88.3% and 85.6% of our net revenues in 1999, 2000 and 2001. In 2001, our three largest customers, Analog Devices, Broadcom and Marvell each represented in excess of 10% of our net revenues and in the aggregate represented 51.9% of our net revenues. We anticipate that our ten largest customers will continue to account for a high percentage of our net revenues for the foreseeable future. 27 The following table sets forth for the periods indicated the percentage of our net revenues derived from testing and assembly of semiconductors used in communications, personal computers and other applications.
YEAR ENDED DECEMBER 31 ----------------------------------- 1999 2000 2001 ----- ----- ----- Communications 60.9% 62.7% 61.3% Personal Computers 32.1 30.2 34.9 Other 7.0 7.1 3.8 ----- ----- ----- Total 100.0% 100.0% 100.0% ===== ===== =====
We characterize a sale geographically based on the country in which the customer is headquartered. The following table sets forth the geographical distribution, by percentage, of our net revenues for the periods indicated.
YEAR ENDED DECEMBER 31 ------------------------------------ GEOGRAPHICAL AREA 1999 2000 2001 - ----------------- ----- ----- ----- United States 76.0% 78.0% 78.4% Europe 7.0 14.1 13.0 Singapore 16.8 7.3 5.6 Rest of Asia 0.2 0.6 3.0 ----- ----- ----- Total 100.0% 100.0 % 100.0% ===== ===== =====
CUSTOMER SERVICE We place strong emphasis on quality customer service. Our broad service offerings, dedicated customer account teams and commitment to finding solutions to our customers' needs and problems have enabled us to develop important relationships with many of our customers. We have received high ratings and recognition in the area of customer service from many of our customers. In 2001, we received the Assembly and Test Supplier of the Year Award from Analog Devices and we received the Certificate of Recognition 2000 for Subcontractors for our excellent performance in Quality, Technology, Costs, Logistics and Management Commitment from Infineon. We are in the process of implementing a comprehensive IT architecture that includes Adexa, Inc.'s iCollaboration global planning suite to help manage our global supply chain operations. We have also recently implemented our B2B strategy using webMethods, enabling our customers to link seamlessly to our systems. As part of our strategy to provide a virtual manufacturing extension to our customers, we have developed our mySTATS portal which allows our customers to obtain real-time manufacturing information on their products from us, and we intend to roll this out to key customers by the second quarter of this year. 28 QUALITY CONTROL We maintain a team of quality control staff comprising engineers, technicians and other employees whose responsibilities are to monitor our test and assembly processes to ensure that they meet our quality standards. Our in-house laboratory is equipped with advanced analytical tools and provides the necessary equipment and resources for our research and development and engineering staff to continuously enhance product quality and process improvement. Our test and assembly operations are undertaken in clean rooms where air purity, temperature and humidity are controlled. To ensure stability and integrity of our operations, we maintain clean rooms at our facilities that meet U.S. federal 209E class 10,000 and 100,000 standards. Our test and assembly operations in Singapore are ISO 9001, 9002 and 14001 certified. ISO 14001 is an international standard on environmental management system, to support environmental protection and prevention of pollution in balance with socio-economic needs. ISO 9002 standards set forth what is required to ensure production of quality products and services. ISO 9001 standards set forth a quality management system and address design, development, production, installation and servicing. We are also OHSMS 18001 certified. OHSMS is the standard for the implementation of an occupational health and safety management system (OHSMS), and was developed to be compatible with the ISO 9001 and ISO 14001 management system standards. In addition, we have both Level 1 Semiconductor Assembly Council, or SAC, and QS9000 certification. SAC certification is one of the most prestigious certifications in the semiconductor manufacturing industry and QS9000, based on ISO9001, is a comprehensive certification of a company's total quality management system. Customers require that our facilities and procedures undergo a stringent vendor qualification process. The qualification process typically takes from two to six weeks but can take longer depending on the requirements of the customer. COMPETITION The independent semiconductor test and assembly service industry is very competitive and diverse. In order to compete, we must offer state-of-the-art testing services and bring the most technologically advanced packages to market as quickly as our competitors and at comparable prices. Test and assembly services are provided by both large multi-national companies and small niche market competitors. We face substantial competition from a number of competitors, some of whom are much larger in size. These competitors' facilities are primarily located in Asia. Some of these companies include Advanced Semiconductor Engineering, Inc., Amkor Technology, Inc., ASE Test Limited, ASAT Holdings Limited, ChipPAC Incorporated and Siliconware Precision Industries Co., Ltd. These companies have significant manufacturing capacity, financial resources, research and development, operations, marketing and other capabilities and have been in operation for some time. Such companies have also established relationships with many of our current or potential customers. We also face competition from the internal capabilities and capacity of many of our current and potential IDM customers. Many IDMs have greater financial and other resources than we do and may rely on internal sources for test and assembly services due to: - their desire to realize higher utilization of their existing test or assembly capacity; - their unwillingness to disclose proprietary technology; - their possession of more advanced testing or assembly technologies; and - the guaranteed availability of their own test or assembly capacity. 29 The principal elements of competition in the independent semiconductor assembly industry include variety of packages offered, price, location, available capacity, cycle time, engineering capability, technical competence, customer service and flexibility. If our competitors are able to bring their new packages to market faster or at lower prices than we can, our net revenues may be affected. In the area of test services, we compete on the basis of quality, cycle time, pricing, location, available capacity, software development, engineering capability, technical competence, customer service and flexibility. Our competitors in the independent testing market are both those listed above as well as smaller niche companies, offering limited services, which compete principally on the basis of engineering capability, location and available capacity. While we believe that we compete favorably with our principal competitors, we cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors or that our operating results will not be adversely affected by increased price competition. See "Item 3. Key Information - D. Risk Factors - We may not be able to compete successfully in our industry." INTELLECTUAL PROPERTY Our operational success will depend in part on the ability to develop and protect our intellectual property. We currently have 13 issued patents and we have 30 pending patents in the United States and other countries related to various aspects of our semiconductor test and assembly. We have also applied for patents in certain other countries where appropriate. If the patents are granted, we may seek to cross-license or share our intellectual property portfolio at a future time if it is advantageous for us to do so. We have licensed patent rights from Motorola, Inc. to use technology in manufacturing BGA packages under an agreement which will expire in December 2002 and is subject to renewal. Under this agreement, we are required to pay Motorola a royalty based upon the number of pads on each BGA package. We cannot assure you that we will be able to renew this agreement when it expires on terms that are favorable to us or at all. In February 2001, we entered into a seven-year license agreement with SyChip, Inc. to license the patent rights to use technologies and know-how relating to wafer redistribution and wafer bumping in the manufacture of flip chip integrated circuits known as the MSIT Portfolio. Under this agreement we are required to pay SyChip both a fixed fee, as well as royalties based on unit production. In addition, we have also reserved a portion of our production capacity using MSIT Portfolio to SyChip. At the end of the license period, we will retain a paid-up, perpetual and royalty-free license of the MSIT Portfolio technology. In August 2001, we entered into a 10-year technology license agreement with Flip Chip Technologies LLC. to license the right to use their proprietary Flex-On-Cap (FOC) wafer bumping process and Redistribution (RDL) technologies to facilitate the manufacture of advanced flip chip integrated circuits. Under this agreement, we are required to pay Flip Chip fixed fees and royalties based on number of wafers produced. At the end of the license period, we will retain a paid-up, perpetual and royalty-free license to practice the FOC process. When we are aware of intellectual property of others that may pertain to or affect our business, we attempt to either avoid processes protected by existing patents, cross-license or otherwise obtain certain process or package technologies. In addition, we execute confidentiality and non-disclosure agreements with our customers and consultants and limit access to and distribution of our proprietary information. Our continued success will rely in part on the technological skills and innovation of our personnel and our ability to develop and maintain proprietary technologies. The departure of any of our management or technical personnel and the breach of their confidentiality and non-disclosure obligations or our failure to achieve our intellectual property objectives could have a material adverse effect on our business, financial condition and results of operations. 30 Our ability to compete successfully and achieve future growth will depend, in part, on our ability to protect our proprietary technology and the proprietary technology of our customers entrusted to us by our customers. We cannot assure you that patents will be issued for pending or future applications or that, if patents are issued, they will not be challenged, invalidated or avoided, or that rights granted thereunder will provide adequate protection or other commercial value to us. The laws of certain countries in which our services are or may be sold may not protect our packages and our intellectual property rights to the same extent as the laws of the United States or other countries where our intellectual property may be filed or registered. In addition, certain countries in which our services are or may be sold could have rights or laws governing intellectual property about which we are unaware. ENVIRONMENTAL MATTERS AND COMPLIANCE Our test and assembly operations do not generate significant pollutants. Our operations are subject to regulatory requirements and potential liabilities arising under Singapore laws and regulations governing among other things, air, emissions, waste water discharge, waste storage, treatment and disposal, and remediation of releases of hazardous materials. We have implemented an environmental monitoring system. We send samples of our air emissions, treated water and sludge to third party accredited laboratories for testing to ensure our compliance with the environmental laws and regulations that apply to us. We believe that we are in compliance with all applicable environmental laws and regulations. Expenditures on environmental compliance currently represent an insignificant portion of our operating expenses. We are certified ISO 14001 by the Productivity and Standards Board (Singapore) and the Japan Audit Compliance Organization. INSURANCE We maintain insurance policies covering losses, including losses due to business interruption and losses due to fire, which we consider to be adequate. Our insurance policies cover buildings, machinery and equipment. Significant damage to our production facilities, whether as a result of fire or other causes, would have a material adverse effect on our business, financial condition and results of operations. We are not insured against the loss of any of our key personnel. C. ORGANIZATIONAL STRUCTURE We are part of the Singapore Technologies Group. The Singapore Technologies Group is a leading technology-based multi-national conglomerate based in Singapore. The Singapore Technologies Group provides a full array of multi-disciplinary capabilities, ranging from research and development, design and engineering, precision and high value-added manufacturing, major infrastructure development to management services in the following five core business groups: Engineering, Technology, Infrastructure & Logistics, Property and Financial Services. Other companies in the Singapore Technologies Group include Chartered Semiconductor, one of our major customers. Temasek Holdings (Private) Limited is the principal holding company through which the corporate investments of the Government of Singapore are held. As of January 31, 2002, Temasek Holdings (Private) Limited directly owns 78.6% of Singapore Technologies Pte Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd, which is in turn 100% owned by Temasek Holdings (Private) Limited. We have three subsidiaries. Our two wholly-owned subsidiaries, STATS Inc. and FastRamp, were both incorporated in the United States in the State of Delaware. STATS Inc. undertakes sales and marketing, design support and research and development through its various facilities in the United States. FastRamp provides high-end engineering and pre-production test services and tester rental services to customers in the United States. Our third subsidiary is Winstek, a Taiwanese test house in which we acquired 51% shareholding in August 2001. Winstek tests optical, mixed-signal, digital and radio frequency devices and provides an integrated range of services, including wafer probe, final test, turnkey and drop shipment services in Taiwan. 31 D. PROPERTY, PLANTS AND EQUIPMENT We presently operate from a 580,000 square feet facility in Singapore which opened in November 1997. In addition to our test and assembly operations, this facility houses our corporate executive, administrative, sales and marketing and finance offices. We constructed this facility on land leased from the Housing & Development Board, a statutory board of the Government of Singapore, for a 30-year term expiring March 2026 with an option for renewal. The facility is designed to accommodate: - 300,000 square feet of test space; - 120,000 square feet of assembly space; - 500 testers; - 720 wire bonders; and - 72 mold systems. In addition to our headquarters in Singapore, we also have two assembly design centers (one in Arizona and one in California, in the United States) and two test development centers (one in California and one in Surrey, in the United Kingdom). FastRamp operates from a 34,000 square feet facility in California, in which our sales office and test development center are also located. Our 51% owned subsidiary, Winstek, has a 220,000 square feet four-storey facility at Chiung Lin, Hsin-Chu Hsien, Taiwan. EQUIPMENT Our operations and expansion plans depend on us being able to obtain an adequate supply of test and assembly equipment on a timely basis. We work closely with our major equipment suppliers to ensure that equipment is delivered on time and such equipment meets our stringent performance specifications. With the exception of a few key suppliers that provide reserved equipment delivery slots and price discount structures, we have no binding supply agreements with any of our suppliers. A reserved equipment delivery slot is one which allows us to obtain an accelerated delivery of the equipment over and above the delivery schedule previously committed to by the supplier. Typically, price discounts are offered for volume purchases. We acquire our test and assembly equipment on a purchase order basis, which exposes us to substantial risks. The unavailability of new test or assembly equipment, the failure of such equipment or other equipment acquired by us to operate in accordance with our specifications or requirements or delays in the delivery of such equipment, could delay implementation of our expansion plans and could materially and adversely affect our results of operations or financial condition. See "Item 3. Key Information - D. Risk Factors - We may be unable to obtain testing and assembly equipment when we require it." Testing Equipment. Testing equipment is one of the most critical components of the testing process. We generally seek to maintain testers from different vendors with similar functionality and the ability to test a variety of different semiconductors. In general, certain semiconductors can only be tested on a limited number of specially configured testers. We purchase testing equipment from major international manufacturers, including Advantest Corporation, Credence Systems Corporation, Agilent Technologies, LTX Corporation and Teradyne Inc. We operate 252 testers, comprising 161 mixed-signal testers, 80 digital testers and 11 memory testers. In certain cases where a customer has specified testing equipment that is not widely applicable to other products that we test, we have required that the customer provide the equipment on a consignment basis. Presently 22 of the aggregate 252 testers we operate are on consignment from customers. In addition to testing equipment, we maintain a variety of other types of equipment, such as 32 automated handlers and probers (with special handlers for wafer probing), scanners, reformers and PC workstations for use in software development. Assembly Equipment. The primary equipment used in assembly includes wire bonders and mold systems. We own and operate approximately 532 wire bonders and approximately 66 mold systems. Certain of our wire bonders allow for interchangeability between lead frame and array packages. We purchase wire bonders from major international manufacturers, including Kulicke & Soffa Industries, Inc. and ESEC S.A. We purchase mold systems from major international manufacturers, including Apic Yamada Corporation, Dai-Ichi Seiko Co Ltd and Han-Mi Co Ltd. RAW MATERIALS Our assembly operations depend on obtaining an adequate supply of raw materials on a timely basis. The principal raw materials used in assembly are leadframe or laminate substrates, gold wire and molding compound. We generally purchase raw materials based on the non-binding forecasts provided to us by our customers. We work closely with our primary suppliers, providing them with a six-month rolling forecast and weekly requirement schedules. Accordingly, our suppliers are better able to supply us with raw materials. We also manage inventory with automated materials management processes using integrated Oracle software systems. The unavailability of an adequate supply of raw materials could materially and adversely affect our business, financial condition and results of operations. See "Item 3. Key Information - D. Risk Factors - We are dependent on raw material suppliers and do not have any long-term supply contracts with them." ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion of our business, financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth under "Item 3. Key Information - D. Risk Factors" and elsewhere in this Annual Report. Our consolidated financial statements are reported in U.S. dollars and have been prepared in accordance with U.S. GAAP. Certain items in the comparative figures have been reclassified to conform with the current year's presentation. OVERVIEW We derive revenues from test services and assembly of array and leaded packages. Net revenue represents the invoiced value of services rendered, excluding goods and services tax, net of returns, trade discounts and allowances. We principally recognize revenue upon shipment of goods on which we have rendered services. For certain contractual arrangements, revenue is realizable, and therefore recognized, upon completion of services. We provide a broad range of test and assembly services and we believe we are a leader in testing mixed-signal and high performance digital semiconductors. We attract new customers with these testing capabilities and then expand our relationship with such customers to include assembly services tailored to their needs. We intend to continue to expand our test and assembly operations in order to position ourselves to meet the increased demand for outsourced test and assembly services. Our results of operations are influenced by the state of the global semiconductor industry which is highly cyclical. According to the November 2001 report by SIA, worldwide semiconductor device market revenue grew 37% from 1999 to $204.4 billion in 2000 (which represented a new industry record). However, worldwide semiconductor market revenue subsequently fell 31.2% to $140.7 billion in 2001 as a result of a cyclical downturn due to inventory overhang and an overall decline in semiconductor demand. This adversely affected our company from the fourth quarter of 2000, continuing through most of 2001. In particular, we experienced weak demand throughout 2001 as our customers significantly delayed or canceled orders. 33 The semiconductor industry is characterized by price erosion which can have a material adverse effect on our revenues and gross margins, particularly when coupled with declining capacity utilization. Prices of our products at a given level of technology decline over the product life cycle, commanding a premium in the earlier stages and declining towards the end of the cycle. To maintain our profitability, we have to offset decreases in average selling prices, or ASPs, by improving our capacity utilization rates and production efficiency, or by shifting to higher margin test and assembly services. In addition, we have to continue to develop and offer test and assembly services which command higher margins. In the past, we have been able to successfully develop and market new higher margin products to meet the requirements of our customers. However, we cannot assure you that we can continue to do this in future nor can we assure you that we will be successful at offsetting any price declines in the future. Our results of operations are generally affected by the capital-intensive nature of our business. A large portion of our cost of revenues is fixed in nature, with variable costs limited to the costs of materials and operating supplies. The major component of our fixed costs relates to test and assembly equipment. Testers typically cost between $1.5 million and $3.0 million each, compared with wire bonders which typically cost $100,000 each. Depreciation of our equipment and machinery is provided on a straight-line basis over their estimated useful lives of 5 years. The useful life estimate reflects our estimate of the period that we expect to derive economic benefits from use of the equipment and machinery. In estimating the useful lives and determining whether subsequent revisions to the useful lives are necessary, we consider the likelihood of technological obsolescence arising from changes in production techniques or in market demand for the use of our equipment and machinery. The effect of any future changes to the estimated useful lives of our equipment and machinery could be significant to our results of operations. Increases or decreases in capacity utilization rates can have a significant effect on gross profit margins since the unit cost of test and assembly services generally decreases as fixed charges, such as depreciation expense and equipment leasing costs, are allocated over a larger number of units. We expanded our test and assembly capabilities between 1999 and 2000 and significantly increased the number of testers and wire bonders. The expansion of our test and assembly capabilities by the end of 2000 allowed a significant increase in our net revenues. However, the capacity utilization of our facilities decreased significantly in 2001 as a result of the downturn in the semiconductor industry. As a result, we have not expanded as aggressively as we did during the two years ended December 31, 2000 and consequently, we increased the number of our testers only marginally from 230 to 252 and our number of wire bonders remained the same at 532 as of December 31, 2001. As a result of the decrease in capacity utilization, our operating results were adversely affected. Depreciation expense and cost of leasing production equipment as a percentage of revenues were 24.5% in 1999, 25.5% in 2000 and 80.7% in 2001. In addition, as a result of the industry downturn, we recognized an asset impairment charge of $23.7 million and prepaid leases write-down of $3.1 million in the fourth quarter of 2001 as the continued softness in demand in the end-markets to which certain of our equipment was dedicated had reduced the anticipated future usage of such equipment. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated from the asset. If such assets are considered to be impaired, an impairment charge is recognized for the amount that the carrying value of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Due to the poor operating results and continued weakness in our industry, we initiated a review in the fourth quarter of 2001 to identify assets whose carrying amounts may not have been recoverable. As a result of the review, we recorded impairment charges related to our equipment and machinery of $23.7 million. These charges include the write-down of tester and assembly machinery held for sale of $4.3 million and a write-down of tester machinery held for use of $19.4 million to reflect their estimated fair value. In determining the fair value of machinery and equipment, we have considered recent offers to purchase such equipment and expected future discounted cash flows. Machinery and equipment held for sale is currently not being used in operations and is expected to be sold or disposed of in the near future. We routinely review the remaining estimated useful lives of our equipment and machinery to determine if such lives should be adjusted due to changes in technology, production techniques and our customer base. However, due to the nature of our 34 testing operations, which may include sudden changes in demand in the end markets, and due to the fact that certain equipment is dedicated to specific customers, we may not be able to anticipate declines in the utility of our machinery and equipment. Consequently, additional impairment charges may be necessary in the future. Our operating expenses consist principally of selling, general and administrative expenses which include payroll-related expenses for selling, marketing and administrative staff, facilities-related expenses, marketing expenses, management fees paid to our parent, Singapore Technologies Pte Ltd and provisions for bad debts on accounts receivable. Our operating expenses also include research and development expenditures which are focused in the following two areas: - development of new test equipment, software and processes to enhance efficiency and reliability and to shorten test time of semiconductors; and - development of new, advanced packages to meet the customized needs of our customers. We are a part of the Singapore Technologies Group which provides us with certain direct and indirect benefits. We pay Singapore Technologies Pte Ltd an annual formula and service based management fee for certain management services, including corporate secretarial, internal audit, training, executive resources and treasury services. The management fee amounted to $1.1 million in 2001. We recognize stock-based compensation expense for options granted under the Share Option Plan in accordance with fixed plan accounting. Reported stock-based compensation expense represents the difference between the exercise price of employee share option grants and the fair market value of our ordinary shares at the date of the grant, amortized over the vesting period of the applicable options. The fair market value of our ordinary shares prior to our initial public offering was computed based on calculating the fair market value of our total invested capital less interest-bearing debt, assuming the exercise of the outstanding options at each valuation date and adding the expected cash proceeds from the exercise of those options. The fair market value of our total invested capital was estimated using the income approach and the market approach, on a closely-held minority interest basis. We have been granted pioneer enterprise status under The Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore, for "Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing Services" from January 1, 1996 to December 31, 2003. During the pioneer enterprise status period, only income from subcontract assembly and testing of integrated circuits, including wafer probe services, is exempt from Singapore income tax, subject to compliance with the conditions stated in the pioneer certificate. See "- Special Tax Status." Until June 30, 1998, our functional currency was the Singapore dollar. Effective July 1, 1998, we changed our functional currency to the United States dollar. Assets and liabilities denominated in foreign currencies are converted into the functional currency at the rates of exchange prevailing at the balance sheet date. Income and expenses in foreign currencies are converted into the functional currency at the rates of exchange at the transaction date. We experience foreign currency exchange gains and losses arising from transactions in currencies other than our functional currency and translations of assets and liabilities which are denominated in currencies other than our functional currency. Our currency gains and losses arise principally from the fluctuation of the U.S. dollar against the Singapore dollar and the Japanese yen from transactions denominated in these currencies. See "- Foreign Currency Risk." In August 2001, we acquired a 51% equity interest in Winstek by subscribing for new shares for cash consideration of $28.0 million. We accounted for this acquisition using the purchase method under U.S. GAAP. We began to consolidate Winstek's financial and operating results into our financial and operating results from the date of acquisition. The purchase price has been allocated to the assets acquired and liabilities assumed according to estimated fair values at the date of acquisition. The allocation resulted in the recognition of goodwill of approximately $1.3 million. In accordance with Statement No. 142, 35 "Goodwill and Other Intangible Assets," we will not amortize the goodwill but will test it for impairment at least annually. See "- Recent Accounting Pronouncements." In 2001, Winstek contributed $1.7 million to our net revenues of $145.9 million. RESULTS OF OPERATIONS The following table sets forth certain operating data as a percentage of net revenues for the periods indicated:
YEAR ENDED DECEMBER 31 --------------------------------------- 1999 2000 2001 ----- ----- ------ Net revenues 100.0% 100.0% 100.0% Cost of revenues 66.1 70.0 149.3 ----- ----- ------ Gross profit (loss) 33.9 30.0 (49.3) ----- ----- ------ Operating expenses: Selling, general and administrative 14.1 12.3 24.7 Research and development 3.6 4.4 10.4 Asset impairments -- -- 16.3 Prepaid leases written off -- -- 2.1 Stock-based compensation 12.6 0.1 0.7 Others, net -- -- 0.1 ----- ----- ------ Total operating expenses 30.3 16.8 54.3 ----- ----- ------ Operating income (loss) 3.6 13.2 (103.6) Other income (expense): Interest income (expense), net (2.8) 2.4 3.6 Foreign currency exchange gain 0.7 0.6 0.5 Other non-operating income, net 1.2 1.1 1.4 ----- ----- ------ Total other income (expense) (0.9) 4.1 5.5 ----- ----- ------ Income (loss) before income taxes 2.7 17.3 (98.1) Income taxes (0.2) (0.9) 6.0 ----- ----- ------ Net income (loss) before minority interest 2.5 16.4 (92.1) Minority interest -- -- 0.2 ----- ----- ------ Net income (loss) 2.5% 16.4% (91.9)% Other comprehensive income: Unrealized loss on available-for-sale marketable securities -- -- (0.2) Translation adjustment -- -- 0.1 ----- ----- ------ Comprehensive income (loss) 2.5% 16.4% (92.0)% ----- ----- ------
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 2001 Net revenues. Net revenues decreased 56.0% from $331.3 million in 2000 to $145.9 million in 2001. The decrease in net revenues was due primarily to a decrease in unit shipments in both assembly and test businesses and, to a lesser extent, a decline in average selling prices, principally resulting from changes in product mix and pricing pressures. These declines were the result of severe weakness in the end markets served by our customers and the high level of excess inventories in the 36 semiconductor industry. Net revenues from test services decreased 55.7% from $151.9 million in 2000 to $67.3 million in 2001. Net revenues from assembly services decreased 56.3% from $179.4 million in 2000 to $78.4 million in 2001. Cost of revenues and gross profit margin. Cost of revenues decreased 6.1% from $231.9 million in 2000 to $217.8 million in 2001. However, cost of revenues as a percentage of sales increased from 70.0% in 2000 to 149.3% in 2001, resulting in a gross loss. Gross loss in 2001 was $71.9 million, or a gross margin of negative 49.3%, as compared to gross profit of $99.3 million, or gross margin of 30.0%, in 2000. The gross loss in 2001 was mainly attributable to substantially lower revenues, lower capacity utilization rates, the high level of fixed costs, primarily depreciation expense and equipment leasing costs, the charge of $1.8 million relating to the early termination of equipment leases and the provision for inventory obsolescence of approximately $2.8 million. Depreciation expense (included in cost of revenues) and cost of leasing testers increased from $84.4 million in 2000 to $117.8 million in 2001 as a result of placing into service additional test and assembly equipment in both years. The inventory provision of $2.8 million was taken for substrates and leadframes accumulated for loadings that did not materialize as a result of the downturn. These "end-of-life" substrates and leadframes are not expected to be usable as our customers no longer require those packages. Selling, general and administrative expenses. Selling, general and administrative expenses decreased 11.7% from $40.8 million in 2000 to $36.0 million in 2001 but as a percentage of net revenues increased from 12.3% of net revenues in 2000 to 24.7% of net revenues in 2001. The decrease in the amount of selling, general and administrative expenses was a result of on-going cost reduction initiatives such as reducing compensation for certain management staff, reducing headcount through attrition, enforcing mandatory vacation days and reducing discretionary spending. Research and development expenses. Research and development expenses increased 3.6% from $14.6 million in 2000, or 4.4% of net revenues in 2000, to $15.2 million in 2001, or 10.4% of net revenues in 2001. These expenses were for additional equipment, supplies and research and development personnel to enhance our testing and advanced packaging technologies. Stock-based compensation expense. Stock-based compensation expense increased by 128.6% from $0.4 million or 0.1% of net revenues in 2000, to $1.0 million or 0.7% of net revenues in 2001 as a result of share options granted under our Employees' Share Ownership Scheme. Asset impairment and prepaid leases written-down. In the fourth quarter of 2001, we recognized an asset impairment charge of $23.7 million and prepaid leases write-down of $3.1 million. The write-downs were taken because the continued softness in demand in the end-markets to which certain of our equipment was dedicated had reduced the anticipated future usage of such equipment. Due to the poor operating results and continued weakness in the semiconductor industry, we initiated a review in the fourth quarter of 2001 to identify long-lived assets whose carrying amounts might not be recoverable. As a result of the review, certain assets, principally testers, were identified to be sold. We recognized asset impairment charges of $4.3 million in respect of equipment held for sale and $19.4 million in respect of tester equipment held for use. We plan to dispose of the equipment held for sale within the next year and are actively seeking buyers for this equipment. At the same time as we carried out our impairment review, we also reviewed the levels of expected future usage for tester equipment leased by us under operating lease arrangements. As a result of this review, we recognized an impairment charge of $3.1 million to write-off prepaid leases for tester equipment which we do not expect to use in the future. Net interest income. Net interest income decreased by 36.4% from $8.2 million in 2000 to $5.2 million in 2001. Net interest income consisted of interest income of $10.6 million and interest expense of $2.4 million in 2000 and interest income of $6.5 million and interest expense of $1.3 million in 2001. The interest income was earned on our marketable debt securities and fixed-term time deposits with various financial institutions. The lower interest income earned in the current year was due primarily to the lower amount of excess cash available for investment in marketable debt securities and fixed-term time deposits in 2001 and the general decline in the interest rate environment. The lower interest expense in the current year resulted from the full repayment of two loans amounting in total to $60 million in February 2000 and the progressive repayments of the EDB loan on its repayment due dates. 37 Foreign currency exchange gain. We recognized exchange gains of $2.0 million in 2000 and $0.8 million in 2001, due primarily to currency fluctuations of the U.S. dollar against the Singapore dollar and the Japanese yen. Other non-operating income. Other non-operating income was $3.5 million in 2000 and $2.0 million in 2001. The decrease was due to a reduction in grants for research and development activities from EDB under its Research and Incentive Scheme for Companies. Taxation. Income tax expense in 2000 was $2.9 million compared to an income tax benefit of $8.8 million in 2001. The income tax benefit of $8.8 million in 2001 comprised income tax expense of $1.4 million and a deferred tax benefit of $10.2 million. The income tax expense for both years was principally due to Singapore tax on interest income generated principally from the investment of excess cash in fixed-term time deposits and marketable debt securities. The deferred tax benefit of $10.2 million resulted principally from recognizing the deferred tax benefit associated with tax losses and unutilized capital allowances carried forward. The deferred tax effects of the tax loss and unutilized capital allowance carry forwards are recognized because they are expected to be carried forward to offset taxable income after the expiration of the pioneer period. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, we believe it is more likely than not that we will realize benefits of these deductible differences. The amount of the deferred tax asset considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period differ materially from current estimates. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 2000 Net revenues. Net revenues increased 64.7% from $201.1 million in 1999 to $331.3 million in 2000. This increase was primarily due to the increase in unit volumes for test and assembly services. Net revenues from test services increased 64.0% from $92.6 million in 1999 to $151.9 million in 2000. The increase in test services net revenues was attributable primarily to growth in test volumes reflecting increased demand and expanded capacity. Revenues from assembly increased 65.3% from $108.5 million in 1999 to $179.4 million in 2000. This increase was primarily due to greater demand for leadframe and array packages. Cost of revenues and gross profit margin. Cost of revenues increased 74.5% from $132.9 million in 1999 to $231.9 million in 2000, primarily due to higher depreciation expense and leasing costs as a result of placing into service additional test and assembly equipment and costs associated with increased test and assembly unit volumes. Depreciation expense (included in cost of revenues) increased from $46.7 million in 1999 to $66.4 million in 2000 and cost of leasing testers increased from $2.6 million in 1999 to $18.0 million in 2000. Gross profit margin decreased from 33.9% in 1999 to 30.0% in 2000. The decrease in gross profit margin was due principally to a higher proportion of array business in 2000 which has lower gross margin and also due to lower capacity utilization. Selling, general and administrative expenses. Selling, general and administrative expenses increased by 43.5% from $28.4 million, or 14.1% of net revenues, in 1999 to $40.8 million, or 12.3% of net revenues, in 2000. The increase was due primarily to higher administrative headcount to support increased operating activities in 2000 which resulted in higher payroll and staff related expenses. Research and development expenses. Research and development expenses increased by 101.0% from $7.3 million, or 3.6% of net revenues, in 1999 to $14.6 million, or 4.4% of net revenues, in 2000. The increased expenses were for additional investments (employees, equipment and operating supplies) primarily in advanced packaging technologies. 38 Stock-based compensation expense. Stock-based compensation expense decreased by 98.4% from $25.3 million, or 12.6% of net revenues, in 1999 to $0.4 million, or 0.1% of net revenues, in 2000. The high charge in 1999 arose as a result of the termination of the Employees' Share Ownership Scheme. Net interest income (expense). Net interest income (expense) increased substantially from a net interest expense of $5.5 million in 1999 to a net interest income of $8.2 million in 2000. The increase was due to interest earned on cash proceeds from our initial public offering in February 2000, the uninvested proceeds of which were invested generally in marketable debt securities and fixed term-time deposits with financial institutions, and from the repayment of our loans of $67.5 million. Foreign currency exchange gain. Exchange gain of $1.4 million was recognized in 1999 and of $2.0 million in 2000. The exchange gain was due primarily to currency fluctuations of the U.S. dollar against Singapore dollar and Japanese yen. Other non operating income. Other non operating income increased by 48.2% from $2.4 million in 1999 to $3.5 million in 2000. The increased income was mainly due to sale of scrap materials, increase in government grants for the purchase of equipment, and training subsidies used for research and development activities. The higher income in year 2000, however, was partially reduced by $0.5 million rental income received in 1999 but ceased in 2000. Income tax expense. Income tax expense in 1999 was $0.5 million compared to $2.9 million in 2000. The higher tax expense was due to a substantial increase in interest income earned in 2000. 39 QUARTERLY RESULTS The following table sets forth our unaudited results of operations, including as a percentage of net revenue, for the eight fiscal quarters ended December 31, 2001. We believe that all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the selected quarterly information when read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report. Our results of operations have varied and may continue to vary significantly from quarter to quarter and are not necessarily indicative of the results of any future periods. In addition, we believe that the period to period comparisons should not be relied upon as an indication of our future performance.
QUARTER ENDED --------------------------------------------------------------------------------- MAR-00 JUN-00 SEP-00 DEC-00 MAR-01 JUN-01 SEP-01 DEC-01 ------ ------ ------ ------ ------- ------- ------- ------- (in thousands) Net revenues 72,176 75,759 90,538 92,798 48,628 35,266 28,049 33,923 Cost of revenues 45,054 50,412 63,202 73,276 58,543 57,200 50,021 52,025 ------ ------ ------ ------ ------- ------- ------- ------- Gross profit (loss) 27,122 25,347 27,336 19,522 (9,915) (21,934) (21,972) (18,102) ====== ====== ====== ====== ======= ======= ======= ======= Operating expenses: Selling, general and administrative 9,586 9,747 10,151 11,314 11,188 8,756 7,839 8,258 Research and development 2,618 4,276 4,078 3,664 3,523 3,500 3,816 4,321 Asset impairments -- -- -- -- -- -- -- 23,735 Prepaid leases written off -- -- -- -- -- -- -- 3,145 Stock-based compensation 247 99 17 85 660 90 100 174 Others, net (6) (227) 41 170 82 -- 28 (9) ------ ------ ------ ------ ------- ------- ------- ------- Total operating expenses 12,445 13,895 14,287 15,233 15,453 12,346 11,783 39,624 ====== ====== ====== ====== ======= ======= ======= ======= Operating income (loss) 14,677 11,452 13,049 4,289 (25,368) (34,280) (33,755) (57,726) Other income (expense): Interest income, net 152 2,920 2,684 2,458 1,890 1,619 1,161 552 Foreign currency exchange gain 860 (398) 606 950 (58) 391 (562) 1,004 (loss) Other non-operating income 598 1,175 967 784 1,157 780 840 (787) (expense), net ------ ------ ------ ------ ------- ------- ------- ------- Total other income 1,610 3,697 4,257 4,192 2,989 2,790 1,439 769 ====== ====== ====== ====== ======= ======= ======= ======= Income (loss) before income taxes 16,287 15,149 17,306 8,481 (22,379) (31,490) (32,316) (56,957) Income taxes (489) (1,050) (851) (475) (604) (217) (122) 9,753 ------ ------ ------ ------ ------- ------- ------- ------- Net income (loss) before minority 15,798 14,099 16,455 8,006 (22,983) (31,707) (32,438) (47,204) interest Minority interest -- -- -- -- -- -- 139 173 ------ ------ ------ ------ ------- ------- ------- ------- Net income (loss) 15,798 14,099 16,455 8,006 (22,983) (31,707) (32,299) (47,031) ====== ====== ====== ====== ======= ======= ======= ======= Other comprehensive income: Unrealized gain (loss) on available- for-sale marketable securities -- -- -- -- 10 59 40 (412) Translation adjustment -- -- -- -- -- -- -- 93 ------ ------ ------ ------ ------- ------- ------- ------- Comprehensive income (loss) 15,798 14,099 16,455 8,006 (22,973) (31,648) (32,259) (47,350) ====== ====== ====== ====== ======= ======= ======= =======
40
AS A PERCENTAGE OF NET REVENUES ------------------------------------------------------------------------------ MAR-00 JUN-00 SEP-00 DEC-00 MAR-01 JUN-01 SEP-01 DEC-01 ------ ------ ------ ------ ------ ------ ------ ------ Net revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of revenues 62.4% 66.5% 69.8% 79.0% 120.4% 162.2% 178.3% 153.4% ----- ----- ----- ----- ----- ----- ------ ------ Gross profit (loss) 37.6% 33.5% 30.2% 21.0% (20.4)% (62.2)% (78.3)% (53.4)% ===== ===== ===== ===== ===== ===== ====== ====== Operating expenses: Selling, general and administrative 13.3% 12.9% 11.2% 12.2% 23.0% 24.8% 28.0% 24.3% Research and development 3.6% 5.6% 4.5% 3.9% 7.2% 9.9% 13.6% 12.7% Asset impairments 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 70.0% Prepaid leases written off 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 9.2% Stock-based compensation 0.3% 0.1% 0.0% 0.1% 1.4% 0.3% 0.3% 0.6% Others, net (0.0)% (0.3)% 0.0% 0.2% 0.2% 0.0% 0.1% 0.0% ----- ----- ----- ----- ----- ----- ------ ------ Total operating expenses 17.2% 18.3% 15.7% 16.4% 31.8% 35.0% 42.0% 116.8% ===== ===== ===== ===== ===== ===== ====== ====== Operating income (loss) 20.4% 15.2% 14.5% 4.6% (52.2)% (97.2)% (120.3)% (170.2)% Other income (expense): Interest income, net 0.2% 3.9% 3.0% 2.6% 3.9% 4.6% 4.1% 1.6% Foreign currency exchange gain (loss) 1.2% (0.5)% 0.7% 1.0% (0.1)% 1.1% (2.0)% 3.0% Other non-operating income (expense), net 0.8% 1.6% 1.1% 0.8% 2.4% 2.2% 3.0% (2.3)% ----- ----- ----- ----- ----- ----- ------ ------ Total other income 2.2% 5.0% 4.8% 4.4% 6.2% 7.9% 5.1% 2.3% ===== ===== ===== ===== ===== ===== ====== ====== Income (loss) before income taxes 22.6% 20.0% 19.1% 9.0% (46.0)% (89.3)% (115.2)% (167.9)% Income taxes (0.7)% (1.4)% (0.9)% (0.5)% (1.2)% (0.6)% (0.4)% 28.7% ----- ----- ----- ----- ----- ----- ------ ------ Net income (loss) before minority interest 21.9% 18.6% 18.2% 8.5% (47.2)% (89.9)% (115.6)% (139.2)% Minority interest 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.5% ----- ----- ----- ----- ----- ----- ------ ------ Net income (loss) 21.9% 18.6% 18.2% 8.5% (47.2)% (89.9)% (115.1)% (138.7)% ===== ===== ===== ===== ===== ===== ====== ====== Other comprehensive income: Unrealized gain (loss) on available-for-sale marketable securities 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.1% (1.2)% Translation adjustment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% ----- ----- ----- ----- ----- ----- ------ ------ Comprehensive income (loss) 21.9% 18.6% 18.2% 8.5% (47.2)% (89.7)% (115.0)% (139.6)% ===== ===== ===== ===== ===== ===== ====== ======
41 LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY As of December 31, 2001, our principal sources of liquidity included $115.2 million in cash and cash equivalents and $23.8 million in marketable securities. In addition, we have $20.0 million of banking and credit facilities consisting of short-term advances and bank guarantees of which we had utilized $1.6 million in the form of bank guarantees as of December 31, 2001. Interest on any future borrowings under the unutilized facilities will be charged at the bank's prevailing rate. Our subsidiary, Winstek, has $16.0 million of unutilized working capital facilities from various banks and financial institutions. Net cash provided by operating activities totaled $130.1 million in 2000 and $41.3 million in 2001. In 2000, the net cash generated from operating activities was primarily due to operating income before the effects of depreciation and amortization of $72.4 million. In 2001, the net cash generated from operating activities was primarily due to positive working capital changes resulting mainly from the collection of accounts receivable, offset by the effect of the timing of payments to suppliers. Net cash used in investing activities totaled $326.1 million in 2000 and $44.3 million in 2001. The net cash used in investing activities consisted of capital expenditures of $300.0 million in 2000 and $56.0 million in 2001, purchases of marketable debt securities of $21.9 million in 2000 and $22.5 million in 2001 and placement of surplus funds in short-term deposits of $10.0 million in 2000. The net cash used in investing activities in 2000 was reduced by receipt of $5.4 million mainly from the sale and lease back of certain equipment. The net cash used in investing activities in 2001 was reduced by receipts of $20.2 million from the sale or maturity of marketable debt securities, $10.0 million from the maturity of short-term deposits, $2.2 million from the disposal of equipment and $1.8 million of cash in Winstek at acquisition as a result of the consolidation of Winstek. Net cash provided by financing activities was $321.7 million in 2000 and net cash used in financing activities was $22.7 million in 2001. In 2000, the net cash generated from financing activities consisted mainly of proceeds from our initial public offering in February 2000 and issuance of shares from the exercise of share options of $389.2 million, reduced by the repayment of loans totaling $67.5 million. In 2001, the cash used in financing activities of $22.7 million was mainly for the repayment of two installments due on the long-term EDB loan of $14.7 million and the repayment of bank loans amounting to $8.8 million by Winstek. CAPITAL REQUIREMENTS Our capital expenditures are primarily driven by the demand for our services. In 2001, we incurred $62.4 million of capital expenditures for test and assembly equipment, peripherals, equipment upgrades and IT systems enhancements. Our capital expenditures in 2001 were lower than our capital expenditures of $276.9 million in 2000 as we cancelled or delayed our capital expenditures in response to the difficult business environment in 2001. Our budgeted capital expenditure for 2002 is $100.0 million including capital expenditures of about $22.0 million at our subsidiary, Winstek. A significant amount of the budgeted capital expenditures for 2002 is allocated for wafer bumping and 300mm capabilities, technology development, IT system enhancements and new generation testers. In addition, from time to time, we may acquire or make investments in additional businesses, products and technologies or establish joint ventures or strategic partnerships that we believe will complement our current and future businesses. Some of these acquisitions or investments could be material. However, we have no specific agreements or understandings with respect to any material acquisition or investment at this time. 42 The following table sets forth our contractual obligations and commitments to make future payments as of December 31, 2001. The following excludes our accounts payable, accrued operating expenses and other current liabilities which are payable in the normal course of operations and which are included in current liabilities at December 31, 2001.
YEAR ENDED DECEMBER 31, 2001, PAYMENTS DUE ----------------------------------------------------------------------- TOTAL WITHIN 1 YEAR 1-3 YEARS 4-5 YEARS AFTER 5 YEARS PAYMENTS ------------- --------- --------- ------------- -------- (in thousands) Long term debt $14,045 $14,045 -- -- $28,090 Capital lease obligations 2,564 7,219 470 -- 10,253 Operating leases 2,825 4,155 3,274 13,913 24,167 Unconditional purchase obligations: - Capital commitments 35,538 -- -- -- 35,538 - Bank guarantees 1,601 -- -- -- 1,601 Total contractual cash obligations $56,573 $25,419 $ 3,744 $13,913 $99,649
CAPITAL RESOURCES As of December 31, 2001, we had borrowings totaling $38.4 million comprising of the balance of $28.1 million outstanding on a loan from the Economic Development Board (EDB), a related party, and obligations under capital leases amounting to $10.3 million. The long-term loan agreement was entered into with EDB on June 5, 1998 for a sum of S$90.0 million. The loan is denominated in Singapore dollars and bears interest at 1% over the prevailing annual interest rate declared by the Central Provident Fund Board, a statutory board of the Government of Singapore. The prevailing interest rate declared by the Central Provident Fund Board was 2.5% at December 31, 2001. The principal amount is repayable over seven equal semi-annual installments commencing from September 2000 and ending on September 1, 2003. The loan is guaranteed by Singapore Technologies Pte Ltd. The loan agreement restricts us, without prior consent from EDB, from paying dividends, from incurring further indebtedness and from undertaking any form of reconstruction, including amalgamation with another company, which would result in a change in the control of our company, in each case without prior lender consent. The capital leases were taken up in 2001 to finance the purchase of new testers. We completed our initial public offering in February 2000. Our net proceeds from the initial public offering were approximately $387.0 million. The IPO proceeds have been used to repay loans of $25.0 million from ST Treasury Services Ltd, a related party, $35.0 million from Den Danske Bank and $22.2 million due on the EDB loan described above, and for general corporate purposes, including for capital expenditures and for general working capital. In 1997, we obtained a grant of S$23.2 million for the funding of certain research and development projects from the Economic Development Board under its Research Incentive Scheme for Companies. The grant was disbursed over a five year period, in the form of reimbursement of a specified percentage of amounts actually spent by us on manpower, research and development equipment, materials, training and technology licensing fees. The grant did not require repayment. Asset-related grants are presented in the consolidated balance sheet as deferred grants and are credited to other income on the straight-line basis over the estimated useful lives of the relevant assets. Income-related grants are credited to other income concurrent with the related qualifying expenditures. There were no conditions attached to the grant other than completing the project to which the grant related and the certification of the costs incurred. The grant ended December 31, 2001 and is not subject to renewal. We have an existing agreement with Citibank, N.A. for a working capital facility of $20.0 million. As of December 31, 2001, we had utilized $1.6 million in the form of bank guarantees under this facility. 43 In January 2002, we established a S$500 million MTN Program. Under the MTN Program, we may, from time to time, issue notes in series or tranches in Singapore dollars or any other currencies as may be agreed upon between us and the dealers of the MTN Program. Each series of notes may be issued in various amounts and terms, and may bear fixed or floating rates of interest. The notes constitute unsecured obligations. The MTN Program limits our ability to pay dividends while the interest on the notes is unpaid, to create security interests to secure our indebtedness and to undertake any form of reconstruction, amalgamation, merger or consolidation with another company if such arrangement would affect our ability to make payments on the notes, among other things. We intend to use the proceeds from the MTN Program for our general corporate purposes including capital expenditure, working capital and investments. We have not issued any notes under the MTN Program. Our ability to issue notes under the MTN Program will depend on market and other conditions (including our financial condition) prevailing at the time we intend to issue notes. As a result, we may not be able to issue notes under the MTN Program. Our subsidiary, Winstek, has $16.0 million of unutilized working capital facilities from various banks and financial institutions. Interest on borrowings under the facilities are charged at the particular bank's prevailing rate. We believe that our cash on hand, existing credit facilities and anticipated cash flows from operations will be sufficient to meet our currently anticipated capital requirements and debt service obligations for 2002. We consider opportunities to obtain additional debt or equity financing from time to time depending on prevailing market conditions. The nature of our industry is such that, in the short-term, we may reduce our capital expenditures by delaying planned capital expenditures in response to a difficult business environment, such as the one that existed in 2001. However, the semiconductor test and assembly market is characterized by rapid technological change which we expect to result in significant capital expenditure requirements within our longer-term horizon. Factors which may affect our level of future capital expenditures include the degree and the timing of technological changes within our industry, changes in demand for the use of our equipment and machinery as a result of changes to our customer base, the level of growth within our industry, and the amount and cost of capital available to us for capital expenditures. If our capital requirements exceed our expectations as a result of higher than anticipated growth in the semiconductor industry, acquisition or investment opportunities, the expansion of our business or otherwise, or if our cash flows from operations are lower than anticipated, including as a result of an unexpected decrease in demand for our services due to a prolonged downturn in the semiconductor industry or otherwise, we may be required to obtain additional debt or equity financing. We may not be able to obtain financing on terms that are favorable to us or at all. SPECIAL TAX STATUS We have been granted pioneer status under The Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86 of Singapore, for "Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing Services" from January 1, 1996 to December 31, 2003. During the period for which our pioneer status is effective, income from our pioneer trade (test and assembly services including wafer probing) is exempt from Singapore income tax. The income from tax exempt profits arising from the pioneer trade may be distributed as tax-exempt dividends and holders of ordinary shares are not subject to Singapore income tax on such dividends. Losses and unutilized capital allowances arising in the pioneer status period are available to be carried forward and offset against profits arising in subsequent periods, including profits from the same pioneer trade arising after the expiration of the pioneer status period. Pioneer loss and unutilized capital allowance carried forward are available indefinitely if more than 50% of the shareholders remain unchanged from the incurrence of the tax loss or allowance to its utilization. Without this exemption from income tax, our profits would be subject to income tax at the applicable corporate income tax rate of 25.5% and 24.5% for income earned in 2000 and 2001, respectively. The pioneer status exemption does not apply to interest income earned during the pioneer status period and such interest income is subject to tax at the applicable corporate income tax rate. At the expiration of the pioneer status period, we expect to apply for Development and Expansion incentive which provides for a concessionary tax rate of not less than 10% on income from our pioneer trade. 44 DERIVATIVE FINANCIAL INSTRUMENTS From time to time, we have entered into foreign forward contracts to mitigate the effect of foreign currency movements on the payroll, cost of materials and equipment. The contracts entered into require the purchase of Singapore dollars or Japanese yen, and the delivery of U.S. dollars. Because the contracts entered into to date do not qualify as hedges under generally accepted accounting principles in the United States, the gains and losses from these contracts have been recorded as foreign currency gains and losses. We had no net gain or loss in 2001 and a net gain of $1.3 million in 2000 arising from forward foreign currency contracts. As of December 31, 2001, we had no foreign currency forward contracts outstanding or any other derivative financial instruments. FOREIGN CURRENCY RISK A portion of our costs is denominated in foreign currencies, like the Singapore dollar and the Japanese yen. As a result, changes in the exchange rates of these currencies or any other applicable currencies to the U.S. dollar will affect our cost of goods sold and operating margins and could result in exchange losses. We cannot fully predict the impact of future exchange rate fluctuations on our profitability. From time to time, we may have engaged in, and may continue to engage in, exchange rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. However, we cannot assure that any hedging technique we implement will be effective. If it is not effective, we may experience reduced operating margins. RESEARCH AND DEVELOPMENT See "Item 4. Information on our Company - B. Business Overview - Research & Development." RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and Other Intangible Assets." Statement No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement No. 141 also specifies the criteria which intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. Statement No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement No. 142. Statement No. 142 will also require that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which was issued in August 2001. We were required to adopt the provisions of Statement No. 141 immediately and Statement No. 142 effective January 1, 2002. Accordingly, we are accounting for the acquisition of our interest in Winstek under SFAS No. 141. The adoption of Statements No's. 141 and 142 did not have a material effect on our financial position or results of operations. In June 2001, the FASB also issued Statement No. 143, "Accounting for Asset Retirement Obligations," in June 2001 which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. This statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, we will 45 recognize a gain or loss on settlement. We are required to adopt the provisions of Statement No. 143 on January 1, 2003. We are currently unable to estimate the impact of adopting this Statement at this time. In August 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Statement No. 144 retains the fundamental provisions of Statement No. 121 for recognition and measurement of the impairment of long-lived assets to be held and used and measurement of long-lived assets to be disposed of by sale. Statement No. 144 addresses certain implementation issues related to Statement No. 121. This Statement also supersedes the accounting and reporting provisions of APB opinion No. 30, "Reporting the Results Of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for segments of a business to be disposed of. Statement No. 144 retains the basic provisions of Opinion No. 30 for the presentation of discontinued operations in the income statement but broadens that presentation to include a component of an entity, rather than a segment of a business. We adopted Statement No. 144 on January 1, 2002. The adoption of Statement No. 144 did not have a material effect on our financial position or results of operations. 46 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. DIRECTORS AND SENIOR MANAGEMENT The following table sets forth the name, age (as at January 31, 2002) and position of each director and member of senior management:
NAME AGE POSITION - ---- --- --------------------------------------------- BOARD OF DIRECTORS Tan Bock Seng(1) 58 Chairman of the Board of Directors Lim Ming Seong(2)(3) 54 Deputy Chairman of the Board of Directors Harry Hooshang Davoody(4) 47 Director, President & Chief Executive Officer Steven Hugh Hamblin(5) 53 Director Koh Beng Seng(6) 51 Director Liow Voon Kheong 51 Director Premod Paul Thomas(1) 44 Director Charles Richard Wofford(6)(7) 68 Director Teng Cheong Kwee(6) 48 Director William J. Meder(1)(8) 61 Director Richard John Agnich(6)(9) 58 Director Gan Chee Yen(10) 42 Alternate Director to Premod Paul Thomas Lai Yeow Hin(10) 37 Alternate Director to Liow Voon Kheong SENIOR MANAGEMENT Tan Lay Koon 43 Chief Financial Officer Han Byung Joon 42 Chief Technology Officer June Chia Lihan 48 Executive Vice President Chan Kok Yong 49 Executive Vice President Ng Tiong Gee 39 Chief Information Officer
- ---------- (1) Member of the Budget Committee. (2) Chairman of the Budget Committee. (3) Member of the Executive Resource & Compensation Committee. (4) Appointed on January 8, 2002 to succeed Tan Bock Seng as the Chief Executive Officer. (5) Chairman of the Audit Committee. (6) Member of the Audit Committee. (7) Chairman of the Executive Resource & Compensation Committee. (8) Appointed on June 1, 2001. (9) Appointed on October 23, 2001. (10) Under Singapore companies law, a director appointed by a company may, if permitted by the Articles of Association of such company, appoint an alternate director to act in place of such director should the director be unable to perform his or her duties as director of such company for a period of time. The Board of Directors held four meetings in person and one meeting by teleconference in 2001. The average attendance by Directors at Board meetings they were scheduled to attend was over 91%. None of our Directors, Senior Management or substantial shareholders are related to each other. Lim Ming Seong is Corporate Advisor, Premod Paul Thomas is Director, Corporate Business & Treasury and Gan Chee Yen is Director, Finance of our parent, Singapore Technologies Pte Ltd. 47 TAN BOCK SENG Tan Bock Seng served as a Director since January 1995 and was our Chairman and Chief Executive Officer since May 1998. On January 8, 2002, he retired as the Chief Executive Officer and remains our non-executive Chairman of the Board of Directors. Mr. Tan has more than 30 years of experience in the semiconductor industry and has held key positions in several multinational corporations, including Fairchild Singapore Pte Ltd and Texas Instruments Singapore Pte Ltd. He was President of Chartered Semiconductor Manufacturing Ltd from 1993 to 1998 and Managing Director of National Semiconductor, Singapore, from 1988 to 1993. Mr. Tan received his Bachelor of Science in Mathematics from the then University of Singapore. LIM MING SEONG Lim Ming Seong became our Deputy Chairman in June 1998. Mr. Lim is the Corporate Advisor of Singapore Technologies Pte Ltd, Deputy Chairman of the Board of Directors of Chartered Semiconductor Manufacturing Ltd and Chairman of CSE Systems & Engineering Ltd. Since joining Singapore Technologies Pte Ltd in December 1986, Mr. Lim has held various senior positions in the Singapore Technologies Group. Prior to joining Singapore Technologies Pte Ltd, Mr. Lim was with the Ministry of Defence of Singapore. Mr. Lim received his Bachelor of Applied Science (Honors) in Mechanical Engineering from the University of Toronto and his Diploma in Business Administration from the University of Singapore. Mr. Lim also participated in the Advanced Management Programs at INSEAD and Harvard University, respectively. HARRY HOOSHANG DAVOODY Harry Davoody was appointed our President & Chief Executive Officer on January 8, 2002. He was appointed to the Board of Directors on the same date. Mr. Davoody has 20 years of experience in the semiconductor industry. He joined Texas Instruments, Inc. as an IC Design Engineer in 1980 and rose through the ranks with various assignments in applications/systems engineering, strategic marketing, worldwide business management and full profit/loss responsibility. Prior to joining our company, Mr Davoody was the Vice-President/General Manager of Mixed-Signal DSP Solutions Division, a major element of Texas Instruments' overall mixed-signal business, and later became the Vice-President/General Manager of Digital Audio Video Products Group, a start-up division of Texas Instruments responsible for digital consumer and multimedia mixed-signal audio/video/imaging products. Mr. Davoody graduated with a Bachelor's Degree in Electrical Engineering from the University of Texas at Arlington, Texas in 1979. Mr. Davoody obtained a Master Degree in Electrical Engineering from Southern Methodist University in 1982 and a Master of Business Administration from the University of Dallas in 1987. STEVEN HUGH HAMBLIN Steven Hugh Hamblin was appointed to our Board of Directors in June 1998. Mr. Hamblin was with Compaq Computer Corporation from 1984 to 1996 and held various positions including, Managing Director of Compaq Asia Manufacturing, Vice President Asia/Pacific Division, Vice President and Financial Controller for Corporate Operations and Vice President of Systems Division Operations. He was with Texas Instruments for ten years before leaving as its Division Controller, Semiconductor Group, to join General Instrument, Microelectronics Division, New York in 1983 as its Group Financial Executive. Mr. Hamblin received his Bachelor of Science in Civil Engineering from the University of Missouri, Columbia and his Master of Science in Industrial Administration from Carnegie-Mellon University. KOH BENG SENG Koh Beng Seng was appointed to our Board of Directors in February 1999. He is currently Deputy President, United Overseas Bank Limited. Mr. Koh is on the Board of Directors of Chartered Semiconductor Manufacturing Ltd. Mr. Koh is active in the financial services sector and was with the Monetary Authority of Singapore from 1973 to 1998, where he served as Deputy Managing Director from 1988 to 1998. Mr. Koh received his Bachelor of Commerce (First Class Honors) from Nanyang University and his Master of Business Administration from Columbia University. Mr. Koh was awarded an Overseas Postgraduate Scholarship by the Monetary Authority of Singapore in 1978. In 1987, the President of the Republic of Singapore awarded him a Meritorious Service Medal. 48 LIOW VOON KHEONG Liow Voon Kheong was appointed to our Board of Directors in October 1997. Mr. Liow is presently the General Manager of EDB Investments Pte Ltd, Director/General Manager of EDB Ventures Pte Ltd and EDB Ventures 2 Pte Ltd and General Manager of PLE Investments Pte Ltd. Mr. Liow started his career with the Economic Development Board in 1976. He received his Bachelor of Engineering (Electrical & Electronics) and his Diploma in Business Administration from the University of Singapore. PREMOD PAUL THOMAS Premod Paul Thomas was appointed to our Board of Directors in March 1998. Mr. Thomas is Director, Corporate Business & Treasury of Singapore Technologies Pte Ltd and is an Alternate Director on the Board of Directors of Chartered Semiconductor Manufacturing Ltd. Before joining Singapore Technologies Pte Ltd in February 1998, he was with Tirtamas Group, Jakarta, as Group Executive Advisor from 1995 to 1998 and with Bank of America from 1983 to 1995. Mr. Thomas received his Bachelor of Commerce (First Class Honors) from Loyola College, India in 1977. He is a Certified Associate of the Indian Institute of Bankers, Bombay, and has a Master of Business Administration from the Indian Institute of Management, Ahmedabad. CHARLES RICHARD WOFFORD Charles Richard Wofford was appointed to our Board of Directors in February 1998. Mr. Wofford is presently a Director of FSI International. Mr. Wofford was with Texas Instruments for 33 years before leaving as Senior Vice-President to join Farr Company in 1991. He was the Chairman, CEO and President of Farr Company from 1992 to 1995. He received his Bachelor of Arts in Mathematics and Psychology from Texas Western College. TENG CHEONG KWEE Teng Cheong Kwee was appointed to our Board of Directors in January 2001. Prior to this appointment, he was the Head of Risk Management & Regulatory Division of the Singapore Exchange Limited. Mr. Teng has more than 20 years of experience in the finance industry. He is a member of the Committee on Corporate Governance, a private sector led committee established by the Government of Singapore to study and recommend measures to raise the standard of corporate governance in Singapore. Mr. Teng received his Bachelor of Engineering (Industrial), First Class Honours and Bachelor of Commerce from the University of Newcastle, Australia. WILLIAM J. MEDER William J. Meder was appointed to our Board of Directors in June 2001. He has 38 years of experience in electronics manufacturing, technology and business management, 33 of which were with Motorola. He runs a consulting firm and currently consults for Motorola Inc., on semiconductor issues and several other multinational companies in the area of business and manufacturing management. Mr. Meder is Chairman of the Board for Leshan Phoenix, a China-U.S. joint venture, and acts as an advisor to the Board for Operations and Investments for PSI Technologies. He is also teaching Business and Manufacturing Strategy for the Chinese Government. He received his Bachelor of Science (Metallurgical Engineering) from Oklahoma University and Master (Materials Science) from Washington University in St. Louis. RICHARD JOHN AGNICH Richard John Agnich was appointed to our Board of Directors in October 2001. He has 27 years of experience in the semiconductor industry. Mr. Agnich joined Texas Instruments in 1973 and held various positions, including that of Senior Vice President, Secretary and General Counsel. He is a past president of the Association of General Counsel, has written on corporate governance and has been a seminar leader and speaker at programs of the Stanford Law School and the SMU Law School. He is also a co-founder and is currently the Chair of Entrepreneurs Foundation of North Texas, and serves on the Board of Trustees of Austin College. Mr. Agnich received his BA in Economics from Stanford University and a Juris Doctor from the University of Texas School of Law. GAN CHEE YEN Gan Chee Yen was appointed Alternate Director to Premod Paul Thomas in July 1999. Mr. Gan has been in the finance accounting field for more than 17 years and is currently the Director, Finance of Singapore Technologies Pte Ltd. He was the 49 Senior Manager of Singapore Technologies Marine Ltd before joining Singapore Technologies Pte Ltd in September 1996 as the Group Financial Controller. Mr. Gan received his Bachelor of Accountancy from the National University of Singapore. LAI YEOW HIN Lai Yeow Hin was appointed Alternate Director to Liow Voon Kheong in October 1997. Mr. Lai started his career with the Singapore Economic Development Board in 1990. He is currently the Senior Manager, Investments of EDB Investments Pte. Ltd. From December 1992 to January 1996, Mr. Lai was the Director of the Economic Development Board's office in Los Angeles. He was a Founding Director of the Singapore American Business Association of Southern California from 1994 to 1996. Mr. Lai received his Master of Science (Electrical Engineering) from the University of Illinois (Urbana-Champaign). TAN LAY KOON Tan Lay Koon joined us in May 2000 as our Chief Financial Officer. Prior to joining our company, Mr. Tan was an investment banker with Salomon Smith Barney, the global investment banking unit of Citigroup Inc. Before that, he held various positions with the Government of Singapore, Times Publishing Limited and United Overseas Bank Limited in Singapore. Mr. Tan graduated with a Bachelor of Engineering (First Class Honors) from the University of Adelaide, Australia as a Colombo Plan scholar. He also has a Master of Business Administration (Distinction) from the Wharton School, University of Pennsylvania where he was elected a Palmer scholar. HAN BYUNG JOON Han Byung Joon joined us as our Chief Technology Officer in December 1999. Prior to joining our company, Dr. Han was Director of Product Development at Anam Semiconductor, Inc. and, before that, held various engineering positions with IBM and AT&T Bell Labs in Murray Hill, New Jersey. Dr. Han is credited with the invention of several wafer and chip scale semiconductor packaging technologies patented today. Dr. Han received his Doctorate in Chemical Engineering from Columbia University, New York, in 1988. JUNE CHIA LIHAN June Chia Lihan joined us in 1994. She is currently our Executive Vice President, Worldwide Sales & Marketing. Prior to that, Ms. Chia held various positions including Executive Vice President for Information Technology/Planning/Industrial Engineering/Purchasing. From 1991 to 1994, Ms. Chia was with Nortel Australia and served as its Director of Manufacturing Operations from early 1993 to July 1994. Prior to joining Nortel, Ms. Chia worked in numerous assignments in Planning, Industrial Engineering and Purchasing in National Semiconductor, Fairchild Singapore and Texas Instruments. Ms. Chia received her Bachelor of Engineering (First Class Honors) and her Master of Business Administration from the National University of Singapore. CHAN KOK YONG Chan Kok Yong joined us in February 2001 as our Executive Vice President, Operations. Prior to joining our company, he was with Unitrode Electronics, a semiconductor test and assembly subsidiary of Texas Instruments where he was Managing Director. As Managing Director, Mr. Chan had overall responsibility for the company's Asian operations. Before joining Unitrode Electronics, Mr. Chan spent nine years with Fairchild Singapore in various operational capacities including the Operations Manager of Fairchild Logic Division. Mr. Chan graduated with a Bachelor of Engineering with honors from the National University of Singapore in 1977. He also has a Master of Business Administration from the National University of Singapore. NG TIONG GEE Ng Tiong Gee was appointed Chief Information Officer in May 2001. Mr. Ng was previously the Chief Information Officer of Gateway Singapore, heading the technology multinational's IT activities in Asia Pacific. Prior to that, he spent over six years with Siemens Components (now known as Infineon Technologies Asia Pacific) where he last served as Director of Information Systems and Services. Between 1988 and 1992, Mr. Ng held various key engineering positions at Digital Equipment Singapore, now part of Compaq. Mr. Ng graduated with a Bachelor of Mechanical Engineering with honors from the National University of Singapore in 1987. He also holds a Master's Degree in Science (computer integrated manufacturing) and Business Administration from the Nanyang Technological University in Singapore. 50 B. COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT In 2001, the aggregate amount of compensation and bonus paid by our company to all our directors and senior management was approximately $2,656,460 broken down as follows:
EXECUTIVE NON EXECUTIVE DIRECTOR DIRECTORS TOTAL --------- ------------- ----------- Tan Bock Seng $737,901 $ 737,901 Lim Ming Seong 45,000 45,000 Steven Hugh Hamblin 45,000 45,000 Koh Beng Seng 31,000 31,000 Premod Paul Thomas 25,000 25,000 Charles Richard Wofford 50,000 50,000 Liow Voon Kheong 5,462 5,462 Teng Cheong Kwee 29,000 29,000 William J. Meder 22,920 22,920 Richard John Agnich 11,250 11,250 Senior Management (excluding Executive Director) as a group 1,653,927 ---------- $2,656,460 ==========
Our company does not have any pension, retirement or other similar post-retirement benefits. We have provided to our directors and officers customary director or officer insurance, as appropriate. Non-executive directors receive annual directors' fees except that the directors' fees for those employed by Singapore Technologies Pte Ltd are paid to Singapore Technologies Pte Ltd and for those employed by EDB Investments Pte Ltd ("EDBI") are paid to EDBI. Those who are not employed by Singapore Technologies Pte Ltd or EDBI also receive compensation for attending meetings of the Board of Directors. Directors are reimbursed for reasonable expenses they incur in attending meetings of the Board and its committees. They may also receive compensation for performing additional or special duties at the request of the Board. Alternate Directors do not receive any compensation for serving or attending meetings of the Board. In 2001, Tan Bock Seng who was an executive director of our company, did not receive directors' fees. As at December 31, 2001, we had twelve directors (including two alternate directors) on the Board. In Singapore it is customary that directors are paid a fee for their contributions to the company. For the financial year ended December 31, 2000, we paid directors' fees totaling $233,000. We will seek approval at our annual general meeting in 2002 for the payment of directors' fees of approximately $275,000 for the financial year ended December 31, 2001 for their contributions to our company. Directors' fees for the financial year ended December 31, 2001 represent an increase of 18.0% over directors' fees for the financial year ended December 31, 2000. Directors' fees in 2001 were higher owing to the appointment of two additional directors to the Board, William J. Meder and Richard John Agnich. C. BOARD PRACTICES WITH RESPECT TO DIRECTORS AND OFFICERS' TERM OF SERVICE BOARD OF DIRECTORS Our Articles of Association set the minimum number of directors at two. We currently have thirteen directors including two alternate directors. A portion of our directors are re-elected at each annual general meeting of shareholders. The number of directors retiring and eligible to stand for re-election each year varies, but generally it is equal to one-third of the board, with 51 the directors who have been in office longest since their re-election or appointment standing for re-election. Our Chief Executive Officer and President will not be required to stand for re-election as a director while he or she is in office. As Singapore Technologies Pte Ltd and its affiliates own 71.9% of our outstanding ordinary shares, it is able to control actions over many matters requiring approval by our shareholders, including the election of directors. Our Articles of Association permit a director to appoint an alternate director to act in place of such director should the director be unable to perform his or her duties as director for a period of time. Under Singapore law, the alternate director is not merely an agent of the director but is also held accountable to the company for his or her actions as director during the period for which he or she acts as alternate director. See "- Compensation" for details on the directors' service contracts with us. COMMITTEES OF THE BOARD OF DIRECTORS (i) Audit Committee The Audit Committee of our Board of Directors currently consists of five members of which a majority may not be executive directors of our company. The Audit Committee members are Steven Hugh Hamblin (Chairman), Koh Beng Seng, Charles Richard Wofford, Teng Cheong Kwee and Richard John Agnich. The Audit Committee reviews the scope and results of the audits provided by our internal and independent auditors, reviews and evaluates our administrative, operating and internal accounting controls, reviews material related party transactions, and reviews the integrity of the financial information presented to our shareholders. Under Singapore law, only board members of a company may serve on its Audit Committee. The Audit Committee held four meetings in 2001. (ii) Executive Resource & Compensation Committee The Executive Resource & Compensation Committee currently consists of Charles Richard Wofford (Chairman), Lim Ming Seong and Peter Seah Lim Huat. Peter Seah is neither a director nor a member of senior management of our company. He is the President and Chief Executive Officer of Singapore Technologies Pte Ltd and was nominated by Singapore Technologies Pte Ltd to the committee. Peter Seah serves on the boards of a number of companies within the Singapore Technologies Group. Our Articles of Association allow non-board members to serve on board committees, other than the Audit Committee which must be comprised of only board members as required under Singapore law. The Executive Resource & Compensation Committee oversees executive compensation and development in our company with the goal of building capable and committed management teams through competitive compensation, focused management and progressive policies that attract, motivate and retain talented executives to meet our current and future growth plans. Specifically, the Executive Resource & Compensation Committee establishes compensation policies and incentive programs for key executives, approves salary reviews, bonuses and incentives for key executives, approves share incentives, including share options and share ownership for executives, approves key appointments and reviews succession plans for key positions, and oversees the development of key executives and younger talented executives. The Executive Resource & Compensation Committee held four meetings in 2001. (iii) Budget Committee The Budget Committee currently consists of Lim Ming Seong (Chairman), Tan Bock Seng, Premod Paul Thomas and William J. Meder. The Budget Committee meets with our senior management to review our annual budget and to review our quarterly financial performance in relation to our budget. The Budget Committee held four meetings in 2001. 52 D. EMPLOYEES We had 2,559 full time employees as of December 31, 2001. Our employees are not members of any labor union or organization in Singapore or any other country in which we operate. Our employees are equity owners of our company and we believe in providing opportunities for our employees to build careers with us. To that end we have in place extensive training and development programs for our employees. We believe that we have a good relationship with our employees. The following table sets forth the total number of employees as of December 31, 2001, broken down by functional responsibility and by geographical locations.
NO. OF EMPLOYEES AS OF DECEMBER 31, 2001 --------------------------------------------------------------------------------------- RESEARCH & SALES & OPERATIONS DEVELOPMENT MARKETING OPERATING SUPPORT TOTAL ---------- ----------- --------- ----------------- ----- Singapore 1,704 118 22 526 2,370 USA 6 25 41 11 83 Taiwan 68 8 3 15 94 Others 0 3 8 1 12 ----- --- -- --- ----- TOTAL 1,778 154 74 553 2,559 ===== === == === =====
E. SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT The following table provides certain information with respect to beneficial ownership of our ordinary shares, including ordinary shares held directly or in the form of American Depositary Shares and share options granted as of January 31, 2002, based on an aggregate of 990,607,105 ordinary shares outstanding as of such date, by our directors and senior management. Beneficial ownership is determined in accordance with rules of the U.S. Securities and Exchange Commission and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Ordinary shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person.
ORDINARY SHARES(1) BENEFICIALLY OWNED ----------------------- DIRECTORS NUMBER PERCENT - --------- ---------- ------- Tan Bock Seng 9,400,000 * Steven Hugh Hamblin 123,333 * Koh Beng Seng 118,333 * Premod Paul Thomas 110,000 * Liow Voon Kheong 12,000 * Charles Richard Wofford 138,333 * William J. Meder 2,000 * Gan Chee Yen 49,000 * All directors and senior management(2) as a group 12,824,999 1.29%
- ---------- * Beneficial ownership of less than 1% of our outstanding ordinary shares. (1) All our ordinary shares have identical rights in all respects and rank equally with one another. (2) Each of our senior management owns less than 1% of our outstanding shares. 53 SHARE OPTIONS FOR DIRECTORS The following table contains information pertaining to share options held by directors as of January 31, 2002:
NUMBER OF ORDINARY SHARES ISSUABLE ON PER SHARE EXERCISE PRICE EXERCISEABLE EXERCISE OF OPTION S$ PERIOD ------------------ ------------------------ ------------------------ Tan Bock Seng 1,600,000 3.554 11/22/2000 to 11/21/2009 1,000,000 6.93 04/20/2001 to 04/19/2010 1,972,000 1.592 04/24/2002 to 04/23/2011 5,000,000 2.294 12/20/2002 to 12/19/2011 Lim Ming Seong 200,000 1.592 04/24/2002 to 04/23/2011 Harry Hooshang Davoody 4,000,000(1) 2.422 01/08/2003 to 01/07/2012(1) Steven Hugh Hamblin 10,000 0.25 02/09/2000 to 12/09/2004 20,000 0.25 02/09/2000 to 06/11/2004 30,000 3.554 02/09/2000 to 11/21/2004 40,000 6.93 04/20/2001 to 04/19/2005 50,000 1.592 04/24/2002 to 04/23/2006 Koh Beng Seng 10,000 0.25 02/09/2000 to 12/09/2004 50,000 3.554 02/09/2000 to 11/21/2004 40,000 6.93 04/20/2001 to 04/19/2005 50,000 1.592 04/24/2002 to 04/23/2006 Premod Paul Thomas 12,500 0.42 12/10/2000 to 12/09/2009 7,500 0.25 12/10/2000 to 12/09/2009 16,000 3.554 11/22/2000 to 11/21/2009 40,000 6.93 04/20/2001 to 04/19/2010 50,000 1.592 04/24/2002 to 04/23/2011 Charles Richard Wofford 25,000 0.42 02/09/2000 to 12/09/2004 20,000 0.25 02/09/2000 to 06/11/2004 20,000 3.554 02/09/2000 to 11/21/2004 40,000 6.93 04/20/2001 to 04/19/2005 50,000 1.592 04/24/2002 to 04/23/2006 Teng Cheong Kwee 50,000 1.592 04/24/2002 to 04/23/2006 William J Meder 20,000 1.624 07/23/2002 to 07/22/2006 Richard John Agnich 20,000 1.298 10/23/2002 to 10/22/2006
54
NUMBER OF ORDINARY SHARES ISSUABLE ON PER SHARE EXERCISE PRICE EXERCISEABLE EXERCISE OF OPTION S$ PERIOD ------------------ ------------------------ ------------------------ Gan Chee Yen 20,000 3.554 02/09/2000 to 11/21/2009 40,000 6.93 04/20/2001 to 04/19/2010 20,000 1.592 04/24/2002 to 04/23/2011
- ---------- (1) Of the 4,000,000 options, 20% of 1,500,000 options will vest and may be exercised at the exercise price indicated above at the end of each 12 month period of continuous service, commencing January 8, 2003. The remaining 2,500,000 options will vest and can be exercised after January 8, 2003 if our ordinary shares achieve and maintain certain specified price levels. EMPLOYEES' SHARE OWNERSHIP SCHEME We had an Employees' Share Ownership Scheme for employees and directors of our company, our subsidiary and the related companies within the Singapore Technologies Group which was terminated prior to the initial public offering of our shares on the Nasdaq National Market and Singapore Exchange in February, 2000. SHARE OPTION PLAN Effective as of May 28, 1999, our company adopted the ST Assembly Test Services Ltd Share Option Plan 1999, or the Share Option Plan. The purpose of the plan is to offer selected individuals an opportunity to acquire or increase a proprietary interest in our company. Options granted under the Share Option Plan may be non-statutory options or incentive stock options intended to qualify under Section 422 of the United States Internal Revenue Code. The aggregate number of shares that may be issued under the Share Option Plan and under all of our other share incentive and options schemes or agreements may not exceed 150 million shares (subject to anti-dilution adjustment pursuant to the Share Option Plan). If an outstanding option expires for any reason or is cancelled or otherwise terminated, the shares allocable to the unexercised portion of such option will again be available for the purposes of the Share Option Plan and all other share incentive and option schemes approved by our Board of Directors. The Share Option Plan is administered by the Executive Resource & Compensation Committee. Our employees, outside directors and consultants are eligible to receive grants of option except that: (i) employees of our affiliates, our outside directors and consultants are not eligible for the grant of incentive stock options; and (ii) employees, outside directors and consultants of our affiliates who are residents of the United States are not eligible for the grant of options. An individual who owns more than 10% of the total combined voting power of all classes of our outstanding shares or of the shares of our parent or subsidiary is not eligible for the grant of options unless the exercise price of the option is at least 110% of the fair market value of a share on the date of grant, and in the case of an incentive stock option, such option by its terms is not exercisable after the expiration of five years from the date of grant. The exercise price of an incentive stock option shall not be less than 100% of the fair market value of a share on the date of grant. In no event will the exercise price for a share be below the par value of that share. Options granted to persons other than officers, outside directors and consultants shall become exercisable at least as rapidly as 20% per year over the five-year period commencing on the date of grant. No option that has an exercise price that is equal to or greater than the fair market value of a share on the date of grant shall be exercisable prior to the first anniversary of the date of grant. No option that has an exercise price that is less than the fair market value of a share on the date of grant shall be exercisable prior to the second anniversary of the date of grant. 55 The exercisability of options outstanding under the Share Option Plan may be fully or partially accelerated under certain circumstances such as a change in control of our company, as defined in the Share Option Plan. Each grant under the Share Option Plan is evidenced by a share option agreement and the term of options granted may not exceed ten years from the date of grant. If the optionee's service with us is terminated, the optionee's outstanding options, to the extent then exercisable, remain exercisable for a specified period (which is based on the reason for the termination) following the date of termination. All options which are not exercisable at the date of termination lapse when the optionee's service terminates. The Executive Resource & Compensation Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options in return for the grant of new options for the same or a different number of shares and at the same or a different exercise price. No modification of an option shall, without the consent of the optionee, impair the optionee's rights or increase the optionee's obligations under such option. Options are generally not transferable under the Share Option Plan. In the event of certain changes in our capitalization, the Executive Resource & Compensation Committee will make appropriate adjustments in one or more of the number of shares available for future grants under the Share Option Plan, the number of shares covered by each outstanding option or the exercise price of each outstanding option. If we are a party to a merger or consolidation, outstanding options will be subject to the agreement of merger or consolidation. The Share Option Plan will terminate automatically on May 28, 2009. The Executive Resource & Compensation Committee may amend, suspend or terminate the Share Option Plan at any time and for any reason, provided that any amendment which increases the number of shares available for issuance under the Share Option Plan, or which materially changes the class of persons who are eligible for the grant of incentive stock options, will be subject to the approval of our shareholders. As of January 31, 2002, options to purchase an aggregate of 52,919,545 ordinary shares were accepted and outstanding, out of which 21,507,000 were held by all directors and senior management as a group. The exercise prices of these options range from S$0.25 to S$6.93. The expiration dates of the options range from June 2004 to January 2012. We expect to grant to our directors, officers and employees further options under the Share Option Plan in 2002. The exercise price of such options will be the fair market value of ordinary shares at the date of the grant. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. MAJOR SHAREHOLDERS As of January 31, 2002, Singapore Technologies Pte Ltd beneficially owns approximately 71.9% of our ordinary shares. As of January 31, 2002, Temasek Holdings (Private) Limited directly owns 78.6% of Singapore Technologies Pte Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd, which is in turn 100% owned by Temasek Holdings (Private) Limited, the principal holding company through which the corporate investments of the Government of Singapore are held. As a result, Singapore Technologies Pte Ltd is able to exercise direct or indirect control over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. Matters that typically require shareholder approval include, among other things: - the election of directors; - our merger or consolidation with any other entity; - any sale of all or substantially all of our assets; and 56 - the timing and payment of dividends. The following table sets forth certain information regarding the ownership of our ordinary shares as of January 31, 2002 by each person who is known by us to own beneficially more than 5% of our outstanding ordinary shares. Beneficial ownership is determined in accordance with rules of the U.S. Securities and Exchange Commission and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Ordinary shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person.
NUMBER OF SHARES PERCENTAGE(2) NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED - ------------------------ ------------------ ------------------ Singapore Technologies Pte Ltd(1) 511,532,398 51.64% Singapore Technologies Semiconductors Pte Ltd(1) 200,695,652 20.26%
- ---------- (1) Temasek Holdings (Private) Limited, the principal holding company through which the corporate investments of the Government of Singapore are held, owns 78.6% of Singapore Technologies Pte Ltd, and owns 100% of Singapore Technologies Holdings Pte Ltd, which owns the remaining 21.4% of Singapore Technologies Pte Ltd which, in turn, owns 100% of Singapore Technologies Semiconductors Pte Ltd. Temasek Holdings (Private) Limited may therefore be deemed to beneficially own the shares directly owned by Singapore Technologies Pte Ltd and Singapore Technologies Semiconductors Pte Ltd. (2) Based on an aggregate 990,607,105 ordinary shares outstanding as of January 31, 2002. All our ordinary shares have identical rights in all respects and rank equally with one another. Our ordinary shares have been traded on the Singapore Exchange Securities Trading Limited or SGX-ST since January 31, 2000 and our ADSs have been traded on the Nasdaq National Market or Nasdaq since January 28, 2000. As of January 31, 2002, 117,000 of our ordinary shares, representing 0.01% of our outstanding shares, were held by a total of 27 holders of record with addresses in the United States. As of the same date 725,495 of our ADSs (representing 7,254,950 ordinary shares), representing 0.73% of our outstanding shares, were held by a total of 5 registered holders of record with addresses in the United States. Because many of our ordinary shares and ADRs were held by brokers and other institutions on behalf of shareholders in street name, we believe that the number of beneficial holders of our ordinary shares and ADRs is substantially higher. On January 31, 2002, the closing price of our ordinary shares on the SGX-ST was S$2.41 per ordinary share and the closing price of our ADSs on Nasdaq was $13.00 per ADS. B. RELATED PARTY TRANSACTIONS We engage in transactions with companies in the Singapore Technologies Group in the normal course of business. Such transactions are generally entered into on normal commercial terms. We entered into a turnkey contract with Chartered Semiconductor for its wafer, sort assembly and test services in March 2000. This agreement governs the conduct of business between the parties, relating, among other things, to the sort, assembly and test services which were previously governed solely by purchase orders executed by Chartered Semiconductor. The agreement does not contain any firm commitment for Chartered Semiconductor to purchase or for us to supply services covered thereunder. The agreement is for a period of three years and will be automatically renewed thereafter unless certain events occur. 57 In October 2001, we gave a guarantee on behalf of our subsidiary, STATS, Inc., for the lease by STATS Inc. of its office in California in the United States. The guarantee covers the full performance of each term, covenant and condition of the lease, including payment of all rent and other sums required to be paid under the lease. We lease the land on which our Singapore facility is situated pursuant to a long-term operating lease from the Housing and Development Board, a statutory board of the Government of Singapore. The lease is for a 30-year period commencing March 1, 1996, and is renewable for a further 30 years subject to the fulfillment of certain conditions. The rent is S$110,745 ($60,490) per month subject to revision to market rate in March of each year, with the increase capped at 4% per annum. In the year ended December 31, 2001, we paid a management fee of $1.1 million to Singapore Technologies Pte Ltd for various management and corporate services provided pursuant to the Singapore Technologies Management and Support Services Agreement entered into on December 1999. Prior to this agreement, these services were subject to a management fee computed based on certain percentages of capital employed, sales, manpower and payroll. We believe that our arrangement with Singapore Technologies Pte Ltd approximates the cost of providing these services. From time to time, we deposit excess funds with ST Treasury Services Ltd, a wholly-owned subsidiary of Singapore Technologies. Our insurance coverage is held under various insurance policies which are negotiated and maintained by Singapore Technologies but billed directly to us. This enables us to benefit from the group rates negotiated by Singapore Technologies. Generally, all new material related party transactions among us and our officers, directors, principal shareholders and their affiliates require approval by the Audit Committee of our Board of Directors. In addition, more significant related party transactions must be separately approved by a majority of the Board of Directors. C. INTEREST OF EXPERTS AND COUNSEL Not applicable ITEM 8. FINANCIAL INFORMATION A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION Please see Item 18 for a list of the financial statements filed as part of this Annual Report. DIVIDEND POLICY We have never declared or paid any cash dividends on our ordinary shares. We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. In addition, our loan agreement with EDB and our MTN Program may restrict the payment of dividends without the consent of the lender. LEGAL PROCEEDINGS On February 20, 2001, a lawsuit was filed by Amkor Technology, Inc. against us and our subsidiary, STATS Inc., alleging patent infringement in respect of certain integrated circuit packages. On September 7, 2001, we announced that we had settled the lawsuit. Amkor granted us a non-exclusive license to practise the Amkor MicroLead FrameTM (MLFTM) patents. We in turn agreed to provide Amkor with a perpetual worldwide immunity from suits based on our Quad Leadless Package (QLPTM) patents. 58 We are not a party to any legal proceedings which we believe would, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations. B. SIGNIFICANT CHANGES There has been no significant subsequent events following the close of the last financial year up to the date of this Annual Report that are known to us and require disclosure in this Annual Report for which disclosure was not made in this Annual Report. ITEM 9. THE OFFER AND LISTING PRICE RANGE OF OUR ORDINARY SHARES AND ADSS The historical 'high' and 'low' prices of stock over the past year and the six monthly periods from August 2001 to January 2002 are as shown below.
PRICE PER ORDINARY SHARE PRICE PER ADS ON THE ON SGX (IN S$) NASDAQ (IN US$) ------------------------ ----------------- HIGH LOW HIGH LOW ----- ---- ----- ----- Annual for 2000 10.90 2.22 63.63 13.13 Annual for 2001 2.84 0.99 16.00 5.60 Quarterly highs and lows: - - quarter ending March 31, 2000 10.60 6.20 63.63 21.00 - - quarter ending June 30, 2000 8.30 4.44 49.38 20.31 - - quarter ending September 30, 2000 4.68 3.26 26.50 18.00 - - quarter ending December 31, 2000 3.44 2.28 20.38 13.13 - - quarter ending March 31, 2001 2.84 1.63 16.00 9.25 - - quarter ending June 30, 2001 1.97 1.36 10.56 7.55 - - quarter ending September 30, 2001 1.82 0.99 9.99 5.80 - - quarter ending December 31, 2001 2.38 1.06 12.96 5.60 Monthly highs and lows: August 2001 1.82 1.57 9.99 8.95 September 2001 1.66 0.99 9.29 5.80 October 2001 1.40 1.06 7.45 5.60 November 2001 1.82 1.26 9.80 7.01 December 2001 2.38 1.64 12.96 8.90 January 2002 2.65 2.17 14.25 11.95
EXCHANGE RATES Fluctuations in the exchange rate between the Singapore dollar and the U.S dollar will affect the U.S. dollar equivalent of the Singapore dollar price of the ordinary shares on the Singapore Exchange Securities Trading Limited and, as a result, are expected to affect the market price of ADSs. These fluctuations will also affect the U.S. dollar conversion by the depositary of any cash dividends paid in Singapore dollars on the ordinary shares represented by ADSs or any other distribution received by the depositary in connection with the payment of dividends on the ordinary shares. Currently, there are no restrictions in Singapore on the conversion of Singapore dollars into U.S. dollars and vice versa. 59 The following table sets forth, for the fiscal years indicated, information concerning the exchange rates between Singapore dollars and U.S. dollars based on the average of the noon buying rate in the city of New York on the last business day of each month during the period for cable transfers in Singapore dollars as certified for customs purposes by the Federal Reserve Bank of New York. The table illustrates how many Singapore dollars it would take to buy one U.S. dollar. These transactions should not be construed as a representation that those Singapore dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Singapore dollars, as the case may be, at any particular rate, the rate stated below, or at all.
SINGAPORE DOLLARS PER US $1.00 NOON BUYING RATE --------------------------------------------------------- AVERAGE(1) LOW HIGH PERIOD END ---------- ---- ---- ---------- Year Ended December 31, 1997 1.49 1.40 1.71 1.61 1998 1.67 1.58 1.80 1.65 1999 1.70 1.66 1.74 1.67 2000 1.72 1.65 1.76 1.73 2001 1.80 1.74 1.85 1.85 Month August 2001 1.74 1.81 1.74 September 2001 1.73 1.77 1.77 October 2001 1.77 1.83 1.82 November 2001 1.81 1.84 1.83 December 2001 1.83 1.85 1.85 January 2002 1.83 1.85 1.84
- ---------- (1) The average of the daily Noon Buying Rates on the last business day of each month during the year. ITEM 10. ADDITIONAL INFORMATION A. SHARE CAPITAL Not applicable B. MEMORANDUM AND ARTICLES OF ASSOCIATION We are a company limited by shares organized under the laws of the Republic of Singapore. The company registration number with the Registry of Companies and Businesses in Singapore is 199407932D. OBJECTS We were established mainly to manufacture, assemble, test and provide services relating to electrical and electronic components. We also carry out research and development work in relation to the electrical and electronic industry. A detailed list of all the other objects and purposes can be found in Article 3 of our Memorandum of Association which was filed as an Exhibit to our registration statement on Form F-1 (Registration Number: 333-93661) in connection with our initial public offering in 2000 and is available for examination at our principal and registered office at No. 5, Yishun Street 23, Singapore 768442, Republic of Singapore. 60 BOARD OF DIRECTORS Our Articles of Association state that a director must declare at a meeting of the Board of Directors if there are matters which may conflict with his duties or interests as a director. He is not allowed to vote in respect of any contract or arrangement or other proposal whatsoever in which he has any interest, directly or indirectly and shall not be counted in the quorum in relation to any resolution which he is not entitled to vote. If an independent quorum is not achieved, the remaining directors may convene a general meeting. Our directors may exercise all the borrowing powers of our company to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures and other securities. No shares are required to be held by a director for director's qualification. Under Singapore law, no person of or over the age of 70 years shall be appointed to act as a director unless the shareholders at a general meeting vote by at least three-fourths majority in favor of his appointment to hold office until the next annual general meeting of the company. Our Articles of Association set the minimum number of directors at two. The number of directors retiring and eligible to stand for re-election each year varies, but generally it is equal to at least one-third of the board, with the directors who have been in office longest since their re-election or appointment standing for re-election. Our Chief Executive Officer and President will not be subject to retirement by rotation as described above while he or she is in office. Our Articles of Association permit a director to appoint an alternate director to act in place of such director should the director be unable to perform his or her duties as director for a period of time. There are currently two alternate directors. Under Singapore law, the alternate director is not merely an agent of the director but is accountable to the company for his or her actions as director during the period for which he or she acts as alternate director. ORDINARY SHARES Our authorized capital is S$800,000,000 consisting of 3,200,000,000 ordinary shares of par value S$0.25 each. We have only one class of shares, namely, ordinary shares, which have identical rights in all respects and rank equally with one another. Our Articles of Association provide that we may issue shares of a different class with preferential, deferred, qualified or other special rights, privileges or conditions as our Board of Directors may determine and may issue preference shares which are, at the option of the company, redeemable, subject to certain limitations. Our directors may issue shares at a premium. If shares are issued at a premium, a sum equal to the aggregate amount or value of the premium will, subject to certain exceptions, be transferred to a share premium account. All of our ordinary shares are in registered form. All issued ordinary shares are entitled to voting rights. We may, subject to and in accordance with the Companies Act, Chapter 50 of Singapore (the "Companies Act"), purchase our own ordinary shares. We may not, except as provided in the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our ordinary shares. NEW ORDINARY SHARES New ordinary shares may only be issued with the prior approval of the shareholders in a general meeting of the shareholders. The approval, if granted, will lapse at the conclusion of the annual general meeting following the date on which the approval was granted or the date by which such annual general meeting is required to be held, whichever is earlier. Our shareholders have given the general authority to issue any remaining approved but unissued ordinary shares prior to the next annual general meeting. Subject to the foregoing, the provisions of the Companies Act and any special rights attached to any class of shares currently issued, all new ordinary shares are under the control of our Board Of Directors who may allot and issue the same with such rights and restrictions as it may think fit. Our shareholders are not entitled to pre-emptive rights under our Articles of Association or Singapore law. 61 SHAREHOLDERS Only persons who are registered in the register of members and, in cases in which the person so registered is The Central Depository (Pte) Limited, or CDP, the persons named as depositors in the depository register maintained by the CDP for our ordinary shares, are recognized as shareholders. We will not, except as required by law, recognize any equitable, contingent, future or partial interest in any ordinary share or other rights for any ordinary share other than the absolute right thereto of the registered holder of the ordinary share or of the person whose name is entered in the depository register for that ordinary share. We may close the register of members for any time or times if we provide the Registrar of Companies and Businesses of Singapore at least 14 days' notice. However, the register may not be closed for more than 30 days in aggregate in any calendar year. We typically close the register to determine shareholders' entitlement to receive dividends and other distributions for no more than ten days a year. TRANSFER OF ORDINARY SHARES There is no restriction on the transfer of fully paid ordinary shares except where required by law. The Board of Directors may decline to register any transfer of ordinary shares which are not fully paid shares or ordinary shares on which we have a lien. Ordinary shares may be transferred by a duly signed instrument of transfer in a form acceptable to our Board of Directors. Our Board of Directors may also decline to register any instrument of transfer unless, among other things, it has been duly stamped and is presented for registration together with the share certificate and such other evidence of title as they may require. We will replace lost or destroyed certificates for ordinary shares if we are properly notified and if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity that our Board of Directors may require. GENERAL MEETINGS OF SHAREHOLDERS We are required to hold an annual general meeting every year. Our Board of Directors may convene an extraordinary general meeting whenever it thinks fit and must do so if shareholders representing not less than 10% of the total voting rights of all shareholders request in writing that such a meeting be held. In addition, two or more shareholders holding not less than 10% of our issued share capital may call a meeting. Unless otherwise required by Singapore law or by the Articles of Association, voting at general meetings is by ordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at that meeting. An ordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiring the affirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under Singapore law, including the voluntary winding up of our company, amendments to the Memorandum and Articles of Association, a change of the corporate name and a reduction in the share capital, share premium account or capital redemption reserve fund. We must give at least 21 days' notice in writing for every general meeting convened for the purpose of passing a special resolution. Ordinary resolutions generally require at least 14 days' notice in writing. The notice must be given to every shareholder who has supplied us with an address in Singapore for the giving of notices and must set forth the place, the day and the hour of the meeting and, in the case of special business, the general nature of that business. VOTING RIGHTS A shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. A proxy need not be a shareholder. A person who holds ordinary shares through the CDP book-entry clearance system will only be entitled to vote at a general meeting as a shareholder if his or her name appears on the depository register maintained by CDP 48 hours before the time for holding the general meeting. Except as otherwise provided in the Articles of Association, two or more shareholders holding at least 33 1/3% of the issued and fully-paid ordinary shares must be present in person or by proxy to constitute a quorum at any general meeting. Under the Articles of Association, on a show of hands, every shareholder present in person and each proxy shall have one vote, and on a poll, every shareholder present in person or by proxy shall have one vote for each ordinary share held. A poll may be demanded in certain circumstances, including by the chairman of the meeting or by any shareholder present in person or by proxy and entitled to vote. 62 DIVIDENDS We may, by ordinary resolution of the shareholders, declare dividends at a general meeting, but we may not pay dividends in excess of the amount recommended by our Board of Directors. We must pay all dividends out of our profits. However, we may capitalize our share premium account and apply it to pay dividends, if such dividends are satisfied by the issue of shares to the shareholders. Our Board of Directors may also declare an interim dividend without the approval of the shareholders. All dividends are paid pro rata among the shareholders in proportion to the amount paid up on each shareholder's ordinary shares, unless the rights attaching to an issue of any ordinary share provide otherwise. Unless otherwise directed, dividends are paid by check or warrant sent through the post to each shareholder at his or her registered address. Notwithstanding the foregoing, the payment to the CDP of any dividend payable to a shareholder whose name is entered in the depository register shall, to the extent of payment made to the CDP, discharge us from any liability to that shareholder in respect of that payment. BONUS AND RIGHTS ISSUE Our Board of Directors may, with approval by the shareholders at a general meeting, capitalize any reserves or profits (including profit or monies carried and standing to any reserve or to the share premium account) and distribute the same as bonus shares credited as paid-up to the shareholders in proportion to their shareholdings. The Board of Directors may also issue rights to take up additional ordinary shares to shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to such issue. TAKE-OVERS The Securities and Futures Act 2001 and the Singapore Code on Takeovers and Mergers (the "Take-Over Code") regulates the acquisition of, among others, ordinary shares of public companies and contain certain provisions that may delay, deter or prevent a future takeover or change in control of our company. Any person acquiring an interest, either on his or her own or together with parties acting in concert with him or her, in 30% or more of our voting shares must extend a takeover offer for the remaining voting shares in accordance with the provisions of the Take-Over Code. "Parties acting in concert" include a company and its related and associated companies, a company and its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts), a company and its pension funds and employee share schemes, a person and any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, a financial or other professional adviser and its client in respect of shares held by the financial adviser and persons controlling, controlled by or under the same control as the adviser and all the funds managed by the adviser on a discretionary basis, where the shareholding of the adviser and any of those funds in the client total 10% or more of the client's equity share capital, directors of a company (including their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) that is subject to an offer or where the directors have reason to believe a bona fide offer for the company may be imminent, partners, and an individual and his or her close relatives, related trusts, any person who is accustomed to act in accordance with his instructions and companies controlled by the individual, his or her close relatives, his or her related trusts or any person who is accustomed to act in accordance with his or her instructions. A mandatory takeover offer is also required to be made if a person holding, either on his or her own or together with parties acting in concert with him or her, between 30% and 50% (both inclusive) of the voting shares acquires additional voting shares representing more than 1% of the voting shares in any six-month period. An offer for consideration other than cash must, subject to certain exceptions, be accompanied by a cash alternative at not less than the highest price paid by the offeror or parties acting in concert within the preceding six months. 63 LIQUIDATION OR OTHER RETURN OF CAPITAL If our company liquidates or in the event of any other return of capital, holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special rights attaching to any other class of shares. INDEMNITY As permitted by Singapore law, the Articles of Association provide that, subject to the Companies Act, we will indemnify our Board of Directors and officers against any liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as an officer, director or employee and in which judgment is given in their favor or in which they are acquitted or in connection with any application under any statute for relief from liability in respect thereof in which relief is granted by the court. We may not indemnify directors and officers against any liability which by law would otherwise attach to them in respect of any negligence, default, breach or duty or breach of trust of which they may be guilty in relation to our company. LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES Except as described herein, there are no limitations imposed by Singapore law or by the Articles of Association on the rights of non-resident shareholders to hold or vote ordinary shares. SUBSTANTIAL SHAREHOLDINGS Under the Companies Act, a person has a substantial shareholding in a company if he or she has an interest (or interests) in one or more voting shares in the company and the nominal amount of that share (or the aggregate of the nominal amounts of those shares) is not less than 5 percent. of the aggregate of the nominal amount of all voting shares in the company. A person having a substantial shareholding in our company is required to make certain disclosures under the Companies Act, including the particulars of his or her interests in our company and the circumstances by which he or she has such interests. MINORITY RIGHTS The rights of minority shareholders of Singapore-incorporated companies are protected under section 216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon application by any shareholder of the company, as they think fit to remedy situations where: (1) the affairs of the company are being conducted or the powers of the board of directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of the shareholders; or (2) the company takes an action, or threaten to take an action, or the shareholders pass a resolution, or threaten to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant. Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing, Singapore courts may direct or prohibit any act or cancel or vary any transaction or resolution, regulate the affairs in the future, authorize civil proceedings to be brought in the name of, or on behalf of, our company by a person or persons and on such terms as the court may direct, provide for the purchase of a minority shareholder's shares by the other shareholders or by us and, in the case of a purchase of shares by us, a corresponding reduction of the share capital, provide that the Memorandum or Articles of Association be amended or provide that our company be wound up. C. MATERIAL CONTRACTS Not Applicable 64 D. EXCHANGE CONTROL Currently, there are no exchange control restrictions in Singapore. E. TAXATION In this section we summarize certain Singapore income tax, stamp duty and estate duty consequences of the purchase, ownership and disposal of the ordinary shares or ADSs, collectively, the "securities," to a holder of the securities who is not a resident in Singapore. This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the securities and does not purport to deal with the tax consequences applicable to all categories of investors. You should consult your own tax advisors as to the Singapore tax consequences of the purchase, ownership and dispositions of the securities. This discussion is based on tax laws in effect in Singapore and on administrative and judicial interpretations of these tax laws, as of the date of this Annual Report, all of which are subject to change, possibly on a retroactive basis. INCOME TAX Non-resident corporate taxpayers are subject to income tax on income that is accrued in or derived from Singapore and on foreign income received or deemed received in Singapore. A non-resident individual is subject to income tax on the income accrued in or derived from Singapore. Subject to the provisions of any applicable treaty for the avoidance of double taxation and subject as discussed below, non-resident taxpayers who derive certain types of income from Singapore are subject to a withholding tax on that income which is at a rate of 24.5% for the year of assessment 2002, or generally 15% in the case of interest, royalty and rental of movable equipment. We are obligated by law to withhold tax at the source. A corporation will be regarded as being resident in Singapore if the control and management of its business is exercised there (for example, if the corporation's board of directors meets and conducts the business of the corporation in Singapore). An individual will be regarded as being resident in Singapore in a year of assessment if, in the preceding year, he or she was physically present in Singapore or exercised an employment in Singapore (other than as a director of a company) for 183 days or more, or if he or she resides in Singapore. TAXATION OF DIVIDENDS If we pay dividends on the ordinary shares or ADSs out of tax exempt income received because of our pioneer status or out of our income subject to a concessionary tax rate, if any, such dividends will be free of Singapore tax in the hands of the holders of the ordinary shares and ADSs. See "Item 5. Operating and Financial Review and Prospects - Special Tax Status" for a discussion of our pioneer status. Where the dividend is declared out of the above tax exempt income or income subject to tax at a concessionary rate, we will have to obtain agreement from the Inland Revenue Authority of Singapore, or IRAS, upon their issue of a finalized tax statement confirming the amount of income available for distribution of tax exempt dividends. Before such finalized tax statement is issued and such agreement has been obtained, we may apply for, and the Comptroller of Income Tax in Singapore may issue to us an approval for distribution of tax exempt dividends based on our estimate of chargeable income furnished to IRAS. Exempt dividends paid by us in excess of our finalized tax exempt income will be deemed distributed out of our ordinary income and will be subject to the treatment outlined below. We pay tax on our non-tax exempt income at the prevailing corporate tax rate, which is currently 24.5% for the Year of Assessment 2001 onwards. This tax paid by us is in effect imputed to, and deemed paid on behalf of, our shareholders. Thus, if we pay dividends on our ordinary shares out of our non-tax exempt income, our shareholders receive the dividends net of 65 the tax paid by us. Dividends received by either a resident or non-resident of Singapore are not subject to withholding tax. Shareholders are taxed in Singapore on the gross amount of dividends, which is the cash amount of the dividend plus an amount normally equivalent to the corporate income tax rate paid by us on the dividend. The tax paid by us effectively becomes available to shareholders as a tax credit to offset the Singapore income tax liability on their overall income, including the gross amount of dividends. A non-resident shareholder is effectively taxed on non-tax exempt dividends at the corporate income tax rate. Thus, because tax deducted from the dividend and paid by us at the corporate income tax rate is in effect imputed to, and deemed paid on behalf of, our shareholders (as discussed in the preceding paragraph), no further Singapore income tax will be imposed on the net dividend received by a non-resident holder of ordinary shares or ADSs. Further, the non-resident shareholder will normally not receive any tax refund from the IRAS. As a temporary measure to cushion the impact of the current economic slow-down, Singapore has also granted certain tax rebates for the Years of Assessment 2001 and 2002. For the Year of Assessment 2002, the tax rebate (excluding tax on Singapore dividends and tax on income subject to final withholding tax) is 5%. In relation to dividends paid out of such non-tax exempt income, the tax imputed to, and deemed paid on behalf of, our shareholders would continue to be at the rate of 24.5%. However, we would also be allowed to distribute, as exempt dividends, an amount of income that is effectively not subject to tax as a result of the tax rebate. No comprehensive tax treaty currently exists between Singapore and the United States. GAINS ON DISPOSAL OF THE ORDINARY SHARES OR ADSS Singapore does not impose tax on capital gains. However, gains or profits may be construed to be of an income nature and subject to tax, especially if they arise from activities which the IRAS regards as the carrying on of a trade in Singapore. Thus, any gains or profits from the disposal of the ordinary shares or ADSs are not taxable in Singapore unless the seller is regarded as carrying on a trade in securities in Singapore, in which case the disposal profits would be taxable as trading profits rather than capital gains. STAMP DUTY There is no stamp duty payable in respect of the issuance and holding of new ordinary shares or ADSs. Where existing ordinary shares or ADSs evidenced in certificated form are acquired in Singapore, stamp duty is payable on the instrument of transfer of the ordinary shares or ADSs at the rate of S$2.00, or S$1.40 in respect of instruments executed between October 13, 2001 and December 31, 2002, for every S$1,000 or part thereof of the consideration for, or market value of, the ordinary shares or ADSs, whichever is higher. The stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where an instrument of transfer is executed outside Singapore or no instrument of transfer is executed, no stamp duty is payable on the acquisition of existing ordinary shares or ADSs. Stamp duty may be payable if the instrument of transfer is executed outside Singapore and is received in Singapore. ESTATE DUTY In the case of an individual who is not domiciled in Singapore, Singapore estate duty is imposed on the value of most movable and immovable properties situated in Singapore. Thus, an individual holder of the ordinary shares who is not domiciled in Singapore at the time of his or her death may be subject to Singapore estate duty on the value of any ordinary shares held by the individual upon the individual's death. Such a shareholder will be required to pay Singapore estate duty to the extent that the value of the ordinary shares, and any other assets subject to Singapore estate duty, exceeds S$600,000. Unless other exemptions apply to the other assets, for example, the separate exemption limit for residential properties, any excess beyond S$600,000 will be taxed at a rate equal to 5% on the first S$12,000,000 of the individual's Singapore chargeable assets and thereafter at a rate equal to 10%. However, an individual who holds ADSs and is not domiciled in Singapore at the time of his 66 or her death would not be subject to Singapore estate tax duty on such ADSs because such ADSs are registered outside Singapore and hence would not be considered as movable properties in Singapore. F. DIVIDENDS AND PAYING AGENTS Not applicable G. STATEMENTS BY EXPERTS Not applicable H. DOCUMENTS ON DISPLAY All documents relating to our company which are referred to in this Annual Report are available at our principal executive and registered office at No. 5, Yishun Street 23, Singapore 768442, Republic of Singapore. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We may employ derivative instruments such as interest rate swaps and currency swaps, forward foreign currency contracts and foreign currency option contracts to manage our interest rate and foreign exchange exposures. These instruments are used solely to reduce or eliminate the financial risks associated with our assets and liabilities and not for trading or speculation purposes. Our exposure to market risk associated with changes in interest rates would primarily relate to our debt obligations. However, as of December 31, 2001, our exposure to interest rate risk was relatively non-existent in view of the absence of outstanding debt obligations except for the long-term loan from the Economic Development Board. The applicable interest rate under the terms of the loan is the interest rate declared by the Central Provident Fund Board, a statutory board of the Singapore government. Our policy is to manage interest rate risk by borrowing a combination of fixed and floating rate obligations depending upon market conditions. We have adopted a foreign currency hedging policy and may utilize foreign currency swaps as well as foreign exchange forward contracts and options. The goal of the hedging policy is to effectively manage risk associated with fluctuations in the value of the foreign currency, thereby making financial results more stable and predictable. Our currency, maturity and interest rate information relating to our short-term and long-term debt and marketable securities are disclosed in Notes 7, 10, and 14 to the consolidated financial statements, respectively. 67 The tables below provide information about our financial instruments that are sensitive to changes in interest rates and foreign currencies as of the dates shown. Weighted average variable rates were based on average interest rates applicable to the loans. The information is presented in U.S. dollar equivalents, which is our reporting currency. Actual cash flows are denominated in Singapore dollars.
EXPECTED MATURITY DATE AS OF DECEMBER 31, 2001 AS OF DECEMBER 31, 2000 ------------------------------------------------------- ------------------------ 2004 AND FAIR FAIR 2002 2003 BEYOND TOTAL VALUE TOTAL VALUE ------ ------ -------- ------ ------ ------ ------ (in thousands, except interest and settlement rate) Debt: Variable rate Singapore dollar long-term debt: 14,045 14,045 -- 28,090 27,959 44,398 42,802 Average interest rate 3.5% 3.5% Assets: Singapore dollar marketable debt securities 3,680 9,405 10,716 23,801 23,801 21,906 21,906 Average interest rate 4.17% 3.5%
The variable rate long-term debt is repayable in seven equal semi-annual installments commencing September 1, 2000. The interest rate for the marketable debt securities represents the contractual interest rate. LIMITATIONS Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES Not applicable ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS See "Item 10. Additional Information" for a description of the rights of securities holders, which remain unchanged. We completed our initial public offering of 175,950,000 ordinary shares, directly or in the form of American Depositary Shares or ADSs, at S$3.554 per ordinary share or $21.00 per ADS in February 2000, after our ordinary shares and American Depositary Receipts were registered under the Securities Act. The aggregate price of the offering amount registered and sold was $369,495,000. We also completed a separate offering of 19,550,000 ordinary shares at S$3.554 per ordinary share in Singapore on the same date. The effective date of our registration statement on Form F-1 (File number: 333-93661) was January 27, 2000. Salomon Smith Barney Inc. was the global coordinator and sole book running manager for the global offering of our ordinary shares and ADSs. 68 The net proceeds from our initial public offering was used to repay loans of $25.0 million from ST Treasury Services Ltd, a related party, $35.0 million from Den Danske Bank and $22.2 million due on the EDB loan on the respective repayment due dates, and for general corporate purposes, including for capital expenditure and general working capital. Except as set forth in the previous sentence, none of the proceeds were paid, directly or indirectly to our directors, officers or their associates or to any person owning ten percent or more of our ordinary shares or to our affiliates. As of December 31, 2001, our cash resources amounted to $139.0 million, comprising $115.2 million in cash and cash equivalents and $23.8 million in marketable securities. ITEM 15. Not applicable ITEM 16. Not applicable ITEM 17. FINANCIAL STATEMENTS See Item 18 for a list of the Financial Statements filed as part of this Annual Report. ITEM 18. FINANCIAL STATEMENTS The following financial statements are filed as part of this Annual Report, together with the report of the independent auditors: Independent Auditors' Report Consolidated Balance Sheets as at December 31, 2000 and 2001 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 1999, 2000 and 2001 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1999, 2000 and 2001 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 2000 and 2001 Notes to the Consolidated Financial Statements 69 ITEM 19. EXHIBITS The following exhibits are filed as part of this Annual Report. 1.1 Memorandum and Articles of Association of ST Assembly Test Services Ltd. 2.1 Form of specimen certificate representing ST Assembly Test Services Ltd's ordinary shares - incorporated by reference to Exhibit 4.1 of Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on January 3, 2000. 2.2 Deposit Agreement among ST Assembly Test Services Ltd, Citibank, N.A., as depositary, and the holders from time to time of ADRs issued thereunder (including the form of ADR) - incorporated by reference to Exhibit 2.2 of Form 20-F of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on March 30, 2001. 4.1 ST Group Management & Support Services Agreement dated December 27, 1999 by and between Singapore Technologies Pte Ltd and ST Assembly Test Services Ltd - incorporated by reference to Exhibit 10.1 of Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on January 3, 2000. 4.2 Loan Agreement dated June 5, 1998 by and between the Economic Development Board and ST Assembly Test Services Ltd - incorporated by reference to Exhibit 10.2 of Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on January 3, 2000. 4.4 Lease Agreement dated November 18, 1996 by and between the Housing and Development Board and ST Assembly Test Services Ltd - incorporated by reference to Exhibit 10.4 of Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on January 3, 2000. 4.5 Immunity Agreement dated October 18, 1996 by and between Motorola Inc. and ST Assembly Test Services Ltd - incorporated by reference to Exhibit 10.5 of Amendment No. 1 to Form F-1 of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on January 3, 2000. 4.6 Programme Agreement dated January 10, 2002 by and between Citicorp Investment Bank (Singapore) Limited and ST Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium Term Note Program. 4.7 Trust Deed dated January 10, 2002 by and between British and Malayan Trustees Limited and ST Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium Term Note Program. 4.8 Agency Agreement dated January 10, 2002 by and between British and Malayan Trustees Limited, Citicorp Investment Bank (Singapore) Limited and ST Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium Term Note Program. 8.1 List of subsidiaries.
70 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. ST ASSEMBLY TEST SERVICES LTD By: /s/ Harry Hooshang Davoody ---------------------------------------- Name: Harry Hooshang Davoody Title: President and Chief Executive Officer Date: February 28, 2002 71 FINANCIAL STATEMENTS INDEX
PAGE ---- Independent Auditors' Report F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) F-4 Consolidated Statements of Shareholders' Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to the Consolidated Financial Statements F-9
INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders ST Assembly Test Services Ltd: We have audited the accompanying consolidated balance sheets of ST Assembly Test Services Ltd and subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations and comprehensive income (loss), shareholders' equity and cash flows for the years ended December 31, 1999, 2000 and 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ST Assembly Test Services Ltd and subsidiaries as of December 31, 2000 and 2001, and the consolidated results of their operations and their cash flows for the years ended December 31, 1999, 2000 and 2001, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG Singapore January 30, 2002 F-1 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
DECEMBER 31, ----------------------------- NOTE 2000 2001 ----- -------- -------- ASSETS Current assets: Cash and cash equivalents 3 $141,733 $115,214 Accounts receivable, net 4 52,315 25,584 Amounts due from ST and ST affiliates 23 8,727 1,793 Short-term deposits with ST affiliates 23 10,000 -- Other receivables 5 18,989 6,047 Inventories 6 14,793 7,262 Marketable securities 7 11,486 3,680 Prepaid expenses 8 24,809 20,737 Other current asset -- 1,067 -------- -------- Total current assets 282,852 181,384 Property, plant and equipment, net 9, 18 380,934 347,262 Marketable securities 7 10,420 20,121 Prepaid expenses 8 37,552 14,486 Goodwill -- 1,321 Other assets -- 12,004 -------- -------- Total Assets $711,758 $576,578 -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt 14 $ 14,799 $ 14,045 Current installments of obligations under capital leases 10 -- 2,564 Accounts payable 13,956 13,692 Amounts due to ST and ST affiliates 23 2,062 2,473 Accrued operating expenses 11 32,963 14,684 Other payables 12 27,705 23,051 Income taxes payable 2,846 1,428 -------- -------- Total current liabilities 94,331 71,937 Obligation under capital leases, excluding current installments 10 -- 7,689 Long-term debt, excluding current installments 14 29,599 14,045 Other non-current liabilities 13 2,631 4,605 -------- -------- Total liabilities 126,561 98,276 Minority interest -- 25,507
F-2 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
DECEMBER 31, ----------------------------- NOTE 2000 2001 ----- -------- -------- Share capital: Ordinary shares -- par value S$0.25 Authorized ordinary shares -- 3,200,000,000 (2000: 1,200,000,000) Issued ordinary shares -- 986,171,915 as of December 31, 2000 and 989,683,485 as of December 31, 2001 15 159,461 159,961 Additional paid-in capital 16 386,325 387,652 Accumulated other comprehensive loss 27 (9,731) (9,941) Retained earnings (deficit) 17 49,142 (84,877) -------- -------- Total shareholders' equity 585,197 452,795 -------- -------- Total Liabilities and Shareholders' Equity $711,758 $576,578 -------- --------
F-3 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------- NOTE 1999 2000 2001 --------- --------- --------- Net revenues $ 201,098 $ 331,271 $ 145,866 Cost of revenues (132,889) (231,944) (217,789) --------- --------- --------- Gross profit (loss) 68,209 99,327 (71,923) --------- --------- --------- Operating expenses: Selling, general and administrative 28,437 40,798 36,041 Research and development 7,283 14,636 15,160 Asset impairments 18 -- -- 23,735 Prepaid leases written off 8 -- -- 3,145 Stock-based compensation 25,327 448 1,024 Other general expenses (net) 37 (22) 101 --------- --------- --------- Total operating expenses 61,084 55,860 79,206 --------- --------- --------- Operating income (loss) 7,125 43,467 (151,129) --------- --------- --------- Other income (expense): Interest income 524 10,638 6,497 Interest expense (6,058) (2,424) (1,275) Foreign currency exchange gain 1,385 2,018 775 Other non-operating income, net 19 2,379 3,525 1,990 --------- --------- --------- Total other income (expense) (1,770) 13,757 7,987 --------- --------- --------- Income (loss) before income taxes 5,355 57,224 (143,142) Income taxes 20 (500) (2,865) 8,810 --------- --------- --------- Income (loss) before minority interest 4,855 54,359 (134,332) Minority interest -- -- 313 --------- --------- --------- Net income (loss) $ 4,855 $ 54,359 $(134,019) ========= ========= ========= Other comprehensive income (loss): Unrealized loss on available-for-sale marketable securities -- -- (303) Foreign currency translation -- -- 93 --------- --------- --------- Comprehensive income (loss) $ 4,855 $ 54,359 $(134,229) ========= ========= ========= Basic net income (loss) per ordinary share $ 0.01 $ 0.06 $ (0.14) Diluted net income (loss) per ordinary share $ 0.01 $ 0.06 $ (0.14) Basic net income (loss) per ADS $ 0.06 $ 0.56 $ (1.36) Diluted net income (loss) per ADS $ 0.06 $ 0.56 $ (1.36) ========= ========= =========
F-4 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------- NOTE 1999 2000 2001 --------- --------- --------- Ordinary shares (in thousands) used in per ordinary share calculation: -- basic 770,259 962,828 989,083 -- effect of dilutive options 16,466 7,803 -- --------- --------- --------- -- diluted 786,725 970,631 989,083 ========= ========= ========= ADS (in thousands) used in per ADS calculation: -- basic 77,026 96,283 98,908 -- effect of dilutive options 1,646 780 -- --------- --------- --------- -- diluted 78,672 97,063 98,908 ========= ========= =========
See accompanying notes to consolidated financial statements. F-5 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE DATA)
ACCUMULATED TOTAL ADDITIONAL UNEARNED SUBSCRIP- OTHER RETAINED SHARE- PAID IN COMPEN- TIONS COMPREHENSIVE EARNINGS HOLDER' ORDINARY SHARES CAPITAL SATION RECEIVABLE INCOME (LOSS) (DEFICIT) EQUITY -------------------------- ---------- -------- ------------ --------------- --------- --------- NO. $ $ $ $ $ $ $ (IN THOUSANDS) Balances at December 31, 1998 780,174 129,042 5,389 (3,756) (2,931) (9,731) (9,975) 108,038 Share issuance 15,972 2,381 -- -- (2,262) -- -- 119 Other changes in unearned compensation -- -- 21,339 (21,339) -- -- -- -- Amortization of stock compensation -- -- 61 9,352 -- -- -- 9,413 Termination of Ownership Scheme (10,718) (1,596) (655) 15,743 5,193 (97) 18,588 Amortization of stock compensation -- -- 171 -- -- -- -- 171 Net income -- -- -- -- -- -- 4,855 4,855 ------- ------- ------- ------- ------ ------ -------- -------- Balances at December 31, 1999 785,428 129,827 26,305 -- -- (9,731) (5,217) 141,184 Share issuances 200,744 29,634 359,572 -- -- -- -- 389,206 Stock compensation -- -- 448 -- -- -- -- 448 Net income -- -- -- -- -- -- 54,359 54,359 ------- ------- ------- ------- ------ ------ -------- -------- Balances at December 31, 2000 986,172 159,461 386,325 -- -- (9,731) 49,142 585,197 Share issuances 3,511 500 303 -- -- -- -- 803 Stock compensation -- -- 1,024 -- -- -- -- 1,024 Unrealized loss on available-for-sale marketable securities -- -- -- -- -- (303) -- (303) Foreign currency translation -- -- -- -- -- 93 -- 93 Net loss -- -- -- -- -- -- (134,019) (134,019) ------- ------- ------- ------- ------ ------ -------- -------- Balances at December 31, 2001 989,683 159,961 387,652 -- -- (9,941) (84,877) 452,795 ======= ======= ======= ======= ====== ====== ======== ========
See accompanying notes to consolidated financial statements. F-6 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- 1999 2000 2001 -------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 4,855 $ 54,359 $(134,019) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 74,166 72,419 100,342 Asset impairments -- -- 23,735 Amortization of leasing prepayments 1,005 14,829 24,618 Prepaid leases written off -- -- 3,145 Loss (gain) on sale of property, plant and equipment 37 (22) 120 Exchange gain (2,337) (2,104) (775) Deferred income taxes -- -- (10,161) Minority interest in loss in subsidiary -- -- (313) Others 101 -- 78 Changes in operating working capital: Accounts receivable (16,751) (14,430) 27,222 Amounts due from ST and ST affiliates (239) (2,195) 6,935 Inventories (4,719) (3,480) 7,530 Other receivables and prepaid expenses (5,342) 139 13,693 Accounts payable 4,246 1,621 19 Amounts due to ST and ST affiliates 1,222 (3,471) 407 Accrued operating expenses and other payables 16,998 12,435 (21,244) -------- --------- --------- Net cash provided by operating activities 73,242 130,100 41,332 -------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales or maturity of marketable securities -- -- 20,181 Purchases of marketable securities -- (21,930) (22,499) Proceeds from maturity of short-term deposits -- -- 10,000 Short-term deposits with ST affiliates -- (10,000) -- Acquisition of subsidiary, net of cash acquired -- -- 1,835 Purchases of property, plant and equipment (84,301) (299,554) (55,980) Proceeds from the sale of property, plant and equipment 1,971 5,423 2,195 -------- --------- --------- Net cash used in investing activities (82,330) (326,061) (44,268) -------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of short-term debt 10,000 - -- Repayment of short-term debt -- (60,000) (8,824) Repayment of long-term debt -- (7,468) (14,711) Proceeds from issuance of shares 3,080 389,206 803 Purchase consideration for share buy-back (116) -- -- -------- -------- --------- Net cash provided by (used in) financing activities 12,964 321,738 (22,732) -------- -------- ---------
F-7 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------ 1999 2000 2001 ------- -------- -------- Net increase (decrease) in cash and cash equivalents for the year 3,876 125,777 (25,668) Effect of exchange rate changes on cash and cash equivalents -- (612) (851) Cash and cash equivalents at beginning of the year 12,692 16,568 141,733 ------- -------- -------- Cash and cash equivalents at end of the year $16,568 $141,733 $115,214 ======= ======== ======== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (net of amount capitalized) $ 6,001 $ 3,045 $ 1,472 Income taxes paid $ 143 $ 616 $ 2,995 Non-cash items Equipment acquired under capital leases $ -- $ -- $ 10,253 Share issue (cancellation) subscriptions receivable $(1,000) $ -- $ -- Sale-leaseback transactions: Sales consideration applied to leasing prepayments $20,246 $ 59,536 $ -- Sales consideration included in other receivables $ -- $ 7,722 $ -- ======= ======== ========
See accompanying notes to consolidated financial statements. F-8 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 1. BUSINESS AND ORGANIZATION BACKGROUND ST Assembly Test Services Ltd (the "Company") is an independent provider of a full range of semiconductor test and assembly services. The Company has operations in Singapore and in the United States of America, its principal market. As of December 31, 2001, the Company was 71.97% owned by Singapore Technologies Pte Ltd ("ST"). In August 2001, the Company acquired a 51% equity interest in Winstek Semiconductor Corporation ("Winstek"), a company incorporated in Taiwan, to enhance the Company's position in the Taiwanese market. The Company purchased new shares issued by Winstek for a total consideration of $27,986 in cash. Winstek's principal activity is the provision of semiconductor test services including wafer probe, final testing and drop shipment services. The Winstek acquisition was accounted for as a purchase business combination, and accordingly, the results of operations of Winstek have been included in the consolidated statements of operations of the Company from August 2001. The purchase price has been allocated to the assets acquired and liabilities assumed according to estimated fair values at the date of acquisition. The allocation resulted in the recognition of goodwill of $1,321. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Current assets $32,109 Property, plant and equipment 31,138 Goodwill 1,321 Other assets 2,088 ------- Total assets acquired 66,656 ======= Current liabilities (11,983) Other liabilities (1,069) ------- Total liabilities assumed (13,052) ======= Minority interest (25,618) ------- Net assets acquired $27,986 =======
Disclosures of results of operations on a proforma basis giving effect to the acquisition are not included as management does not consider this to be a material business combination. F-9 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISKS The Company has a number of major customers in North America, Europe and Asia. During the years ended December 31, 1999, 2000 and 2001, the Company's largest customer accounted for 25%, 32% and 29% of revenues, respectively. The Company's five largest customers collectively accounted for approximately 73%, 70% and 67% of revenues for the years ended December 31, 1999, 2000 and 2001, respectively (See Note 21). The Company anticipates that significant customer concentration will continue for the foreseeable future, although the companies which constitute the Company's largest customers may change. The Company believes that the concentration of its credit risk in trade receivables is mitigated substantially by its credit evaluation process, credit policies and credit control and collection procedures. In addition, the Company participates in a pooled cash management program and places short-term advances with ST or its affiliates. RISKS AND UNCERTAINTIES The Company's future results of operations include a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, dependence on the state of the semiconductor industry and the demand for end-use applications products such as communications equipment and personal computers, pricing pressures and declines in average selling prices, reliance on a small group of principal customers, decisions by customers to discontinue outsourcing of test and assembly services, changes in customer order patterns, rescheduling or cancelling of customer orders, changes in product mix, capacity utilization, availability of financing, level of competition, continued success in technological innovations, delays in acquiring or installing new equipment, shortages in supply of key components, exchange rate fluctuations and litigation. F-10 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) ACCOUNTING PRINCIPLES The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). (b) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the financial statements of ST Assembly Test Services Ltd and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. (c) USE OF ESTIMATES IN THE FINANCIAL STATEMENTS The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from these estimates. (d) FOREIGN CURRENCY TRANSACTIONS The Company's functional currency is the US dollar. Assets and liabilities which are denominated in foreign currencies are converted into the functional currency at the rates of exchange prevailing at the balance sheet date. Income and expenses are converted at the rates of exchange at transaction dates prevailing during the year. Foreign currency transaction gains or losses are included in results of operations. (e) FINANCIAL INSTRUMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which was amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment of SFAS No. 133." SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments and hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Changes in the fair value of those instruments will be reported in earnings or other comprehensive income depending on the use of the derivatives and whether it qualifies for hedge accounting. The accounting for gains and losses associated with changes in the fair value of the derivatives and the effect on the consolidated financial statements will depend on its hedge designation and whether the hedge is highly effective in achieving offsetting changes in the fair values of cash flows of the asset or liability hedged. The Company adopted SFAS 133, as amended, on January 1, 2001. The adoption of SFAS 133, as amended, did not have a material effect on the Company's financial position or results of operations and the Company had no outstanding derivative instruments at December 31, 2000 and 2001. (f) CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. F-11 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) (g) INVENTORIES Inventories are valued at the lower of cost and net realizable value. Cost is determined principally on a standard cost basis which approximates the actual cost on the weighted average basis. (h) GOODWILL Goodwill is not amortized, but is tested for impairment. In addition, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. Under SFAS No. 142, the Company will test goodwill for impairment on at least an annual basis by first comparing the fair value of the applicable reporting unit to its carrying value. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to determine the amount of impairment loss, if any. The second step of the test involves the comparison of the implied fair value of the goodwill to its carrying value. If the carrying value of reporting unit goodwill exceeds its implied fair value, an impairment loss is recognized for an amount equal to the excess. The implied fair value of reporting unit goodwill is determined in the same manner as the amount of goodwill recognized in a purchase business combination is determined. The Company has a single reporting unit. Refer to note 2 (v) for further discussion of SFAS No.'s 141 and 142. (i) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line method over the following periods: Building, mechanical and electrical installation - 3 to 20 years Plant and machinery - 5 years Toolings - 5 years Office furniture and equipment - 5 years Computer equipment - 2 to 3 years Motor vehicle - 5 years
No depreciation is provided on property, plant and equipment under installation or construction and freehold land. Repairs and replacements of a routine nature are expensed, while those that extend the life of an asset are capitalized. Plant and equipment under capital leases are initially stated at the present value of minimum lease payments and are amortized straight-line over the shorter of the lease term or the estimated useful life of the assets. (j) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF The Company accounts for impairments of long-lived assets in accordance with the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. F-12 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) (k) MARKETABLE SECURITIES Marketable securities at December 31, 2001 consist of corporate debt securities denominated principally in Singapore dollars. The Company classifies its securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale. Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. A decline in the market value of any available-for-sale or held-to-maturity security below cost that is deemed to be other than temporary results in a reduction in its carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned. At December 31, 2001, the securities held were classified as available-for-sale. (l) OPERATING LEASES Rental payments under operating leases are expensed on a straight-line basis over the periods of the respective leases. (m) GRANTS Asset-related government grants consist of grants for the purchase of equipment used for research and development activities. Asset-related grants are presented in the consolidated balance sheet as deferred grants and are credited to other income on the straight-line basis over the estimated useful lives of the relevant assets. Income-related government grants are subsidies of training and research and development expenses. Income-related grants are credited to other income concurrent with the related qualifying expenditures. (n) REVENUE RECOGNITION Net revenue represents the invoiced value of services rendered, excluding goods and services tax, net of returns, trade discounts and allowances. Revenue is principally recognized upon shipment of goods on which services have been rendered. For certain contractual arrangements, revenue is realizable, and therefore recognized, upon completion of services. F-13 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) (o) RESEARCH AND DEVELOPMENT Research and development expenses are expensed as incurred. Research and development expenses amounted to $7,283, $14,636 and $15,160 during the years ended December 31, 1999, 2000 and 2001, respectively. (p) STOCK-BASED EMPLOYEE COMPENSATION The Company measures stock-based employee compensation cost for financial statement purposes in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its related interpretations and includes pro forma information in Note 22 in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation." Compensation cost for stock options granted to employees in connection with the Company's fixed option plan is measured as the excess of fair market value of the stock subject to the option at the grant date over the exercise price of the option and is recorded over the requisite vesting periods. Compensation cost for options granted to employees under the Company's prior variable option plan was recorded over the requisite vesting periods based upon the current market value of the Company's stock at the end of each period. (q) PENSION PLANS The Company has a defined contribution plan, required by local regulation, which covers substantially all of its domestic employees who are Singapore citizens and Singapore permanent residents. Under the defined contribution plan, the Company made monthly contributions based on the statutory funding requirement into a Central Provident Fund. Total plan expenses for the years ended December 31, 1999, 2000 and 2001 were $1,220, $2,367 and $2,737, respectively. Winstek operates a defined benefit retirement plan for a substantial portion of its employees in Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally based on years of service and average salary for the six months prior to approved retirement date. Winstek contributes its pension obligations to Central Trust of China, as required by the Labor Standards Law. The funding of the pension plan is determined in accordance with statutory funding requirements. Winstek is obligated to make up any shortfall in the plan's assets in meeting the benefits accrued to the participating staff. Total pension plan expenses for the period from August 21, 2001 (acquisition date) to December 31, 2001 were approximately $39. Additional disclosures regarding this pension plan pursuant to SFAS No. 132, "Employees Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and 106" are not considered necessary due to the immateriality of the amounts involved. (r) INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such loss carryforwards and deferred tax assets will not be realized. F-14 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) (s) NET INCOME (LOSS) PER SHARE The computation of basic net income (loss) per share is calculated as the net income or loss for the year divided by the weighted average number of shares outstanding during the year, as adjusted on a retroactive basis for stock splits. Diluted net income (loss) per share reflects the potential dilution that would occur if share options or other contracts to issue ordinary shares were exercised and converted into ordinary shares. (t) COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments and unrealized gain (loss) on available-for-sale marketable securities, and is presented in the consolidated statements of operations and comprehensive income (loss). (u) SEGMENT DISCLOSURES SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("SFAS 131"), requires that a public company report descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has one operating segment. (v) RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the FASB issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. SFAS No. 141 also specifies criteria which intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. SFAS No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 will also require that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which was issued in August 2001. The Company is required to adopt the provisions of SFAS No. 141 immediately and SFAS No. 142 effective January 1, 2002. Accordingly, the Company accounted for the acquisition of its interest in Winstek under SFAS No. 141. The adoption of SFAS No's. 141 and 142 did not have a material effect on the Company's financial position or results of operations. F-15 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. This statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The Company is required to adopt the provisions of SFAS No. 143 on January 1, 2003. The Company is currently unable to estimate the impact of adopting SFAS No. 143. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for recognition and measurement of the impairment of long-lived assets to be held and used and measurement of long-lived assets to be disposed of by sale. SFAS No. 144 addresses certain implementation issues related to SFAS No. 121. This Statement also supersedes the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for segments of a business to be disposed of. SFAS No. 144 retains the basic provisions of Opinion No. 30 for the presentation of discontinued operations in the income statement but broadens that presentation to include a component of an entity, rather than a segment of a business. The Company is required to adopt SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not have a material effect on the Company's financial position or results of operations. (w) RECLASSIFICATIONS Certain reclassifications have been made in prior years' financial statements to conform to classifications used in the current year. 3. CASH AND CASH EQUIVALENTS Cash and cash equivalents at December 31, 2000 and 2001 consist of:
DECEMBER 31, --------------------------------- 2000 2001 -------- -------- Cash at banks and in hand $ 1,828 $ 400 Cash equivalents - bank fixed deposits 38,132 36,109 Cash equivalents - ST pooled cash management 5,409 1,599 Cash equivalents - ST treasury deposits 96,364 77,106 -------- -------- $141,733 $115,214 ======== ========
F-16 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) The Company participates in a pooled cash management program which requires the Company to place surplus cash with ST as overnight advances. These deposits, as well as short-term deposits with the ST treasury unit with original maturities of three months or less, are classified as cash equivalents. 4. ACCOUNTS RECEIVABLE Accounts receivable at December 31, 2000 and 2001 consist of:
DECEMBER 31, -------------------------------- 2000 2001 ------- ------- Accounts receivable - third parties $53,408 $26,368 Allowance for doubtful accounts (1,093) (784) ------- ------- $52,315 $25,584 ======= =======
Movements in the allowance for doubtful accounts are as follows:
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- 1999 2000 2001 ----- ------ ------ Beginning $ 211 $ 92 $1,093 Charge (credit) for the year (119) 1,384 (309) Utilized for the year -- (383) -- ----- ------ ------ Ending $ 92 $1,093 $ 784 ===== ====== ======
5. OTHER RECEIVABLES Other receivables at December 31, 2000 and 2001 consist of:
DECEMBER 31, ---------------------------------- 2000 2001 ------- ------ Deposits and staff advances $ 410 $ 103 Grant receivable (Note 13) 7,467 5,606 Other receivables 11,112 338 ------- ------ $18,989 $6,047 ======= ======
F-17 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 6. INVENTORIES Inventories at December 31, 2000 and 2001 consist of:
DECEMBER 31, -------------------------------- 2000 2001 ------- ------- Raw materials $12,047 $ 8,687 Factory supplies 1,849 1,352 Work-in-progress 2,501 1,580 Finished goods 40 736 -------- ------- 16,437 12,355 Allowance for inventory obsolescence (1,644) (5,093) -------- ------- $14,793 $ 7,262 ======== =======
Movements in the allowance for inventory obsolescence are as follows:
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- 1999 2000 2001 ------ ------ ------- Beginning $ 583 $1,103 $ 1,644 Charge for the year 1,413 541 5,124 Utilized in year (893) -- (1,675) Translation adjustment -- -- -- ------ ------ ------- Ending $1,103 $1,644 $ 5,093 ====== ====== =======
7. MARKETABLE SECURITIES Available-for-sale debt securities at December 31, 2000 and 2001 consist of the following (at fair value):
DECEMBER 31, --------------------- 2000 2001 ------- ------- Corporate debt securities: Due in one year or less $11,486 $ 3,680 Due after one year through five years 10,420 20,121 ------- ------- $21,906 $23,801 ======= =======
Realized gains and losses were immaterial in the years ended December 31, 2000 and 2001. F-18 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 8. PREPAID EXPENSES Prepaid expenses at December 31, 2000 and 2001 consist of:
DECEMBER 31, ------------------------ 2000 2001 ------- ------- Leasing prepayments $61,940 $34,090 Other prepayments 421 1,133 ------- ------- $62,361 $35,223 ======= ======= Current assets $24,809 $20,737 Non-current assets 37,552 14,486 ------- ------- $62,361 $35,223 ======= =======
Leasing prepayments represent prepayments of lease rental obligations for certain plant and machinery leased under sale and lease-back arrangements. In the year ended December 31, 2001, the Company recorded an impairment charge of $3,145 to write off prepaid leases for testers which the Company does not expect to use in the future. 9. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, 2000 and 2001 consist of:
DECEMBER 31, --------------------- 2000 2001 -------- -------- Cost: Freehold land $ -- $ 5,652 Buildings, mechanical and electrical installation 52,154 64,688 Plant and machinery 348,071 464,603 Toolings 26,861 31,141 Office furniture and equipment 8,386 11,069 Computer equipment 10,357 16,225 Motor vehicle -- 127 Assets under installation and construction in progress 81,006 20,637 -------- -------- Total cost $526,835 $614,142 ======== ========
F-19 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31, ------------------- 2000 2001 -------- -------- Accumulated depreciation: Buildings, mechanical and electrical installation $ 12,065 $ 16,557 Plant and machinery 113,561 218,854 Toolings 12,540 17,969 Office furniture and equipment 2,249 4,013 Computer equipment 5,486 9,481 Motor vehicle -- 6 -------- -------- Total accumulated depreciation 145,901 266,880 -------- -------- Property, plant and equipment (net) $380,934 $347,262 ======== ========
Depreciation charged to results of operations amounted to $48,839, $71,971 and $99,318 (excluding asset impairment charges of $23,735) for the years ended December 31, 1999, 2000 and 2001, respectively. Included in assets under installation and construction are assets acquired under capital lease obligations with a cost of $10,253 at December 31, 2001. One of the buildings is built on land held on a 30-year operating lease, renewable for a further 30-year period subject to the fulfillment of certain conditions. The other building is on freehold land. 10. CAPITAL LEASES Future minimum lease payments under US dollar denominated capital leases for equipment and machinery as of December 31, 2001 are as follows:
2001 ------- Payable in year ending December 31, 2002 $ 3,168 2003 4,210 2004 3,620 2005 470 ------- Total minimum obligations 11,468 Less amounts representing interest at rates ranging from 6.6% to 7.2% per annum (1,215) ------- Present value of minimum obligations 10,253 Current installments of obligations under capital leases (2,564) ------- Obligations under capital leases, excluding current installments $ 7,689 =======
F-20 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 11. ACCRUED OPERATING EXPENSES Accrued operating expenses at December 31, 2000 and 2001 consist of:
DECEMBER 31, ----------------------- 2000 2001 ------- ------- Staff costs $ 7,646 $ 1,841 Purchase of raw materials 11,163 5,179 Maintenance fees, license fees and royalties 1,778 1,193 Interest expense 535 329 Provision for vacation liability 1,688 170 Others 10,153 5,972 ------- ------- $32,963 $14,684 ======= =======
12. OTHER PAYABLES Other payables at December 31, 2000 and 2001 consist of:
DECEMBER 31, ------------------------------ 2000 2001 ------- ------- Liabilities for purchase of property, plant and equipment $27,705 $23,051 ======= =======
13. OTHER NON-CURRENT LIABILITIES Other non-current liabilities at December 31, 2000 and 2001 consist of:
DECEMBER 31, --------------------- 2000 2001 ------ ------ Deferred grant $2,631 $2,573 Others -- 2,032 ------ ------ $2,631 $4,605 ====== ======
The deferred grant refers to a 5-year grant of $13,878 obtained by the Company in 1997 for funding of certain research and development projects from the Economic Development Board ("EDB") under its Research Incentive Scheme for Companies. The grant, which is a reimbursement of specified costs, has no requirement for repayment. F-21 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 14. LONG-TERM DEBT Long-term debt at December 31, 2000 and 2001 consists of:
DECEMBER 31, ------------------------ 2000 2001 -------- -------- Singapore dollar loan $ 44,398 $ 28,090 Less current installments (14,799) (14,045) -------- -------- $ 29,599 $ 14,045 ======== ========
The term loan bears interest at 1% over the prevailing rate declared by the Central Provident Fund ("CPF") Board, a statutory board of Singapore, for contributions made to the CPF under the CPF Act. Interest is payable semi-annually. Principal is denominated in Singapore dollars and is repayable in 7 equal semi-annual installments commencing September 1, 2000. The loan agreement restricts the Company without prior approval from paying dividends, from incurring further indebtedness and from undertaking any form of reconstruction, including amalgamation with another company, which would result in a change in the control of the Company. The loan is unsecured, but is supported by a corporate guarantee given by ST. The term loan at December 31, 2000 and 2001 bore interest at 3.5% per annum. At December 31, 2001, the Company has undrawn banking and credit facilities consisting of short-term loans and bank guarantees of $34,400 with financial institutions. 15. SHARE CAPITAL By an ordinary resolution passed on May 31, 2001, the Company's authorized share capital was increased by the creation of an additional 2,000,000,000 ordinary shares of S$0.25 each. Accordingly, the Company's authorized share capital at December 31, 2001 is S$800,000,000 comprising 3,200,000,000 ordinary shares of S$0.25 par value each. Under Singapore law, all increases in share capital (including rights issues) require prior shareholders' approval. Singapore law does not provide for the issue of shares of no par value and prohibits the issue of shares at a discount to par value. In January 1999, the paid-in capital, net of subscriptions receivable, was increased by S$108 (US$65) from S$192,255 to S$192,363 with the issue of 8,600,000 ordinary shares of S$0.25 each at par, partly paid to S$0.0125 to employees of the Company, its subsidiary ST Assembly Test Services, Inc., ST and related corporations of ST under the Ownership Scheme. (See Note 22) In July 1999, the paid-in capital, net of subscriptions receivable, was increased by S$92 (US$54) to S$192,455 with the issue of 7,371,600 ordinary shares of S$0.25 each at par, partly paid to S$0.0125 to employees of the Company, its subsidiary ST Assembly Test Services, Inc., ST and related corporations of ST under the Ownership Scheme. (See Note 22) F-22 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) In November 1999, the Company terminated the Ownership Scheme. Under the terms of the termination, the Company received proceeds from participants amounting to approximately $2,961 to fully pay up the remaining second installment of 95% of the subscription price for 17,407,695 ordinary shares issued under the Ownership Scheme. The remaining 9,605,505 partly paid ordinary shares in issue under the Ownership Scheme were bought back from the employees by the Company at a total cash consideration of approximately $104. Also, as part of the consideration for the buy back, under the terms of the termination, such employees were granted new options to subscribe for 6,385,450 ordinary shares, at an exercise price of $0.25 each (S$0.42), and 3,220,055 ordinary shares, at an exercise price of $0.15 each (S$0.25), under the ST Assembly Test Services Ltd Share Option Plan 1999 (See Note 22). All the shares purchased by the Company were cancelled on acquisition. Also at this time, the Company purchased 1,112,400 partly paid shares held by a subsidiary of ST for a cash consideration of $12. All the shares purchased by the Company were cancelled on acquisition. In February 2000, the Company issued 175,950,000 ordinary shares at $2.10 per share and 19,550,000 ordinary shares at S$3.554 (US$2.10) per share in the initial public offering of the Company's shares on the Nasdaq National Market and Singapore Exchange. Offering proceeds, net of expenses, amounted to approximately $387,025. 5,244,220 and 3,511,570 ordinary shares were issued as a result of the employees exercising their share options during the years 2000 and 2001, respectively. 16. ADDITIONAL PAID-IN CAPITAL Additional paid-in capital includes the excess of proceeds received from issues of share capital (net of the costs of issue) over the par value of shares issued, which under Singapore law must be credited to the share premium account. The share premium may only be applied in paying up unissued shares to be issued to shareholders, paying up in whole or in part the balance unpaid on shares in issue, in payment of dividends, if such dividends are satisfied by the issue of shares to members of the Company, in writing off preliminary expenses and share and debenture issue expenses and by provision for premiums payable on the redemption of redeemable preferred shares. The Company has not utilized any amounts in the share premium account for the above mentioned purposes. In 1999, as part of the termination of the Ownership Scheme, the Company purchased 10,717,905 of its own ordinary shares of S$0.25 each, partly paid up to S$0.0125 per share. All the shares purchased by the Company were cancelled on acquisition. Upon cancellation, an amount of $97, representing the amount by which the Company's issued share capital was diminished on cancellation, was transferred to the capital redemption reserve within additional paid-in capital, as required by Singapore law (See Note 22). In 2000, the share premium arising from the initial public offering and exercise of employees' share options amounted to $359,572, net of share issue expenses of $23,500. As of December 31, 2000 and 2001, the Company's share premium account amounted to $360,069 and $360,372, respectively. 17. RETAINED EARNINGS Singapore law allows dividends to be paid only out of profits of the Company, determined in accordance with accounting principles generally accepted in Singapore. Shareholders of ordinary shares are not liable for Singapore income tax on dividends paid by the Company out of its tax exempt profits from pioneer activities. F-23 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 18. ASSET IMPAIRMENTS Due to the poor operating results and continued weakness in the semiconductor industry, the Company initiated a review in the fourth quarter of 2001 to identify long-lived assets whose carrying amounts might not be recoverable. As a result of the review, the Company recorded asset impairment charges totaling $23,735. These charges include a write down of machinery and equipment held for sale of $4,367 and a write down of machinery and equipment held for use of $19,368 to reflect their estimated fair value. In determining the fair value of machinery and equipment held for sale and held for use, the Company has considered recent offers and expected future discounted cash flows. The machinery and equipment held for sale is currently not being used in operations. The carrying amount of machinery and equipment held for sale was reduced to $2,771. Management expects machinery and equipment held for sale to be disposed in the near future. The Company routinely reviews the remaining estimated useful lives of their equipment and machinery to determine if such lives should be adjusted due to the likelihood of technological obsolescence arising from changes in production techniques or in market demand for the use of its equipment and machinery. However, due to the nature of the testing operations, which may include sudden changes in demand in the end markets, and due to the fact that certain equipment is dedicated to specific customers, the Company may not be able to anticipate declines in the utility of its machinery and equipment. Consequently, additional impairment charges may be necessary in the future. 19. OTHER NON-OPERATING INCOME
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------- 1999 2000 2001 ------ ------ ------ Government grant income $1,612 $2,792 $1,293 Other income, net 767 733 697 ------ ------ ------ $2,379 $3,525 $1,990 ====== ====== ======
20. INCOME TAXES Income (loss) before income taxes consists of the following:
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------- 1999 2000 2001 ------ ------- --------- Singapore $4,747 $56,505 $(142,493) Foreign 608 719 (649) ------ ------- --------- $5,355 $57,224 $(143,142) ====== ======= =========
F-24 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) Income tax benefit (expense) consists of the following:
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------- 1999 2000 2001 ----- ------- ------- Current tax provision: Singapore $(279) $(2,568) $(1,107) Foreign (221) (297) (244) ----- -------- ------- $(500) $(2,865) $(1,351) ===== ======== ======= Deferred tax benefit: Singapore $ -- $ -- $ 9,661 Foreign -- -- 500 ----- ------- ------- $ -- $ -- $10,161 ===== ======= ======= $(500) $(2,865) $ 8,810 ===== ======= =======
The Company has been granted pioneer status under the Singapore Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86 (the "Act"), for "Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing Services" from January 1, 1996 to December 31, 2003, subject to compliance with certain conditions. During the pioneer status period, Singapore-resident income from pioneer trade is exempt from income tax, subject to compliance with the conditions stated in the pioneer certificate and the Act. Income derived from non-pioneer activities during the pioneer period, however, is subject to income tax at the prevailing enacted rate of tax. Current tax expense for the years ended December 31, 1999, 2000 and 2001 in relation to the Singapore operation represents income tax payable on non-pioneer trade income, principally rental and interest income. The tax-exempt profits arising from the pioneer trade can be distributed as tax-exempt dividends that are not subject to Singapore income tax in the hands of the shareholders. Losses and unutilized capital allowances arising in the pioneer status period are available for carryforward to be offset against profits arising in subsequent periods, including profits arising after the pioneer status period. Pioneer loss and unutilized capital allowance carryforwards are available indefinitely, subject to more than 50% of the shareholders staying the same from the incurrence of the tax loss or allowance to its utilization. As of December 31, 2000, the Company has no pioneer loss and unutilized capital allowance carryforwards. As of December 31, 2001, the Company had pioneer loss and unutilized capital allowance carryforwards of $21,941 and $77,296, respectively. As of December 31, 2001, the Company has available a foreign net operating loss carryforward of approximately $702 which can be use to offset profits of its Taiwan subsidiary arising in the next four years. The foreign net operating loss carryforward will expire on December 31, 2006. F-25 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) The Company also has foreign investment tax credits carryforwards of approximately $1,211 and $1,151, which expire on December 31, 2004 and 2005, respectively. The foreign investment tax credit carryforwards can be used to offset income tax payable in future years. The offsetting amount is limited to 50% of the offsetting year's income tax payable. The last year of expiry for the tax credit carryforwards is, however, not subject to the 50% limitation. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss, unutilized capital allowance and investment tax credit carryforwards. The tax effect of significant items comprising the Company's deferred income tax assets at December 31, 2001 are as follows:
DECEMBER 31, ------------ 2001 ------- Deferred income tax assets Operating loss carryforwards $ 2,896 Unutilized capital allowance carryforwards 7,730 Investment tax credits 2,362 Other (24) ------- $12,964 =======
There were no material deferred tax assets or liabilities at December 31, 2000. There was no valuation allowance for deferred tax assets as of January 1, 2000 or 2001. The deferred tax assets were generated in 2001, principally as a result of the deferred tax benefits associated with tax losses and unutilized capital allowances. The deferred tax effects of the operating loss and unutilized capital allowance carryforwards are recognized because they are expected to be carried forward to offset taxable income arising after the expiration of the pioneer period. Such carryforwards are expected to be utilized during the post-pioneer period. The post-pioneer period tax rate is expected to be 10%. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period differ materially from current estimates. F-26 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) A reconciliation of the expected tax expense (benefit) at the statutory rate of tax to actual tax expense (benefit) is as follows:
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------- 1999 2000 2001 ------- -------- -------- Income tax expense (benefit) computed at Singapore statutory rate of 24.5% (2000: 25.5%, 1999: 26%) $ 1,392 $ 14,592 $(35,069) Non-deductible expenses 6,635 143 243 Effect of pioneer status (7,862) (11,772) 6,972 Effect of recognizing deferred tax assets at post-pioneer concessionary tax rate -- -- 19,433 All other items, net 335 (98) (389) ------- -------- -------- Income tax expense (benefit) $ 500 $ 2,865 $ (8,810) ======= ======== ========
The pioneer status relief had the effect of increasing diluted net income per ordinary share by $0.01 and $0.01 and diluted net income per ADS by $0.10 and $0.12 for the years ended December 31, 1999 and 2000, respectively. 21. REVENUE DATA AND MAJOR CUSTOMERS Revenues by major service line and by geographical areas (identified by location of customer headquarter) were:
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------- 1999 2000 2001 -------- -------- -------- United States -- assembly $ 93,989 $155,892 $ 71,025 -- test 58,896 102,629 43,287 -------- -------- -------- 152,885 258,521 114,312 -------- -------- -------- Singapore -- assembly 11,230 5,919 2,090 -- test 22,547 18,215 6,097 -------- -------- -------- 33,777 24,134 8,187 -------- -------- -------- Rest of Asia -- assembly 259 1,112 2,318 -- test 106 731 2,066 -------- -------- -------- 365 1,843 4,384 -------- -------- -------- Europe -- assembly 3,010 16,440 3,050 -- test 11,061 30,333 15,933 -------- -------- -------- 14,071 46,773 18,983 -------- -------- -------- Total $201,098 $331,271 $145,866 ======== ======== ========
F-27 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) Revenues from major customers, as a percentage of net revenues, were as follows:
FOR THE YEAR ENDED DECEMBER 31, ------------------------------- 1999 2000 2001 ----- ----- ----- % % % Customer A 16.8 32.1 29.2 Customer B 25.2 18.1 12.3 Customer C 4.6 5.6 10.4 Customer D* 16.4 7.3 5.6 Others 37.0 36.9 42.5 ----- ----- ----- 100.0 100.0 100.0 ----- ----- -----
- ------------ * ST affiliate 22. SHARE OPTIONS AND INCENTIVE PLANS (a) EMPLOYEES' SHARE OWNERSHIP SCHEME Effective April 1998, the Company adopted the ST Assembly Test Services Employees' Share Ownership Scheme. The Ownership Scheme was administered by a committee nominated by the directors and provided for the grant of options to employees and directors of the Company and certain of its affiliates. The exercise period of the options was 30 days and the subscription price for each share which may be purchased upon exercise of the options was determined by the committee but could not be less than the par value. The subscription price was payable in installments, the first installment of 5% of the subscription price being payable upon exercise of the option, the second installment of 95% of the subscription price being payable over a period between the second and fifth years following the date the option was granted, however, such cumulative second installment due could be deferred and payable at each successive anniversary date but was not due until ten years after the date of grant of the option. Where employees failed to pay the second installment within ten years of the date of grant of the option, the employees were required to sell their shares to an ST affiliate at the greater of 5% of the market value of the shares, as determined by the committee, or 5% of the net asset value of the shares. Employees leaving the employment of the Company were entitled to retain those shares which had been fully paid for, while shares not fully paid for were either required to be sold to the ST affiliate or, in certain circumstances, were allowed to be fully paid. The Ownership Scheme was accounted for in accordance with variable plan accounting under Accounting Principles Board ("APB") Opinion No. 25. Compensation cost for shares granted under the Ownership Scheme was recorded as compensation expense over the requisite vesting period, with the unvested shares reflected as unearned compensation in a separate component of shareholders' equity based on the current market price of the shares at the end of the relevant period. The Company determined the fair market values of ordinary shares underlying each option grant based on the income approach and the market approach. The income approach indicates the fair market value of the common stock of a business based on the value of the cash flows that the business can be expected to generate in the future. The market approach indicates the fair market value of the ordinary shares based on a comparison of the Company to comparable publicly traded companies, comparable transactions in its industry, and prior transactions. F-28 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) In November 1999, the Company terminated the Ownership Scheme. Under the terms of the termination, the Company received proceeds from participants amounting to approximately $2,961 to fully pay up the remaining second installment of 95% of the subscription price for 17,407,695 ordinary shares issued under the Ownership Scheme. The remaining 9,605,505 partly paid ordinary shares in issue under the Ownership Scheme were bought back from the employees by the Company at a total cash consideration of approximately $104. Also, as part of the consideration for the buy back, under the terms of the termination, such employees were granted new options to subscribe for 6,385,450 ordinary shares, at an exercise price of $0.25 each (S$0.42), and 3,220,055 ordinary shares, at an exercise price of $0.15 each (S$0.25), under the ST Assembly Test Services Ltd Share Option Plan 1999 (the "Share Option Plan"). Total compensation expense recognized for stock-based compensation under the Ownership Scheme for the year ended December 31, 1999 was $25,095. Information for the year ended December 31, 1999 was as follows:-
DECEMBER 31, ------------- 1999 -------- Shares outstanding at beginning of year (in thousands) 20,774 Shares granted during the year (in thousands) 7,372 -------- 28,146 Termination of Ownership Scheme: -- shares converted into fully paid shares (in thousands) (17,408) -- shares repurchased and cancelled (in thousands) (10,718) Other shares converted into fully paid shares (in thousands) (20) -------- Shares outstanding at year end (in thousands) -- ======== Weighted average grant date fair value of options $ 0.51 ========
(b) SHARE OPTION PLAN Effective May 1999, the Company adopted the Share Option Plan which provides for a maximum of 150 million shares (subject to adjustment under the plan) to be reserved for option plans. Options granted under the plan may include non-statutory options as well as incentive stock options intended to qualify under Section 422 of the United States Internal Revenue Code. The plan is administered by a committee appointed by the directors. Employees, outside directors and consultants are eligible for the grant of options except for (i) employees of affiliates, and outside directors and consultants, who are not eligible for the grant of incentive stock options; and (ii) employees, outside directors and consultants of affiliates resident in the United States, who are not eligible for the grant of options. F-29 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) The exercise price of an incentive stock option is the fair market value of the shares at the date of the grant. In certain circumstances, the exercise price may be higher than the fair market value but in no event will the exercise price be below the par value of the share. Option periods may not exceed 10 years from the date of grant. Upon leaving the employment of the Company, outstanding options remain exercisable for a specified period. The following table summarizes stock option activity under the Share Option Plan for the years ended December 31, 1999, 2000 and 2001:
WEIGHTED AVERAGE OPTIONS EXERCISE PRICE ------- -------------- (IN THOUSANDS) Options outstanding at January 1, 1999 -- -- Granted during the year 18,840 $0.97 Lapsed during the year (126) $1.12 ------ ----- Options outstanding at December 31, 1999 18,714 $0.99 Granted during the year 27,568 $2.85 Lapsed during the year (4,999) $2.77 Exercised during the year (5,244) $0.42 ------ ----- Options outstanding at December 31, 2000 36,039 $2.21 Granted during the year 26,823 $0.94 Lapsed during the year (7,581) $2.13 Exercised during the year (3,511) $0.21 ------ ----- Options outstanding at December 31, 2001 51,770 $1.70 ====== ===== Exercisable at end of year (in thousands) 8,122 $1.98 ====== =====
Weighted average fair value of options granted in 1999, 2000 and 2001 were $0.55, $2.44, and $0.74 respectively. F-30 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) The following table summarizes information about fixed stock options outstanding at December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------- ----------------------------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED NUMBER REMAINING AVERAGE NUMBER AVERAGE OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT EXERCISE RANGE OF EXERCISE PRICES 12/31/2001 LIFE PRICE 12/31/2001 PRICE ------------------------ -------------- ----------- -------- -------------- -------- (IN THOUSANDS) (IN THOUSANDS) $0.14 1,002 7.6 years $0.14 583 $0.14 $0.24 1,281 8.0 years $0.24 1,281 $0.24 $0.63 to $0.89 19,829 9.4 years $0.87 -- -- $1.25 to $1.63 15,345 9.2 years $1.51 1,740 $1.63 $2.00 to $2.61 5,121 8.0 years $2.08 2,663 $2.06 $3.99 9,192 8.3 years $3.99 1,855 $3.99 ------ ----- 51,770 8,122 ====== =====
Total compensation expense recognized for stock-based compensation under the Share Option Plan for the years ended December 31, 1999, 2000 and 2001 were $232, $448 and $1,024, respectively. (c) IMPACT OF APPLYING FAIR VALUE BASED METHOD The fair value of shares granted under the Ownership Scheme for the years ended December 31, 1999 was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
DECEMBER 31, ----------- 1999 -------- Expected term 10 years Dividend yield 0.0% Risk-free interest rate 5.6% Expected volatility 78.6%
F-31 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) The fair value of options granted under the Share Option Plan for the years ended December 31, 1999, 2000 and 2001 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1999 2000 2001 ------------- ------------- ------------- Expected term 10 years 10 years 5-10 years Dividend yield 0.0% 0.0% 0.0% Risk-free interest rate 5.9%-6.4% 4.2%-4.7% 2.7%-3.9% Expected volatility 59.4%-77.3% 67.4%-82.9% 57.6%-64.2%
Had the Company determined compensation for the Ownership Scheme and the Share Option Plan under Statement of Financial Accounting Standards No. 123, the Company's net income (loss) would have been reduced to the pro forma amounts indicated below:
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------- 1999 2000 2001 ------- ------- --------- % % % Net income (loss): As reported $ 4,855 $54,359 $(134,019) Pro forma 18,952 36,011 (151,586) Basic net income (loss) per share: As reported $ 0.01 $ 0.06 $ (0.14) Pro forma $ 0.02 $ 0.04 $ (0.15) Diluted net income (loss) per share: As reported $ 0.01 $ 0.06 $ (0.14) Pro forma $ 0.02 $ 0.04 $ (0.15)
23. RELATED PARTY TRANSACTIONS The Singapore Technologies Group is a leading technology-based multi-national conglomerate based in Singapore. The Singapore Technologies Group provides a full array of multi-disciplinary capabilities, ranging from research and development, design and engineering, precision and high value-added manufacturing, major infrastructure development to management services in the following five core business groups: Engineering, Technology, Infrastructure & Logistics, Property and Financial Services. As of December 31, 2001, Temasek Holdings (Private) Limited ("Temasek") directly owns 78.6% of Singapore Technologies Pte Ltd. The remaining 21.4% is owned by Singapore Technologies Holdings Pte Ltd, which is in turn 100% owned by Temasek. Temasek is a holding company through which the corporate investments of the government of Singapore are held. The Company is in the semiconductor division of the ST Group which specializes in design, manufacture, assembly and testing of F-32 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) semiconductors. Companies within the ST Group, including Chartered Semiconductor Manufacturing Ltd engage in transactions with the Company in the normal course of their respective businesses. The building of the Company is built on land held on a long-term operating lease from a statutory board of the government of Singapore. The lease is for a 30-year period commencing March 1, 1996 and renewable for a further 30 years subject to the fulfillment of certain conditions. The rent is subject to annual revision, with the increase capped at 4% per annum. ST provides management and corporate services to the Company. Under a service agreement effective January 1, 2000, annual management fees are payable for the provision of specified services on mutually agreed terms which the Company believes approximates the cost of providing those services. The fees are subject to review by the parties every three years. Prior to this agreement these services were subject to a management fee computed based on certain percentages of capital employed, revenue, manpower and payroll. ST provides short-term financing for the Company (generally on a 3 to 6 months renewable basis) using its cost competitive corporate banking advantage in the banking community. In February 2000, the Company repaid the short-term loan and has since not utilized the financing facility. The Company participates in a ST cash management program managed by a bank. Under the program, cash balances are pooled and daily cash surpluses or shortfalls of the Company within the pool earn or bear interest at prevailing interest rates. The Company also places short-term deposits with ST or its affiliates at competitive interest rates comparable to rates offered by commercial banks in Singapore. Short-term deposits with the ST Treasury unit with original maturities in excess of three months are included in short-term deposits with ST affiliates. Certain general and administrative expenses of ST Assembly Test Services, Inc., our subsidiary, are borne by and recharged to the Company by Chartered Semiconductor Manufacturing Inc., a United States incorporated affiliate of ST. These expenses amounted to $1,252, $556 and $513 for 1999, 2000 and 2001, respectively. The Company had the following significant transactions with ST and ST affiliates:
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------- 1999 2000 2001 ------- ------- ------ ST - Management fees expense $ 1,223 $ 1,676 $1,019 ST affiliates - Net revenues 33,777 24,091 8,188 Purchase of property, plant and equipment 160 -- -- Interest income -- 4,621 4,596 Interest expense 1,458 211 -- Rental income 482 -- -- General and administrative expenses 1,252 556 513 ======= ======= ======
F-33 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) As of December 31, 2000 and 2001, there were the following amounts owing by (to) affiliates:-
DECEMBER 31, ----------------------- 2000 2001 ------- ------ Amounts due from ST and ST affiliates Accounts receivable, net of allowance for doubtful accounts $ 8,727 $1,793 ======= ====== Short-term deposits with ST affiliates $10,000 $ -- ======= ====== Amounts due to ST Other payables $ 927 $1,520 Amounts due to ST affiliates Accounts payable 1,135 953 ------- ------ $ 2,062 $2,473 ======= ======
24. COMMITMENTS (a) LEASES The Company has leased land for a 30-year period commencing March 1, 1996 and renewable for a further 30 years subject to the fulfillment of certain conditions. The annual rent (excluding rebates) is currently fixed at $726. The rent is subject to annual revision with the increase capped at 4% per annum. Operating lease rental expense for the years ended December 31, 1999, 2000 and 2001 was $594, $583 and $544, respectively. The Company has leased certain plant and equipment under operating leases and under sale and lease-back arrangements. These leases extend through 2004. Operating lease rental expenses in respect of these leases for the years ended December 31, 1999, 2000 and 2001 were $1,673, $17,971 and $24,516, respectively. Future minimum lease payments under non-cancelable operating leases of factory land and plant and equipment as of December 31, 2001 were:
DECEMBER 31 ----------- 2001 ------- Payable in year ending December 31, 2001 $ -- 2002 2,825 2003 2,299 2004 1,856 2005 1,654 2006 1,620 Thereafter 13,913 ------- $24,167 =======
F-34 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) (b) TECHNOLOGY ARRANGEMENTS The Company acquires patent rights and licence technologies from other companies for use in its processes. Cost of the technology licences is amortized over the shorter of the useful life or licence period. At December 31, 2001, unamortized costs for technology licences amounted to $1,348. The Company may obtain other suitable patent rights in the future relating to current or future technologies. There can be no assurance that the Company will always be able to obtain such future patents on favorable commercial terms. As is typical of the semiconductor industry, the Company may in the future receive notices from third parties asserting patent rights, copyrights or other rights covering the Company's designs or processes. (c) CAPITAL COMMITMENTS As of December 31, 2000 and 2001, there were the following capital commitments:-
DECEMBER 31, --------------------- 2000 2001 ------- ------- Building, mechanical and electrical installation $ 103 $ 614 Plant and machinery 25,084 34,924 ======= =======
25. FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates for fair value. Accordingly, these estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Certain of these financial instruments are with major financial institutions and expose the Company to market and credit risks and may at times be concentrated with certain counterparties or groups of counterparties. The creditworthiness of counterparties is continually reviewed, and full performance is anticipated. The methods and assumptions used to estimate the fair value of significant classes of financial instruments is set forth below: CASH AND CASH EQUIVALENTS Cash and cash equivalents are due on demand or carry a maturity date of less than three months when purchased. The carrying amount of these financial instruments is a reasonable estimate of fair value. MARKETABLE SECURITIES The fair value is estimated based upon the quoted market price on the last business day of the fiscal year. The fair value of securities, for which there are no quoted market prices, is estimated based upon similar types of securities that are traded in the market. F-35 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) LONG-TERM DEBT The fair value is based on current interest rates available to the Company for issuance of debts of similar terms and remaining maturities. LIMITATIONS Fair value estimates are made at a specific point in time, and are based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
AS OF DECEMBER 31, 2000 AS OF DECEMBER 31, 2001 --------------------------- -------------------------- CARRYING ESTIMATED CARRYING ESTIMATED AMOUNT FAIR VALUE AMOUNT FAIR VALUE -------- ---------- -------- ---------- FINANCIAL ASSETS: Cash and cash equivalents $141,733 $141,733 $115,214 $115,214 Marketable securities 21,906 21,906 23,801 23,801 FINANCIAL LIABILITIES: Long-term debt 44,398 42,802 28,090 27,959
26. SUBSEQUENT EVENT In January 2002, the Company established a S$500 million Multicurrency Medium Term Note Programme ("MTN Programme"). Under the MTN Programme, the Company may from time to time issue notes in series or tranches ("Notes") in Singapore dollars or any other currencies as may be agreed between the dealers of the MTN Programme and the Company. Each series or tranche of the Notes may be issued in various amounts and terms, and may bear fixed or floating rates of interest. The Notes will constitute direct, unconditional, unsecured and unsubordinated obligations of the Company, ranking pari passu, without any preference or priority among themselves, and pari passu, with all other unsecured obligations (other than subordinated obligations and priorities created by law) of the Company. Proceeds from the MTN Programme will be used for general corporate purposes, including capital expenditure and working capital. The Company has not issued any Notes under the MTN Programme. F-36 ST ASSEMBLY TEST SERVICES LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 IN THOUSANDS OF US DOLLARS (EXCEPT SHARE AND PER SHARE DATA) 27. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss at December 31, 2000 and 2001 are as follows:
2000 2001 ------ ------ Currency translation loss $9,731 $9,638 Unrealized loss on available-for-sale marketable securities -- 303 ------ ------ $9,731 $9,941 ====== ======
F-37 EX-1.1 3 u91877ex1-1.txt MEMORANDUM AND ARTICLES OF ASSOCIATION EXHIBIT 1.1 THE COMPANIES ACT, CAP. 50 ---------------- PRIVATE COMPANY LIMITED BY SHARES ---------------- MEMORANDUM OF ASSOCIATION OF **ST ASSEMBLY TEST SERVICES LTD *(formerly known as ANAM/AMKOR ST PTE LTD) 1. The name of the Company is ** ST Assembly Test Services Ltd * ST Assembly Test Services Pte Ltd 2. The Registered Office of the Company will be situated in the Republic of Singapore. 3. The objects for which the Company is established are:- (1) To carry on the business of manufacturing, installing, buying, selling, maintaining, assembling, importing, exporting, distributing, handling, testing, servicing, repairing and otherwise dealing in electrical and electronic components, parts, fittings, accessories, equipment and materials of every kind and description, including but not limited to semiconductor components, parts, fittings, accessories, equipment and materials. (2) To carry out research and development work (including but not limited to investigations and experimental work) of every description in relation to, but not limited to, the electrical and electronic industry and the application and use thereof and to collect, collate, prepare and distribute (by way of sale, licence, concession or otherwise) the technology thereof and information and statistics relating thereto. (3) To carry out modification, repairs, overhaul and testing of electronics, components, parts, fittings and accessories including but not limited to semiconductor components, parts, fittings and accessories. (4) To train personnel including but not limited to personnel for the electrical and electronic industry and to advance the skills of such persons. (5) To carry on all or any of the businesses of electrical, mechanical, motor and general engineers, manufacturers and merchants of, agents for and dealers in engineering specialities of every description. (6) To manufacture, buy, sell, maintain, repair, provide technical services, alter and otherwise deal in apparatus, plant, machinery, fittings, furnishings, tools, materials, products and things of all kinds capable of being used for the purposes of the abovementioned businesses or any of them or likely to be required in relation thereto. (7) To carry on any other business which may seem to the Company capable of being conveniently carried on in connection with its business or calculated directly or indirectly to enhance the value of or render profitable any of the Company's properties or rights. * The Name of the Company was changed to "ST Assembly Test Services Pte Ltd" with effect from 20 January 1995. ** The Name of the Company was changed to "ST Assembly Test Services Ltd" with effect from 30 April 1998. (8) To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which the Company is authorized to carry on, or possessed of property suitable for the purposes of the Company. (9) To apply for, purchase, or otherwise acquire any patents, patent rights, copyrights, trade marks, formulae, licences, concessions, and the like, conferring any exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company; and to use, exercise, develop, or grant licences in respect of, or otherwise turn to account, the property, rights, or information so acquired. (10) To amalgamate or enter into partnership or into any arrangement for sharing of profits, union of interest, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in or about to carry on or engage in any business or transaction which the Company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit the Company. (11) To take, or otherwise acquire, and hold shares, debentures, or other securities of any other company. (12) To enter into any arrangements with any government or authority, supreme, municipal, local, or otherwise, that may seem conducive to the Company's objects, or any of them; and to obtain from any such government or authority any rights, privileges, and concessions which the Company may think it desirable to obtain; and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions. (13) To establish and support or aid in the establishment and support of associations, institutions, funds, trusts, and conveniences calculated to benefit employees or directors or past employees or directors of the Company or its predecessors in business, or the dependants or connections of any such persons; and to grant pensions and allowances, and to make payments towards insurance; and to subscribe or guarantee money for charitable or benevolent objects, or for any exhibition, or for any public, general, or useful object. (14) To promote any other company or companies for the purpose of acquiring or taking over all or any of the property, rights, or liabilities of the company or companies, or for any other purpose which may seem directly or indirectly calculated to benefit the Company. (15) To purchase, take on lease or in exchange, hire, or otherwise acquire any movable or immovable properties and any rights or privileges which the Company may think necessary or convenient for the purposes of its business, and in particular any land, buildings, easements, machinery, plant, and stock-in-trade. - 2 - (16) To construct, improve, maintain, develop, work, manage, carry out, or control any buildings, works, factories, mills, roads, ways, tramways, railways, branches or sidings, bridges, reservoirs, water-courses, wharves warehouses, electric works, shops, stores, and other works, and conveniences which may seem calculated directly or indirectly to advance the Company's interests; and to contribute to, subsidize, or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out, or control thereof. (17) To guarantee and give guarantees or indemnities for the payment of money or the performance of contracts or obligations by any person or company. (18) To lend and advance money or give credit to any person or company and on such terms as may be considered expedient, and either with or without security; to secure or undertake in any way the repayment of moneys lent or advanced to or the liabilities incurred by any person or company, and otherwise to assist any person or company. (19) To borrow or raise or secure the payment of money in such manner as the Company may think fit and to secure the same or the repayment or performance of any debt, liability, contract, guarantee or other engagement already incurred by or to be entered into by the Company in any way and in particular by the issue of debentures perpetual or otherwise, charged upon all or any of the Company's property (both present and future), including its uncalled capital; and to purchase, redeem, or pay off any such securities. (20) To invest and deal with the money of the Company not immediately required in such manner as may from time to time be thought fit. (21) To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the Company's capital or any debentures, or other securities of the Company, or in or about the organization, formation, or promotion of the Company or the conduct of its business. (22) To draw, make, accept, endorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, and other negotiable or transferable instruments. (23) To sell or dispose of the undertaking of the Company or any part thereof for such consideration as the Company may think fit, and in particular for shares, debentures, or securities of any other company having objects altogether or in part similar to those of the Company. (24) To adopt such means of making known and advertising the business and products of the Company as may seem expedient. - 3 - (25) To apply for, secure, acquire by grant, legislative enactment, assignment, transfer, purchase, or otherwise, and to exercise, carry out, and enjoy any charter, licence, power, authority, franchise, concession, right, or privilege, which any Government or authority or any corporation or other public body may be empowered to grant; and to pay for, aid in, and contribute towards carrying the same into effect; and to appropriate any of the Company's shares, debentures, or other securities and assets to defray the necessary costs, charges, and expenses thereof. (26) To apply for, promote, and obtain any statute, order, regulation, or other authorization or enactment which may seem calculated directly or indirectly to benefit the Company; and to oppose any bills, proceedings, or applications which may seem calculated directly or indirectly to prejudice the Company's interests. (27) To procure the Company to be registered or recognized in any country or place outside the Republic of Singapore. (28) To sell, improve, manage, develop, exchange, lease, dispose of, turn to account, or otherwise deal with all or any part of the property and rights of the Company. (29) To issue and allot fully or partly paid shares in the capital of the Company in payment or part payment of any movable or immovable property purchased or otherwise acquired by the Company or any services rendered to the Company. (30) To distribute any of the property of the Company among the members in kind or otherwise but so that no distribution amounting to a reduction of capital shall be made without the sanction required by law. (31) To take or hold mortgages, liens, and charges to secure payment of the purchase price, or any unpaid balance of the purchase price, of any part of the Company's property of whatsoever kind sold by the Company, or any money due to the Company from purchasers and others. (32) To undertake and transact all kinds of agency or secretarial business and also to undertake and execute any trusts, the undertaking whereof may seem desirable, and either gratuitously or otherwise. (33) To transact any lawful business in aid of the Republic of Singapore in the prosecution of any war or hostilities in which the Republic of Singapore is engaged. (34) To carry out all or any of the objects of the Company and do all or any of the above things in any part of the world and either as principal, agent, contractor, or trustee, or otherwise, and by or through trustees or agents or otherwise, and either alone or in conjunction with others. (35) To do all such other things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the Company. AND IT IS HEREBY DECLARED that the word "company" in this Memorandum when not referring to this Company shall be deemed to include any corporation partnership association club or other body of persons whether incorporated or not and wherever incorporated or domiciled and whether now - 4 - existing or hereafter to be formed AND further that unless the context or subject matter is inconsistent therewith words signifying the singular number shall be deemed and taken to include the plural and vice versa AND further that the objects specified in each of the paragraphs in this Memorandum shall be regarded as independent objects, and accordingly, shall be in no wise limited or restricted (except when otherwise expressed in such paragraph), by reference to the objects indicated in any other paragraph or the name of the Company, but may be carried out in as full and ample a manner and construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. 4. The liability of the members is limited. 5. The original capital of the Company is $300,000,000* divided into 300,000,000* shares of $1/- each, and the Company shall have power to increase or reduce the capital to consolidate or subdivide the shares into shares of larger or smaller amounts, and to issue all or any part of the original or any additional capital as fully paid or partly paid shares and with any special or preferential rights or privileges or subject to any special terms or conditions, and either with or without any special designation, and also from time to time to alter, modify, commute, abrogate or deal with any such rights, privileges, terms, conditions or designations in accordance with the regulations for the time being of the Company. ----------------------------------- * Pursuant to an ordinary resolution passed at:- (i) an Extraordinary General Meeting held on 30 April 1998, 300,000,000 shares of $1/- each was sub-divided into 1,200,000,000 shares of $0.25 each. (ii) the Seventh Annual General Meeting held on 31 May 2001, the authorised share capital of the Company was increased to $800,000,000 divided into 3,200,000,000 ordinary shares of $0.25 each, by the creation of 2,000,000,000 ordinary shares of $0.25 each. - 5 - WE, the several persons whose names, addresses and descriptions are subscribed, are desirous of being formed into a Company in pursuance of this Memorandum of Association and respectively agree to take the number of shares in the capital of the Company set opposite our respective names:-
======================================================================= Number of Shares taken by each Names, Addresses and Descriptions of Subscribers Subscriber - ----------------------------------------------------------------------- /s/ ANTHONY LEE HWEE KHIAM -------------------------- ANTHONY LEE HWEE KHIAM 27 Jalan Jambu Mawar One (1) Singapore 2158 Advocate & Solicitor /s/ LOH WAI MOOI MICHELLE ------------------------- LOH WAI MOOI MICHELLE 15 Jalan Tempua One (1) Singapore 1129 Advocate & Solicitor - ----------------------------------------------------------------------- Total number of shares taken Two (2) =======================================================================
Dated this 29th day of October 1994. Witness to the above signatures:- /s/ JUNE LOW FUI SIAN ---------------------- JUNE LOW FUI SIAN Advocate and Solicitor c/o Bih Li & Lee Advocates & Solicitors 79 Robinson Road #24-01 CPF Building Singapore 0106 - 6 - ---------------------------------------------- NEW ARTICLES OF ASSOCIATION OF ST ASSEMBLY TEST SERVICES LTD (ADOPTED BY SPECIAL RESOLUTION PASSED ON 19 January 2000) ---------------------------------------------- ALLEN & GLEDHILL 36, ROBINSON ROAD, #18-01, CITY HOUSE, SINGAPORE 068877. CONTENTS --------
PAGE ---- ARTICLES OF ASSOCIATION:- Preliminary 1 Share Capital 3 Issue of Shares 3 Variation of Rights 3 Alteration of Share Capital 4 Shares 5 Share Certificates 6 Calls on Shares 8 Forfeiture and Lien 9 Transfer of Shares 11 Transmission of Shares 13 Stock 13 General Meetings 14 Notice of General Meetings 14 Proceedings at General Meetings 16 Votes of Members 18 Corporations Acting by Representatives 20 Directors 20 Managing Director or Chief Executive Officer or President 22 Appointment and Retirement of Directors 23 Alternate Directors 24
CONTENTS --------
PAGE ---- Meetings and Proceedings of Directors 25 Borrowing Powers 27 General Powers of Directors 27 Secretary 28 The Seal 28 Authentication of Documents 29 Reserves 29 Dividends 30 Capitalisation of Profits and Reserves 31 Accounts 32 Auditors 33 Notices 33 Winding Up 34 Indemnity 35 Secrecy 35
- ii - THE COMPANIES ACT, CHAPTER 50 --------------------------- PUBLIC COMPANY LIMITED BY SHARES --------------------------- ARTICLES OF ASSOCIATION of ST ASSEMBLY TEST SERVICES LTD (Adopted by Special Resolution passed on 19 January 2000) ------------------------------------------------------------ PRELIMINARY 1. The regulations in Table A in the Fourth Schedule Table "A" not to to the Companies Act, Chapter 50 (as amended) shall not apply. apply to the Company. 2. In these presents (if not inconsistent with the Interpretation. subject or context) the words and expressions set out in the first column below shall bear the meanings set opposite to them respectively. "The Act" The Companies Act, Chapter 50. "The Company" ST Assembly Test Services Ltd. "In writing" Written or produced by any substitute for writing or partly one and partly another. "Month" Calendar month. "Office" The registered office of the Company for the time being. "Ordinary Shares" The ordinary shares of $0.25 each in the capital of the Company. "Paid" Paid or credited as paid. "Seal" The Common Seal of the Company. "The Statutes" The Act and every other Act for the time being in force concerning companies and affecting the Company. "These presents" These Articles of Association as from time to time altered. "Year" Calendar year. The expressions "Depositor", "Depository", "Depository Agent" and "Depository Register" shall have the meanings ascribed to them respectively in the Act. References in these presents to "holders" of shares or a class of shares shall:- (a) exclude the Depository except where otherwise expressly provided in these presents or where the term "registered holders" or "registered holder" is used in these presents; and (b) where the context so requires, be deemed to include references to Depositors whose names are entered in the Depository Register in respect of those shares. and "holding" and "held" shall be construed accordingly. The expression "Director" shall have the meaning ascribed to it in the Act and shall, where the context so requires, be deemed to include a reference to an Alternate Director. The expression "Secretary" shall include any person appointed by the Directors to perform any of the duties of the Secretary and where two or more persons are appointed to act as Joint Secretaries shall include any one of those persons. All such of the provisions of these presents as are applicable to paid-up shares shall apply to stock, and the words "share" and "shareholder" shall be construed accordingly. Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include corporations. Subject as aforesaid any words or expression defined in the Act shall (if not inconsistent with the subject or context) bear the same meanings in these presents. A Special Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these presents. - 2 - SHARE CAPITAL 3. The authorised share capital of the Company Authorised share is $300,000,000* divided into 1,200,000,000* ordinary capital. shares of $0.25 each. ISSUE OF SHARES 4. Subject to the Statutes and to these presents, Issue of Shares. no shares may be issued by the Directors without the prior approval of the Company in General Meeting but subject thereto and to Article 8, and to any special rights attached to any shares for the time being issued, the Directors may allot or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and subject or not to the payment of any part of the amount thereof in cash as the Directors may think fit, and any shares may be issued with such preferential, deferred, qualified or special rights, privileges or conditions as the Directors may think fit, and preference shares may be issued which are or at the option of the Company are liable to be redeemed, the terms and manner of redemption being determined by the Directors, Provided always that:- (a) no shares shall be issued to transfer a controlling interest in the Company without the prior approval of the members in a General Meeting; and (b) no shares shall be issued at a discount except in accordance with the Statutes. 5. (A) In the event of preference shares being issued Rights of the total nominal value of issued preference shares preference shall not at any time exceed the total nominal value of shareholders. the issued ordinary shares and preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balance sheets and attending General Meetings of the Company, and preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital or winding-up or sanctioning a sale of the undertaking or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six months in arrears. (B) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued. VARIATION OF RIGHTS 6. (A) Whenever the share capital of the Company is Variation of divided into different classes of shares, the special rights. rights attached to any class may, subject to the provisions of the Statutes, be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of * Pursuant to an ordinary resolution passed at the Seventh Annual General Meeting held on 31 May 2001, the authorised share capital of the Company was increased to $800,000,000 divided into 3,200,000,000 ordinary shares of $0.25 each, by the creation of 2,000,000,000 ordinary shares of $0.25 each. - 3 - the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding-up. To every such separate General Meeting all the provisions of these presents relating to General Meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy at least one-third in nominal value of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him. Provided always that where the necessary majority for such a Special Resolution is not obtained at such General Meeting, consent in writing if obtained from the holders of three-quarters in nominal value of the issued shares of the class concerned within two months of such General Meeting shall be as valid and effectual as a Special Resolution carried at such General Meeting. The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied. (B) The special rights attached to any class of Creation or issue of shares having preferential rights shall not unless further shares with otherwise expressly provided by the terms of issue special rights. thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto. ALTERATION OF SHARE CAPITAL 7. The Company may from time to time by Ordinary Power to increase Resolution increase its share capital by such sum to be share capital. divided into shares of such amounts as the resolution shall prescribe. 8. (A) The Company may by Ordinary Resolution in Authority to issue General Meeting give to the Directors a general shares. authority, either unconditionally or subject to such conditions as may be specified in the Ordinary Resolution, to issue shares (whether by way of rights, bonus or otherwise) where, unless previously revoked or varied by the Company in General Meeting, such authority to issue shares does not continue beyond the conclusion of the Annual General Meeting of the Company next following the passing of the Ordinary Resolution or the date by which such Annual General Meeting is required to be held, or the expiration of such other period as may be prescribed by the Statutes (whichever is the earliest). (B) Except so far as otherwise provided by the conditions of issue or by these presents, all new shares shall be subject to the provisions of the Statutes and of these presents with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise. - 4 - 9. The Company may by Ordinary Resolution:- Power to consolidate, cancel (a) consolidate and divide all or any of its and sub-divide share capital into shares of larger amount shares. than its existing shares; (b) cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken by any person and diminish the amount of its capital by the amount of the shares so cancelled; (c) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Statutes), and so that the resolution whereby any share is sub- divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may, as compared with the others, have any such preferred, deferred or other special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares; (d) subject to the provisions of the Statutes, convert any class of shares into any other class of shares. 10. (A) The Company may reduce its share capital or Power to reduce any capital redemption reserve fund, share premium share capital. account or other undistributable reserve in any manner and with and subject to any incident authorised and consent required by law. Without prejudice to the generality of the foregoing, upon cancellation of any share purchased or otherwise acquired by the Company pursuant to these presents, the nominal amount of the issued share capital of the Company shall be diminished by the nominal amount of the share so cancelled. (B) The Company may, subject to and in accordance Company may with the Statutes, purchase or otherwise acquire shares acquire its own in the issued share capital of the Company on such terms issued ordinary and in such manner as the Company may from time to time shares. think fit. If required by the Statutes, any share which is so purchased or acquired by the Company shall be deemed to be cancelled immediately on purchase or acquisition by the Company. On the cancellation of any share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may deal with any such share which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Statutes. SHARES 11. Except as required by law, no person shall be Exclusion of recognised by the Company as holding any share upon equities. any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these presents or by law otherwise provided) any other right in - 5 - respect of any share, except an absolute right to the entirety thereof in the person (other than the Depository) entered in the Register of Members as the registered holder thereof or (as the case may be) person whose name is entered in the Depository Register in respect of that share. 12. Without prejudice to any special rights Redeemable previously conferred on the holders of any shares or preference shares. class of shares for the time being issued, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue preference shares which are, or at the option of the Company are, liable to be redeemed. 13. Subject to the provisions of these presents Unissued shares. and of the Statutes relating to authority and of any resolution of the Company in General Meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper. 14. The Company may exercise the powers of paying Power to pay commissions conferred by the Statutes to the full commission and extent thereby permitted provided that the rate brokerage. or amount of the commissions paid or agreed to be paid shall be disclosed in the manner required by the Statutes. Such commissions may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful. 15. Subject to the terms and conditions of any Renunciation of application for shares, the Directors shall allot allotment. shares applied for within thirty days of the closing date of any such application. The Directors may, at any time after the allotment of any share but before any person has been entered in the Register of Members as the holder or (as the case may be) before that share is entered against the name of a Depositor in the Depository Register, recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the Directors may think fit to impose. SHARE CERTIFICATES 16. Every share certificate shall be issued under Form of share the Seal and shall specify the number and class of shares certificate. to which it relates and the amount paid up thereon and shall bear the autographic or facsimile signatures of one Director and the Secretary or a second Director or some other person appointed by the Directors. The facsimile signatures may be reproduced by mechanical, electronic or other method approved by the Directors. No certificate shall be issued representing shares of more than one class. - 6 - 17. (A) The Company shall not be bound to register Rights and more than three persons as the registered holder of a liabilities of share except in the case of executors or administrators joint holders. of the estate of a deceased member. (B) In the case of a share registered jointly in the names of several persons the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to any one of the registered joint holders shall be sufficient delivery to all. 18. Subject to the payment of all or any part of Entitlement to the stamp duty payable (if any) on each share certificate. certificate prior to the delivery thereof which the Directors in their absolute discretion may require, every person whose name is entered as a member in the Register of Members shall be entitled to receive within thirty days of the closing date of any application for shares or after the date of lodgement of a registrable transfer one certificate for all his shares of any one class or several certificates in reasonable denomina- tions each for a part of the shares so allotted or transferred. Where such a member transfers part only of the shares comprised in a certificate or where such a member requires the Company to cancel any certificate or certificates and issue new certificates for the purpose of subdividing his holding in a different manner the old certificate or certificates shall be cancelled and a new certificate or certificates for the balance of such shares issued in lieu thereof and such member shall pay all or any part of the stamp duty payable (if any) on each share certificate prior to the delivery thereof which the Directors in their absolute discretion may require and a maximum fee of $2 for each new certificate or such other fee as the Directors may from time to time determine. 19. Where some only of the shares comprised in a Shares comprised share certificate are transferred the old certificate in certificate. shall be cancelled and a new certificate for the balance of such shares issued in lieu without charge. 20. (A) Any two or more certificates representing Surrender for shares of any one class held by any person whose name cancellation of is entered in the Register of Members may at his request certificate. be cancelled and a single new certificate for such shares issued in lieu without charge. (B) If any person whose name is entered in the Register of Members shall surrender for cancellation a share certificate representing shares held by him and request the Company to issue in lieu two or more share certificates representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request. Such person shall (unless such fee is waived by the Directors) pay a maximum fee of $2 for each share certificate issued in lieu of a share certificate surrendered for cancellation or such other fee as the Directors may from time to time determine. (C) Subject to the provisions of the Statutes, Replacement of if any share certificate shall be defaced, worn out, certificate. destroyed, lost or stolen, it may be renewed on such evidence being produced and a letter of indemnity (if required) being given by the shareholder, transferee, person entitled, purchaser, member firm or member company of any Stock Exchange upon which the shares in the Company may be listed or on behalf of its or their client or clients as the Directors of the Company - 7 - shall require, and (in case of defacement or wearing out) on delivery up of the old certificate and in any case on payment of such sum not exceeding $2 as the Directors may from time to time require together with the amount of the proper duty with which such share certificate is chargeable under any law for the time being in force relating to stamps. In the case of destruction, loss or theft, a shareholder or person entitled to whom such renewed certificate is given shall also bear the loss and pay to the Company all expenses incidental to the investigations by the Company of the evidence of such destruction or loss. (D) In the case of shares registered jointly in the names of several persons any such request may be made by any one of the registered joint holders. CALLS ON SHARES 21. The Directors may from time to time make Calls on shares and calls upon the members in respect of any moneys time when made. unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of issue of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments. 22. Each member shall (subject to receiving at Calls on shares and least fourteen days' notice specifying the time or when payable. times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as the Directors may determine. 23. If a sum called in respect of a share is not Interest on calls. paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding ten per cent. per annum) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part. 24. Any sum (whether on account of the nominal Sum due on value of the share or by way of premium) which by the allotment. terms of issue of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these presents be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable. In case of non-payment all the relevant provi- sions of these presents as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 25. No member shall be entitled to receive any Rights of member dividend or vote at any meeting or upon a poll, until suspended until calls he shall have paid all calls for the time being due and are duly paid. payable on every share held by him, whether alone or jointly with any other person, together with interest and expenses (if any). - 8 - 26. The Directors may on the issue of shares Power to differentiate between the holders as to the amount differentiate. of calls to be paid and the times of payment. 27. The Directors may if they think fit receive Payment in advance from any member willing to advance the same all or any of calls. part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding eight per cent. per annum) as the member paying such sum and the Directors may agree. Capital paid on shares in advance of calls shall not while carrying interest confer a right to participate in profits. FORFEITURE AND LIEN 28. If a member fails to pay in full any call or Notice requiring instalment of a call on the due date for payment payment of calls. thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment. 29. The notice shall name a further day (not being Notice to state time less than fourteen days from the date of service of the and place. notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be forfeited. 30. If the requirements of any such notice as Forfeiture on non- aforesaid are not complied with, any share in respect compliance with of which such notice has been given may at any time notice. thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder. 31. A share so forfeited or surrendered shall Sale or disposition of become the property of the Company and may be sold, forfeited or re-allotted or otherwise disposed of either to the surrendered shares. person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re-allotment or disposition the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer or effect the transfer of a forfeited or surrendered share to any such other person as aforesaid. 32. A member whose shares have been forfeited or Rights and liabilities surrendered shall cease to be a member in respect of members whose of the shares but shall notwithstanding the shares have been forfeiture or surrender remain liable to pay to the forfeited or Company all moneys which at the date of forfeiture surrendered. or surrender were presently payable by him to the Company in - 9 - respect of the shares with interest thereon at eight per cent. per annum (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment and the Directors may at their absolute discretion enforce payment without any allowance for the value of the shares at that time of forfeiture or surrender or waive payment in whole or in part. 33. The Company shall have a first and paramount Company's lien. lien on every share (not being a fully paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and for all moneys as the Company may be called upon by law to pay in respect of the shares of the member or deceased member. The Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article. 34. The Company may sell in such manner as the Sale of shares Directors think fit any share on which the Company has subject to lien. a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing stating and demanding payment of the sum presently payable and giving notice of intention to sell in default shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy. 35. The net proceeds of such sale after payment of Application of the cost of such sale shall be applied in or towards proceeds of payment or satisfaction of the debts or liabilities and such sale. any residue shall be paid to the person entitled to the shares at the time of the sale or to his executors, administrators or assigns, as he may direct. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer or effect the transfer of the shares sold to the purchaser. 36. A statutory declaration in writing that the Title to shares declarant is a Director or the Secretary of the Company forfeited and and that a share has been duly forfeited or surrendered right of or sold to satisfy a lien of the Company on a date purchaser of stated in the declaration shall be conclusive evidence such share. of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration and the receipt of the Company for the consideration (if any) given for the share on the sale, re-allotment or disposal thereof together (where the same be required) with the share certificate delivered to a purchaser (or where the purchaser is a Depositor, to the Depository) or allottee thereof shall (subject to the execution of a transfer if the same be required) constitute a good title to the share and the share shall be registered in the name of the person to whom the share is sold, re-allotted or disposed of or, where such person is a Depositor, the Company shall procure that his name be entered in the Depository Register in respect of the share so sold, re-allotted or disposed of. Such person shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share. - 10 - TRANSFER OF SHARES 37. All transfers of the legal title in shares Form of transfer. may be effected by the registered holders thereof by transfer in writing in any form acceptable to the Directors. The instrument of transfer of any share shall be signed by or on behalf of both the transferor and the transferee and be witnessed, provided that an instrument of transfer in respect of which the transferee is the Depository shall be effective although not signed or witnessed by or on behalf of the Depository. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register of Members in respect thereof. 38. The Register of Members may be closed at Closing of Register such times and for such period as the Directors may of Members. from time to time determine, provided always that such Register shall not be closed for more than thirty days in any year. 39. There shall be no restriction on the transfer Directors' right to of fully paid up shares (except where required by law) refuse to register a but the Directors may, in their sole discretion, decline transfer. to register any transfer of shares upon which the Company has a lien and in the case of shares not fully paid up may refuse to register a transfer to a transferee of whom they do not approve. Provided always that in the event of the Directors refusing to register a transfer of shares, they shall within thirty days beginning with the date on which the application for a transfer of shares was made, serve a notice in writing to the applicant stating the facts which are considered to justify the refusal as required by the Statutes. 40. The Directors may in their sole discretion When Directors may refuse to register any instrument of transfer of shares refuse to register a unless:- transfer. (a) all or any part of the stamp duty (if any) payable on each share certificate and such fee not exceeding $2 as the Directors may from time to time require, is paid to the Company in respect thereof; (b) the instrument of transfer is deposited at the Office or at such other place (if any) as the Directors may appoint accompanied by the certificates of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do; (c) the instrument of transfer is in respect of only one class of shares; and (d) the amount of the proper duty with which each share certificate to be issued in consequence of the registration of such transfer is chargeable under any law for the time being in force relating to stamps is tendered. - 11 - 41. If the Directors refuse to register a transfer Notice on refusal to of any shares, they shall within thirty days after the register a transfer. date on which the application for transfer was lodged with the Company send to the transferor and the transferee a notice in writing stating the reasons justifying the refusal to transfer and a notice of refusal as required by the Statutes. 42. All instruments of transfer which are Retention of registered may be retained by the Company. transfers. 43. There shall be paid to the Company in respect Fee for registration of the registration of any instrument of transfer of probate etc. or probate or letters of administration or certificate of marriage or death or stop notice or power of attorney or other document relating to or affecting the title to any shares or otherwise for making any entry in the Register of Members affecting the title to any shares such fee not exceeding $2 as the Directors may from time to time require or prescribe. 44. The Company shall be entitled to destroy all Destruction of instruments of transfer which have been registered at instrument of any time after the expiration of six years from the date transfer. of registration thereof and all dividend mandates and notifications of change of address at any time after the expiration of six years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof and it shall conclusively be presumed in favour of the Company that every entry in the Register of Members purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and every share certificate so destroyed was a valid and effective certificate duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company; Provided always that:- (a) the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant; (b) nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; and (c) references herein to the destruction of any document include references to the disposal thereof in any manner. - 12 - TRANSMISSION OF SHARES 45. (A) In the case of the death of a member whose Transmission. name is entered in the Register of Members, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only person(s) recognised by the Company as having any title to his interest in the shares. (B) In the case of the death of a member who is a Depositor, the survivors or survivor where the deceased is a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder and where such executors or administrators are entered in the Depository Register in respect of any shares of the deceased member, shall be the only person(s) recognised by the Company as having any title to his interest in the shares. (C) Nothing in this Article shall release the estate of a deceased holder (whether sole or joint) from any liability in respect of any share held by him. 46. Any person becoming entitled to the legal Persons becoming title in a share in consequence of the death or entitled to shares bankruptcy of a person whose name is entered in the on death or Register of Members may (subject as hereinafter bankruptcy of provided) upon supplying to the Company such evidence member. as the Directors may reasonably require to show his legal title to the share either be registered himself as holder of the share upon giving to the Company notice in writing of such desire or transfer such share to some other person. All the limitations, restrictions and provisions of these presents relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the person whose name is entered in the Register of Members had not occurred and the notice or transfer were a transfer executed by such person. 47. Save as otherwise provided by or in accordance Rights of with these presents, a person becoming entitled to a persons entitled share pursuant to Article 45(A) or (B) or Article 46 to shares on (upon supplying to the Company such evidence as the transmission. Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the member in respect of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to meetings of the Company until he shall have been registered as a member in the Register of Members or his name shall have been entered in the Depository Register in respect of the share. STOCK 48. The Company may from time to time by Ordinary Power to convert Resolution convert any paid-up shares into stock and into stock. may from time to time by like resolution reconvert any stock into paid-up shares of any denomination. - 13 - 49. The holders of stock may transfer the same or Transfer of stock. any part thereof in the same manner and subject to the same Articles as and subject to which the shares from which the stock arose might previously to conversion have been transferred (or as near thereto as circumstances admit) but no stock shall be transferable except in such units (not being greater than the nominal amount of the shares from which the stock arose) as the Directors may from time to time determine. 50. The holders of stock shall, according to the Rights of amount of stock held by them, have the same rights, stockholders. privileges and advantages as regards dividend, return of capital, voting and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except as regards participation in the profits or assets of the Company) shall be conferred by an amount of stock which would not, if existing in shares, have conferred such privilege or advantage; and no such conversion shall affect or prejudice any preference or other special privileges attached to the shares so converted. GENERAL MEETINGS 51. An Annual General Meeting shall be held once Annual General in every year, at such time (within a period of not Meeting. more than fifteen months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Directors. All other General Meetings shall be called Extraordinary General Meetings. 52. The Directors may whenever they think fit, Extraordinary and shall on requisition in accordance with the General Meeting. Statutes, proceed with proper expedition to convene an Extraordinary General Meeting. NOTICE OF GENERAL MEETINGS 53. Any General Meeting at which it is proposed Notice of Meetings. to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to the Company, shall be called by twenty-one days' notice in writing at the least and an Annual General Meeting and any other Extraordinary General Meeting by fourteen days' notice in writing at the least. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given in the manner hereinafter mentioned to all members other than such as are not under the provisions of these presents entitled to receive such notices from the Company; Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed:- (a) in the case of an Annual General Meeting, by all the members entitled to attend and vote thereat; and - 14 - (b) in the case of an Extraordinary General Meeting, by a majority in number of the members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right; Provided also that the accidental omission to give notice to or the non-receipt of notice by any person entitled thereto shall not invalidate the proceedings at any General Meeting. At least 14 days' notice of any General Meeting shall be given by advertisement in the daily press. 54. (A) Every notice calling a General Meeting shall Contents of notice. specify the place and the day and hour of the meeting, and there shall appear with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him and that a proxy need not be a member of the Company. (B) In the case of an Annual General Meeting, the notice shall also specify the meeting as such. (C) In the case of any General Meeting at which business other than routine business is to be transacted, the notice shall specify the general nature of such business; and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect. 55. Routine business shall mean and include only Routine business. business transacted at an Annual General Meeting of the following classes, that is to say:- (a) declaring dividends; (b) receiving and adopting the accounts, the reports of the Directors and Auditors and other documents required to be attached or annexed to the accounts; (c) appointing or re-appointing Directors to fill vacancies arising at the meeting on retirement whether by rotation or otherwise; (d) re-appointing the retiring Auditors (unless they were last appointed otherwise than by the Company in General Meeting); (e) fixing the remuneration of the Auditors or determining the manner in which such remuneration is to be fixed; and (f) fixing the remuneration of the Directors proposed to be paid under Article 81. - 15 - 56. Any notice of a General Meeting to consider Notice to state special business shall be accompanied by a statement effect of special regarding the effect of any proposed resolution on the business. Company in respect of such special business. PROCEEDINGS AT GENERAL MEETINGS 57. The Chairman of the Board of Directors, Chairman. failing whom the Deputy Chairman, shall preside as chairman at a General Meeting. If there be no such Chairman or Deputy Chairman, or if at any meeting n either be present within 15 minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number (or, if no Director be present or if all the Directors present decline to take the chair, the members present shall choose one of their number) to be chairman of the meeting. 58. No business other than the appointment of a Quorum. chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business. Save as herein otherwise provided, the quorum at any General Meeting shall be two or more members holding or representing in aggregate not less than 33 1/3 per cent. of the total issued and fully paid up shares in the capital of the Company, present in person or by proxy. 59. If within 30 minutes from the time appointed If quorum not for a General Meeting (or such longer interval as the present, chairman of the meeting may think fit to allow) a quorum adjournment or is not present, the meeting, if convened on the dissolution of requisition of members, shall be dissolved. In any other meeting. case it shall stand adjourned to the same day in the next week (or if that day is a public holiday then to the next business day following that public holiday) at the same time and place or such other day, time or place as the Directors may by not less than ten days' notice appoint. At the adjourned meeting any one or more members present in person or by proxy shall be a quorum. 60. The chairman of any General Meeting at which a Adjournment. quorum is present may with the consent of the meeting (and shall if so directed by the meeting) adjourn the meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. When a meeting is adjourned for 30 days or more or sine die, not less than seven days' notice of the adjourned meeting shall be given in like manner as in the case of the original meeting. 61. Save as hereinbefore expressly provided, it Notice of shall not be necessary to give any notice of an adjournment. adjournment or of the business to be transacted at an adjourned meeting. 62. If an amendment shall be proposed to any Amendment to resolution under consideration but shall in good faith resolution. be ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a Special - 16 - Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon. 63. At any General Meeting a resolution put to Method of voting. the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by:- (a) the chairman of the meeting; or (b) any member present in person or by proxy and entitled to vote; or (c) a member present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) a member present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid on all the shares conferring that right; Provided always that no poll shall be demanded on the choice of a chairman or on a question of adjournment. 64. A demand for a poll may be withdrawn only with Taking a poll. the approval of the meeting. Unless a poll is required a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is required, it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. 65. In the case of an equality of votes, whether Casting vote on a show of hands or on a poll, the chairman of the of Chairman. meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote. 66. A poll demanded on any question shall be Polls and taken either immediately or at such subsequent time continuance of (not being more than 30 days from the date of the business after meeting) and place as the chairman may direct. No demand for a poll. notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded. - 17 - VOTES OF MEMBERS 67. Subject and without prejudice to any special Voting rights of privileges or restrictions as to voting for the time members. being attached to any special class of shares for the time being forming part of the capital of the Company each member entitled to vote may vote in person or by proxy. On a show of hands every member who is present in person and each proxy shall have one vote and on a poll, every member who is present in person or by proxy shall have one vote for every share which he holds or represents. For the purpose of determining the number of votes which a member, being a Depositor, or his proxy may cast at any General Meeting on a poll, the reference to shares held or represented shall, in relation to shares of that Depositor, be the number of shares entered against his name in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by the Depository to the Company. 68. In the case of joint holders of a share the Voting rights of joint vote of the senior who tenders a vote, whether in holders. person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members or (as the case may be) the Depository Register in respect of the share. 69. Where in Singapore or elsewhere a receiver or Voting rights of other person (by whatever name called) has been receiver or court appointed by any court claiming jurisdiction in that appointed persons. behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such receiver or other person on behalf of such member to vote in person or by proxy at any General Meeting or to exercise any other right conferred by membership in relation to meetings of the Company. 70. No member shall, unless the Directors Rights to be present otherwise determine, be entitled in respect of shares and to vote. held by him to vote at a General Meeting either personally or by proxy or to exercise any other right conferred by membership in relation to meetings of the Company if any call or other sum presently payable by him to the Company in respect of such shares remains unpaid. 71. No objection shall be raised as to the When objection to admissibility of any vote except at the meeting or admissibility of votes adjourned meeting at which the vote objected to is or may be made. may be given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the meeting whose decision shall be final and conclusive. 72. On a poll, votes may be given either Voting. personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. 73. (A) A member may appoint not more than two Appointment of proxies to attend and vote at the same General Meeting proxies. provided that if the member is a Depositor, the Company shall be entitled and bound:- - 18 - (a) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered against his name in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by the Depository to the Company; and (b) to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered against the name of that Depositor in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by the Depository to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor. (B) The Company shall be entitled and bound, in Notes and determining rights to vote and other matters in respect instructions. of a completed instrument of proxy submitted to it, to have regard to the instructions (if any) given by and the notes (if any) set out in the instrument or proxy. (C) In any case where a form of proxy appoints Proportion in more than one proxy, the proportion of the shareholding shareholding to be concerned to be represented by each proxy shall be represented by specified in the form of proxy. proxies. (D) A proxy need not be a member of the Company. Proxy need not be a member. 74. (A) An instrument appointing a proxy shall be in Instrument writing in any usual or common form or in any other appointing proxies. form which the Directors may approve and:- (a) in the case of an individual, shall be signed by the appointor or his attorney; and (b) in the case of a corporation, shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation. (B) The signature on such instrument need not be witnessed. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy pursuant to the next following Article, failing which the instrument may be treated as invalid. 75. An instrument appointing a proxy must be left Deposit of at such place or one of such places (if any) as may be instrument of proxy. specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no place is so specified, at the Office) not less than 48 hours before the time appointed for the holding of the meeting or adjourned meeting or (in the case of a poll taken - 19 - otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. The instrument shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates; Provided that an instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not be required again to be delivered for the purposes of any subsequent meeting to which it relates. 76. An instrument appointing a proxy shall be Rights of deemed to include the right to demand or join in proxies. demanding a poll, to move any resolution or amendment thereto and to speak at the meeting. 77. A vote cast by proxy shall not be invalidated Intervening death by the previous death or insanity of the principal or or insanity of by the revocation of the appointment of the proxy or principal not to of the authority under which the appointment was made revoke proxy. provided that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the Office at least one hour before the commencement of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast. CORPORATIONS ACTING BY REPRESENTATIVES 78. Any corporation which is a member of the Corporation acting Company may be resolution of its directors or other by representatives. governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of the Company and such corporation shall for the purposes of these presents be deemed to be present in person at any such meeting if a person so authorised is present thereat. DIRECTORS 79. The number of Directors shall not be less Number and than two. All Directors of the Company shall be natural characteristics persons. of Director. 80. A Director shall not be required to hold any No shares shares of the Company by way of qualification. A qualification for Director who is not a member of the Company shall Directors. nevertheless be entitled to attend and speak at General Meetings. 81. The ordinary remuneration of the Directors Remuneration of shall from time to time be determined by an Ordinary Directors. Resolution of the Company, shall not be increased except pursuant to an Ordinary Resolution passed at a General Meeting where notice of the proposed increase shall have been given in the notice convening the General Meeting and shall (unless such resolution otherwise provides) be divisible - 20 - among the Directors as they may agree, or failing agreement, equally, except that any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration related to the period during which he has held office. 82. Any Director who holds any executive office, Extra remuneration. or who serves on any committee of the Directors, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remunera- tion by way of salary, commission or otherwise as the Directors may determine. 83. The Directors may repay to any Director all Expenses. such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or General Meetings or otherwise in or about the business of the Company. 84. The Directors shall have power to pay and Pensions etc. agree to pay pensions or other retirement, super- annuation, death or disability benefits to (or to any person in respect of) any Director for the time being holding any executive office and for the purpose of providing any such pensions or other benefits, to contribute to any scheme or fund or to pay premiums. 85. A Director may be party to or in any way Holding of office of interested in any contract or arrangement or transaction profit and to which the Company is a party or in which the Company contracting with is in any way interested and he may hold and be company. remunerated in respect of any office or place of profit (other than the office of Auditor of the Company or any subsidiary thereof) under the Company or any other company in which the Company is in any way interested and he (or any firm of which he is a member) may act in a professional capacity for the Company or any such other company and be remunerated therefor and in any such case as aforesaid (save as otherwise agreed) he may retain for his own absolute use and benefit all profits and advantages accruing to him thereunder or in consequence thereof. 86. A Director who holds any office or possesses Declaration of any property whereby whether directly or indirectly Director's conflict of duties or interests might be created in conflict with interest. his duties or interests as Director shall declare the fact and the nature, character and extent of the conflict at a meeting of the Directors of the Company in accordance with the Statutes. 87. (A) The Directors may from time to time appoint Appointment to be one or more of their body to be the holder of any holder of executive executive office (including, where considered office. appropriate, the office of Chairman or Deputy Chairman) on such terms and for such period as they may (subject to the provisions of the Statutes) determine and, without prejudice to the terms of any contract entered into in any particular case, may at any time revoke any such appointment. (B) The appointment of any Director to the office of Chairman or Deputy Chairman or Managing or Joint Managing or Deputy or Assistant Managing Director or Chief Executive Officer or President shall automatically determine if he ceases to be a Director but without prejudice to any claim for damages for breach - 21 - of any contract of service between him and the Company. (C) The appointment of any Director to any other executive office shall not automatically determine if he ceases from any cause to be a Director, unless the contract or resolution under which he holds office shall expressly state otherwise, in which event such determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company. 88. The Directors may entrust to and confer upon Powers of executive any Directors holding any executive office any of the office holders. powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. MANAGING DIRECTOR OR CHIEF EXECUTIVE OFFICER OR PRESIDENT 89. The Directors may from time to time appoint Appointment of one or more of their body to be Managing Director or Managing Director or Chief Executive Officer or President of the Company and Chief Executive may from time to time (subject to the provisions of any Officer or President. contract between him or them and the Company) remove or dismiss him or them from office and appoint another or others in his or their place or places. 90. A Managing Director or Chief Executive Officer Retirement removal or President shall not while he continues to hold that and registration of office be subject to retirement by rotation and he shall Managing Director or not be taken into account in determining the rotation Chief Executive of retirement of Directors but he shall, subject to the Officer or President. provisions of any contract between him and the Company, be subject to the same provisions as to resignation and removal as the other Directors of the Company and if he ceases to hold the office of Director from any cause he shall ipso facto and immediately cease to be a Managing ---------- Director or Chief Executive Officer or President. 91. The remuneration of a Managing Director or Remuneration of Chief Executive Officer or President shall from time to Managing Director or time be fixed by the Directors and may subject to these Chief Executive presents be by way of salary or commission or Officer or President. participation in profits or by any or all these modes. 92. A Managing Director or Chief Executive Officer Powers of Managing or President shall at all times be subject to the Director or Chief control of the Directors but subject thereto the Executive Officer or Directors may from time to time entrust to and confer President. upon a Managing Director or Chief Executive Officer or President for the time being such of the powers exercisable under these presents by the Directors as they may think fit and may confer such powers for such time and to be exercised on such terms and conditions and with such restrictions as they think expedient and they may confer such powers either collaterally with or to the exclusion of and in substitution for all or any of the powers of the Directors in that behalf and may from time to time revoke, withdraw, alter or vary all or any of such powers. - 22 - APPOINTMENT AND RETIREMENT OF DIRECTORS 93. The office of a Director shall be vacated in Vacation of office any of the following events, namely:- of Director. (a) if he shall become prohibited by law from acting as a Director; or (b) if (not being a Director holding any executive office for a fixed term) he shall resign by writing under his hand left at the Office or if he shall in writing offer to resign and the Directors shall resolve to accept such offer; or (c) if he shall have a receiving order made against him or shall compound with his creditors generally; or (d) if he becomes of unsound mind or if in Singapore or elsewhere an order shall be made by any court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs; or (e) if he is removed by the Company in General Meeting pursuant to Article 98. 94. At each Annual General Meeting one-third of Retirement of the Directors for the time being (or, if their number Directors by is not a multiple of three, the number nearest to but rotation. not less than one-third) shall retire from office by rotation. Provided that no Director holding office as Managing Director or Chief Executive Officer or President shall be subject to retirement by rotation or be taken into account in determining the number of Directors to retire. 95. The Directors to retire in every year shall Selection of be those subject to retirement by rotation who have been Directors to retire longest in office since their last re-election or of rotation. appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director shall be eligible for re-election. 96. The Company at the meeting at which a Director Filling vacated retires under any provision of these presents may by office. Ordinary Resolution fill the office being vacated by electing thereto the retiring Director or some other person eligible for appointment. In default the retiring Director shall be deemed to have been re-elected except in any of the following cases:- (a) where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost; - 23 - (b) where such Director has given notice in writing to the Company that he is unwilling to be re-elected; (c) where the default is due to the moving of a resolution in contravention of the next following Article; or (d) where such Director has attained any retiring age applicable to him as Director. The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break. 97. A resolution for the appointment of two or Appointment of more persons as Directors by a single resolution shall Directors. not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it; and any resolution moved in contravention of this provision shall be void. 98. The Company may in accordance with and subject Removal of Director. to the provisions of the Statutes by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these presents or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and appoint another person in place of a Director so removed from office and any person so appointed shall be treated for the purpose of determining the time at which he or any other Director is to retire by rotation as if he had become a Director on the day on which the Director in whose place he is appointed was last elected a Director. In default of such appointment the vacancy arising upon the removal of a Director from office may be filled as a casual vacancy. 99. The Company may by Ordinary Resolution appoint Directors' power to any person to be a Director either to fill a casual fill casual vacancies vacancy or as an additional Director. Without prejudice and appoint thereto the Directors shall have power at any time so to additional Directors. do, but any person so appointed by the Directors shall hold office only until the next Annual General Meeting. He shall then be eligible for re-election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting. ALTERNATE DIRECTORS 100. (A) Any Director may at any time by writing under Appointment of his hand and deposited at the Office, or delivered at a Alternate Director. meeting of the Directors, appoint any person (other than another Director) to be his alternate Director and may in like manner at any time terminate such appointment. Such appointment, unless previously approved by the Directors, shall have effect only upon and subject to being so approved. - 24 - (B) The appointment of an alternate Director shall determine on the happening of any event which if he were a Director would cause him to vacate such office or if the Director concerned (below called "his principal") ceases to be a Director. (C) An Alternate Director shall (except when absent from Singapore) be entitled to receive notices of meetings of the Directors and shall be entitled to attend and vote as a Director at any such meeting at which is principal is not personally present and generally at such meeting to perform all functions of his principal as a Director and for the purposes of the proceedings at such meeting the provisions of these presents shall apply as if he (instead of his principal) were a Director. If his principal is for the time being absent from Singapore or temporarily unable to act through ill health or disability, his signature to any resolution in writing of the Directors shall be as effective as the signature of his principal. To such extent as the Directors may from time to time determine in relation to any committee of the Directors, the foregoing provisions of this paragraph shall also apply mutatis mutandis to any ---------------- meeting of any such committee of which his principal is a member. An Alternate Director shall not (save as aforesaid) have power to act as a Director nor shall he be deemed to be a Director for the purposes of these presents. (D) An Alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements or transactions and to be repaid expenses and to be indemnified to the same extent mutatis mutandis ---------------- as if he were a Director but he shall not be entitled to receive from the Company in respect of his appointment as Alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to his principal as such principal may by notice in writing to the Company from time to time direct. MEETINGS AND PROCEEDINGS OF DIRECTORS 101. (A) Subject to the provisions of these presents Meetings of the Directors may meet together for the despatch of Directors. business, adjourn and otherwise regulate their meetings as they think fit. At any time any Director may, and the Secretary on the requisition of a Director shall, summon a meeting of the Directors. It shall not be necessary to give notice of a meeting of Directors to any Director for the time being absent from Singapore. Any Director may waive notice of any meeting and any such waiver may be retroactive. (B) Directors may participate in a meeting of the Directors by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, without a Director being in the physical presence of another Director or Directors, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. 102. The quorum necessary for the transaction of Quorum. the business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number shall be two. A meeting of the Directors at which a quorum is - 25 - present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. 103. Questions arising at any meeting of the Casting vote of Directors shall be determined by a majority of votes. chairman. In case of an equality of votes (except where only two Directors are present and form the quorum or when only two Directors are competent to vote on the question in issue) the chairman of the meeting shall have a second or casting vote. 104. A Director shall not vote in respect of any Prohibition against contract or arrangement or any other proposal voting. whatsoever in which he has any interest, directly or indirectly. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting. 105. The continuing Directors may act Proceeding in case notwithstanding any vacancies, but if and so long as of vacancy. the number of Directors is reduced below the minimum number fixed by or in accordance with these presents the continuing Directors or Director may act for the purpose of filling up such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors. 106. (A) The Directors may elect from their number a Chairman of Chairman and a Deputy Chairman (or two or more Deputy Directors. Chairmen) and determine the period for which each is to hold office. If no Chairman or Deputy Chairman shall have been appointed or if at any meeting of the Directors no Chairman or Deputy Chairman shall be present within five minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting. (B) If at any time there is more than one Deputy Chairman the right in the absence of the Chairman to preside at a meeting of the Directors or of the Company shall be determined as between the Deputy Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Directors. *107. A resolution in writing signed by a majority Resolution in writing. in number of the Directors shall be as effective as a resolution duly passed at a meeting of the Directors and may consist of several documents in the like form, each signed by one or more Directors. The expressions "in writing" and "signed" include approval by any such Director by telefax, telex, cable or telegram or any form of electronic communication approved by the Directors for such purpose from time to time incorporating, if the Directors deem necessary, the use of security and/or identification procedures and devices approved by the Directors. 108. The Directors may delegate any of their powers Committee of or discretion to committees consisting of one or more Directors. members of their body and (if thought fit) one or more other persons co-opted as hereinafter provided. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee of persons other than Directors and for such co-opted members to have voting rights as members of the committee. - ------------ * Deleted and substituted by Special Resolution passed at the Seventh Annual General Meeting held on 31 May 2001. - 26 - 109. The meetings and proceedings of any such Meetings of committee consisting of two or more members shall be committee. governed mutatis mutandis by the provisions of these ---------------- presents regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article. 110. All acts done by any meeting of Directors, or Validity of act of of any such committee, or by any person acting as a Directors in spite Director or as a member of any such committee, shall as of formal defect. regards all persons dealing in good faith with the Company, notwithstanding that there was defect in the appointment of any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of the committee and had been entitled to vote. BORROWING POWERS 111. Subject as hereinafter provided and to the Borrowing powers. provisions of the Statutes, the Directors may exercise all the powers of the Company to borrow money, to mortgage or charge its undertaking, property and uncalled capital and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. GENERAL POWERS OF DIRECTORS 112. The business and affairs of the Company shall General power of be managed by the Directors, who may exercise all such Directors to manage powers of the Company as are not by the Statutes or by Company's business. these presents required to be exercised by the Company in General Meeting, subject nevertheless to any regulations of these presents, to the provisions of the Statutes and to such regulations, being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made; Provided that the Directors shall not carry into effect any proposals for selling or disposing of the whole or substantially the whole of the Company's undertaking unless such proposals have been approved by the Company in General Meeting. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article. 113. The Directors may establish any local boards Power to establish or agencies for managing any of the affairs of the local boards etc. Company, either in Singapore or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers, authorities and discretions vested in the Directors, with power to sub-delegate, and may authorise the members of any local boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors - 27 - may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. 114. The Directors may from time to time and at Power to appoint any time by power of attorney or otherwise appoint any attorney. company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, autho- rities and discretions (not exceeding those vested in or exercisable by the Directors under these presents) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. 115. The Company or the Directors on behalf of the Power to keep Company may in exercise of the powers in that behalf Branch Register. conferred by the Statutes cause to be kept a Branch Register or Register of Members and the Directors may (subject to the provisions of the Statutes) make and vary such regulations as they may think fit in respect of the keeping of any such Register. 116. All cheques, promissory notes, drafts, bills Execution of of exchange, and other negotiable or transferable negotiable instruments, and all receipts for moneys paid to the instruments and Company, shall be signed, drawn, accepted, endorsed, or receipts for money otherwise executed, as the case may be, in such manner paid. as the Directors shall from time to time by resolution determine. SECRETARY 117. The Secretary shall be appointed by the Appointment and Directors on such terms and for such period as they may removal of think fit. Any Secretary so appointed may at any time Secretary. be removed from office by the Directors, but without prejudice to any claim for damages for breach of any contract of service between him and the Company. If thought fit two or more persons may be appointed as Joint Secretaries. The Directors may also appoint from time to time on such terms as they may think fit one or more Assistant Secretaries. The appointment and duties of the Secretary or Joint Secretaries shall not conflict with the Statutes and in particular Section 171 of the Act. THE SEAL 118. The Directors shall provide for the safe Usage of Seal. custody of the Seal which shall not be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. 119. Every instrument to which the Seal shall be Seal. affixed shall be signed autographically by one Director and the Secretary or by a second Director or some another person appointed by the Directors save that as regards any certificates for - 28 - shares or debentures or other securities of the Company the Directors may by resolution determine that such signatures or either of them shall be dispensed with or affixed by some method or system of mechanical signature or other method approved by the Directors. 120. (A) The Company may exercise the powers conferred Official Seal. by the Statutes with regard to having an official seal for use abroad and such powers shall be vested in the Directors. (B) The Company may exercise the powers conferred Share Seal. by the Statutes with regard to having a duplicate Seal as referred to in Section 124 of the Act which shall be a facsimile of the Seal with the addition on its face of the words "Share Seal". AUTHENTICATION OF DOCUMENTS *121. Any Director or the Secretary or any person Power to appointed by the Directors for the purpose shall have authenticate power to authenticate any documents affecting the documents and constitution of the Company and any resolutions passed certified copies of by the Company or the Directors or any committee, and resolutions of the any books, records, documents and accounts relating to Company or the the business of the Company, and to certify copies Directors. thereof or extracts therefrom as true copies or extracts; and where any books, records, documents or accounts are elsewhere than at the Office, the local manager or other officer of the Company having the custody thereof shall be deemed to be a person appointed by the Directors as aforesaid. A document purporting to be a copy of a resolution, or an extract from the minutes of a meeting, of the Company or of the Directors or any committee which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed, or as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting. Any authentication or certification made pursuant to this Article may be made by any electronic means approved by the Directors from time to time for such purpose incorporating, if the Directors deem necessary, the use of security procedures or devices approved by the Directors. RESERVES 122. The Directors may from time to time set aside Power to carry out of the profits of the Company and carry to reserve profits to reserve. such sums as they think proper which, at the discretion of the Directors, shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also, without placing the same to reserve, carry forward any profits. In carrying sums to reserve and in applying the same the Directors shall comply with the provisions of the Statutes. - ------------ * Deleted and substituted by Special Resolution passed at the Seventh Annual General Meeting held on 31 May 2001. - 29 - DIVIDENDS 123. The Company may by Ordinary Resolution Dividends. declare dividends but no such dividend shall exceed the amount recommended by the Directors. 124. If and so far as in the opinion of the Interim dividend. Directors the profits of the Company justify such payments, the Directors may declare and pay the fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time declare and pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. 125. Unless and to the extent that the rights Apportionment of attached to any shares or the terms of issue thereof dividends. otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares - -------- during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article no amount paid on a share in advance of calls shall be treated as paid on the share. 126. No dividend shall be paid otherwise than out Dividend payable of profits available for distribution under the only out of profits. provisions of the Statutes. 127. No dividend or other moneys payable on or in Dividend not to bear respect of a share shall bear interest as against the interest. Company. 128. (A) The Directors may retain any dividend or other Retention of moneys payable on or in respect of a share on which the dividend. Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. (B) The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a member, or which any person is under those provisions entitled to transfer, until such person shall become a member in respect of such shares or shall transfer the same. 129. The waiver in whole or in part of any dividend Waiver of dividend. on any share by any document (whether or not under seal) shall be effective only if such document is signed by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of the holder) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company. 130. The Company may upon the recommendation of the Payment of dividend Directors by Ordinary Resolution direct payment of a in specie. dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, - 30 - may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Directors. 131. Any dividend or other moneys payable in cash Dividends payable on or in respect of a share may be paid by cheque or by cheque or warrant sent through the post to the registered address warrant. appearing in the Register of Members or (as the case may be) the Depository Register of a member or person entitled thereto (or, if two or more persons are registered in the Register of Members or (as the case may be) entered in the Depository Register as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons) or to such person at such address as such member or person or persons may be writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque or warrant by the banker upon whom it is drawn shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby. Notwithstanding the foregoing provisions of this Article and the provisions of Article 133, the payment by the Company to the Depository of any dividend payable to a Depositor shall, to the extent of the payment made to the Depository, discharge the Company from any liability to the Depositor in respect of that payment. 132. If two or more persons are registered in the Payment of dividend Register of Members or (as the case may be) the to joint holders. Depository Register as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share. 133. Any resolution declaring a dividend on shares Resolution declaring of any class, whether a resolution of the Company in dividends. General Meeting or a resolution of the Directors, may specify that the same shall be payable to the persons registered as the holders of such shares in the Register of Members or (as the case may be) the Depository Register at the close of business on a particular date and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect -------- of such dividend of transferors and transferees of any such shares. CAPITALISATION OF PROFITS AND RESERVES 134. The Directors may, with the sanction of an Power to capitalise Ordinary Resolution of the Company, capitalise any sum profits and standing to the credit of any of the Company's reserve implementation of accounts (including Share Premium Account, Capital resolution to Redemption Reserve Fund or other undistributable capitalise profits. reserve) or any sum standing to the credit of profit and loss account by appropriating such sum to the persons registered as holders of shares in the Register of Members or (as the case may be) in the Depository Register at the close of business on the date of the Resolution (or such other date - 31 - as may be specified therein or determined as therein provided) or such other date as may be determined by the Directors in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation, with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. 135. In addition and without prejudice to the power Power to capitalise to capitalise profits and other moneys provided for by profits for paying up Article 134, the Directors shall have power to shares to be issued capitalise any undivided profits or other moneys of the under share option Company not required for the payment or provision of scheme. the fixed dividend on any shares entitled to fixed cumulative or non-cumulative preferential dividends (including profits or moneys carried and standing to any reserve or reserves) and to apply such profits or moneys in paying up in full at par unissued shares on terms that such shares shall, upon issue, be held by or for the benefit of participants of any share incentive or option scheme or plan implemented by the Company and approved by shareholders in General Meeting in such manner and on such terms as the Directors shall think fit. ACCOUNTS 136. Accounting records sufficient to show and Accounting records. explain the Company's transactions and otherwise complying with the Statutes shall be kept at the Office, or at such other place as the Directors think fit. No member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a court of competent jurisdiction or authorised by the Directors. 137. In accordance with the Statutes, the Directors Presentation of shall cause to be prepared and to be laid before the accounts. Company in General Meeting such profit and loss accounts, balance sheets, group accounts (if any) and reports as may be necessary. The interval between the close of a financial year of the Company and the issue of accounts relating thereto shall not exceed six months. 138. A copy of every balance sheet and profit and Copies of accounts. loss account which is to be laid before a General Meeting of the Company (including every document required by law to be comprised therein or attached or annexed thereto) shall not less than 14 days before the date of the meeting be sent to every member of, and every holder of debentures of, the Company and to every other person who is - 32 - entitled to receive notices of meetings from the Company under the provisions of the Statutes or of these presents; Provided that this Article shall not require a copy of these documents to be sent to more than one or any joint holders or to any person of whose address the Company is not aware, but any member or holder of debentures to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office. AUDITORS 139. Subject to the provisions of the Statutes, Validity of acts of all acts done by any person acting as an Auditor shall, Auditor despite as regards all persons dealing in good faith with the formal defects. Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment or subsequently became disqualified. 140. An Auditor shall be entitled to attend any Notices to Auditors. General Meeting and to receive all notices of and other communications relating to any General Meeting which any member is entitled to receive and to be heard at any General Meeting on any part of the business of the meeting which concerns him as Auditor. NOTICES 141. Any notice or document (including a share Service of notice or certificate) may be served on or delivered to any document. member by the Company either personally or by sending it through the post in a prepaid cover addressed to such member at his registered address appearing in the Register of Members or (as the case may be) the Depository Register, or (if he has no registered address within Singapore) to the address, if any, within Singapore supplied by him to the Company or (as the case may be) supplied by him to the Depository as his address for the service of notices, or by delivering it to such address as aforesaid. Where a notice or other document is served or sent by post, service or delivery shall be deemed to be effected at the time when the cover containing the same is posted and in proving such service or delivery it shall be sufficient to prove that such cover was properly addressed, stamped and posted. 142. Any notice given to that one of the joint Service of notice to holders of a share whose name stands first in the joint holders. Register of Members or (as the case may be) the Depository Register in respect of the share shall be sufficient notice to all the joint holders in their capacity as such. For such purpose a joint holder having no registered address in Singapore and not having supplied an address within Singapore for the service of notices shall be disregarded. 143. A person entitled to a share in consequence Service of notices of the death or bankruptcy of a member upon supplying after death, to the Company such evidence as the Directors may bankruptcy etc. reasonably require to show his title to the share, and upon supplying also to the Company or (as the case may be) the Depository an address within Singapore for the service of notices, shall be entitled to have served upon or delivered to him at such address any notice or document to which the member but - 33 - for his death or bankruptcy would have been entitled, and such service or delivery shall for all purposes be deemed a sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share. Save as aforesaid any notice or document delivered or sent by post to or left at the address of any member in pursuance of these presents shall, notwithstanding that such member be then dead or bankrupt or in liquidation, and whether or not the Company shall have notice of his death or bankruptcy or liquidation, be deemed to have been duly served or delivered in respect of any share registered in the name of such member in the Register of Members or, where such member is a Depositor, entered against his name in the Depository Register as sole or first-named joint holder. 144. A member who (having no registered address No notice to member within Singapore) has not supplied to the Company or with no registered (as the case may be) the Depository an address within address in Singapore for the service of notices shall not be Singapore. entitled to receive notices from the Company. WINDING UP 145. The Directors shall have power in the name Voluntary winding and on behalf of the Company to present a petition to up. the court for the Company to be wound up. 146. If the Company shall be wound up (whether Distribution of the liquidation is voluntary, under supervision, or by assets in specie. the court) the Liquidator may, with the authority of a Special Resolution, divide among the members in specie --------- or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members of different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability. 147. On a voluntary winding up of the Company, no Liquidators' commission or fee shall be paid to a Liquidator without commission. the prior approval of the members in General Meeting. The amount of such commission or fee shall be notified to all members not less than seven days prior to the General Meeting at which it is to be considered. 148. In the event of a winding up of the Company Service of notice every member of the Company who is not for the time after winding up. being in the Republic of Singapore shall be bound, within fourteen days after the passing of an effective resolution to wind up the Company voluntarily, or within the like period after the making of an order for the winding up of the Company, to serve notice in writing on the Company appointing some householder in the Republic of Singapore upon whom all summonses, notices, processes, orders and judgments in relation to or under the - 34 - winding up of the Company may be served, and in default of such nomination the liquidator of the Company shall be at liberty on behalf of such member to appoint some such person, and service upon any such appointee shall be deemed to be a good personal service on such member for all purposes, and where the liquidator makes any such appointment he shall, with all convenient speed, give notice thereof to such member by advertisement in any leading daily newspaper in the English language in circulation in Singapore or by a registered letter sent through the post and addressed to such member at his address as appearing in the Register of Members or (as the case may be) the Depository Register, and such notice shall be deemed to be served on the day following that on which the advertisement appears or the letter is posted. INDEMNITY 149. Subject to the provisions of and so far as Indemnity of may be permitted by the Statutes, every Director, Directors and Auditor, Secretary or other officer of the Company office. shall be entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities incurred by him in the execution and discharge of his duties or in relation thereto including any liability incurred by him in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of the Company. Without prejudice to the generality of the foregoing, no Director, Manager, Secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other Director or officer or for joining in any receipt or other act for conformity or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto unless the same shall happen through his own negligence, wilful default, breach of duty or breach of trust. SECRECY 150. No member shall be entitled to require Secrecy. discovery of or any information respecting any detail of the Company's trade or any matter which may be in the nature of a trade secret, mystery of trade or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Directors it will be inexpedient in the interest of the members of the Company to communicate to the public save as may be authorised by law. - 35 - EX-4.6 4 u91877ex4-6.txt PROGRAMME AGREEMENT DATED JANUARY 10,2002 EXHIBIT 4.6 CONFORMED COPY DATED 10TH JANUARY, 2002 ST ASSEMBLY TEST SERVICES LTD AS ISSUER - AND - CITICORP INVESTMENT BANK (SINGAPORE) LIMITED AS ARRANGER AND DEALER ----------------------------------------------------------- PROGRAMME AGREEMENT RELATING TO ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME ----------------------------------------------------------- [ALLEN & GLEDHILL LOGO] 36, ROBINSON ROAD, #18-01, CITY HOUSE, SINGAPORE 068877. C O N T E N T S
CLAUSE TITLE PAGE - ------ ----- ---- 1. INTERPRETATION 1 2. ISSUE AND DELIVERY OF NOTES 5 3. CONDITIONS OF ISSUE 6 4. WARRANTIES AND AGREEMENTS 12 5. INDEMNITIES 18 6. LISTING 19 7. AUTHORITY TO DISTRIBUTE DOCUMENTS 19 8. AGREEMENTS OF DEALERS 20 9. AUTHORITY OF ISSUER 21 10. COMMUNICATIONS 21 11. STATUS OF THE DEALERS AND THE ARRANGER 22 12. TIME 22 13. FEES, EXPENSES AND STAMP DUTIES 22 14. ACCESSIONS AND TERMINATION 23 15. BENEFIT OF AGREEMENT 24 16. INCREASE IN PROGRAMME LIMIT 24 17. COUNTERPARTS 25 18. GOVERNING LAW 25 APPENDIX 1 - INITIAL DOCUMENTATION LIST 26 APPENDIX 2 - FORM OF PRICING SUPPLEMENT 27 APPENDIX 3 - PROCEDURES MEMORANDUM 33
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CLAUSE TITLE PAGE - ------ ----- ---- APPENDIX 4 - FORM OF SUBSCRIPTION AGREEMENT 50 APPENDIX 5 - VRN SCHEDULE 59 APPENDIX 6 - FORM OF CERTIFICATE OF NO MATERIAL ADVERSE CHANGE 60 APPENDIX 7 - SELLING RESTRICTIONS 62 APPENDIX 8 - FORM OF DEALER ACCESSION LETTER 66 APPENDIX 9 - FORM OF LETTER FROM ISSUER ON AN INCREASE IN THE PROGRAMME LIMIT 69
T H I S A G R E E M E N T is made on 10th January, 2002 B E T W E E N:- (1) ST ASSEMBLY TEST SERVICES LTD (the "Issuer"); (2) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED (the "Arranger"); and (3) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED (the "Dealer"). W H E R E A S the Issuer proposes to issue from time to time pursuant to the Trust Deed (defined below) multicurrency medium term notes in an aggregate principal amount outstanding at any one time not exceeding the Programme Limit (defined below) and the Dealers (defined below) may from time to time subscribe for such notes. I T I S A G R E E D as follows:- 1. INTERPRETATION (A) Definitions: For the purposes of this Agreement and the Appendices, and except where the context requires otherwise:- "Agency Agreement" means the agency agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, (2) Citicorp Investment Bank (Singapore) Limited, as issuing and paying agent, (3) Citicorp Investment Bank (Singapore) Limited, as agent bank, and (4) the Trustee, as trustee, as amended, varied or supplemented from time to time; "Agent Bank" means Citicorp Investment Bank (Singapore) Limited in its capacity as agent bank under the Agency Agreement, or its successors in such capacity; "Agreement Date" means, in relation to any Note, the date on which agreement is reached for its issue as contemplated by Clause 2 which, in the case of a Syndicated Issue, will be the execution date of the relevant Subscription Agreement; "business day" means a day (other than Saturday or Sunday) on which commercial banks are open for business in Singapore; "Certification Date" means each Agreement Date, each Issue Date and each date on which the Information Memorandum or any of the Contracts is amended, varied, supplemented or replaced; "Conditions" means, in relation to the Notes of any Series, the terms and conditions applicable thereto, which shall be substantially in the form set out in Part II of Schedule 1 to the Trust Deed, as modified, with respect to any Notes represented by a Global Note, by the provisions of such Global Note, shall incorporate any additional provisions forming part of such terms and conditions set out in the Pricing Supplement(s) relating to the Notes of 1 such Series and shall be endorsed on the Definitive Notes subject to amendment and completion as referred to in the first paragraph appearing after the heading "Terms and Conditions of the Notes" as set out in Part II of Schedule 1 to the Trust Deed, and any reference to a particularly numbered Condition shall be construed accordingly; "Contracts" means this Agreement, the Agency Agreement, the Trust Deed, the Depository Agreement, the Deed of Covenant and, in relation to any Syndicated Issue, the relevant Subscription Agreement; "Coupon" means an interest coupon appertaining to an interest bearing Definitive Note; "Dealers" means the Dealer of this Agreement and each other person, if any, who has been, or, for the purposes of Clause 2, who is subsequently, appointed as a Dealer pursuant to Clause 14 (but excludes any person who has ceased to be a Dealer pursuant to Clause 14 or whose appointment has lapsed pursuant to its terms); "Deed of Covenant" means the deed of covenant dated 10th January, 2002 executed by the Issuer by way of deed poll in relation to the Notes (which are represented by a Global Note and which are deposited with the Depository), as amended, varied or supplemented from time to time; "Definitive Note" means a definitive note of the Issuer, in bearer form having, where appropriate, Coupons attached on issue; "Depositors" means, at any time, persons (including Depository Agents) having any Notes standing to the credit of their Securities Accounts at that time; "Depository" means The Central Depository (Pte) Limited; "Depository Agent" means a corporation authorised by the Depository to maintain Sub-Accounts; "Depository Agreement" means the depository agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, and (2) the Depository, as depository, as amended, varied or supplemented from time to time; "Event of Default" has the meaning given to it in the Conditions; "Global Note" means a global Note representing Notes of one or more Tranches of the same Series, being a Temporary Global Note and/or, as the context may require, a Permanent Global Note, in each case without Coupons; "Group" means the Issuer and its subsidiaries; 2 "Information Memorandum" means the information memorandum prepared by the Issuer in consultation with the Arranger, relating to the Programme, as revised, supplemented, amended, updated or replaced from time to time, (which term shall include those documents incorporated therein by reference from time to time as provided therein); "Initial Documentation List" means the list of documents and confirmations set out in Appendix 1; "Issue Date" means, in relation to Notes comprising a Tranche, the date (being a business day) of the issue and subscription of such Notes pursuant to Clause 2; "Issue Price" means, in relation to Notes comprising a Tranche, the price at which such Notes will be purchased by a Dealer; "Issuing and Paying Agent" means Citicorp Investment Bank (Singapore) Limited in its capacity as issuing and paying agent under the Agency Agreement, or its successor in such capacity; "Lead Manager" means, in relation to any Syndicated Issue, the Relevant Dealer specified as such in the relevant Subscription Agreement; "Maturity Date" means, in relation to any Note, the date on which it is expressed to be payable; "Note" means a note to be issued pursuant to this Agreement, such Note being a Global Note or a Definitive Note; "Permanent Global Note" means a Global Note representing Notes of one or more Tranches of the same Series, either on issue or upon exchange of interests in a Temporary Global Note; "Pricing Supplement" means, in relation to any Tranche, a pricing supplement specifying the relevant issue details in relation to such Tranche, substantially in the form of Appendix 2; "Principal Subsidiaries" has the meaning ascribed to it in Condition 9; "Procedures Memorandum" means the administrative and operative procedures and guidelines relating to the settlement of issues of Notes as shall be agreed upon from time to time by the Issuer, the Arranger and the Trustee and which, at the date of this Agreement, are set out in Appendix 3 (as amended, varied or supplemented from time to time); "Programme" means the Multicurrency Medium Term Note Programme established by this Agreement; "Programme Dealers" means all Dealers other than those appointed as such solely in respect of one or more specified Tranches; 3 "Programme Limit" means, subject to Clause 3(C)(8) and Clause 16, S$500,000,000 or its equivalent in other currencies; "Relevant Dealer(s)" means, in relation to any Tranche, the Dealer or Dealers with whom the Issuer has concluded or is negotiating an agreement for the issue of such Tranche; "Securities Accounts" means the securities accounts of the Depositors maintained with the Depository (but does not include Sub-Accounts); "Securities Act" means the U.S. Securities Act of 1933, as amended; "Series" means (1) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (a) expressed to be consolidated and forming a single series and (b) identical in all respects (including as to listing) except for their respective Issue Dates, Issue Prices and/or dates of the first payment of interest and (2) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective Issue Prices and Rates of Interest; "SGX-ST" means the Singapore Exchange Securities Trading Limited; "Singapore Dollar(s)" and "S$" mean the lawful currency of Singapore; "Stock Exchange" means the SGX-ST or any other or further stock exchange(s) on which any Notes may from time to time be listed, and references in this Agreement to the "relevant Stock Exchange" shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are from time to time, or are intended to be, listed; "Sub-Accounts" means the securities sub-accounts maintained by each Depository Agent for its own account and for the account of its clients; "Subscription Agreement" means an agreement between two or more Relevant Dealers and the Issuer made pursuant to Clause 2(B), substantially in the form of Appendix 4; "Syndicated Issue" means an issue of Notes pursuant to an agreement reached under Clause 2(B); "Temporary Global Note" means a Global Note representing Notes of one or more Tranches of the same Series on issue; "Tenor" means, in relation to any Note, in accordance with Clause 3(C), the period from and including its Issue Date to but excluding its Maturity Date; "Tranche" means Notes which are identical in all respects (including as to listing); 4 "Trust Deed" means the trust deed dated 10th January, 2002 made between (1) the Issuer, as issuer, and (2) the Trustee, as trustee, as amended, varied or supplemented from time to time; "Trustee" means British and Malayan Trustees Limited in its capacity as trustee under the Trust Deed, or its successor in such capacity; and "VRN Schedule" means the document set out in Appendix 5 setting out the procedures for the determination of the Agreed Yield or, as the case may be, the Rate of Interest in relation to each Series of Variable Rate Notes as amended, varied or supplemented from time to time. (B) Miscellaneous: (1) Terms defined in the Trust Deed and/or in the Notes (including the Conditions) shall have the same meaning when used herein. (2) Headings of Clauses and sub-Clauses in this Agreement are for convenience only and shall not affect the interpretation hereof. (3) References to "Appendices" and "Clauses" are to be construed as references to the appendices to, and the clauses of, this Agreement. (4) All references in this Agreement to the Depository shall, wherever the context so permits, be deemed to include references to any additional or alternative clearing system approved by the Issuer (where relevant), the Relevant Dealer(s) and the Trustee. (5) A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 2001 to enforce any term of this Agreement. 2. ISSUE AND DELIVERY OF NOTES (A) Individual Offers: Subject to the terms and conditions of this Agreement, the Issuer may from time to time (by telephone or other means of communication) invite any Dealer to bid for Notes, and any Dealer may at any time (by telephone or other means of communication) make unsolicited bids to the Issuer for Notes. If a Dealer's bid is subsequently accepted by the Issuer then the Issuer will be obliged to issue, and such Dealer will be obliged to subscribe for, the relevant Notes on the Issue Date and otherwise on the terms so agreed. Any oral acceptance of any bid by the Issuer will be confirmed in writing from the Relevant Dealer to the Issuer in accordance with the Procedures Memorandum provided that any failure to give such a confirmation, or any delay in giving such a confirmation, shall not affect the validity of the Issuer's oral acceptance or the obligations of the Relevant Dealer and the Issuer arising therefrom. (B) Syndicated Issues: Two or more Dealers may from time to time agree with the Issuer that such persons will severally or jointly and severally agree to subscribe or procure subscribers for Notes. The terms upon which such Notes are to be subscribed shall be substantially similar to the terms of this Agreement and shall be set out in a Subscription Agreement executed by the Issuer and the Relevant Dealers. 5 (C) Procedures Memorandum: The parties agree that in relation to any issue of Notes the Issuer and the Relevant Dealer(s) (or, in the case of a Syndicated Issue, the Lead Manager(s)) will use best endeavours to follow the administrative and operative procedures and guidelines set out in the Procedures Memorandum, unless the Issuer, the Relevant Dealer(s) (or, in the case of a Syndicated Issue, the Lead Manager(s)), the Trustee and, if affected by any proposed change, the Issuing and Paying Agent agree otherwise. The Procedures Memorandum may be changed in respect of any Relevant Dealer (or, in the case of a Syndicated Issue, the Lead Manager(s)) by agreement in writing between the Issuer, the Trustee and such Dealer (or, in the case of a Syndicated Issue, the Lead Manager(s)) following consultation with the Issuing and Paying Agent. (D) Commissions and Fees: At the time of delivery of, and payment for, any Notes sold by the Issuer pursuant to Clause 2(A), in consideration of the obligations undertaken herein by the Relevant Dealer, the Issuer agrees to pay the Relevant Dealer the commission or fee (if any) agreed (and any goods and services or other tax thereon) between the Issuer and the Relevant Dealer. Such commission or fee may be deducted by the Relevant Dealer from the price payable to the Issuer in respect of the relevant Notes, or as otherwise agreed. (E) Agent Bank: If Notes are issued that require one or more agent banks, the Issuer shall request the Issuing and Paying Agent to act as such. (F) Modifications: If:- (1) the Issuer and any Dealer shall at any time agree to issue and subscribe for Notes in a form or subject to provisions not specifically contemplated in Clause 2(C) or the Information Memorandum; or (2) any relevant law, regulation or directive is introduced or changed, or there is any change in the interpretation or application of any relevant law, regulation or directive, after the date of this Agreement, the Issuer and the Dealers (after consultation with the Issuing and Paying Agent) shall establish what, if any, modifications will be required to this Agreement, the form of the relevant Notes, the Conditions in relation thereto and any other agreement or document referred to herein as may be necessary or desirable to take into account such agreement, introduction or change. (G) Compliance with Laws: No Notes shall in any event be issued unless and until this Agreement and the documents referred to herein comply with all relevant laws, regulations and directives in respect of such issue of Notes. Any issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time. 3. CONDITIONS OF ISSUE (A) First Issue: The Issuer shall distribute to each Dealer all of the documents and confirmations described in the Initial Documentation List promptly after such 6 documents and confirmations have been received by it from the Issuer. The Issuer may not make its first request to any Dealer to bid for Notes until that Dealer shall have received, and found reasonably satisfactory, all of the documents and confirmations described in the Initial Documentation List. Any Dealer (with respect to itself only) may waive the production of any of the documents and confirmations described in the Initial Documentation List. (B) Each Issue: The obligation of a Relevant Dealer to subscribe for any Notes which it has agreed to subscribe for pursuant to Clause 2 is conditional upon the following:- (1) the Board of Directors of the Issuer having duly resolved to issue the relevant Notes; (2) the Issuer's representations and warranties set out in this Agreement being true, accurate, correct and complied with in all material respects on the Agreement Date and the proposed Issue Date (in each case as if such representations and warranties were repeated on each such date with reference to the then existing circumstances taking into account the issue of such Notes) and the performance, on or prior to each such date, by the Issuer of its covenants, agreements or obligations under this Agreement to be performed on or prior to each such date (other than any obligations that may have been waived by the Relevant Dealer and which waiver continues in effect) except to the extent to which failure to do so would not be material in the context of the issue of the Notes; (3) (in respect of such Notes which are to be listed) all consents and the approval in-principle of the relevant Stock Exchange having been obtained and on terms and conditions acceptable to the Relevant Dealer, such consents and approval being valid and continuing to be in force and effect until the Issue Date and all conditions attached to such consents and approval being complied with by the Issue Date (save for any conditions to be complied with after the Issue Date which shall be complied with as soon as practicable thereafter); (4) (a) there having been, as at the proposed Issue Date, no adverse change, or any development involving a prospective adverse change, in the financial condition, business or results of operations of the Issuer or the Group, taken as a whole, which is material in the context of the issue and offering of the Notes from that set forth in the audited consolidated accounts of the Issuer and its subsidiaries for the year ended 31st December, 2000 contained in the Information Memorandum or, if available, the most recent audited consolidated accounts or, as the case may be, unaudited half yearly results of the Group delivered to the Dealers pursuant to Clause 4(A)(13) except as may be disclosed in the Information Memorandum or in any public 7 announcement of the Issuer made prior to the Agreement Date or as disclosed to the Relevant Dealer prior to the Agreement Date; and (b) there having been delivered to the Relevant Dealer on the proposed Issue Date a certificate (substantially in the form set out in Appendix 6) dated the proposed Issue Date, signed by a duly authorised officer of the Issuer, stating that, to the best of his knowledge and belief after making due enquiries, (i) since the date of the most recent audited consolidated accounts or, as the case may be, unaudited half yearly results of the Group delivered to the Dealers pursuant to Clause 4(A)(13), except as may be disclosed in the Information Memorandum or in any public announcement of the Issuer made prior to the Agreement Date or as disclosed to the Relevant Dealer prior to the Agreement Date, there has been no adverse change, or any development involving a prospective adverse change, in the financial condition, business or results of operations of the Issuer or the Group, taken as a whole, which is material in the context of the issue and offering of the Notes, (ii) the Issuer's representations and warranties set out in this Agreement are true, accurate, correct and complied with in all material respects on the proposed Issue Date (as if such representations and warranties were repeated on the proposed Issue Date with reference to the then existing circumstances taking into account the issue of such Notes) and (iii) the Issuer has performed all of its covenants, agreements or obligations under this Agreement to be performed on or prior to the proposed Issue Date (other than any obligations that may have been waived by the Relevant Dealer and which waiver continues in effect) except to the extent to which failure to do so would not be material in the context of the issue of the Notes; (5) there being no outstanding breach in any material respect of any of the obligations of the Issuer under this Agreement, the Notes or the other Contracts which has not been waived by the Relevant Dealer on or prior to the proposed Issue Date; (6) the aggregate principal amount of the Notes to be issued, when added to the aggregate principal amount of all Notes outstanding (as defined in the Trust Deed) on the proposed Issue Date, not exceeding the Programme Limit; (7) no meeting of the holders of Notes (or any of them) to consider matters which would in the reasonable opinion of the Relevant Dealer be considered to be material in the context of the issue of the Notes having been duly convened but not yet held or, if held but adjourned, the adjourned meeting having not been held and the 8 Issuer not being aware of any circumstances which would lead to the convening of such a meeting; (8) there not having been, between the Agreement Date and the Issue Date for such Notes:- (a) any introduction or prospective introduction of, or any change or prospective change in, or in the interpretation or application of, any legislation, statute, regulation, order, policy, directive, request or guideline (whether or not having the force of law) by the Monetary Authority of Singapore, the Securities Industry Council, the SGX-ST or any other governmental or regulatory body in Singapore; or (b) any material adverse change or prospective material adverse change in monetary, political (including, but not limited to, changes by reason of military action), financial (including, but not limited to, stock market conditions, currency exchange conditions in any of the financial markets and interest rates) or economic conditions in Singapore or internationally (including changes or developments in stock, bond, money and interest rate markets) or the occurrence of any combination of any such changes, crises or developments, in either case, as would in the opinion of the Relevant Dealer (exercised in good faith):- (i) materially and adversely prejudice or affect the success of the placement, issue, offer, sale or distribution (whether in the primary or secondary markets) of the Notes; or (ii) materially and adversely affect the listing of the Notes (where applicable); or (iii) materially and adversely affect the business or financial position of the Issuer or the Group; (9) the forms of the Pricing Supplement, the Temporary Global Note, the Permanent Global Note and the Definitive Notes in relation to the relevant Tranche and the relevant settlement procedures having been agreed by the Issuer, the Relevant Dealer, the Issuing and Paying Agent and the Trustee (in respect of the Temporary Global Note, the Permanent Global Note and the Definitive Notes only) on or prior to the proposed Issue Date; (10) any calculations or determinations which are required by the relevant Conditions to have been made prior to the Issue Date having been duly made; 9 (11) the provisions of sub-Clause (C) below not being breached thereby; (12) there being no infringement in any respect of any law, order, rule, regulation, directive, policy or request (whether or not having the force of law) promulgated or issued by any legislative, executive, judicial or regulatory body, including, but not limited to, the SGX-ST, the Monetary Authority of Singapore and the Registry of Companies as a result of the issue of the Notes of that Series or the carrying out of any transaction contemplated by, or the compliance with the terms of, the Contracts; (13) the Form 30B having been lodged with the Registrar of Companies and Businesses, the Information Memorandum having been lodged with the Registrar of Companies and Businesses for the purpose of Section 106D of the Companies Act, Chapter 50 of Singapore (the "Companies Act"), and all acts being done in order to invoke the applicable exemptions under Sections 106C, 106D and/or 106E of the Companies Act having been duly performed and all requirements in connection therewith having been duly complied with; (14) the Minister for Finance not having revoked, pursuant to Section 106J of the Companies Act, the exemption invoked by the Issuer under Section 106C or 106D of the Companies Act in connection with the issue of the Notes nor any exemption under Division 5A of Part IV of the Companies Act relied on or to be relied on by the Relevant Dealer in connection with the issue of the Notes and the sale of the Notes by the Relevant Dealer; and (15) all requirements of the Monetary Authority of Singapore, the SGX-ST, the Registry of Companies and Businesses and any other relevant authority in connection with the issue of the Notes and (where applicable) listing or any of the transactions contemplated by this Agreement or the Contracts being fully complied with by such time as stipulated in such requirements. (C) Terms: (1) The Issuer and any Relevant Dealer may from time to time determine the terms and conditions of Notes to be issued by the Issuer and subscribed for by that Dealer, by fixing the Maturity Date, the interest rate or interest rate formula (if any) and any other relevant terms thereof. Subject to compliance with all relevant laws, regulations and directives, Notes may be denominated in Singapore Dollars, United States dollars, Australian dollars, Canadian dollars, Dutch guilders, Euro, Hong Kong dollars, Italian lire or Japanese yen or in other currencies the Issuer and the Relevant Dealer so agree. Notes will be issued in Series and each Series may be issued in one or more Tranches on different Issue Dates and each Tranche shall be for Notes having a minimum aggregate principal amount of S$20,000,000 (or its equivalent in other currencies). (2) The Notes of each Series may be Fixed Rate Notes, Floating Rate Notes, Variable Rate Notes or Hybrid Notes. In the case of an issue of Variable Rate Notes, the Issuer and the Relevant Dealer shall comply with the provisions set out in the VRN 10 Schedule, unless the Issuer and the Relevant Dealer agree otherwise. The VRN Schedule may be changed in respect of any Series of Variable Rate Notes by agreement in writing between the Issuer and the Relevant Dealer. (3) Subject to compliance by the Issuer with all relevant laws, regulations and directives, Notes shall have maturities of not less than 12 months nor more than 15 years from their respective Issue Dates or such shorter Tenor as may be agreed between the Issuer and the Relevant Dealer. (4) Notes may either be listed on a stock exchange or may be unlisted. Notes may be cleared through the clearing system operated by the Depository. (5) Further Notes of the same Series may be issued at different Issue Prices and on different Issue Dates. The Issuer may, however, at any time by notice to the Dealers under this Agreement determine that no further Notes of a particular Series will be issued. Any such determination will be irrevocable. (6) Prior to the Issue Date for any Tranche of Notes to be subscribed for by any Dealer, a Pricing Supplement in respect of such Tranche shall be prepared (in the case of a subscription pursuant to Clause 2(A)) by the Relevant Dealer and (in the case of a Syndicated Issue) by the Lead Manager after consultation with the Issuer. (7) Notes of each Tranche may be issued in the form of:- (a) a Temporary Global Note, which will be exchangeable commencing on the Exchange Date (as defined in the relevant Temporary Global Note) for (i) Definitive Notes or (ii) a Permanent Global Note which will be exchangeable as described therein for Definitive Notes, in accordance with the terms thereof; or (b) a Permanent Global Note which will be exchangeable for Definitive Notes upon the occurrence of the events set out in the relevant Permanent Global Note, in accordance with the terms thereof. (8) The aggregate principal amount of Notes outstanding (other than (a) Notes which have become due for payment where the Issuing and Paying Agent is holding sufficient funds for the payment in full of all such Notes and (b) Notes which have become void in accordance with their terms) at any one time shall not exceed the Programme Limit. (9) The Notes and Coupons shall be substantially in the respective forms set out in the Trust Deed, as amended, varied and/or supplemented in relation to each Series by the Pricing Supplement(s) relating to such Series. Notes having terms not contemplated by this Agreement or the Information Memorandum or a form not contemplated by the Trust Deed may be issued by agreement between the Issuer, the Relevant Dealer(s), the Issuing and Paying Agent and the Trustee. (D) Determination of Amounts Outstanding: For the purposes of Clause 4(A)(11), paragraph (6) of sub-Clause (B) above and paragraph (8) of sub-Clause (C) above:- 11 (1) the premium of Notes payable on the redemption of such Notes shall be added to their principal amount; (2) the principal amount of Notes issued at a discount or premium as at any time shall equal their principal amount as at such time; and (3) the Singapore Dollar equivalent of the principal amount of Notes denominated in a currency other than Singapore Dollars shall be determined on the basis of the spot rate for the sale of the Singapore Dollar against the purchase of relevant currency in the Singapore foreign exchange market quoted by any leading bank selected by the Relevant Dealer with the consent of the Issuer (such consent not to be unreasonably withheld) on the Agreement Date. 4. WARRANTIES AND AGREEMENTS (A) Warranties and Agreements: The Issuer warrants to and agrees with the Arranger and the Dealers and each of them that at the date of this Agreement and each Certification Date:- (1) Corporate Existence and Capacity: it is a public company duly incorporated and validly existing under the laws of Singapore with corporate power and authority to conduct its business in each jurisdiction where it carries on business and to own its assets; (2) Information Memorandum: (a) the Information Memorandum contains all information with regard to the Issuer and its subsidiaries which is material in the context of the issue and offering of the Notes, such information is true and accurate in all material respects, the opinions, expectations and intentions expressed in the Information Memorandum have been carefully considered, are based on all relevant considerations and facts which the Issuer is aware or ought to be aware existing at the date thereof and are fairly, reasonably and honestly held by the directors of the Issuer; that there are no other material facts the omission of which in the said context would make any such information or expression misleading in any material respect and the directors of the Issuer have made all reasonable enquiries to ascertain all material facts for the purpose aforesaid and to verify all facts and information therein are true and accurate in all material respects and will if required supply the Arranger with such evidence to support the same as the Arranger may reasonably require to satisfy itself as to the accuracy and completeness thereof and, where such information relates to opinions or expectations, the basis for such opinions or expectations, (b) all factual information furnished or to be furnished by the Issuer or its subsidiaries to the Arranger in connection with the issue of the Notes or the Information Memorandum or the negotiation of this Agreement is provided to the Arranger responsibly and is honestly held and (c) the Issuer 12 shall make available to each Dealer, from time to time, as many copies of the Information Memorandum as such Dealer may reasonably request; (3) Accounts: (a) the audited consolidated accounts of the Issuer and the Group contained in the most recent Information Memorandum:- (i) include a balance sheet and profit and loss account and such other documents required by United States generally accepted accounting principles to be annexed to such accounts to be laid before the Issuer in general meeting for the financial year in question; (ii) were prepared in accordance with United States generally accepted accounting principles; (iii) have been prepared in accordance with all applicable laws in Singapore; and (iv) represent a true and fair view of the financial position and state of affairs of the Issuer and the Group taken as a whole for the financial year ended on and as at the relevant date and, without prejudice to the generality of the foregoing, such financial statements make adequate provision or reserve for, where necessary or as appropriate, and disclose all known material liabilities (actual or contingent) and all material capital commitments (actual or contingent) of the Issuer and its subsidiaries and the provisions or reserves included therein are sufficient to cover all material taxation deferred or otherwise in respect of all accounting periods ended on or before the relevant date for which the Issuer or its subsidiaries would (based on circumstances and facts which the Issuer is aware) at any time thereafter become or have become liable; and (b) the most recent unaudited results of the Issuer and the Group have been prepared in accordance with United States generally accepted accounting principles; (4) Changes: since the date of the most recent audited consolidated accounts or, as the case may be, unaudited half yearly group results of the Group delivered to the Dealers pursuant to Clause 4(A)(13) and except as may be disclosed in the Information Memorandum, there has been no adverse change, or any development involving a prospective adverse change, in the financial condition, business or results of operations of the Issuer or the Group taken as a whole, which is material in the context of the issue and offering of the Notes or which may affect the ability of the Issuer to perform its payment obligations under the Notes; 13 (5) The Contracts and the Notes: (a) it has the corporate power and authority and the legal capacity to issue the Notes issued or to be issued by it upon the terms and conditions set out in the Notes and the Contracts and to enter into and perform and observe its obligations thereunder, (b) the execution, delivery and performance by it of the Notes and the Contracts have been duly authorised by all necessary corporate action on its part under all applicable laws and regulations and no further corporate or other action is required to be taken by it under any applicable law or regulation of Singapore to authorise the execution, delivery and/or performance of the Notes and the Contracts and (c) the Notes (when executed and delivered in accordance with the Contracts) and the Contracts constitute its valid, legally binding and enforceable obligations except that:- (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights; and (ii) the availability of equitable remedies may be affected by equitable principles generally; (6) Status of the Notes: the Notes, when issued and delivered in accordance with this Agreement and the Trust Deed, will be direct, unconditional, unsecured and unsubordinated obligations of the Issuer ranking pari passu, without any preference or priority among themselves, and pari passu with all other unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer; (7) Compliance: the issue of Notes under this Agreement, their offering on the terms and subject to the conditions contained herein, the execution and issue by the Issuer of, and compliance by the Issuer with the terms of, the Notes (including any Temporary Global Note or Permanent Global Note) and the Coupons and the execution and delivery by or on behalf of the Issuer of, and compliance by the Issuer with the terms of, the Contracts:- (a) do not, and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, the Memorandum and Articles of Association; (b) do not and will not contravene any law, rule, regulation, judgement, decree, permit, authorisation, policy or directive (in each case, whether or not having the force of law) which is binding on the Issuer, or to which the Issuer is subject; (c) do not and will not infringe in any material respect or result in any breach in any material respect of, any of the terms of, or constitute a default in any material respect under, or cause to be exceeded in any material respect any limit imposed by, any agreement, trust deed or instrument to 14 which the Issuer or any of its Principal Subsidiaries is a party or is subject or by which the Issuer or any of its Principal Subsidiaries or any part of their respective undertaking, assets, property or revenues is bound; or (d) do not and will not result in the creation or imposition of or oblige the Issuer or any of its Principal Subsidiaries to create any encumbrance on its assets or any of them; (8) No Litigation: save as disclosed in the Information Memorandum, there are no pending actions, suits or proceedings against or affecting the Issuer or any of its Principal Subsidiaries or any of their respective properties which could individually or in the aggregate have a material adverse effect on the financial condition, business or results of operations of the Issuer or would adversely affect the ability of the Issuer to perform its payment or other material obligations under the Contracts or the Notes, or which are otherwise material in the context of the issue of the Notes, and to the best of the knowledge of the Issuer, no such actions, suits or proceedings are threatened; (9) No Event of Default: no condition, omission, event or act has occurred or circumstance arisen which, had the Notes already been issued, would (or upon the giving of notice and/or the passage of time and/or the fulfilment of any other requirement provided in Condition 9 would) constitute an Event of Default; (10) No Breach: neither the Issuer nor any of its Principal Subsidiaries is in breach of or in default under any agreement to which it is a party or which is binding on the Issuer or any of its Principal Subsidiaries or any of their respective assets or revenues, which breach or default is material in the context of the issue and offering of the Notes; (11) Maximum Aggregate Amount: as of the Issue Date for any Notes, after giving effect to the issuance of such Note and of any other Notes to be issued by the Issuer, and to the redemption of Notes to be redeemed by the Issuer, and Notes which have become void in accordance with their terms, on or prior to such Issue Date, the aggregate principal amount of Notes outstanding will not exceed the Programme Limit; (12) Contracts: the Issuer will not without first notifying all Dealers in writing terminate or amend the terms of any of the Contracts; (13) Delivery of Accounts and Other Information: the Issuer shall:- (a) as soon as the same are published, but in any event no later than 150 days after the end of each financial year, make available to each of the Dealers copies of the Annual Report 15 of the Issuer for that year including the audited consolidated accounts of the Group for that year, prepared in accordance with United States generally accepted accounting principles (except as otherwise stated in such accounts or the notes thereto) and a copy of the report of the Issuer's auditors thereon; (b) as soon as the same are published, but in any event no later than 90 days after the end of the relevant financial half year, make available to each of the Dealers copies of the unaudited half yearly summary group results of the Group (if any); (c) on or promptly after the date on which the Issuer issues any press release or makes any public announcement or discloses to the public any other event or circumstance which is material in the context of the Programme or the Notes, furnish such information to the Dealers, and if furnished orally such information will be confirmed promptly in writing in accordance with Clause 10; (14) Notification of Event of Default: the Issuer shall, promptly upon becoming aware of the same, notify the Dealers of the occurrence of any Event of Default and of any other event or circumstance which, upon the giving of notice and/or the passage of time and/or the fulfilment of any other requirement provided in Condition 9, would constitute an Event of Default; (15) Securities Act:- (a) in the reasonable belief of the Issuer, no substantial US market interest within the meaning of Regulation S under the Securities Act exists in its debt securities; and (b) neither the Issuer, its affiliates nor any person acting on behalf of the Issuer or such affiliates has engaged or will engage in any directed selling efforts (as defined in Regulation S under the Securities Act) with respect to the Notes and each of them has complied and will comply with the offering restrictions requirement of such Regulation; (16) Authorisations and Consents: all consents, authorisations, licences or approvals of, and registrations and filings with, any governmental or regulatory authority required by the Issuer in connection with the issue by the Issuer of Notes under this Agreement and the performance of the Issuer's obligations under the Contracts and the Notes have been obtained and are in full force and effect or where such consents, authorisations, licences or approvals contain any terms, conditions or restrictions, such terms, conditions and restrictions have been complied with or, as the case may be, will be 16 obtained, fulfilled or done to the extent that they are capable of being obtained, fulfilled or done on or before the relevant Issue Date, or if they can only be fulfilled after the relevant Issue Date, that they will be so fulfilled as soon as practicable thereafter and the Issuer is permitted to issue such Notes pursuant to all relevant laws, regulations, and directives; (17) Authorised Representative: the Issuer will notify the Dealers immediately in writing if any of the persons named in the list referred to in paragraph 3 of the Initial Documentation List ceases to be authorised to take action on behalf of the Issuer or if any additional person becomes so authorised together, in the case of an additional authorised person, with evidence satisfactory to the Dealers that such person has been so authorised; (18) Information on Noteholders' Meetings: the Issuer will, at the same time as it is despatched, furnish the Dealers with a copy of every notice of a meeting of the holders of the Notes (or any of them) which is despatched at the instigation of the Issuer and will notify the Dealers promptly after it becomes aware that a meeting of the holders of the Notes (or any of them) has been convened by Noteholders; (19) Use of Proceeds: the Issuer will apply the net proceeds of the issues of the Notes (after deducting issue expenses) for general corporate purposes (including capital expenditure), working capital requirements and investments of the Issuer and its subsidiaries; (20) Insurance: each of the Issuer and its Principal Subsidiaries has (using its reasonable endeavours) caused to be effected adequate insurance cover with reputable insurers on all their real property which are of an insurable nature against fire and other risks normally insured against by the Issuer and its Principal Subsidiaries in respect of such real property; (21) Taxation: as far as the Issuer is aware or save as disclosed in the Information Memorandum, neither the Issuer nor any of the Principal Subsidiaries are subject to any taxation dispute which, when finally determined, would have a material adverse effect on the financial position of the Issuer or the Group taken as a whole; (22) Notification: the Issuer shall promptly after becoming aware notify the Relevant Dealer before the relevant Issue Date of any breach of any of the representations, warranties, undertakings and agreements contained in this Clause in any respect or of anything which has or would have rendered or will render untrue or incorrect in any respect any of such representations, warranties, undertakings and agreements and take such steps as may be reasonably requested by the Relevant Dealer to remedy and/or publicise the same; and 17 (23) Exchange of Global Notes: the Issuer shall procure that each Temporary Global Note shall be exchanged for a Permanent Global Note or for Definitive Notes and that each Permanent Global Note shall be exchanged for Definitive Notes, in each case in accordance with the Agency Agreement and the relevant Global Note. When a Dealer agrees to purchase Notes such agreement shall be on the basis of, and in reliance on, a representation which the Issuer shall be deemed to make on each Certification Date to the effect that the above warranties and agreements are correct and complied with in all respects as at the date of such representation and as at the proposed Issue Date with reference to the then existing circumstances. (B) Continuation in Force: The warranties and agreements contained in this Clause shall continue in full force and effect notwithstanding any investigation by or on behalf of the Dealers (or any of them) or completion of the issue and subscription of any Notes. 5. INDEMNITIES (A) Breach of Warranty: Without prejudice to the other rights or remedies of the Dealers, the Issuer covenants with the Arranger and the Dealers and each of them that the Issuer will keep the Arranger and the Dealers indemnified against any reasonable losses, liabilities, costs, claims, charges, actions, demands and expenses (including, but not limited to, all reasonable costs, charges and expenses paid or incurred in disputing or defending any of the foregoing) which they may incur or which may be made against them as a result of or in relation to any actual or alleged misrepresentation in or breach of any of the warranties or agreements of the Issuer set out in Clause 4(A) except that such indemnity shall not extend to any action against the Arranger or, as the case may be, any Dealer commenced by any person who has been supplied with, and relied on, any information supplied by the Arranger or, as the case may be, such Dealer in contravention of Clause 8. In case any action, proceeding, claim or demand shall be brought against the Arranger or any of the Dealers, in respect of which indemnity may be sought from the Issuer as provided above, the Arranger or, as the case may be, such Dealer shall promptly notify the Issuer in writing and (subject to the provision by the Issuer of such security against such Dealer's liability in respect of such action, proceeding, claim or demand as the Arranger or, as the case may be, such Dealer may require) the Issuer shall have the option to assume the defence thereof, including the employment of legal advisers selected by the Issuer but approved by the Arranger or, as the case may be, such Dealer (such approval not to be unreasonably withheld) subject to the payment by the Issuer of all fees and expenses of such employment. The Arranger or, as the case may be, such Dealer shall have the right to select separate legal advisers to assume such legal defences and otherwise to participate in the defence of such action, proceeding, claim or demand on behalf of the Arranger or, as the case may be, such Dealer but the fees and expenses of such legal adviser shall be borne by the Arranger or, as the case may be, such Dealer (unless the Issuer has authorised the employment of separate legal advisers by the Arranger or, as the case may be, such Dealer such authorisation not to be 18 unreasonably withheld). The Issuer shall not be liable in respect of any settlement of any action effected without its consent. (B) Failure to Issue: The Issuer covenants with the Dealers that it will keep the Dealers indemnified against any losses which they may incur as a result of Notes not being issued for any reason (other than (1) any failure of a Dealer to pay or (2) either of the conditions in Clause 3(B)(8) or 3(B)(14) not having been fulfilled) after an agreement for the purchase of such Notes has been made. 6. LISTING (A) Initial Application for Listing: The Issuer confirms that it has caused to be made or will cause to be made an application for the Programme to be listed on the SGX-ST. In connection with such application, the Issuer agrees:- (1) on the date of this Agreement (or as soon as practicable thereafter) to supply to the SGX-ST copies of the Information Memorandum and such other documents, information and undertakings as may be required for the purpose of obtaining such listing; and (2) to use its best endeavours procure that the Information Memorandum shall be approved by the SGX-ST. (B) Maintenance of Listings: The Issuer agrees to use all reasonable endeavours to maintain such listing for so long as any Notes which are or are to be listed on the SGX-ST are outstanding, to pay all fees and to deliver, publish, register and furnish (or procure that any such action is taken on its behalf) from time to time such further documents, information and undertakings (in addition to any already published or lodged with the SGX-ST) and publish all advertisements or other material as may be necessary or advisable in order to maintain the listing on the SGX-ST of the Programme. (C) Announcements: The Issuer hereby authorises the Relevant Dealer(s) to arrange, on behalf and at the expense of, and after consultation with, the Issuer, for the publication on behalf of the Issuer of such particulars of the Programme or the Notes from time to time in such newspapers or otherwise and on such dates as are required by the Stock Exchange and otherwise as the Issuer may agree with the Relevant Dealer. The Issuer may also authorise the Arranger or any other Dealer specifically for such purpose. (D) Alternative or No Listing: The Issuer agrees that if maintenance of such listing has become impossible or if in connection with any issue of the Notes, the Issuer and the Relevant Dealer(s) (or the Lead Manager in the case of a Syndicated Issue) agree to list such Notes on another stock exchange, it will use all reasonable endeavours to obtain and maintain a quotation for a listing of the Programme and/or such Notes, as the case may be, on another stock exchange or exchanges agreed between it and either (1) the Relevant Dealer(s) (in the case of Notes which have been issued and are outstanding) or (2) all Dealers (in relation to the Programme). This sub-Clause (D) shall be applied to any subsequent listing of the Programme or the Notes mutatis mutandis. In addition, the Issuer and the Relevant Dealer(s) may agree that an issue of the Notes be unlisted. 7. AUTHORITY TO DISTRIBUTE DOCUMENTS 19 Subject to Clause 8, the Issuer hereby authorises each of the Dealers on behalf of the Issuer to provide copies of the Information Memorandum (and such additional written information as the Issuer shall, in writing, provide to and authorise the Dealers so to use) to actual and potential purchasers of the Notes or of any interest therein or right in respect thereof. The foregoing authority shall extend to permit the provision of copies of some only of the documents for the time being comprising the Information Memorandum where the remainder of such documents at that time forming the Information Memorandum have already been previously provided to the same recipient. 8. AGREEMENTS OF DEALERS (A) No Distribution: Each Dealer agrees not to offer, sell or deliver any Note or any interest therein or right in respect thereof, or to distribute the Information Memorandum or any other document, to any person or in or from any jurisdiction except in such manner and in such circumstances as will result in compliance with all applicable laws, regulations and authorisations issued thereunder. Each Dealer will moreover comply, at its own expense, with the restrictions set out in Appendix 7. Each Dealer will keep the Issuer indemnified against any losses, liabilities, costs, claims, charges, actions, demands and expenses (including, but not limited to, all reasonable costs, charges and expenses paid or incurred in disputing or defending any of the foregoing) which it may incur, or which may be made against it, as a result of or in relation to any unauthorised action by that Dealer or the failure by such Dealer to comply with the restrictions set out in this Clause or in Appendix 7. The provisions of Clause 5 with respect to the conduct and settlement of action shall apply mutatis mutandis to the indemnity set out in this Clause. (B) Circulation of Material: Each Dealer agrees and undertakes that, in connection with the sale and distribution of the Notes, it will circulate the most up-to-date material which has been supplied by the Issuer pursuant to Clause 4(A)(13) above (and which has not been the subject of a notice of withdrawal by the Issuer). (C) No representation: Except as expressly set out in the Information Memorandum, no Dealer is authorised to make any representation or to use any information in connection with the sale of any Note or any interest therein or right in respect thereof. (D) Obtaining of Consents: Each Dealer agrees that it will obtain, and that the Issuer shall have no responsibility for obtaining, any consent, approval or permission required for the purchase, offer, sale or delivery of the Notes under the laws and regulations in force in any jurisdiction to which it is subject or in or from which any subscription, offer, sale or delivery or distribution of the Information Memorandum or any other document is made, except for the invocation of the exemption under Section 106C and/or Section 106D of the Companies Act for the offer of the Notes in Singapore, which shall, and the Issuer hereby agrees that such invocation shall, be the responsibility of the Issuer. (E) Compliance and Procedures: Each Dealer purchasing any Notes shall comply with all other procedures relating to the issue and purchase of Notes set out in the Contracts. 20 9. AUTHORITY OF ISSUER Unless herein otherwise specifically provided, any order, notice, request, direction or other communication from the Issuer made or given under any provision of this Agreement shall be sufficient if it is signed by any of the persons named in the list referred to in paragraph 3 of the Initial Documentation List, subject to any notification received by the Dealers from the Issuer in accordance with Clause 4(A)(17). 10. COMMUNICATIONS All communications shall be by facsimile or in writing delivered by hand or sent by prepaid registered post or by telephone (but only where specifically provided). All communications by telephone shall be promptly confirmed by facsimile, provided that any failure so to confirm shall not invalidate the original communication. Each communication shall be made to the relevant party at the facsimile number or address or telephone number, in the case of a communication by facsimile or in writing, marked for the attention of, and in the case of a communication by telephone made to, the person from time to time designated in writing by that party to the other for the purpose. The initial telephone number, facsimile number, address and person so designated by the Issuer, the Arranger and the Dealer are set out below:- The Issuer ST Assembly Test Services Ltd, 5, Yishun Street 23, Singapore 768442. Telephone Number: 751 1822/751 1851 Facsimile Number: 755 1585/755 3153 Attention: Mr Tan Lay Koon/Ms Pearlyne Wang The Arranger Citicorp Investment Bank (Singapore) Limited, 3, Temasek Avenue, #17-00, Centennial Tower, Singapore 039190. Telephone Number: 328 5172/5505 Facsimile Number: 328 5663 Attention: Mr Tan Kee Phong/Ms Donna Kng/Mr Daniel Tay The Dealer Citicorp Investment Bank (Singapore) Limited, 3, Temasek Avenue, #15-00, Centennial Tower, Singapore 039190. 21 Telephone Number: 328 2800 Facsimile Number: 222 7921 Attention: Ms Cynthia Teong/Ms Christina Lim A communication will be deemed received (if by telephone) when made, (if by facsimile) when despatched and receipt in good order is acknowledged by telephone, (if in writing by hand) when left at the address required by this Clause or (if in writing sent by prepaid registered post) within two days after being sent by prepaid registered post addressed to the relevant party at that address, in each case in the manner required by this Clause. Every communication shall be irrevocable unless not acted upon. 11. STATUS OF THE DEALERS AND THE ARRANGER (A) Dealers' Obligations Several: Save as provided in the relevant Subscription Agreement, the obligations of the Dealers under this Agreement are several and not joint. (B) Exoneration: Without prejudice to each Dealer's obligations under Clause 8, none of the Dealers or the Arranger will be responsible to any other Dealer for the adequacy, accuracy or completeness or reasonableness of any representation, warranty, undertaking, agreement, statement or information in the Information Memorandum, any Pricing Supplement, the Contracts or any information provided in connection with the Programme. (C) Responsibilities: Each of the Dealers confirms that, in relation to each other Dealer and the Arranger, it has itself been, and will at all times continue to be (based on information which it has deemed sufficient), solely responsible for making its own independent investigation and appraisal of the business, financial condition, creditworthiness, prospects, status and affairs of the Issuer and its subsidiaries and assuring itself of the nature and suitability to such Dealer of all legal, tax and accounting matters and all documentation in connection with the Programme or any Tranche. (D) Role of the Arranger: The Arranger shall have only those duties, obligations and responsibilities expressly specified in this Agreement. 12. TIME Time shall be of the essence of the terms of this Agreement. 13. FEES, EXPENSES AND STAMP DUTIES (A) Arrangement Fee: The Issuer agrees to pay to the Arranger an arrangement fee (including any goods and services and other taxes or duties thereon) in the amount, at the time and in the manner stated in a letter dated 22nd May, 2001 from the Arranger to the Issuer and countersigned by the Issuer. (B) Expenses and Stamp Duties: The Issuer agrees to:- (1) Enforcement Expenses: pay to the Arranger and each Dealer, on demand, all costs and expenses (including, without limitation, goods and services tax and any other taxes or duties thereon and any 22 legal fees) incurred by the Arranger or, as the case may be, that Dealer in enforcing any rights under this Agreement or any Notes; (2) Expenses: pay to the Arranger and each Dealer (a) all reasonable costs and expenses incurred in or in connection with the performance of the Issuer's obligations hereunder, including (without limitation) (i) all expenses incurred in connection with the issue, authentication, packaging and initial delivery of the Notes and the preparation and printing of Temporary Global Notes, the Permanent Global Notes, the Definitive Notes, the Contracts, the Information Memorandum and all amendments and supplements thereto and any other document relating to the issue and delivery of the Notes and (ii) the cost of any advertising agreed by the Issuer in connection with the issue of the Notes and (b) all fees and expenses payable to any Stock Exchange in connection with or relating to the listing of the Programme and the Notes on such Stock Exchange and all the fees and charges of the Depository; and (3) Stamp and Other Duties: indemnify and hold the Arranger and the Dealers harmless against any documentary, stamp, goods and services, value added or similar transfer or issue tax, including any interest and penalties, on the issue of Temporary Global Notes, the Permanent Global Notes and Definitive Notes in accordance with the terms of this Agreement, and on the execution and delivery of the Contracts, or on the exchange of Temporary Global Notes or Permanent Global Notes for Definitive Notes. (C) No Deduction or Withholding: All payments of fees and expenses hereunder will be made without any deduction or withholding for or on account of any taxes, duties or other levies (including, but not limited to, any taxes, duties or levies on the supply of goods and services). Where any services or supplies supplied under this Agreement falls within the ambit of the Goods and Services Act, Chapter 117A of Singapore, the party making payments for such services or supplies shall also pay the applicable goods and services tax. 14. ACCESSIONS AND TERMINATION (A) Additional Dealers: The Issuer may from time to time appoint one or more additional Dealers upon the terms of this Agreement. Any such appointment of a Dealer may be in respect of a single Tranche or the whole Programme. Upon any person who is not a Programme Dealer (1) entering into a Subscription Agreement or (2) receiving a letter substantially in the form of Appendix 8 duly countersigned by the Issuer, such person shall become a party to this Agreement as a Dealer vested with all the authority, rights, powers, duties and obligations as if originally named as a Dealer hereunder, provided that such authority, rights, powers, duties and obligations shall be limited to those that accrue in connection with the Tranche in respect of which such person is appointed Dealer and shall not extend to those that relate to Programme Dealers unless such person is appointed as a Programme Dealer. 23 (B) Termination: (1) The Issuer may at any time terminate this Agreement by giving not less than 30 days' notice to the Dealers, the Issuing and Paying Agent and the Trustee. (2) The Issuer may terminate this Agreement with respect to any Dealer by giving not less than 30 days' notice to such Dealer, the Issuing and Paying Agent and the Trustee. Any party may terminate this Agreement with respect to itself by giving not less than 30 days' notice to the other parties, the Issuing and Paying Agent and the Trustee. (3) Notwithstanding paragraphs (1) and (2) above, any settlement with respect to Notes placed by a Dealer occurring after termination of this Agreement shall be made in accordance with this Agreement. (C) Rights Accrued: No such termination shall, in any event, affect any rights or obligations accrued or incurred as at the effective date of termination or which accrue thereafter in relation to any act or omission which occurred prior to such termination. Without prejudice to the generality of the foregoing, the Issuer will, notwithstanding termination of this Agreement for any reason, remain responsible for the expenses to be paid or reimbursed by it pursuant to Clause 13 and all obligations of the Issuer under Clause 5, and all obligations of the Dealers under Clause 8 shall remain in effect. In addition, if any such termination occurs after the Issuer has accepted an offer to subscribe or procure the subscription of Notes and prior to the Issue Date in respect thereof, the obligations of the Issuer under Clauses 2 and 3 and the obligations of the Dealers under Clause 8 shall also remain in effect. 15. BENEFIT OF AGREEMENT (A) Benefit: This Agreement shall be binding upon and shall inure for the benefit of the Issuer, the Arranger and each Dealer and their respective successors and permitted assigns. (B) Assignment and Transfer: The Dealers may assign or transfer their rights or obligations under this Agreement. If the Dealers assign their rights or transfer their obligations as provided in this Clause, the relevant assignee or transferee shall be treated as if it were a party to this Agreement with effect from the date on which such assignment or transfer takes effect; provided that any transfer shall only become effective when the Issuer has received an undertaking from the transferee to be bound by this Agreement and to perform the obligations transferred to it. 16. INCREASE IN PROGRAMME LIMIT (A) Notice of Increase: From time to time the Issuer may increase the Programme Limit by delivering to the Arranger, the Issuing and Paying Agent, the Agent Bank, the Trustee and each of the Programme Dealers the letter set out in Appendix 9, whereupon all references in the Contracts and the Procedures Memorandum shall be to the Programme Limit in the increased amount. (B) Conditions Precedent: The right of the Issuer to increase the Programme Limit shall be subject to the Issuer having received the consent to the increase in the Programme Limit of the Board of the Issuer and all necessary consents, approvals, 24 clearances and authorisations from any applicable regulatory authorities including the SGX-ST and to the production by the Issuer of a supplement to the Information Memorandum and any further or other documents required by the SGX-ST for the purpose of listing the Programme and/or the Notes. 17. COUNTERPARTS This Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 18. GOVERNING LAW This Agreement is, and every agreement for the issue and subscription of Notes pursuant to Clause 2 shall be, governed by and construed in accordance with the laws of Singapore. 25 A P P E N D I X 1 INITIAL DOCUMENTATION LIST 1. A certified copy of each of (1) the certificate of incorporation of the Issuer and (2) the Memorandum and Articles of Association of the Issuer. 2. A certified copy of the resolutions of the Board of Directors of the Issuer authorising (1) the establishment of the Programme, (2) the execution, delivery and performance of the Contracts and (3) appropriate persons to execute and deliver the Contracts on behalf of the Issuer and to take any action on behalf of the Issuer in connection with the Contracts, including the issue of the Notes in accordance with Clause 2. 3. A certified list of names, titles and specimen signatures of the persons authorised on behalf of the Issuer:- (1) to execute the Contracts, the Notes (as appropriate) to be issued pursuant to Clause 2 and any agreements entered into pursuant to Clause 2; (2) to sign or give or deliver all notices and other documents to be delivered in connection with the Contracts and the Notes to be issued pursuant to Clause 2; and (3) to take any other action in relation to the Contracts and the Notes to be issued pursuant to Clause 2. 4. Certified copies of all consents required by the Issuer for the establishment of the Programme, the issue and payment of the Notes and the execution, delivery and performance of the Contracts or, if no such consents are necessary, a certificate to that effect from a person duly authorised by the Issuer so to certify. 5. A legal opinion addressed to the Arranger and the Dealers dated on or after the date of this Agreement, in such form and with such contents as the Arranger may require from Allen & Gledhill. 6. The Agency Agreement duly executed and delivered by the parties thereto. 7. The Trust Deed duly executed and delivered by the parties thereto. 8. The Depository Agreement duly executed and delivered by the parties thereto. 9. The Deed of Covenant duly executed and delivered by the Issuer. 10. Copies of the Information Memorandum in such numbers as agreed with the Issuer. 26 A P P E N D I X 2 FORM OF PRICING SUPPLEMENT Pricing Supplement [LOGO, if document is printed] ST ASSEMBLY TEST SERVICES LTD (Incorporated with limited liability in Singapore) S$500,000,000 Multicurrency Medium Term Note Programme SERIES NO: [ ] TRANCHE NO: [ ] [Brief Description and Amount of Notes] Issue Price : [ ] per cent. [Publicity Name(s) of Dealer(s)] The date of this Pricing Supplement is [ ]. 27 This Pricing Supplement relates to the Tranche of Notes referred to above. Where interest is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available under Section13(1)(a) of the Income Tax Act, Chapter 134 of Singapore shall not apply if such person acquires such Notes using the funds and profits of such person's operations through a permanent establishment in Singapore. Any person whose interest derived from the Notes is not exempt from tax shall include such interest in a return of income made under the Income Tax Act, Chapter 134 of Singapore. Signed: ---------------------------------------- Duly Authorised Officer The terms of the Notes and additional provisions relating to their issue are as follows:- [Include whichever of the following apply] 1. Series No.: [ ] 2. Tranche No.: [ ] 3. Currency: [ ] 4. Principal Amount of Series: [ ] 5. Principal Amount of Tranche: [ ] 6. Denomination Amount: [ ] 7. Calculation Amount (if different from Denomination Amount): [ ] 8. Issue Date: [ ] 9. Redemption Amount [Denomination Amount/ (including early redemption): [others]] 10. Interest Basis: [Fixed Rate/Floating Rate/ Variable Rate/Hybrid] 11. Interest Commencement Date: [ ] 12. Fixed Rate Note (a) Maturity Date: [ ] 28 (b) Fixed Rate Day Basis: [ ] (c) Reference Date(s): [ ] (d) Initial Broken Amount: [ ] (e) Final Broken Amount: [ ] (f) Interest Rate: [ ] per cent. per annum 13. Floating Rate Note (a) Redemption Month: [month and year] (b) Interest Determination Date: [ ] (c) FRN Day Basis: [ ] (d) Interest Period: [ ] (e) Benchmark: [SIBOR, Swap Rate or other benchmark] (f) Primary Source: [Specify relevant screen page or "Reference Banks"] (g) Reference Banks: [Specify three] (h) Spread: [ ] per cent. per annum 14. Variable Rate Note (a) Redemption Month: [month and year] (b) Interest Determination Date: [ ] (c) VRN Day Basis: [ ] (d) Interest Period: [ ] (e) Benchmark: [SIBOR, Swap Rate or other benchmark] (f) Primary Source: [Specify relevant screen page or "Reference Banks"] (g) Reference Banks: [Specify three] (h) Spread: [ ] per cent. per annum 29 15. Hybrid Note (a) Fixed Rate Period: [ ] (b) Floating Rate Period: [ ] (c) Maturity Date: [ ] (d) Redemption Month: [month and year] (e) Interest Determination Date: [ ] (f) Fixed Rate Day Basis: [ ] (g) FRN Day Basis: [ ] (h) Reference Date(s): [ ] (i) Initial Broken Amount: [ ] (j) Final Broken Amount: [ ] (k) Interest Rate: [ ] per cent. per annum (l) Interest Period: [ ] (m) Benchmark: [SIBOR, SWAP RATE or other] (n) Primary Source: [specify relevant screen page or "Reference Banks"] (o) Reference Banks: [specify three] (p) Spread: [ ] per cent. per annum 16. Issuer's Redemption Option: [Yes/No] Issuer's Redemption Option Period: [Specify maximum and minimum (Condition 5(d)): number of days for notice period] [Specify Dates] 17. Noteholders' Redemption Option: [Yes/No] Noteholders' Redemption Option Period: [Specify maximum and minimum (Condition 5(e)(i)): number of days for notice period] [Specify Dates] 18. Issuer's Purchase Option: [Yes/No] 30 Issuer's Purchase Option Period: [Specify maximum and (Condition 5(b)): minimum number of days for notice period] [Specify Dates] 19. Noteholders' VRN Purchase Option: [Yes/No] Noteholders' VRN Purchase Option Period: [Specify maximum and (Condition 5(c)(i)): minimum number of days for notice period] [Specify Dates] 20. Noteholders' Purchase Option: [Yes/No] Noteholders' Purchase Option Period: [Specify maximum and (Condition 5(c)(ii)): minimum number of days for notice period] [Specify Dates] 21. Redemption for Taxation Reasons: [Yes/No] [on [insert other dates of redemption not on interest payment dates]] 22. Notes to be represented on issue by: [Temporary Global Note/ Permanent Global Note. If nothing is specified and this Pricing Supplement does not specify that the TEFRA C Rules apply, Notes will be represented initially by a Temporary Global Note] 23. Temporary Global Note exchangeable for Definitive Notes: [Yes/No] 24. Temporary Global Note exchangeable for Permanent Global Note: [Yes/No] 25. Listing: [ ] 26. Notes to be cleared through The [Yes/No] Central Depository (Pte) Limited 27. Method of issue of Notes: [Individual Dealer/ Syndicated Issue] 28. The following Dealer(s) [is/are] [insert legal name(s) of subscribing the Notes: Dealer(s)] 29. The aggregate principal amount of S$[ ] Notes issued has been translated in 31 Singapore Dollars at the rate of [ ] producing a sum of (for Notes not denominated in Singapore Dollars): 30. Other terms: Details of any additions or variations to terms and conditions of the Notes as set out in the Information Memorandum: Any additions or variations to the selling restrictions: 32 A P P E N D I X 3 PROCEDURES MEMORANDUM ----------------------------------------------------------- PROCEDURES MEMORANDUM relating to ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME ----------------------------------------------------------- [ALLEN&GLEDHILL LOGO] 36 Robinson Road #18-01 City House Singapore 068877 C O N T E N T S 33
CLAUSE TITLE PAGE - ------ ----- ---- PROCEDURES MEMORANDUM 35 OPERATING PROCEDURES 36 A. RESPONSIBILITIES OF THE ISSUING AND PAYING AGENT 36 B. RESPONSIBILITIES OF EACH DEALER/LEAD MANAGER 36 C. RESPONSIBILITY OF THE ISSUER 36 D. RESPONSIBILITY OF THE ISSUER, LEAD MANAGER AND MANAGERS 37 E. SETTLEMENT 37 ANNEX A - 38 PART I - SETTLEMENT PROCEDURES FOR NON-SYNDICATED ISSUES 38 PART II - SETTLEMENT PROCEDURES FOR SYNDICATED ISSUES 43 ANNEX B - FORM OF DEALER'S CONFIRMATION TO ISSUER FOR NON-SYNDICATED ISSUES 48 ANNEX C - FORM OF ISSUER'S CONFIRMATION TO ISSUING AND PAYING AGENT AND DEALER FOR NON-SYNDICATED ISSUES 49
34 PROCEDURES MEMORANDUM This is the Procedures Memorandum referred to in the Programme Agreement (as defined below), which sets out the administrative and operative procedures and guidelines to be followed in relation to issues of Notes pursuant to the S$500,000,000 Multicurrency Medium Term Note Programme (the "Programme") established by ST Assembly Test Services Ltd (the "Issuer") under the Programme Agreement for the issue of debt securities (the "Notes"). The documentation for the Programme provides for the issue of Notes denominated in Singapore Dollars, United States dollars, Australian dollars, Canadian dollars, Dutch guilders, Euro, Hong Kong dollars, Italian lire or Japanese yen or in any currency or currencies as may be agreed between the Issuer and the relevant Dealer (subject to compliance with all relevant laws, regulations and directives) on one or more of the following interest payment bases:- (a) Fixed Rate Notes; (b) Floating Rate Notes; (c) Variable Rate Notes; and/or (d) Hybrid Notes, and on such other terms as may be agreed between the Issuer and the Relevant Dealer(s). Terms used herein (including the definitions of "Arranger" and "Dealers") shall have the respective meanings given to them in the Programme Agreement (as amended, varied or supplemented, the "Programme Agreement") dated 10th January, 2002 and made between the Issuer, the Arranger and the Dealers named therein and in the Trust Deed (as amended, varied or supplemented, the "Trust Deed") dated 10th January, 2002 and made between the Issuer and British and Malayan Trustees Limited (the "Trustee", which expression shall include all persons for the time being the trustee or trustees under the Trust Deed). An Agency Agreement (as amended, varied or supplemented, the "Agency Agreement") dated 10th January, 2002 has been entered into in relation to the Notes between the Issuer, Citicorp Investment Bank (Singapore) Limited, as issuing and paying agent and agent bank, and the Trustee. 35 OPERATING PROCEDURES Dealers must confirm all trades directly with the Issuer, the Agent Bank (if not itself the Dealer) and the Issuing and Paying Agent. A. RESPONSIBILITIES OF THE ISSUING AND PAYING AGENT The Issuing and Paying Agent will, in addition to the responsibilities in relation to settlement described in Annex A hereto, be responsible for the following:- (i) in the case of Notes which are to be listed on a Stock Exchange, distributing to the relevant Stock Exchange such number of copies of the Pricing Supplements as it may reasonably require; and (ii) in the case of Notes which are to be listed on a Stock Exchange, immediately notifying the Issuer and the Relevant Dealer(s), as the case may be, if at any time the Issuing and Paying Agent is notified by the Issuer or the relevant Stock Exchange that the listing of the Notes to be issued has been refused or otherwise will not take place. B. RESPONSIBILITIES OF EACH DEALER/LEAD MANAGER Each Dealer or, as the case may be, the Lead Manager which agrees to purchase Notes from the Issuer will be responsible for the following:- (i) in the case of non-Syndicated Issues, preparing a confirmation (substantially in the form of Annex B hereto) giving details of the Notes to be issued; (ii) preparing a Pricing Supplement (the form of which is set out in Appendix 2 to the Programme Agreement) in respect of each Tranche of Notes; (iii) in the case of non-Syndicated Issues, each Dealer will be responsible for notifying the Issuing and Paying Agent upon completion of the distribution of the Notes purchased by that Dealer and, in the case of Syndicated Issues, the Lead Manager will be responsible for notifying the Issuing and Paying Agent upon completion of the distribution of the Notes of such issue; and (iv) completing and submitting a Return on Debt Securities (in respect of each Tranche or Series) to the Monetary Authority of Singapore and the Inland Revenue Authority of Singapore within ten working days (excluding Saturdays and Sundays) from the date of issue of each Tranche or Series. C. RESPONSIBILITY OF THE ISSUER 36 The Issuer will:- (i) (in the case of non-Syndicated Issues) send to the Dealer a duly signed confirmation (substantially in the form of Annex C hereto), approving the Pricing Supplement; and (ii) sign and return to the Dealer/Lead Manager the Return on Debt Securities referred to above. D. RESPONSIBILITY OF THE ISSUER, LEAD MANAGER AND MANAGERS In the case of Syndicated Issues, the Issuer, the Lead Manager and the Managers will cause to be prepared and agreed the Subscription Agreement. E. SETTLEMENT The settlement procedures set out in Annex A hereto shall apply, as guidelines, to each issue of Notes (Part I in the case of non-Syndicated Issues and Part II in the case of Syndicated Issues), unless otherwise agreed between the Issuer, the Issuing and Paying Agent and the Relevant Dealer(s) or the Lead Manager, as the case may be. 37 A N N E X A PART I SETTLEMENT PROCEDURES FOR NON-SYNDICATED ISSUES
DAY LATEST TIME ACTION - --- ----------- ------ [to be agreed for The Issuer may agree terms each issue of Notes] with one or more of the Dealer(s) for the issue and subscription of Notes. [to be agreed for The Issuer obtains, with the each issue of Notes] assistance of the Relevant Dealer(s), all necessary governmental and regulatory approvals and consents for the issue of Notes and delivers any such approvals and consents to the Relevant Dealer(s). no later than Issue 3.00 p.m. Each Dealer which has Date minus 3 reached agreement with the Issuer by telephone confirms the terms of the agreement to the Issuer by facsimile (substantially in the form set out in Annex B) (including the attached Pricing Supplement) and copies the facsimile to the Issuing and Paying Agent, the Agent Bank (if different) and the Trustee. no later than Issue 2.00 p.m. The Issuer confirms its Date minus 2 instructions to the Issuing and Paying Agent by facsimile with a copy to the Agent Bank (if different) and the Trustee and its agreement with the Relevant Dealer(s) by facsimile (substantially in the form set out in Annex C) and the Issuer signs and returns therewith the Pricing Supplement as attached to the Dealer's confirmation (the "Confirmation"). In the case of any discrepancy between such facsimile from the Issuer and the facsimile from the Dealer(s) to the Issuing and Paying Agent referred to above, the
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DAY LATEST TIME ACTION - --- ----------- ------ details set out in the signed Pricing Supplement shall (in the absence of manifest error) be conclusive evidence of the agreement and shall be binding on the parties accordingly. no later than Issue 3.00 p.m. In the case of non-fixed Date minus 2 rate Notes, the Issuing and Paying Agent notifies the Issuer, the Relevant Dealer(s) and (in the case of Notes which are to be listed) the relevant Stock Exchange by facsimile of the interest rate for the first interest period (if already determined and notified to the Issuing and Paying Agent by the Agent Bank). Where the interest rate has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined and notified to the Issuing and Paying Agent by the Agent Bank. no later than Issue 5.00 p.m. In the case of Notes which Date minus 2 are to be listed, the Issuing and Paying Agent also notifies the relevant Stock Exchange, or arranges for the notification to the relevant Stock Exchange by the relevant listing agent, by facsimile of details of the Notes to be issued by sending the Pricing Supplement, once signed by the Issuer, and received by the Issuing and Paying Agent. no later than Issue 2.00 p.m. In the case of Notes which Date minus 1 are to be listed on the SGX-ST, the Issuing and Paying Agent sends three copies of the Pricing Supplement to the SGX-ST and the Issuer pays the initial listing fee to the SGX-ST. no later than Issue 3.00 p.m. In the case where the Notes Date minus 1 are to be accepted for clearance by the Depository, the Relevant Dealer provides the Depository with a provisional list of the Securities Accounts of the Depository Agents and the direct Securities Account holders which are to be credited with the Notes, specifying the names,
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DAY LATEST TIME ACTION - --- ----------- ------ NRIC/Passport Numbers, Securities Account Numbers, DA Codes as well as the aggregate principal amount of the Notes to be credited to the Securities Accounts. no later than Issue 3.45 p.m. In the case where the Notes Date minus 1 of any Tranche are initially represented by a Global Note, the Issuer executes the Global Note for such Tranche and delivers it to the Issuing and Paying Agent for authentication. The Relevant Dealer(s) instruct(s) its bank to pay the subscription price to such account of the Issuer with such bank in the principal financial centre for the currency in which the Notes are denominated as the Issuer may have notified to the Relevant Dealer(s) for the purpose in the Confirmation. Issue Date 2.00 p.m. In the case of Notes which are to be accepted for clearance by the Depository, upon receipt of appropriate documentation and instructions from the Issuer and verification thereof, the Issuing and Paying Agent completes and authenticates a Global Note. Following payment to the Issuer of the subscription price in immediately available and freely transferable funds or (as the case may be) same day funds to such account as the Issuer shall have notified to the Relevant Dealer(s) for the purpose in the Confirmation and, on the receipt of confirmation from the Issuer that it has received the subscription price due to it, the Issuing and Paying Agent delivers the Global Note to the Depository. The Relevant Dealer delivers to the Depository the final list of the Securities Accounts of the Depository Agents and the direct Securities Account holders which are to be credited with the Notes, specifying the names, NRIC/Passport Numbers,
40
DAY LATEST TIME ACTION - --- ----------- ------ Securities Account Numbers, DA Codes as well as the aggregate principal amount of the Notes to be credited to the Securities Accounts. In the case of Notes which are not to be accepted for clearance by the Depository, the Issuing and Paying Agent completes and authenticates a Global Note. Following payment to the Issuer of the subscription price in immediately available and freely transferable funds or (as the case may be) same day funds to such account as the Issuer shall have notified to the Relevant Dealer(s) for the purpose in the Confirmation and, on the receipt of confirmation from the Issuer that it has received the subscription price due to it, the Issuing and Paying Agent delivers the Global Note to the Relevant Dealer(s). In any other cases, the delivery of, and payment for, Notes will be made in the manner agreed between the Issuer and the Relevant Dealer(s). On or subsequent to The Issuing and Paying Agent the Issue Date notifies the Issuer of the issue of Notes giving details of the Temporary Global Note or (as the case may be) Permanent Global Note and the principal amount represented thereby. In the case where the Notes are not to be accepted for clearance by the Depository and are initially represented by a Temporary Global Note, the Relevant Dealer procures the preparation of Definitive Notes. The Issuing and Paying Agent notifies the Singapore Exchange Securities Trading Limited, in the case of Notes which are to be listed on the SGX-ST (and in respect of which a copy of the Pricing Supplement has been delivered to the SGX-ST), the issue for any reason does not proceed.
41
DAY LATEST TIME ACTION - --- ----------- ------ Within 10 working The Issuer and Relevant days from the Issue Dealer(s) sign the Return on Date (excluding Debt Securities and Relevant Saturdays and Dealer(s) submits a duly Sundays) completed Return on Debt Securities in respect of the Notes to the Monetary Authority of Singapore and the Inland Revenue Authority of Singapore.
Explanatory Notes (a) Each day is a day (other than Saturday or Sunday) on which commercial banks are open for business in Singapore. (b) The Issue Date must be a business day as defined in the Notes. (c) Times given are approximate times for the taking of the action in question and are references to Singapore time. 42 PART II SETTLEMENT PROCEDURES FOR SYNDICATED ISSUES
DAY LATEST TIME ACTION - --- ----------- ------ [to be agreed for The Issuer may, subject to each issue of Notes] the execution of the Subscription Agreement referred to below, agree terms with a Dealer (which expression in this Part II includes any entity to be appointed as a dealer under the Subscription Agreement referred to below) (the "Lead Manager") for the issue and purchase of Notes to be subscribed pursuant to a Subscription Agreement (whether pursuant to an unsolicited bid by such Lead Manager or pursuant to an enquiry by the Issuer). The Lead Manager may invite other Dealers (new or additional) to join an underwriting syndicate on the basis of an invitation telex agreed between the Issuer and the Lead Manager and on the terms of the Pricing Supplement referred to below and the Subscription Agreement. The Lead Manager and any such Dealers are together referred to as the "Managers". [to be agreed for The Issuer obtains, with the each issue of Notes] assistance of the Lead Manager, all necessary governmental and regulatory approvals and consents for the issue of Notes and delivers any such approvals and consents to the Lead Manager. no later than Issue The Issuer and the Lead Date minus 10 (or Manager agree a form of such number of days Manager and the Pricing agreed between the Supplement (substantially in Issuer, the Lead) the form of Issuing and Manager and the Paying Appendix 2 to the Issuing and Paying Programme Agreement). A Agent) draft Agent) Subscription Agreement (substantially in the and form of Appendix 4 to the Programme Agreement or such other form as may be agreed between the Issuer and the Lead Manager) is also
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DAY LATEST TIME ACTION - --- ----------- ------ prepared and agreed. The Lead Manager sends a copy of the draft Subscription Agreement to any other Manager at least two business days before the Subscription Agreement is intended to be signed. At the same time the Lead Manager sends a copy of the Information Memorandum and Programme Agreement (together with such other items from the Initial Documentation List as the Lead Manager deems appropriate) to any other Manager which has not previously received such documents. The Subscription Agreement and the Pricing Supplement are agreed and executed and copies of the Subscription Agreement and the Pricing Supplement are sent by facsimile to the Issuing and Paying Agent. no later than Issue 3.00 p.m. In the case of non-fixed Date minus 2 rate Notes, the Issuing and Paying Agent notifies the Issuer, the Lead Manager and (in the case of Notes which are to be listed) the relevant Stock Exchange by facsimile of the interest rate for the first interest period (if already determined and notified to the Issuing and Paying Agent by the Agent Bank). Where the interest rate has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined and notified to the Issuing and Paying Agent by the Agent Bank. no later than Issue 5.00p.m. In the case of Notes which Date minus 2 are to be listed, the Issuing and Paying Agent also notifies the relevant Stock Exchange, or arranges for the notification to the relevant Stock Exchange by the relevant listing agent, by facsimile of details of the Notes to be issued by sending the Pricing Supplement, once signed by the Issuer, and received by the Issuing and Paying Agent.
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DAY LATEST TIME ACTION - --- ----------- ------ no later than Issue 2.00 p.m. In the case of Notes which Date minus 1 are to be listed on the SGX-ST, the Issuing and Paying Agent sends three copies of the Pricing Supplement to the SGX-ST and the Issuer pays the initial listing fee to the SGX-ST. no later than Issue 3.00 p.m. In the case where the Notes Date minus 1 are to be accepted for clearance by the Depository, the Lead Manager provides the Depository with a provisional list of the Securities Accounts of the Depository Agents and the direct Securities Account holders which are to be credited with the Notes, specifying the names, NRIC/Passport Numbers, Securities Account Numbers, DA Codes as well as the aggregate principal amount of the Notes to be credited to the Securities Accounts. no later than Issue 3.45 p.m. In the case where the Notes Date minus 1 of any Tranche are initially represented by a Global Note, the Issuer executes the Global Note for such Tranche and delivers it to the Issuing and Paying Agent for authentication. The Lead Manager instruct(s) its bank to pay the subscription price to such account of the Issuer with such bank in the principal financial centre for the currency in which the Notes are denominated as the Issuer may have notified to the Lead Manager for the purpose. Issue Date 2.00 p.m. In the case of Notes which are to be accepted for clearance by the Depository, upon receipt of appropriate documentation and instructions from the Issuer and verification thereof, the Issuing and Paying Agent completes and authenticates a Global Note. Following payment to the Issuer of the subscription price in immediately available and freely transferable funds or (as the case may be) same day funds to such account as the Issuer
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DAY LATEST TIME ACTION - --- ----------- ------ shall have notified to the Lead Manager for the purpose and, on the receipt of confirmation from the Issuer that it has received the subscription price due to it, the Issuing and Paying Agent delivers the Global Note to the Depository. The Lead Manager delivers to the Depository the final list of the Securities Accounts of the Depository Agents and the direct Securities Account holders which are to be credited with the Notes, specifying the names, NRIC/Passport Numbers, Securities Account Numbers, DA Codes as well as the aggregate principal amount of the Notes to be credited to the Securities Accounts. In the case of Notes which are not to be accepted for clearance by the Depository, the Issuing and Paying Agent completes and authenticates a Global Note. Following payment to the Issuer of the subscription price in immediately available and freely transferable funds or (as the case may be) same day funds to such account as the Issuer shall have notified to the Lead Manager for the purpose in the Confirmation and, on the receipt of confirmation from the Issuer that it has received the subscription price due to it, the Issuing and Paying Agent delivers the Global Note to the Lead Manager. In any other cases, the delivery of, and payment for, Notes will be made in the manner agreed between the Issuer and the Lead Manager. On or subsequent to The Issuing and Paying Agent the Issue Date notifies the Issuer of the issue of Notes giving details of the Temporary Global Note or (as the case may be) Permanent Global Note and the principal amount represented thereby.
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DAY LATEST TIME ACTION - --- ----------- ------ In the case where the Notes are not to be accepted for clearance by the Depository and are initially represented by a Temporary Global Note, the Lead Manager procures the preparation of Definitive Notes. The Issuing and Paying Agent notifies the SGX-ST, in the case of Notes which are to be listed on the SGX-ST (and in respect of which a copy of the Pricing Supplement has been delivered to the SGX-ST), if the issue for any reason does not proceed. Within 10 working days The Issuer and the Lead from the Issue Date Manager sign the Return on (excluding Saturdays Debt Securities and the Lead and Sundays) Manager submits a duly completed Return on Debt Securities in respect of the Notes to the Monetary Authority of Singapore and the Inland Revenue Authority of Singapore.
Explanatory Notes (a) Each day is a day (other than Saturday or Sunday) on which commercial banks are open for business in Singapore. (b) The Issue Date must be a business day as defined in the Notes. (c) Times given are approximate times for the taking of the action in question and are references to Singapore time. 47 A N N E X B FORM OF DEALER'S CONFIRMATION TO ISSUER FOR NON-SYNDICATED ISSUES To: ST Assembly Test Services Ltd, 5, Yishun Street 23, Singapore 768442. [date] Attention: [ ] [N.B. - If the Relevant Dealer is not a Programme Dealer, the provisions of the Dealer Accession Letter may be inserted here.] Dear Sirs, ST ASSEMBLY TEST SERVICES LTD S$500,000,000 Multicurrency Medium Term Note Programme We hereby confirm the agreement for the issue to us of Notes forming part of the above Programme in accordance with the terms of the Programme Agreement dated 10th January, 2002 (as amended, varied or supplemented from time to time) and with the terms specified in the attached Pricing Supplement. [Agree additional conditions precedent.] Please confirm your agreement to the terms of issue by signing and faxing to us a copy of the following Pricing Supplement (with the original to follow). Please also fax a copy of the Pricing Supplement to the Issuing and Paying Agent. This letter is governed by, and shall be construed in accordance with, the laws of Singapore. Yours faithfully, For and on behalf of [Name of Dealer] By: -------------------------------- Name: ------------------------------ Title: ----------------------------- [attach Pricing Supplement] 48 A N N E X C FORM OF ISSUER'S CONFIRMATION TO ISSUING AND PAYING AGENT AND DEALER FOR NON-SYNDICATED ISSUES To: [Name of Dealer] [date] Attention: [ ] cc: [Agent Bank, if not Dealer, and Issuing and Paying Agent] cc: [Trustee] Dear Sirs, ST ASSEMBLY TEST SERVICES LTD S$500,000,000 Multicurrency Medium Term Note Programme Terms defined in the Procedures Memorandum (the "Procedures Memorandum") have the same meanings herein. We confirm our receipt of your telefax to us dated [Date] confirming the terms agreed between us for the issue of Notes relating to the above Programme. We confirm the accuracy of the details set out in the attached Pricing Supplement signed by us, and hereby confirm our agreement to issue to you Notes as set out in it. We hereby confirm our telephone instruction to the Issuing and Paying Agent to undertake the duties set out in Part I of Annex A of the Procedures Memorandum, including to authenticate and deliver a [Temporary/Permanent] Global Note as specified in the attached Pricing Supplement in accordance with the terms of the Procedures Memorandum and the Agency Agreement relating to the above Programme, subject to payment of the [net] purchase price. Our account for settlement is [ ] with [ ]. Yours faithfully, For and on behalf of ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Name: ------------------------------ Title: ----------------------------- [attach signed Pricing Supplement] 49 A P P E N D I X 4 FORM OF SUBSCRIPTION AGREEMENT DATED [ ] ST ASSEMBLY TEST SERVICES LTD as Issuer - and - [LEAD MANAGER] - and - OTHERS --------------------------------------------------- SUBSCRIPTION AGREEMENT relating to [Brief Description and Amount of Notes] issued by ST ASSEMBLY TEST SERVICES LTD as Series [ ] of its S$500,000,000 Multicurrency Medium Term Note Programme --------------------------------------------------- [ALLEN & GLEDHILL LOGO] 36 Robinson Road #18-01 City House Singapore 068877 50 C O N T E N T S
CLAUSE TITLE PAGE - ------ ----- ---- 1. APPOINTMENT 2. ISSUE OF THE NOTES 3. STABILISATION 4. AGREEMENT BY THE MANAGERS 5. CONDITIONS PRECEDENT 6. CLOSING 7. EXPENSES 8. TERMINATION 9. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 2001 10. GOVERNING LAW THE ANNEX - PRICING SUPPLEMENT
51 T H I S A G R E E M E N T is made on [ ] B E T W E E N:- (1) ST ASSEMBLY TEST SERVICES LTD of [ ] (the "Issuer"); and (2) [LEAD MANAGER] (the "Lead Manager") and [OTHER MANAGERS] (together, the "Managers"). W H E R E A S:- (A) The Issuer proposes to issue [Brief Description and Amount of Notes] (the "Notes", which expression, where the context so admits, shall include [the Temporary Global Note/the Permanent Global Note/the Temporary Global Note and the Permanent Global Note] to be delivered in respect thereof). Definitive Notes will be in bearer form in the denomination of [ ] each with coupons attached. (B) The Notes will be issued as Series [ ] of the S$500,000,000 Multicurrency Medium Term Note Programme established by the Issuer. (C) This Agreement is supplemental to the Programme Agreement (as amended, varied or supplemented, the "Programme Agreement") dated 10th January, 2002 made between the Issuer, the Arranger and the Dealers party thereto. 1. APPOINTMENT In accordance with Clause 14(A) of the Programme Agreement, the Issuer appoints those of the Managers who are not Dealers (the "New Dealers") as Dealers under the Programme Agreement for the purposes of the issue of the Notes only and not for any other Tranche or Series under the Programme Agreement. Each New Dealer accepts its appointment under the Programme Agreement and each such New Dealer is hereby vested with all the authority, rights, powers, duties and obligations of a Dealer under the Programme Agreement as if each New Dealer had originally been named a Dealer in the Programme Agreement, as set out in Clause 14(A) thereof. This Agreement shall, in relation to each New Dealer, be deemed to constitute such New Dealer's confirmation and agreement to perform and comply with the duties and obligations assumed by it under the Programme Agreement on the terms set out in this Agreement. 2. ISSUE OF THE NOTES (A) Programme Agreement: The Notes will be issued pursuant to Clause 2(B) of, and on the terms of Clauses 2 to 5 (excluding Clause 3(B)(8)), 10 and 15 of, the Programme Agreement as modified by this Agreement. Unless otherwise defined in this Agreement, terms defined in the Programme Agreement shall have the same meanings in this Agreement. References in the Programme Agreement to Notes and Dealer(s) shall be construed as references to the Notes and the Manager or Managers, as the case may be, for the purposes of this Agreement. (B) Agreement to Issue: Subject to the terms and conditions hereof, the Issuer agrees to issue the Notes on [Issue Date] (the "Issue Date") or such other date as the Issuer and the Lead Manager on behalf of the Managers may agree (the "Closing Date"), to the Managers or as they may direct in accordance with Clause 6. The Notes will be 52 issued at a price (the "Issue Price") equal to [[ ] per cent. of] their principal amount [less [(i) a commission (the "Selling Commission") of [ ] per cent. of such principal amount and (ii) a combined management and underwriting commission of [ ] per cent. of such principal amount [plus accrued interest from the Issue Date to the Closing Date]/(i) a selling commission and (ii) a combined management and underwriting commission at the respective rates stated in a letter of today's date from the Lead Manager to the Issuer and countersigned by the Issuer]]. (C) The Notes: The Issuer will issue the Notes having the terms set out in Schedule 1 to the Trust Deed as supplemented by the Pricing Supplement (the "Pricing Supplement) dated the date of this Agreement (and annexed hereto) relating to the Notes which the Issuer confirms it has prepared. 3. STABILISATION The Lead Manager shall, subject to all applicable laws and regulations, be the stabilising manager and may over-allot or effect transactions which stabilise or maintain the market price of the Notes at a level which might not otherwise prevail, but in doing so the Lead Manager shall act as principal and not as agent of the Issuer. Such stabilising, if commenced, may be discontinued at any time. Any loss resulting from over-allotment and stabilisation shall be borne by the stabilising manager for its own account. Nothing in this Agreement shall be construed so as to require the Issuer to issue Notes in excess of $[principal amount] in aggregate principal amount. 4. AGREEMENT BY THE MANAGERS (A) Subscription: The Managers [severally] [jointly and severally] agree that they will subscribe for the Notes [set out against the names of the respective Managers below] on the Closing Date, all on the terms set out in this Agreement.
[ MANAGER PRINCIPAL AMOUNT OF NOTES ------- ------------------------- [ ] [ ] [ ] [ ] [ ] [ ] --------------- [ ] ==============]
(B) IPMA: (1) The Managers agree as between themselves that they will be bound by and will comply with the International Primary Market Association Standard Form Agreement Among Managers version 1 [[(the "Agreement Among Managers")] as amended [hereinafter] [in the manner set out in the invitation facsimile dated [ ] with respect to the Notes] and further agree that references in the Agreement Among Managers to the "Lead Manager" shall mean [ ]. (2) [The Managers agree as between themselves to amend the Agreement Among Managers as follows:- 53 [ ]] 5. CONDITIONS PRECEDENT (A) Programme Agreement: Clause 3(B) of the Programme Agreement shall apply to the issue and subscription of the Notes [with the following modifications]. (B) Further Conditions Precedent: The obligations of the Managers to subscribe for the Notes are subject to the following conditions precedent:- [(a) on or prior to the Closing Date, there having been delivered to the Managers opinions, in form and substance satisfactory to the Lead Manager, dated the Closing Date, of [ ] legal advisers to the Issuer as to Singapore law and [details of Managers' Singapore lawyers], if any;] (b) at the Closing Date (i) the representations and warranties of the Issuer herein being true, accurate and correct in all material respects at, and as if made on, the Closing Date, and (ii) the Issuer having performed all of its obligations hereunder to be performed on or before the Closing Date except to the extent to which failure to do so would not be material in the context of the issue of the Notes and there having been delivered to the Managers a certificate signed by a duly authorised officer of the Issuer (acting on behalf of the Issuer), dated the Closing Date, to such effect; and (c) on or prior to the Closing Date, in the opinion of the Lead Manager, none of the circumstances described in Clause 8(a), (b) or (c) having arisen; [and (d) state further conditions precedent, as agreed]. 6. CLOSING (A) Issue of Notes: At [ ] hours (Singapore time) (or such other time as may be agreed between the Lead Manager, on behalf of the Managers, and the Issuer) on the Closing Date, the Issuer will issue and deliver or procure to be delivered to the Managers or their order in such place as the Lead Manager may reasonably require a [Temporary/Permanent] Global Note representing the Notes duly executed and authenticated. (B) Payment: At [ ] hours (Singapore time) (or such other time as may be agreed between the Lead Manager, on behalf of the Managers, and the Issuer) on the Closing Date, the Managers will pay or cause to be paid to the Issuer the [net] subscription moneys for the Notes (being the aggregate amount payable for the Notes calculated at the Issue Price [less the commissions referred to in Clause 2(B) and the amount payable to the Managers under Clause 7] [and plus the accrued interest, if any]). [Such payment shall be made by the Managers, in [specify currency], in [immediately available and freely transferable funds/same day funds] so as to be received before 3.00 p.m. (local time in the principal financial centre for the currency in which the Notes are 54 denominated) to the account of the Issuer [account number] with [name of bank in [principal financial centre of the currency in which the Notes are denominated]]]. 7. EXPENSES The Issuer will pay on the Closing Date to the Managers [(and authorises the Managers to deduct such sum from the subscription moneys for the Notes as provided in Clause 6(B))] S$[ ] in lieu of reimbursement of their legal and other expenses incurred in connection with the issue of the Notes. [Set out other agreement on expenses.] 8. TERMINATION Notwithstanding anything contained in this Agreement, the Lead Manager on behalf of the Managers may by notice to the Issuer terminate this Agreement at any time prior to payment of the [net] subscription moneys for the Notes to the Issuer in any of the following circumstances:- (a) if there shall have come to the notice of the Managers any material breach of, or any event rendering untrue or incorrect in all material respects, any of the warranties and agreements contained in Clause 4 of the Programme Agreement (or any deemed repetition thereof) or any failure to perform any of the Issuer's covenants, agreements or obligations contained in the Programme Agreement and in this Agreement except to the extent to which failure to do so would not be material in the context of the issue of the Notes; (b) if any of the conditions specified in Clause 5 has not been satisfied or waived by the Lead Manager on behalf of the Managers; or (c) if, there shall have been:- (i) any introduction or prospective introduction of, or any change or prospective change in, or in the interpretation or application of, any legislation, statute, regulation, order, policy, directive, request or guideline (whether or not having the force of law) by the Monetary Authority of Singapore, the Securities Industry Council, the SGX-ST or any other governmental or regulatory body in Singapore; or (ii) any material adverse change or prospective material adverse change in monetary, political (including, but not limited to, changes by reason of military action), financial (including, but not limited to, stock market conditions, currency exchange conditions in any of the financial markets and interest rates) or economic conditions in Singapore or internationally (including changes or developments in stock, bond, money and interest rate markets) or the occurrence of 55 any combination of any such changes, crises or developments, in either case, as would in the opinion of the Lead Manager (exercised in good faith):- (1) materially and adversely prejudice or affect the success of the placement, issue, offer, sale or distribution (whether in the primary or secondary markets) of the Notes; or (2) materially and adversely affect the listing of the Notes (where applicable); or (3) materially and adversely affect the business or financial position of the Issuer or the Group, and upon notice being given, the parties to this Agreement shall (except for the liability of the Issuer in relation to expenses as provided under Clause 7 and except for any liability arising before or in relation to such termination pursuant to the Programme Agreement including Clauses 5 and 8 of the Programme Agreement) be released and discharged from their respective obligations under this Agreement. 9. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 2001 A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 2001 to enforce any term of this Agreement. 10. GOVERNING LAW This Agreement shall be governed by, and construed in accordance with, the laws of Singapore. 56 THE ANNEX Pricing Supplement [The relevant Pricing Supplement will be annexed to the Subscription Agreement] 57 I N W I T N E S S W H E R E O F this Agreement has been entered into on the date stated at the beginning. The Issuer ST ASSEMBLY TEST SERVICES LTD By: Witness: -------------------------------------- ---------------------------- Name: Name: ------------------------------------ ------------------------------- Title: Address: ----------------------------------- ----------------------------
The Managers [LEAD MANAGER] By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- [OTHER MANAGERS] Each by its duly authorised attorney: By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 58 A P P E N D I X 5 VRN SCHEDULE For the purpose of determining the Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect of each Variable Rate Note for each Interest Period, not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor later than 3 p.m. (Singapore time) on the third business day prior to the commencement of each Interest Period, the Issuer and the Relevant Dealer shall endeavour to agree on the following:- (1) whether interest in respect of such Variable Rate Note is to be paid on the first day or the last day of such Interest Period; (2) if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Interest Amount for such Variable Rate Note for such Interest Period shall be zero); and (3) if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in respect of such Variable Rate Note for such Interest Period (an "Agreed Rate") and, in the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period. 59 A P P E N D I X 6 FORM OF CERTIFICATE OF NO MATERIAL ADVERSE CHANGE To: [Name of Relevant Dealer(s)] [Address] [Date] Dear Sirs, ST ASSEMBLY TEST SERVICES LTD S$500,000,000 Multicurrency Medium Term Note Programme I, [name], [title] of ST Assembly Test Services Ltd (the "Issuer") refer to the Programme Agreement (the "Programme Agreement") dated 10th January, 2002 made between (1) the Issuer, as issuer, (2) Citicorp Investment Bank (Singapore) Limited, as arranger, and (3) Citicorp Investment Bank (Singapore) Limited, as dealer, relating to the above-mentioned Programme and HEREBY CERTIFY on behalf of the Issuer that, to the best of my knowledge and belief after making due enquiries, (i) since the date of the most recent audited consolidated accounts of the Group delivered to the Dealer pursuant to Clause 4(A)(13) of the Programme Agreement, except as disclosed in the Information Memorandum or in any public announcement of the Issuer made prior to the Agreement Date or as disclosed to the Relevant Dealer prior to the Agreement Date, there has been, as at the date hereof, no adverse change, or any development involving a prospective adverse change, in the financial condition, business or results of operations of the Issuer or the Group, taken as a whole, which is material in the context of the issue and offering of the Notes, (ii) the Issuer's representations and warranties set out in the Programme Agreement are true, accurate, correct and complied with in all material respects on the date hereof (as if such representations and warranties were repeated on the date hereof with reference to the circumstances existing at the date hereof taking into account the issue of the Notes) and (iii) the Issuer has performed all of its covenants, agreements or obligations under the Programme Agreement to be performed on or prior to the date hereof (other than any obligations that may be waived by the Relevant Dealers) except to the extent to which failure to do so would not be material in the context of the issue of the Notes. Terms defined and references construed in the Programme Agreement shall bear the same meanings and construction in this Certificate. Yours faithfully, For and on behalf of ST ASSEMBLY TEST SERVICES LTD 60 By: -------------------------------- Name: ------------------------------ Title: ----------------------------- 61 A P P E N D I X 7 SELLING RESTRICTIONS 1. United States: (1) The Notes have not been and will not be registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. Each Dealer represents and agrees that it has offered and sold any Notes, and will offer and sell any Notes (a) as part of their distribution at any time and (b) otherwise until 40 days after the completion of the distribution of all Notes of the Series of which such Notes are a part, as determined and notified by the Issuing and Paying Agent to such Dealer, as provided below, only in accordance with Rule 903 of Regulation S under the Securities Act. Accordingly, each Dealer further represents and agrees that neither it nor its affiliates nor any person acting on its or their behalf have engaged nor will engage in any directed selling efforts with respect to the Notes and it and they have complied and will comply with the offering restrictions requirement of Regulation S under the Securities Act. Each Dealer who has purchased Notes of a Series (or in the case of a sale of a Series of Notes issued to or through more than one Dealer, each of such Dealers as to the Notes of such Series purchased by or through it or, in the case of a syndicated issue, the relevant Lead Manager) shall determine and notify to the Issuing and Paying Agent the completion of the distribution of the Notes of such Series. On the basis of such notification or notifications, the Issuing and Paying Agent will notify such Dealer or, as the case may be, such Lead Manager of the end of the distribution compliance period with respect to such Series. Each Dealer also agrees that, at or prior to confirmation of sale of Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or notice to substantially the following effect:- "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of the Securities as determined and certified by the relevant Dealer, in the case of a non-syndicated issue or the Lead Manager, in the case of a syndicated issue, except in either case in accordance with Regulation S under the Securities Act. Terms used above have the meanings given to them by Regulation S under the Securities Act." Terms used in this sub-paragraph (1) have the meanings given to them by Regulation S under the Securities Act. (2) In addition, under U.S. Treas. Reg. 1.163-5(c)(2)(i)(C) (the "C Rules"), Notes in bearer form must be issued and delivered outside the United States and its possessions in connection with their original issuance. In relation to each such Tranche, each Dealer represents and agrees that it has not offered, sold or delivered, and shall not offer, sell or deliver, directly or indirectly, Notes in bearer form within the United States or 62 its possessions in connection with their original issuance. Further, in connection with its original issuance of Notes in bearer form, it has not communicated, and shall not communicate, directly or indirectly, with a prospective purchaser if either such purchaser or it is within the United States or its possessions or otherwise involve its U.S. office in the offer or sale of Notes in bearer form. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code and regulations thereunder, including the C Rules. (3) In addition, (a) except to the extent permitted under U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D) (the "D Rules"), (i) each Dealer represents that it has not offered or sold, and agrees that it during the distribution compliance period will not offer or sell, Notes to a person who is within the United States or its possessions or to a United States person, and (ii) each Dealer represents that it has not delivered and agrees that it will not deliver within the United States or its possessions Notes that are sold during the distribution compliance period; (b) each Dealer represents and agrees that it has and throughout the distribution compliance period will have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Notes are aware that such Notes may not be offered or sold during the distribution compliance period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules; (c) if the Dealer is a United States person, it represents that it is acquiring the Notes for purposes of resale in connection with their original issuance and if it retains Notes for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D)(6); and (d) with respect to each affiliate that acquires Notes from a Dealer for the purpose of offering or selling such Notes during the distribution compliance period, the Dealer agrees that it will obtain from such affiliate for the Issuer's benefit the representations and agreements contained in sub-paragraphs (a), (b) and (c) above; and (e) each Dealer agrees that it will obtain from any distributor (within the meaning of U.S. Treas. Reg. Section 1.163-5(c)(20(i)(D)(4)(ii)) that purchases any Notes from it pursuant to a written contract with such Dealer (except a distributor that is one of its affiliates or is another Dealer), for the benefit of the relevant Issuer and each other Dealer, the representations contained in, and such distributor' agreement to comply with, the provisions of sub-clauses(a), (b), (c) and (d) of this paragraph insofar as they relate to the D rules, as if such distributor were a Dealer hereunder. 63 Terms used in this sub-paragraph (3) have the meanings given to them by the U.S. Internal Revenue Code and regulations thereunder, including the D Rules. Notes will be issued in accordance with the provisions of the D Rules, unless the Pricing Supplement specifies that Notes will be issued in accordance with the provisions of the C Rules. 2. Singapore: Each Dealer acknowledges that (1) the Information Memorandum has not been registered as a prospectus with the Registrar of Companies and Businesses in Singapore but has been lodged as an information memorandum with the Registrar of Companies and Businesses in Singapore for the purposes of Section 106D of the Companies Act, Chapter 50 of Singapore (the "Companies Act") and (2) the Notes will be issued in Singapore pursuant to exemptions invoked under Section 106C and/or Section 106D of the Companies Act. Accordingly, each Dealer represents and agrees that (a) in relation to Notes which are not listed or quoted on the SGX-ST or a recognised stock exchange within the meaning of the Companies Act, it will not offer or sell such Notes nor will it circulate or distribute the Information Memorandum or any other offering document or material relating to such Notes, directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 106C of the Companies Act, (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 106D of the Companies Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Companies Act and (b) in relation to Notes which are listed or quoted on the SGX-ST or a recognised stock exchange (the "Listed Notes"), until the date falling six months from the date of issue of the relevant Listed Notes (the "Expiry Date"), it will not offer or sell such Listed Notes nor will it circulate or distribute the Information Memorandum or any other offering document or material relating to such Listed Notes, directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 106C of the Companies Act, (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 106D of the Companies Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Companies Act. After the Expiry Date, such Listed Notes may be offered or sold to the public or any member of the public in Singapore provided that they continue to be listed or quoted on the SGX-ST or such recognised stock exchange. 3. General: The selling restrictions herein contained may be modified, varied or amended from time to time by notification from the Issuer to the Dealers and each Dealer undertakes that it will at all times comply with all such selling restrictions. Each Dealer understands that no action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of the Information Memorandum or any other document or any Pricing Supplement, in any country or jurisdiction where action for that purpose is required. Each Dealer will comply with all laws, regulations and directives in each jurisdiction in which it purchases, offers, sells or delivers Notes or any interest therein or rights in respect thereof or has in its possession or distributes, any other document or any Pricing Supplement. No Dealer will directly or indirectly offer, sell or deliver Notes or any interest therein or rights in respect thereof or distribute or publish any prospectus, circular, 64 advertisement or other offering material (including, without limitation, the Information Memorandum) in any country or jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations, and all offers, sales and deliveries of Notes or any interest therein or rights in respect thereof by it will be made on the foregoing terms. In connection with the offer, sale or delivery by any Dealer of any Notes or any interest therein or rights in respect thereof, the Issuer shall not have responsibility for, and each Dealer will obtain, any consent, approval or permission required in and each Dealer will comply with the laws and regulations in force in, any jurisdiction to which it is subject or from which it may make any such offer or sale. 65 A P P E N D I X 8 FORM OF DEALER ACCESSION LETTER To: ST Assembly Test Services Ltd, 5, Yishun Street, 23, Singapore 768442. Attention: [ ] [Date] Dear Sirs, ST ASSEMBLY TEST SERVICES LTD (the "Issuer") S$500,000,000 Multicurrency Medium Term Note Programme We refer to the Programme Agreement dated 10th January, 2002 entered into in respect of the above S$500,000,000 Multicurrency Medium Term Note Programme (the "Programme") and made between the Issuer, the Arranger and the Dealers party thereto (which agreement, as amended, varied or supplemented from time to time, is herein referred to as the "Agreement"). Terms defined in the Agreement shall have the same meaning in this letter. Conditions Precedent We confirm that we are in receipt of the following documents:- (a) a copy of the Agreement; (b) a copy of all documents referred to in the Initial Documentation List [as we have requested] (and any such document not received by us by the date of this letter shall be deemed to have been waived by us); (c) a copy of the most recent Information Memorandum; and (d) a side letter in a form approved by ourselves from the legal advisers referred to in paragraph 5 of the Initial Documentation List addressed to ourselves and giving us the full benefit of the existing legal opinions (except where any such opinion is expressed to be given in favour of all future Dealers), and have found them to our satisfaction. For the purpose of the Agreement, our notice details are as follows:- (insert name, address, telephone, fax and attention). 66 We confirm our agreement with you that, as from [date from which appointment of Programme Dealer is to take effect/date on or prior to the Agreement Date of the relevant Tranche], we have become a [Programme] Dealer [in respect of [describe Tranche and Series]]* in accordance with the terms of Clause 14(A) of the Agreement. This letter is governed by, and shall be construed in accordance with, the laws of Singapore. Please confirm your acceptance of the terms of this letter by countersigning it below and returning an original to us. Yours faithfully, For and on behalf of [NAME OF NEW DEALER] By: -------------------------------- Name: ------------------------------ Title: ----------------------------- - -------------------------------------------------------------------------------- To: [Name of New Dealer] We confirm the terms of the above letter. Yours faithfully, For and on behalf of ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Name: ------------------------------ Title: ----------------------------- 67 cc: Citicorp Investment Bank (Singapore) Limited (as Issuing and Paying Agent) cc: British and Malayan Trustees Limited (as Trustee) * Not applicable to Programme Dealers. NB. The text of this letter may be included in the confirmation telex, fax or letter sent from a Dealer-for-a-Day for a Non-Syndicated Issue to the Issuer. 68 A P P E N D I X 9 FORM OF LETTER FROM ISSUER ON AN INCREASE IN THE PROGRAMME LIMIT To: The Arranger, the Issuing and Paying Agent, the Agent Bank, the Trustee and the Programme Dealers (as those expressions are defined in the Agreement defined below) [Date] Dear Sirs, ST ASSEMBLY TEST SERVICES LTD (the "Issuer") S$500,000,000 Multicurrency Medium Term Note Programme We refer to the Programme Agreement dated 10th January, 2002 entered into in respect of the above S$500,000,000 Multicurrency Medium Term Note Programme (the "Programme") and made between the Issuer, the Arranger and the Dealers party thereto (which agreement, as amended, varied or supplemented from time to time, is herein referred to as the "Agreement"). Terms defined in the Agreement shall have the same meaning in this letter. We hereby notify you, pursuant to Clause 16 of the Agreement, that the Programme Limit will be increased to S$[ ] (or its equivalent in other currencies) from [date]. We would like to draw your attention to Clause 16(A) of the Agreement, under which increase shall (subject as set out below) take effect from [date], whereupon all references in the Contracts and the Procedures Memorandum will be deemed amended accordingly. We understand that this increase is subject to the satisfaction of the conditions set out in Clause 16(B) of the Agreement. Yours faithfully, For and on behalf of ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Name: ------------------------------ Title: ----------------------------- 69 I N W I T N E S S W H E R E O F this Agreement has been entered into on the date stated at the beginning. The Issuer ST ASSEMBLY TEST SERVICES LTD By: sd. HARRY H DAVOODY Witness: sd. LEONG FANG YUN --------------------------------------- --------------------------- Name: HARRY H DAVOODY Name: LEONG FANG YUN ------------------------------------- ------------------------------ Title: DIRECTOR Title: SOLICITOR ------------------------------------ -----------------------------
The Arranger CITICORP INVESTMENT BANK (SINGAPORE) LIMITED By: sd. RONALD LOW --------------------------------------- Name: RONALD LOW ------------------------------------- Title: MANAGING DIRECTOR ------------------------------------ The Dealer CITICORP INVESTMENT BANK (SINGAPORE) LIMITED By: sd. RONALD LOW --------------------------------------- Name: RONALD LOW ------------------------------------- Title: MANAGING DIRECTOR ------------------------------------ 70 EX-4.7 5 u91877ex4-7.txt TRUST DEED DATED JANUARY 10,2002 EXHIBIT 4.7 CONFORMED COPY DATED 10TH JANUARY, 2002 ST ASSEMBLY TEST SERVICES LTD - AND - BRITISH AND MALAYAN TRUSTEES LIMITED ---------------------------------------------------------- TRUST DEED RELATING TO ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME ---------------------------------------------------------- [ALLEN & GLEDHILL LOGO] 36 ROBINSON ROAD #18-01 CITY HOUSE SINGAPORE 068877 C O N T E N T S
CLAUSE HEADING PAGE - ------ ------- ---- 1. INTERPRETATION 1 2. AMOUNT AND STATUS OF NOTES; COVENANT TO REPAY AND PAY INTEREST 9 3. FORM OF NOTES AND COUPONS 11 4. STAMP DUTIES AND TAXES 12 5. COVENANT TO OBSERVE PROVISIONS OF NOTES AND TRUST DEED 12 6. ISSUE OF SHARES 12 7. SUBSIDIARY AS GUARANTOR 13 8. POWER TO INSTITUTE PROCEEDINGS 13 9. PROOF OF DEFAULT 13 10. APPLICATION OF MONEYS RECEIVED BY TRUSTEE 14 11. PAYMENT 15 12. DEPOSIT OF UNCLAIMED REDEMPTION MONEYS 15 13. FORFEITURE OF UNCLAIMED REDEMPTION MONEYS 16 14. REPRESENTATIONS AND WARRANTIES 16 15. GENERAL COVENANTS 17 16. REMUNERATION OF TRUSTEE 25 17. ISSUING AND PAYING AGENT 26 18. CANCELLATION OF NOTES AND COUPONS; RECORD OF CANCELLATION 26 19. NOTEHOLDERS TO BE TREATED AS HOLDING ALL COUPONS 27
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CLAUSE HEADING PAGE - ------ ------- ---- 20. PROVISIONS SUPPLEMENTAL TO THE TRUSTEES ACT, CHAPTER 337 OF SINGAPORE 27 21. WAIVER 31 22. COMPETENCE OF A MAJORITY OF TRUSTEES 31 23. INDEMNITY OF TRUSTEE 32 24. AMOUNTS DUE TO TRUSTEE 32 25. ASSUMPTION OF PERFORMANCE OF COVENANTS 32 26. TRUSTEE NOT PRECLUDED FROM ENTERING INTO CONTRACTS 33 27. CONSENT BY TRUSTEE 33 28. MODIFICATIONS 33 29. DELEGATION BY TRUSTEE 34 30. APPOINTMENT OF TRUSTEE AS ATTORNEY 34 31. APPOINTMENT, RETIREMENT AND REMOVAL OF TRUSTEE 35 32. NOTIFICATION TO THE STOCK EXCHANGE 36 33. POWERS OF TRUSTEE TO BE ADDITIONAL 36 34. CURRENCY INDEMNITY 36 35. COMMUNICATIONS 37 36. PARTIAL INVALIDITY 37 37. GOVERNING LAW 37 SCHEDULE 1 PART I - FORM OF DEFINITIVE NOTE 38
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CLAUSE HEADING PAGE - ------ ------- ---- PART II - TERMS AND CONDITIONS OF THE NOTES 41 PART III - FORM OF COUPON FOR FIXED RATE NOTES AND HYBRID NOTES 72 PART IV - FORM OF COUPON FOR FLOATING RATE NOTES, VARIABLE RATE NOTES AND HYBRID NOTES 73 SCHEDULE 2 - FORM OF TEMPORARY GLOBAL NOTE 75 SCHEDULE 3 - FORM OF PERMANENT GLOBAL NOTE 89 SCHEDULE 4 - PROVISIONS FOR MEETINGS OF NOTEHOLDERS 101
T H I S T R U S T D E E D is made on 10th January, 2002 B E T W E E N:- (1) ST ASSEMBLY TEST SERVICES LTD (the "Issuer"), a company incorporated in Singapore and having its registered office at 5, Yishun Street 23, Singapore 768442; and (2) BRITISH AND MALAYAN TRUSTEES LIMITED (the "Trustee", which expression shall, wherever the context so admits, include all persons for the time being the trustee or trustees of this Trust Deed), a company incorporated in Singapore and having its registered office at 17, Phillip Street, #08-00, Grand Building, Singapore 048695. W H E R E A S:- (A) The Issuer has entered into the Programme Agreement (as defined below) pursuant to which the Issuer may issue from time to time medium term notes in an aggregate principal amount outstanding at any time not exceeding the Programme Limit (as defined below). (B) Each issue of Notes (as defined below) will initially be represented either (1) by a Temporary Global Note (as defined below) exchangeable for Definitive Notes (as defined below) or for a Permanent Global Note (as defined below) which will be exchangeable as described therein for Definitive Notes or (2) by a Permanent Global Note which will be exchangeable as described therein for Definitive Notes. (C) The Trustee is duly registered as a trust company under the Trust Companies Act, Chapter 336 of Singapore and has agreed to act as trustee of this Trust Deed for the benefit of the Noteholders upon the terms and subject to the conditions hereinafter contained. N O W T H I S T R U S T D E E D W I T N E S S E S A N D I T I S H E R E B Y A G R E E D A N D D E C L A R E D as follows:- 1. INTERPRETATION (A) In this Trust Deed, unless there is something in the subject or context inconsistent therewith:- "Agency Agreement" means the Agency Agreement dated 10th January, 2002 between (1) the Issuer, (2) Citicorp Investment Bank (Singapore) Limited, as issuing and paying agent, (3) Citicorp Investment Bank (Singapore) Limited, as agent bank, and (4) the Trustee, as amended, varied or supplemented from time to time; "Agent Bank" means Citicorp Investment Bank (Singapore) Limited at its office at 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653, or at such other or further offices as may from time to time be designated by the Issuer, approved in advance in writing by the Trustee and notified to the Noteholders in accordance with Condition 15, or such other or 1 further institutions at such offices as may from time to time be appointed by the Issuer as agent bank for the Notes and the Coupons and whose appointment shall be approved and notified to the Noteholders as aforesaid; "Agents" means the Issuing and Paying Agent and the Agent Bank or either of them and shall include such other Agent or Agents as may be appointed from time to time under the Agency Agreement; "Auditors" means the auditors for the time being of the Issuer or, if there shall be joint auditors of the Issuer, any one or more of such joint auditors or, in the event of their being unable or unwilling to carry out any action requested of them pursuant to the provisions of this Trust Deed, such other auditors as may be nominated by the Issuer in consultation with the Trustee for the purpose or, in default of such nomination or approval, nominated by the Trustee in consultation with the Issuer; "business day" means a day (other than Saturday or Sunday) on which commercial banks are open for business in Singapore; "Conditions" means, in relation to the Notes of any Series, the terms and conditions applicable thereto, which shall be substantially in the form set out in Part II of Schedule 1, as modified, with respect to any Notes represented by a Global Note, by the provisions of such Global Note, shall incorporate any additional provisions forming part of such terms and conditions set out in the Pricing Supplement(s) relating to the Notes of such Series and shall be endorsed on the Definitive Notes subject to amendment and completion as referred to in the first paragraph appearing after the heading "Terms and Conditions of the Notes" as set out in Part II of Schedule 1, and any reference to a particularly numbered Condition shall be construed accordingly; "Coupon" means an interest coupon appertaining to an interest bearing Definitive Note; "Couponholders" has the meaning ascribed to it in the Conditions; "Dealers" means the dealers for the time being under the Programme Agreement; "Deed of Covenant" means the deed of covenant dated 10th January, 2002 executed by the Issuer by way of deed poll in relation to the Notes (which are represented by Global Notes and which are deposited with the Depository), as amended, varied or supplemented from time to time; "Definitive Note" means a definitive Note in bearer form, being substantially in the form set out in Part I of Schedule 1 and having, where appropriate, Coupons attached on issue; "Depository" means The Central Depository (Pte) Limited; 2 "Depository Agreement" means the depository agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, and (2) the Depository, as depository, as amended, varied or supplemented from time to time; "Event of Default" means any of the events specified in Condition 9 to be an event of default; "Extraordinary Resolution" has the meaning set out in Schedule 4; "Fixed Rate Notes" means Notes which are to bear interest on the basis of a fixed rate (in accordance with Condition 4(I)(a)); "Floating Rate Notes" means Notes which are to bear interest on the basis of a floating rate (in accordance with Condition 4(II)(b)); "Global Note" means a global Note representing Notes of one or more Tranches of the same Series, being a Temporary Global Note and/or, as the context may require, a Permanent Global Note, in each case without Coupons; "Group" means the Issuer and its subsidiaries and "member of the Group" shall be construed accordingly; "Hybrid Notes" means Notes which are to bear interest on the basis of a fixed rate (in accordance with Condition 4(III)(b)) and a floating rate (in accordance with Condition 4(III)(c)); "Interest Amounts" has the meaning ascribed to it in Condition 4(II)(d); "Interest Period" has the meaning ascribed to it in Condition 4(II)(a); "Issue Date" has the meaning ascribed to it in the Programme Agreement; "Issue Documents" means this Trust Deed, the Agency Agreement, the Depository Agreement and the Deed of Covenant; "Issuing and Paying Agent" means Citicorp Investment Bank (Singapore) Limited at its office at 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653, or at such other or further offices as may from time to time be designated by the Issuer, approved in advance in writing by the Trustee and notified to the Noteholders in accordance with Condition 15, or such other or further institutions at such offices as may from time to time be appointed by the Issuer as issuing and paying agent for the Notes and the Coupons and whose appointment shall be approved and notified to the Noteholders as aforesaid; "Noteholders" has the meaning ascribed to it in the Conditions; 3 "Notes" means multicurrency medium term notes of the Issuer to be issued pursuant to the Programme Agreement and constituted by this Trust Deed (and shall, where the context so admits, include the Global Notes); "outstanding" means, in relation to the Notes of any Series, all the Notes of such Series issued other than (a) those which have been redeemed in accordance with the Conditions, (b) those in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys in respect thereof (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under the Conditions after such date) have been duly paid to the Issuing and Paying Agent as provided in the Agency Agreement and remains available for payment against surrender of the relevant Notes and/or, as the case may be, Coupons, (c) those which have been purchased in accordance with Conditions 5(b), 5(c) and 5(g) and cancelled, (d) those which have become void under Condition 8, (e) those mutilated or defaced Notes which have been surrendered in exchange for replacement Notes pursuant to Condition 12, (f) (for the purpose only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 12 and (g) any Temporary Global Note to the extent that it shall have been exchanged for one or more Definitive Notes or a Permanent Global Note pursuant to its provisions and any Permanent Global Note to the extent that it shall have been exchanged for one or more Definitive Notes, in either case pursuant to its provisions; provided that for the purposes of (i) ascertaining the right to attend and vote at any meeting of the Noteholders, (ii) the determination of how many Notes are outstanding for the purposes of Schedule 4, (iii) the exercise of any discretion, power or authority which the Trustee is required, expressly or impliedly to exercise in or by reference to the interests of the Noteholders and (iv) the certification (where relevant) by the Trustee as to whether an Event of Default is in its opinion materially prejudicial to the interests of the Noteholders, those Notes which are beneficially held by, or are held on behalf of, the Issuer or any of its subsidiaries shall (unless and until ceasing to be so held) be deemed not to remain outstanding; "Permanent Global Note" means a Global Note representing Notes of one or more Tranches of the same Series, either on issue or upon exchange of interests in a Temporary Global Note, being substantially in the form set out in Schedule 3; "Potential Event of Default" means an event which with the giving of notice and/or lapse of time and/or the issuing of a certificate and/or the fulfilment of any other requirement provided for in Condition 9 would become an Event of Default; "Pricing Supplement" means, in relation to any Tranche, a pricing supplement specifying the relevant issue details in relation to such Tranche, substantially in the form of Appendix 2 to the Programme Agreement; 4 "Principal Subsidiaries" has the meaning ascribed to it in Condition 9; "Programme Agreement" means the Programme Agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, (2) Citicorp Investment Bank (Singapore) Limited, as arranger, and (3) Citicorp Investment Bank (Singapore) Limited, as dealer, as amended, varied or supplemented from time to time; "Programme Limit" means, subject to the Programme Agreement, S$500,000,000 or its equivalent in other currencies; "Rate of Interest" has the meaning ascribed to it in Condition 4; "Reference Bank" means any person named as such in the Conditions or any successor Reference Bank; "Relevant Date" has the meaning ascribed to it in Condition 7; "repay" shall include "redeem" and vice versa and "repaid", "repayable", "repayment", "redeemed", "redeemable" and "redemption" shall be construed accordingly; "Series" means (a) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (i) expressed to be consolidated and forming a single series and (ii) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (b) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest; "SGX-ST" means the Singapore Exchange Securities Trading Limited; "Stock Exchange" means the SGX-ST and includes any other stock exchange on which the Notes are listed and which is for the time being approved for the purposes of this Trust Deed by the Trustee; "subsidiary" means any company which is for the time being a subsidiary (within the meaning of Section 5 of the Companies Act, Chapter 50 of Singapore) of the Issuer; "Temporary Global Note" means a Global Note representing Notes of one or more Tranches of the same Series on issue, being substantially in the form set out in Schedule 2; "this Trust Deed" means this Trust Deed and the Schedules (as from time to time modified in accordance with the provisions herein contained) and includes any deed or other document executed in accordance with the provisions hereof (as from time to time modified as aforesaid) and expressed to be supplemental hereto; 5 "Tranche" means Notes which are identical in all respects (including as to listing); "trust corporation" means a trustee corporation as defined in Section 4(1) of the Companies Act, Chapter 50 of Singapore; "Variable Rate Notes" means Notes which are to bear interest on the basis of a variable rate (in accordance with Condition 4(II)(c)); words denoting the singular number only shall include the plural number and vice versa; words denoting the neuter or masculine gender only shall include the feminine gender and the masculine or neuter gender, as the case may be; and words denoting persons only shall include firms and corporations. (B) Unless otherwise indicated, in this Trust Deed, references to:- (a) any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such re-enactment; (b) Schedules, Clauses and paragraphs shall be construed as references to, respectively, the Schedules to and the Clauses and paragraphs of this Trust Deed; (c) "Singapore Dollars" and "S$" shall be construed as references to the lawful currency for the time being of Singapore; (d) "US Dollars" and "US$" shall be construed as references to the lawful currency of the time being of the United States of America; (e) costs, charges, remuneration or expenses shall be deemed to include, in addition, goods and services, value added and other duties or tax (other than income tax) charged or chargeable in respect thereof; (f) any action, remedy or method of judicial proceeding for the enforcement of rights of creditors shall be deemed to include, in respect of any jurisdiction other than Singapore, references to such action, remedy or method of judicial proceeding for the enforcement of rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate to such action, remedy or method of judicial proceeding described or referred to in this Trust Deed; (g) principal and/or premium and/or interest and/or Redemption Amounts in respect of the Notes or to any moneys payable by the Issuer under 6 this Trust Deed or the Notes shall, unless the context otherwise requires, be construed in accordance with Condition 7; and (h) the Depository shall, wherever the context so permits, be deemed to include references to any additional or alternative clearing system approved by the Issuer, the Issuing and Paying Agent and the Trustee. (C) Except to the extent that the context requires otherwise, any reference in this Trust Deed to:- an "Act of Parliament" or any Section of, Schedule to or other provision of an Act of Parliament shall be construed, at any particular time, as including a reference to any modification, extension or re-enactment thereof then in force and all instruments, orders and regulations then in force and made under or deriving validity from the relevant Act or provision; an "agency" of a state includes any agency, authority, central bank, department, government, legislature, minister, ministry, official or public or statutory person (whether autonomous or not) of, or of the government of, that state; the "assets" of any person means all or any part of its business, undertaking, property, assets, revenues (including any right to receive revenues) and uncalled capital; "borrowed money" includes any indebtedness (a) for or in respect of money borrowed or raised (whether or not for cash), by whatever means (including acceptances, deposits, discounting, factoring, finance leases, hire purchase, sale-and-leaseback, sale-and-repurchase and any form of "off-balance sheet" financing) or (b) for the deferred purchase price of assets or services (other than goods or services obtained on normal commercial terms in the ordinary course of trading); "consent" also includes an approval, authorisation, exemption, filing, licence, order, permission, recording or registration (and references to obtaining consents shall be construed accordingly); a "directive" includes any present or future directive, regulation, requirement, rule or credit restraint programme of any agency of any state (but, if not having the force of law, only if compliance with the directive is in accordance with the general practice of persons to whom the directive is intended to apply); "disposal" includes any sale, assignment, exchange, transfer, concession, loan, lease, surrender of lease, licence, reservation, waiver, compromise, release of security, dealing with or the granting of any option or right or interest whatsoever or any agreement for any of the same and "dispose" means to make a disposal, and "acquisition" and "acquire" shall be construed mutatis mutandis; 7 a "guarantee" also includes an indemnity, and any other obligation (whatever called) of any person to pay, purchase, provide funds (whether by the advance of money, the purchase of or subscription for shares or other securities, the purchase of assets or services, or otherwise) for the payment of, indemnify against the consequences of default in the payment of, or otherwise be responsible for, any indebtedness of any other person (and "guaranteed" and "guarantor" shall be construed accordingly); "indebtedness" includes any obligation (whether present or future, actual or contingent, secured or unsecured, as principal, surety or otherwise) for the payment or repayment of money; a "law" includes common or customary law and any constitution, decree, judgment, legislation, order, ordinance, regulation, statute, treaty or other legislative measure, in each case of any jurisdiction whatsoever (and "lawful" and "unlawful" shall be construed accordingly); something having a "material adverse effect" on the Issuer is to it having a material adverse effect (1) on its financial condition or business or on the consolidated financial condition or business of it and its subsidiaries or (2) on its ability to perform or comply with its payment or other material obligations under any of the Issue Documents or the Notes; a "month" means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it commences or, where there is no date in the next calendar month numerically corresponding as aforesaid, the last day of such calendar month, and "months" and "monthly" shall be construed accordingly; any "obligation" of any person under this Trust Deed or any other agreement or document shall be construed as a reference to an obligation expressed to be assumed by or imposed on it under this Trust Deed or, as the case may be, that other agreement or document (and "due", "owing", "payable" and "receivable" shall be similarly construed); a "person" includes any individual, company, corporation, firm, partnership, joint venture, association, organisation, trust, state or agency of a state (in each case, whether or not having separate legal personality); "related corporation" has the meaning ascribed to it in section 6 of the Companies Act, Chapter 50 of Singapore; "security" includes any mortgage, pledge, lien, hypothecation, security interest or other charge or encumbrance and any other agreement or arrangement having substantially the same economic effect (including any "hold-back" or "flawed asset" arrangement) (and "secured" shall be construed accordingly); 8 "tax(es)" includes any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; a "time of the day" is to Singapore time unless otherwise stated; and the "winding-up" of a person also includes the amalgamation, reconstruction, reorganisation, administration, judicial management, dissolution, liquidation, merger or consolidation of that person, and any equivalent or analogous procedure under the law of any jurisdiction in which that person is incorporated, domiciled or resident or carries on business or has assets. (D) Unless the context otherwise requires, words or expressions contained in this Trust Deed shall bear the same meanings as in the Companies Act, Chapter 50 of Singapore. (E) The headings to Clauses and Conditions are inserted for convenience only and shall not affect the construction of this Trust Deed, the Notes or the Coupons. (F) Terms defined in the Conditions shall have the same meanings in this Trust Deed, except where the context requires otherwise or where a different meaning is attributed to the relevant term in this Trust Deed. (G) A person who is not a party to this Trust Deed has no right under the Contracts (Rights of Third Parties) Act 2001 to enforce any term of this Trust Deed. 2. AMOUNT AND STATUS OF NOTES; COVENANT TO REPAY AND PAY INTEREST (A) The Issuer may from time to time issue Notes in Tranches of one or more Series on a continuous basis in accordance with the Programme Agreement, the aggregate principal amount of the Notes outstanding at any time not exceeding the Programme Limit. Upon the issue by the Issuer of any Notes expressed to be constituted by this Trust Deed, such Notes shall forthwith be constituted by this Trust Deed without any further formality. As soon as possible after the issue of any Tranche, the Issuer shall give written notice or procure that such written notice is given to the Trustee of the issue of such Tranche, specifying the details included in the relevant Pricing Supplement. (B) The Issuer hereby covenants with the Trustee that the Notes and the Coupons will constitute direct, unconditional and unsecured obligations of the Issuer. The Notes and the Coupons will rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law or this Trust Deed) of the Issuer from time to time outstanding. (C) On any date when the Notes or any of them become due to be redeemed in accordance with the Conditions or any of the provisions of this Trust Deed, the Issuer will unconditionally pay or procure to be paid to or to the order of or for the account of the Trustee in the currency in which the Notes are denominated and in immediately available 9 and freely transferable funds or same day funds, the redemption moneys of the Notes of the relevant Series becoming due for redemption on that date and shall (subject to the provisions of the Conditions), until such payment is duly made and (in the case of payment made after the due date or pursuant to Clause 8) notice thereof is duly given to the Noteholders in accordance with Condition 15, with effect from the respective dates of issue of the Notes of each Series unconditionally pay or procure to be paid to or to the order of or for the account of the Trustee as aforesaid interest on the principal amount of each Note of each Series (including, without limitation, default interest) at the relevant rates (as well after as before any judgment or other order of a court of competent jurisdiction) calculated from time to time in accordance with, for the periods and on the dates provided for in, the Conditions; provided that every payment of principal or interest in respect of the Notes of each Series in accordance with the Conditions made to the order of the Issuing and Paying Agent in the manner provided in the Agency Agreement shall be in satisfaction pro tanto of the covenant by the Issuer in this Clause contained except to the extent that there is default in the subsequent payment thereof to the Noteholders or, as the case may be, the Couponholders in accordance with the Conditions. The Trustee shall hold the benefit of this covenant on trust for the Noteholders and Couponholders of the relevant Series. (D) At any time after the occurrence of an Event of Default or at any time with the written consent of the Issuer, the Trustee may:- (a) by notice in writing to the Issuer and the Issuing and Paying Agent require the Issuing and Paying Agent pursuant to the Agency Agreement:- (i) to act thereafter as the Issuing and Paying Agent of the Trustee under this Trust Deed and the Notes of such Series on the terms provided in the Agency Agreement (with consequential amendments as necessary and except that the Trustee's liability under the Agency Agreement for the indemnification, remuneration and all other expenses of the Issuing and Paying Agent shall be limited to the amounts for the time being held by the Trustee on the terms of this Trust Deed) and thereafter to hold all Notes and Coupons and all moneys, documents and records held by it in respect of the Notes and Coupons on behalf of the Trustee; or (ii) to deliver up all Notes and Coupons and all sums, documents and records held by it in respect of the Notes and Coupons to the Trustee or as the Trustee shall direct in such notice, provided that such notice shall be deemed not to apply to any documents or records which the Issuing and Paying Agent is obliged not to release by any law or regulation; and (b) by notice in writing to the Issuer require it to make all subsequent payments in respect of the Notes and Coupons to or to the order of the Trustee and not to the Issuing and Paying Agent; with effect from the issue of any such notice to the Issuer and until such notice is 10 withdrawn, the proviso to sub-Clause (C) of this Clause shall cease to have effect. (E) If any Floating Rate Note, Variable Rate Note or Hybrid Note becomes due and payable under the Conditions, the Rate of Interest and the Interest Amounts payable in respect of such Note shall continue to be calculated by the Agent Bank in accordance with the Conditions (with consequential amendments as necessary) except that such Rate of Interest and the Interest Amounts payable need not be published unless the Trustee otherwise requires. The first period in respect of which interest shall be so calculated shall commence on the expiry of the Interest Period during which such Notes become so repayable. (F) Each Series shall form a separate series of Notes and accordingly, unless for any purpose the Trustee shall reasonably otherwise determine, the provisions of sub-Clauses (C), (D) and (E) above of this Clause and of Clauses 3 to 33 (both inclusive) and (subject as mentioned therein) Schedule 4 shall apply mutatis mutandis separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions "Notes", "Noteholders", "Coupons" and "Couponholders", together with all other terms that relate to Notes or their Conditions, shall be construed as referring to those of the particular Series in question and not of all Series unless expressly as provided, so that each Series shall be constituted by a separate trust pursuant to sub-Clause (C) above and that, unless expressly provided, events affecting one Series shall not affect any other. (G) For the purposes of any limitation on liabilities pursuant to this Trust Deed:- (a) any advances (which shall exclude trade balances in the ordinary course of business) made by the Issuer or any guarantor company (if any) to any of their respective holding companies or their respective holding companies' subsidiaries (if any); or (b) any investment by the Issuer or any guarantor company (if any) in the shares of their respective holding companies' subsidiaries (if any), shall not be brought into account as an asset unless the company to or in which such advance or investment is made is a guarantor company and covenants with the Trustee to limit itself to the same limitation of liabilities as applies by virtue of this Trust Deed to the Issuer. 3. FORM OF NOTES AND COUPONS (A) The Notes of each Series will initially be represented by a Temporary Global Note or a Permanent Global Note relating to such Series. Interests in the Temporary Global Note relating to such Series will be exchangeable for Definitive Notes or interests in the Global Note relating to such Series as set out in the Temporary Global Note relating to such Series. Interests in the Permanent Global Note relating to such Series will be exchangeable for Definitive Notes relating to such Series as set out in the Permanent Global Note relating to such Series. 11 (B) The Definitive Notes of each Series and the Coupons will be security printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Schedule 1. The Notes will be endorsed with the Conditions. (C) Each Temporary Global Note and Permanent Global Note shall be affixed with the Common Seal of the Issuer and signed manually by two Directors or a Director and the Secretary of the Issuer and shall be authenticated by or on behalf of the Issuing and Paying Agent. Each Definitive Note and Coupon shall be signed manually or in facsimile by a duly authorised officer of the Issuer and shall be authenticated by or on behalf of the Issuing and Paying Agent. The Issuer may use the facsimile signature of any person who shall have been a Director, the Secretary or a duly authorised officer (as the case may be) of the Issuer at the date hereof notwithstanding the fact that any such person shall have ceased to hold such office or, as the case may be, be so authorised at the date of delivery of any Note or Coupon and Notes and Coupons so delivered incorporating such signature shall (provided that they have been duly authenticated) be valid and binding obligations of the Issuer. 4. STAMP DUTIES AND TAXES The Issuer will pay all stamp duties and goods and services, value added or other similar duties or taxes (if any) payable in Singapore on the issue of the Notes and the Coupons, the initial delivery of the Global Notes and the execution of the Issue Documents. If the Notes shall become due and payable, the Trustee (or any Noteholder or Couponholder, where permitted under this Trust Deed so to do) shall take any proceedings to enforce the obligations of the Issuer under the Issue Documents or under the Notes or the Coupons or any of them and for the purposes of such proceedings, any of the Issue Documents or any Notes or Coupons are taken into any jurisdiction and any stamp duties or goods and services, value added or other similar duties or taxes become payable thereon or in respect thereof in any such jurisdiction, the Issuer will pay (or reimburse the person making a valid payment of) such stamp duties or goods and services, value added or other duties or taxes (including penalties or interest, if any). 5. COVENANT TO OBSERVE PROVISIONS OF NOTES AND TRUST DEED The Issuer hereby covenants with the Trustee that it will comply with those provisions of this Trust Deed which are expressed to be binding on it and that it will perform and observe the same and comply with and procure compliance with (a) the terms of each of the Notes in accordance with the Conditions and (b) the terms of the Issue Documents. The Notes and Coupons shall be held subject to and with the benefit of the provisions contained in this Trust Deed, all of which shall be binding upon the Issuer, the Noteholders and the Couponholders and all persons claiming through or under them respectively. The Trustee shall itself be entitled to enforce the obligations of the Issuer under the Notes and Conditions as if the same were set out and contained in this Trust Deed which shall be read and construed as one document with the Notes. 6. ISSUE OF SHARES 12 The Issuer reserves the right to issue shares or rights to subscribe for shares to its shareholders or otherwise, either for cash or as a bonus distribution, and none of the Noteholders shall have any right to participate in such issue unless otherwise resolved by the Issuer in general meeting. 7. SUBSIDIARY AS GUARANTOR The Issuer expressly covenants with the Trustee that the Issuer will, at the request in writing of the Trustee in relation to Notes which are listed on the SGX-ST but subject to any governmental or statutory restrictions, regulations, restraints or other control, cause any wholly-owned subsidiary (formed or acquired before or after the date of this Trust Deed) to become a guarantor for the Issuer guaranteeing the due and punctual payment by the Issuer (whether at maturity, redemption or otherwise) of the principal, interest and other moneys from time to time payable under or in respect of the Notes or this Trust Deed. 8. POWER TO INSTITUTE PROCEEDINGS (A) (a) At any time after the Notes shall have become due and repayable, the Trustee may, without further notice to the Issuer or the Noteholders or Couponholders, institute such proceedings against the Issuer as it may think fit to enforce repayment of the Notes and payment of accrued interest. (b) At any time after an Event of Default has occurred or after the Notes shall have become due and repayable, the Trustee may, without further notice to the Issuer or the Noteholders or Couponholders, institute such proceedings against the Issuer as it may think fit to enforce the provisions of the Issue Documents (other than those provisions relating to the repayment of the Notes and payment of accrued interest). (B) The Trustee shall not be bound to take any steps (including, without limitation, giving notice that the Notes are due and repayable in accordance with Condition 9) to enforce the performance by the Issuer of any of the provisions of the Issue Documents or of the Notes or the Coupons unless (a) it shall have been so requested in writing by the holders of not less than 30 per cent. in principal amount of the Notes outstanding or so directed by an Extraordinary Resolution and (b) it shall have been indemnified to its satisfaction by the Noteholders against all actions, proceedings, claims, demands and liabilities to which it may thereby become liable and all costs, charges, damages and expenses which may be incurred by it in connection therewith. (C) Only the Trustee may pursue the remedies available under the general law or under the Issue Documents, the Notes or the Coupons to enforce the rights of the Noteholders or Couponholders or the provisions of the Issue Documents, the Notes or the Coupons. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer to enforce the performance of any of the provisions of the Issue Documents, the Notes or the Coupons unless the Trustee, having become bound as aforesaid to take proceedings, fails or neglects to do so within a reasonable period and such failure or neglect is continuing. 9. PROOF OF DEFAULT 13 Should the Trustee (or any Noteholder or Couponholder, where entitled under this Trust Deed to do so) take legal proceedings against the Issuer to enforce any obligation under this Trust Deed or under the Notes or the Coupons:- (a) proof therein that as regards any specified Note default has been made in paying any principal due to the relative Noteholder shall (unless the contrary be proved) be sufficient evidence that like default has been made as regards all other Notes which are then due and repayable; and (b) proof therein that as regards any specified Coupon default has been made in paying any interest due to the relative Couponholder shall (unless the contrary be proved) be sufficient evidence that like default has been made as regards all other Coupons which are then due and payable. Except as herein otherwise expressly provided, the Trustee shall be and is hereby authorised to assume without enquiry, and it is hereby declared to be the intention of the Trustee that it shall assume without enquiry, in the absence of actual knowledge or express notice to the contrary, that the Issuer is duly performing and observing all the covenants and provisions contained in this Trust Deed and on its part to be performed and observed and that no Event of Default and Potential Event of Default shall have occurred. 10. APPLICATION OF MONEYS RECEIVED BY TRUSTEE (A) The Trustee shall hold the moneys arising from any exercise of the powers contained in this Trust Deed and the Trustee shall hold all moneys received by it under this Trust Deed after the Notes shall have become due and payable upon trust (subject to sub-Clause (B) below) to apply the same:- (a) first, in paying or providing for the payment or satisfaction of all costs, charges, expenses (including legal expenses), losses and liabilities properly incurred in or about the exercise of such powers or otherwise in relation to this Trust Deed and payments made by the Trustee under any of the provisions contained in this Trust Deed and of all remuneration payable to the Trustee under this Trust Deed with interest thereon as hereinafter provided; (b) secondly, in or towards payment pari passu and rateably of all arrears of interest remaining unpaid on the Notes; (c) thirdly, in or towards payment pari passu and rateably of all principal moneys due in respect of the Notes; and (d) fourthly, in payment of the balance (if any) to the Issuer (without prejudice to any questions as to how such moneys should be dealt with as between the Issuer and any other person or persons for the time being entitled thereto in priority to the Issuer). 14 Without prejudice to the provisions of this Clause, if the Trustee shall hold any moneys which represent principal or interest in respect of Notes or Coupons which have become void under Condition 8, the Trustee shall (subject to paying or providing for the payment or satisfaction of the said costs, charges, expenses and liabilities of, and payments by, the Trustee referred to above and the payment of the remuneration of the Trustee (together with interest thereon referred to above)) pay the same forthwith to the Issuer (without prejudice to any questions as to how such surplus should be dealt with as between the Issuer and any other person or persons for the time being entitled thereto in priority to the Issuer). (B) If the amount of the moneys at any time available for the payment of principal and interest in respect of the Notes shall be less than ten per cent. in principal amount of the Notes then due and repayable, the Trustee may, at its discretion, invest such moneys upon some or one of the investments hereinafter authorised with power from time to time, at the like discretion, to vary such investments; and such investments with the resulting income therefrom may be accumulated until the accumulations, together with any other funds for the time being under the control of the Trustee and available for such payment, shall amount to at least ten per cent. of the principal amount of the Notes then outstanding and then such accumulations and funds (after deduction of any taxes applicable thereto) shall be applied as specified in sub-Clause (A) above. 11. PAYMENT (A) Any payment to be made in respect of the Notes or the Coupons by the Issuer or the Trustee may be made as provided in the Conditions and any payment so made shall be a good discharge pro tanto to the Issuer or the Trustee, as the case may be. (B) Upon any payment under any of the provisions of Clause 10 which is made in the manner provided in sub-Clause (A) above, the Note or Coupon in respect of which such payment is made shall, if the Trustee so requires, be produced to the person by or through whom such payment is made and the Issuer shall cause such person to enface a memorandum of the amount and date of payment on such Note or Coupon or, in the case of payment in full, shall cause to be surrendered to the Issuer such Note or Coupon or (if the Issuer agrees) shall cancel the same or procure the same to be cancelled and shall certify or procure the certification of such cancellation. 12. DEPOSIT OF UNCLAIMED REDEMPTION MONEYS In the event of a holder of any Notes which the Issuer is ready to pay off or satisfy failing to claim or accept the redemption moneys due to him and failing to surrender such Notes to the Issuer, within 30 days after the due date for redemption of such Notes, the Issuer shall at the request of the Trustee or shall otherwise be at liberty to deposit or procure the deposit with a bank in an interest bearing account in the name of the Trustee or pay to the Trustee an amount equal to the amount due to such Noteholder and upon such deposit or payment being made the Notes which the Issuer is ready to pay off or satisfy shall be deemed to have been paid off or satisfied in accordance with the provisions hereof. After provision for payment of or satisfaction of such Notes is made by such deposit or payment of the funds required for the purpose, the Trustee shall not be responsible for the safe custody of such moneys or for interest thereon except such interest (if any) as the said moneys may earn whilst on deposit less any costs, charges or expenses incurred or levied by the Trustee in relation thereto. 15 13. FORFEITURE OF UNCLAIMED REDEMPTION MONEYS Any moneys deposited with or paid to the Trustee for the payment of the principal of or interest on any Notes or Coupon and remaining unclaimed for five years after the appropriate Relevant Date for payment shall (subject to paying or providing for the payment or satisfaction of the costs, charges, expenses and liabilities of, and payments by, the Trustee referred to in Clause 10(A) and the payment of the remuneration of the Trustee), on written notice being given to the Trustee by the Issuer, be repaid by the Trustee to the Issuer (without prejudice to any questions as to how such surplus should be dealt with as between the Issuer and any other person or persons for the time being entitled thereto in priority to the Issuer), and all liability of the Trustee and the Issuer under the Notes and the Coupons with respect to such moneys shall thereupon cease, provided that the Trustee before being required to make any such repayment to the Issuer may, at the expense of the Issuer, cause to be published prior to the date of such repayment at least twice and at intervals of not less than 21 days in a leading English language newspaper in Singapore a notice that such moneys remain unclaimed and that after the date stated therein (not being less than 21 days after the date of the second such notice) any unclaimed balance of the said moneys then remaining including any accrued interest thereon, after deduction of all relevant expenses, shall be returned to the Issuer. 14. REPRESENTATIONS AND WARRANTIES The Issuer represents and warrants to and for the benefit of the Trustee as follows:- (a) it is a company duly incorporated and is validly existing under the laws of Singapore with corporate power and authority to conduct its business in each jurisdiction where it carries on business and to own its assets; (b) it has the corporate power to enter into, exercise its rights and perform and comply with its obligations under each of the Issue Documents and the Notes; (c) all action, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents) in order (i) to enable it lawfully to enter into, exercise its rights and perform and comply with its obligations under each of the Issue Documents and the Notes, (ii) to ensure that those obligations are valid, legally binding and enforceable except that (1) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights and (2) the availability of equitable remedies may be affected by equitable principles generally, (iii) to ensure that those obligations rank and will at all times rank in accordance with Clause 2(B) and (iv) to make the Issue Documents and the Notes admissible in evidence in the courts of Singapore have been taken, fulfilled and done; (d) its entry into, exercise of its rights and/or performance of or compliance with its obligations under each of the Issue Documents and the Notes do not and will not violate, or exceed any borrowing or 16 other power or restriction granted or imposed by, (i) any law to which it is subject or (ii) any provision of its Memorandum and Articles of Association; (e) its obligations under each of the Issue Documents and the Notes are valid, binding and enforceable in accordance with their respective terms except that (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights and (ii) the availability of equitable remedies may be affected by equitable principles generally; (f) no information, exhibit or report furnished in writing by it to the Trustee in connection with the negotiation of this Trust Deed contained any misstatement of fact as at the date of such exhibit or report or as at the date when such information was given which was material in the context of this Trust Deed or the Notes or omitted to state a fact as at such date which in any such case would be materially adverse to the interests of the Trustee or the Noteholders under this Trust Deed or the Notes; and (g) each of the above representations and warranties will be correct and complied with in all respects on the date of this Trust Deed and on each Issue Date as if repeated then by reference to the then existing circumstances. 15. GENERAL COVENANTS So long as any of the Notes remains outstanding, the Issuer hereby covenants with the Trustee that it will:- (a) at all times carry on and conduct its affairs and procure each of its Principal Subsidiaries to carry on and conduct their affairs in a proper and efficient manner; (b) at all times keep proper books of account; (c) procure that no Event of Default applicable to it shall occur and give notice in writing to the Trustee promptly upon becoming aware of the occurrence of any Event of Default or Potential Event of Default and without waiting for the Trustee to take any action in respect thereof; (d) at all times give to the Trustee such information regarding itself, its subsidiaries and the Notes as it shall reasonably require for the purpose of the discharge of the duties, powers, trusts, authorities and discretions vested in it by this Trust Deed or by operation of law and in particular, but without prejudice to the generality of the foregoing, will, subject to any written law for the time being in force, to the same extent as if the Trustee or any approved company auditor appointed by the Trustee were a director of the Issuer:- 17 (i) (in the event that the Trustee has reasonable grounds to believe that an Event of Default has occurred or is likely to occur or a Potential Event of Default has occurred) make available for its or his inspection the whole of the accounting and other records of the Issuer and its subsidiaries; and (ii) (in the event that the Trustee has reasonable grounds to believe that an Event of Default has occurred or is likely to occur or a Potential Event of Default has occurred) give to it or him such information as it or he requires with respect to all matters relating to the accounting and other records of the Issuer and its subsidiaries, provided that so long as no Event of Default has occurred, this undertaking shall not apply to confidential information; (e) send to the Trustee (i) as soon as available and in any event within 150 days after the end of each of its financial years (beginning with the current one), a copy of its annual report and audited accounts (both consolidated and unconsolidated) as at the end of and for that financial year and (ii) as soon as available and in any event within 90 days after the end of the first six months of each of its financial years (beginning with the current one), a copy of its unaudited accounts (both consolidated and unconsolidated) as at the end of and for that six month period; (f) make available for inspection by Noteholders at its registered office copies of each annual balance sheet and profit and loss statement sent to the Trustee pursuant to paragraph (e) above as soon as practicable after the date of issue thereof; (g) send to (i) the Trustee prior to the date of publication, a copy of each notice to the Noteholders to be published in accordance with Condition 15 and (ii) the Stock Exchange prior to the date of publication, three copies of each notice to the Noteholders to be published in accordance with Condition 15; (h) at the same time as sent to its shareholders, deliver to the Trustee copies of any circular, document or other written information sent to its shareholders as such; (i) at all times execute and do all such further documents, acts and things as are necessary at any time or times in the reasonable opinion of the Trustee to give effect to the terms and conditions of the Issue Documents; (j) in the event of the unconditional payment to the Issuing and Paying Agent or the Trustee of any sum due in respect of the Notes or any of them or any of the Coupons relative thereto being made after the due date for payment in respect thereof, forthwith cause notice to be 18 given to the Noteholders in accordance with Condition 15 that such payment has been made; (k) if the Notes are so listed, use all reasonable endeavours (i) to maintain the listing of the Notes on the Stock Exchange or, if the Issuer is unable to do so having used all reasonable endeavours or if the maintenance of such listing is agreed by the Trustee to be unduly onerous or if the Trustee is satisfied that the respective interests of the Noteholders would not be materially prejudiced, use all reasonable endeavours to obtain and maintain the quotation for, or listing of, the Notes on such other stock exchange or exchanges as it may (with the approval of the Trustee (such approval not to be unreasonably withheld)) decide and (ii) to procure that there will at all times be furnished to any stock exchange on which the Notes are for the time being listed or quoted on its application such information, documents, instruments and undertaking and do all things that may be necessary on its part as such stock exchange may require in accordance with its normal requirements or in accordance with any arrangements for the time being made with any such stock exchange; (l) comply in all material respects with its obligations under the Agency Agreement and the Depository Agreement and, without prejudice to the generality of the foregoing, at all times maintain an Issuing and Paying Agent with a specified office in Singapore and (in the case of Floating Rate Notes and Variable Rate Notes), an Agent Bank with a specified office in Singapore and three Reference Banks; (m) use reasonable endeavours to ensure that the Issuing and Paying Agent complies with its obligations under the Agency Agreement and the Agent Bank complies with its obligations under the Agency Agreement, not make any modification or amendment to the Agency Agreement or (unless the same is required by the Depository) the Depository Agreement without the prior written consent of the Trustee (such consent not to be unreasonably withheld) and use reasonable endeavours to make such amendments to the Agency Agreement or the Depository Agreement as may reasonably be required by the Trustee (subject to the agreement of the Issuing and Paying Agent, the Agent Bank or, as the case may be, the Depository); (n) in the event that the Agent Bank shall not perform its obligations under Condition 4 to notify the Issuer of the Rate of Interest in respect of any Interest Period, forthwith notify the Trustee of such fact; (o) give not less than 30 days' notice to the Noteholders of the proposed appointment or removal of any Agent and, if the Trustee considers it necessary, of any change in the name or specified office of such Agent (subject to the Issuer having received notice of such change in 19 accordance with the provisions of the Agency Agreement) but so that no such notice of termination or appointment of any Agent with a specified office in Singapore shall take effect until a new Agent with a specified office in Singapore approved by the Trustee has been appointed on terms approved by the Trustee in accordance with the Agency Agreement; (p) use reasonable endeavours to procure that the Issuing and Paying Agent shall notify the Trustee forthwith in the event that it does not on the due date for repayment of the Notes or any of them or the due date for payment of any of the Coupons relative thereto, receive unconditionally the full amount in the currency in which the Notes are denominated of the moneys payable on such due date on all such Notes or Coupons, as the case may be; (q) not do or permit any act or omission whereby it would without the prior consent of the Trustee cease to be domiciled or to be resident (for the purposes of taxation jurisdiction) in Singapore; (r) within one month after 31st March, 30th June, 30th September and 31st December in each year (commencing with 31st March, 2002) prepare and lodge with the Trustee and the Stock Exchange a report signed by two Directors of the Issuer relating to the quarterly period prior to the relevant date, which report shall state:- (i) whether or not the limitations on the amount that the Issuer may borrow as herein provided have been exceeded; (ii) whether or not the Issuer and the guarantor companies (if any) have observed and performed all the covenants and obligations binding on them by or pursuant to this Trust Deed; (iii) whether or not any Event of Default has occurred and, if so, whether it is continuing and particulars thereof; (iv) whether or not any material trading or capital loss has been sustained by the Group or any guarantor company (if any); (v) whether or not any circumstances materially affecting the Group or any guarantor company (if any) have occurred which adversely affect the Notes and, if so, particulars of those circumstances; (vi) whether any contingent liabilities have been incurred by the Issuer or any guarantor company (if any) and, if so, the amount thereof and whether or not any contingent liability has matured or is likely to mature within the succeeding 12 months which will materially affect the Issuer or any guarantor company (if any) in its ability to repay the Notes; 20 (vii) whether or not there has been any change in any accounting method or methods of valuation of assets or liabilities of the Issuer; (viii) whether or not any circumstances have arisen which render adherence to the existing method of valuation of assets or liabilities of the Issuer misleading or inappropriate; and (ix) whether or not any substantial change has taken place in the nature of the business of the Issuer or any guarantor company (if any) since the date of this Trust Deed and, if so, particulars of that change; (s) (without prejudice to paragraph (e) above), send to the Trustee and to the Stock Exchange within three months of the expiration of the first six months of each of its financial years a copy of its unaudited consolidated balance sheet and profit and loss account as at the end of and for the relevant six month period; (t) as soon as practicable but not later than 15 days after request by the Trustee, deliver a certificate signed by one of its duly authorised officers to the effect that, to the best of its knowledge, information and belief:- (i) there did not exist, as at a date not more than five days prior to the date of the certificate, any Event of Default or, if such an Event of Default did then exist, specifying the same; and (ii) as at a date not more than five days prior to the date of such certificate, it has complied with its obligations contained in this Trust Deed or, if such is not the case, specifying the circumstances of such non-compliance; (u) send to the Trustee as soon as practicable and in any event within seven days after being so requested by the Trustee in writing, a certificate of the Issuer signed by any duly authorised officer setting out the total principal amount of Notes which, at the date of such certificate, were held by or on behalf of the Issuer or its subsidiaries; (v) ensure that any Director shall immediately notify the Trustee in the event that the Issuer or its Directors shall become aware that the Issuer is unable to fulfil or comply with any of the provisions of this Trust Deed; (w) not pay any dividend, whether in cash or in specie, reduce its capital or make any other distribution to its shareholders while any interest on any of the Notes is overdue and unpaid or while any of the Notes which has become payable has not been paid off as a consequence of default by the Issuer; 21 (x) subject to any order to the contrary that may be issued by the Registrar of Companies, comply in all respects with the requirements of Section 200 of the Companies Act, Chapter 50 of Singapore; (y) if the Issuer shall become obliged to redeem the Notes prior to their stated maturity date in accordance with Condition 9, not less than 10 days nor more than 30 days prior to the date of publication of the notice of redemption required to be given to the Noteholders in accordance with the Conditions give notice of such intention to the Issuing and Paying Agent and the Trustee, stating the date on which the Notes are to be redeemed; (z) obtain or cause to be obtained, maintain in full force and effect and comply in all respects with any conditions or restrictions imposed in connection with every consent, authorisation, approval or other orders of all regulatory or relevant authorities and do, or cause to be done, all other acts and things, which may from time to time be necessary under applicable law for the continued due performance of its obligations under the Notes, the Coupons or the Issue Documents; (aa) file or procure the filing of a "Return on Debt Securities" in the form prescribed under the 1999 Monetary Authority of Singapore ("MAS") Guidelines to both the Monetary Authority of Singapore and the Inland Revenue Authority of Singapore within ten business days from the relevant date of issue of the Notes of each Series and any other related documents required by the relevant authorities to be timeously filed; (bb) ensure that its payment obligations under this Trust Deed rank and will at all times rank equally and rateably in all respects with all its other unsecured indebtedness except for such indebtedness as would, by virtue only of the law in force in Singapore, be preferred in the event of a winding up; (cc) not, and will ensure that none of its Principal Subsidiaries will, create or have outstanding any mortgage, charge, pledge or other security interest over the whole or any part of its undertakings, assets, property or revenues, present or future, where such mortgage, charge, pledge or other security interest is given, or is intended to be given, to secure the indebtedness of, or guaranteed by, the Issuer or any of its Principal Subsidiaries unless such mortgage, charge, pledge or other security interest is forthwith extended equally and rateably to the indebtedness of the Issuer in respect of the Notes, except for:- (i) liens arising solely by operation of law (or by an agreement evidencing the same) in the ordinary course of its business in respect of indebtedness which either (1) has been due for less than 14 days or (2) is being contested in good faith and by appropriate means; and 22 (ii) any security created or to be created with the prior consent of the Trustee; (dd) not, and will ensure that none of its Principal Subsidiaries will, (whether by a single transaction or a number of related or unrelated transactions and whether at one time or over a period of time) sell, transfer, lease out, lend or otherwise dispose of (whether outright, by a sale-and-repurchase or sale-and-leaseback arrangement, or otherwise) all or substantially all of its assets nor of any part of its assets which, either alone or when aggregated with all other disposals required to be taken into account under this paragraph (dd), is substantial in relation to its assets, or those of itself and its Principal Subsidiaries, taken as a whole or the disposal of which (either alone or when so aggregated) could have a material adverse effect on it. The following disposals shall not be taken into account under this paragraph (dd):- (i) disposals in the ordinary course of business; (ii) disposals on normal commercial terms of obsolete assets or assets no longer required for the purpose of the Issuer's or, as the case may be, such Principal Subsidiary's business; (iii) the exchange of assets of a similar nature and value; (iv) any sale-and-leaseback of assets of an aggregate amount at any one time not exceeding 35 per cent. of the total assets of the Issuer or, as the case may be, such Principal Subsidiary (as determined by the Trustee by reference to the latest audited financial statements of the Issuer or, as the case may be, such Principal Subsidiary); (v) any sale or lease of assets by the Issuer or, as the case may be, such Principal Subsidiary to a special purpose vehicle, being a transaction having the principal commercial or economic effect of an "off-balance sheet" financing scheme, with a leaseback of the assets to the Issuer or, as the case may be, such Principal Subsidiary and an option on the part of the Issuer or, as the case may be, such Principal Subsidiary to repurchase the assets; and (vi) any disposal which the Trustee shall have agreed shall not be taken into account; (ee) ensure that there is no material change in the nature of its business, or the business of itself and its subsidiaries taken as a whole (whether by a single transaction or a number of related or unrelated transactions, whether at one time or over a period of time and whether by disposal, acquisition or otherwise); 23 (ff) insure and keep adequately insured, and procure that each of its Principal Subsidiaries shall insure and keep adequately insured with reputable insurers, all its and their, as the case may be, real property which are of an insurable nature against fire and other risks normally insured against by the Issuer and its Principal Subsidiaries in respect of such real property, and pay or procure to be duly paid all premiums or other sums payable in respect of such insurance. The Trustee shall be at liberty (but shall not be obliged) from time to time to accept as sufficient evidence of the fact a certificate under the hand of one of its duly authorised officers to the effect that such property and assets as ought to be insured in accordance with the provisions of this paragraph (ff) were, at the date of such certificate, duly insured to such value as aforesaid and that all premiums have been paid to the date of such certificate; (gg) not, unless requested by law, undertake any re-organisation, amalgamation, reconstruction, merger or consolidation with any other company or person or any other schemes of compromise or arrangement affecting its present constitution except where such event does not or is not likely to affect its ability to perform any of its payment or other material obligations under the Notes or this Trust Deed; (hh) not, without the prior consent in writing of the Trustee, alter any provision in its Memorandum and Articles of Association relating to its borrowing powers and principal business activities; (ii) file or cause to be filed all tax returns required to be filed with the relevant authorities in Singapore and pay or cause to be paid all taxes shown to be due and payable on such returns or any assessments made against it (other than those being contested in good faith and on reasonable grounds and where such payment may be lawfully withheld and in any event by such time as is necessary to prevent enforcement action against it); (jj) give to the Trustee, within 14 days of a request by the Trustee, a certificate by the Auditors listing those subsidiaries (if any) of the Issuer that as at the date of such request were Principal Subsidiaries; (kk) keep and maintain its assets in good working order and condition subject to normal wear and tear and casualty loss; (ll) promptly on demand reimburse the Trustee for any reasonable costs incurred in appointing and retaining reputable professional consultants as and when the Trustee believes any such appointment to be necessary; (mm) ensure that the Programme Limit is not exceeded at any time; and (nn) from time to time as requested or contemplated by this Trust Deed or as reasonably requested by the Trustee, make available through the 24 Issuing and Paying Agent or otherwise such documents as may be required by the Noteholders in connection with the meetings of Noteholders. 16. REMUNERATION OF TRUSTEE (A) The Issuer shall (subject as provided below) until the trusts hereof shall be finally wound up pay to the Trustee remuneration for its ordinary services as Trustee such sum at such times and in such manner as is separately agreed between the Issuer and the Trustee or such other sum as may from time to time be agreed between the Issuer and the Trustee. All such remuneration shall accrue from day to day from the date of this Trust Deed and shall be payable in priority to payments to the Noteholders and Couponholders. The Trustee shall not be entitled to remuneration (except for such remuneration as may be agreed between the Issuer and the Trustee) in respect of any period after the date on which, all the unredeemed Notes having become due for redemption, the redemption moneys in respect thereof (together with interest thereon to the date of redemption) have been paid to the Issuing and Paying Agent unless and until upon due presentation of any Note payment of the moneys due in respect thereof is improperly withheld or refused, in which event remuneration will commence again to accrue from the date of such presentation. (B) At any time after the occurrence of an Event of Default or in the event of the Trustee considering it expedient or necessary or being required to undertake duties which the Trustee and the Issuer agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, the Issuer shall pay the Trustee such additional remuneration as may be agreed between them. In the event of the Trustee and the Issuer failing to agree upon whether such duties are of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, or failing to agree upon such additional remuneration, such matters shall be determined by a merchant bank (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated by the President for the time being of The Law Society of Singapore and the decision of any such merchant bank or the President for the time being of The Law Society of Singapore shall be final and binding on the Issuer and the Trustee. The fees and expenses payable in respect of such determination shall be borne by the Issuer. (C) In addition to remuneration under this Trust Deed, the Issuer shall, on written request by the Trustee, pay all reasonable costs, charges, expenses (including legal expenses) and liabilities which the Trustee may incur in relation to the preparation and execution of the Issue Documents and the exercise of the powers or the execution of the trusts vested in it by or pursuant to the Issue Documents. (D) All payments of fees under this Trust Deed will be made without deduction or withholding for or on account of any taxes, duties or other levies (including but not limited to any taxes, duties or levies on the supply of goods and services). If the Issuer is required by law to deduct or withhold any such taxes, duties or levies, the Issuer shall pay such additional amounts as shall be necessary in order that the net amounts received by the Trustee after such deduction or withholding shall equal the amounts which would have been receivable by the Trustee had no such deduction or withholding been required to be made. 25 (E) Without prejudice to sub-Clause (D) above, where any law or regulation or official directive of a competent authority relating to any tax, duty or levy on the supply of goods and services in Singapore arising from or in connection with the enactment of the Goods and Services Tax Act, Chapter 117A of Singapore shall subject the Trustee to any tax, duty or levy in respect of the fees receivable by the Trustee, the Trustee shall inform the Issuer of such event and the Issuer shall, within 21 days of any notice from the Trustee issued from time to time to the Issuer pay to the Trustee such amounts as would compensate the Trustee for any such tax, duty or levy paid by it. The certificate of the Trustee as to the amount of payment to be made by the Issuer and the basis and calculation thereof shall (save for manifest error) be binding on the Issuer. (F) Unless otherwise specifically stated in any discharge pursuant to this Trust Deed, the provisions of this Clause shall continue in full force and effect notwithstanding such discharge. (G) The Trustee shall be entitled in its absolute discretion to determine in respect of which Series of Notes any costs, charges, expenses or liabilities incurred under this Trust Deed have been incurred or to allocate any such costs, charges, expenses or liabilities as between the Notes of any Series. 17. ISSUING AND PAYING AGENT The Issuer shall ensure that the power to appoint and to terminate the appointment of the Issuing and Paying Agent shall at all times be vested in the Issuer. The Issuer may terminate the appointment of the Issuing and Paying Agent by giving at least 60 days' written notice of termination to the Trustee and the Issuing and Paying Agent, provided that (a) such notice shall not expire less than 30 days before or after any due date for payment of any Notes or Coupons, (b) no such notice shall take effect until a new Issuing and Paying Agent has been appointed and (c) the Issuer shall comply with the provisions of paragraph (l) of Clause 15. Notice shall be given to the Noteholders in accordance with Condition 15 within 30 days after any appointment of an Issuing and Paying Agent or no later than the date on which the termination of the appointment of the Issuing and Paying Agent takes effect. 18. CANCELLATION OF NOTES AND COUPONS; RECORD OF CANCELLATION (A) All Notes redeemed by the Issuer or purchased and elected to be cancelled by the Issuer or any of its subsidiaries or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 12, together in each case with all unmatured Coupons attached thereto or surrendered therewith, and all Coupons paid or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 12 shall be cancelled forthwith by or on behalf of the Issuer. The Issuer shall procure that a certificate stating (a) the aggregate amount paid in respect of Notes that have been redeemed and cancelled and the aggregate amount paid in respect of any related Coupons that have been paid and cancelled or in respect of interest paid on a Global Note (other than Notes purchased by the Issuer or any of its subsidiaries and surrendered for cancellation and/or Coupons attached thereto and surrendered therewith), (b) the certificate numbers of such Notes, (c) the total number and maturity dates of such Coupons, (d) the certificate numbers of those Notes which have been purchased and cancelled as aforesaid 26 and (e) the total number and maturity date of unmatured Coupons not surrendered with Definitive Notes redeemed or purchased and cancelled shall be given to the Trustee by the Issuing and Paying Agent (if the Issuing and Paying Agent is not also the Trustee) as soon as reasonably possible and in any event within one month after the end of each calendar quarter during which such redemption, purchase, replacement or payment (as the case may be) and cancellation takes place. Such certificate may be accepted by the Trustee as conclusive evidence of repayment or discharge pro tanto of the Notes and/or of payment of interest thereon, as the case may be. (B) The Issuer shall procure that there shall be kept a full and complete record of all Notes and Coupons (other than serial numbers of Coupons except as regards unmatured Coupons not attached to or surrendered with Notes presented for redemption or cancellation), their redemption, purchase, payment, exchange, cancellation and destruction and of all replacement Notes or Coupons issued in substitution for lost, stolen, mutilated, defaced or destroyed Notes or Coupons, and the Issuer shall further procure that such record shall be made available to the Trustee at all reasonable times. 19. NOTEHOLDERS TO BE TREATED AS HOLDING ALL COUPONS (A) Wherever in this Trust Deed, the Trustee is required or entitled to exercise a trust, duty, right, power, authority or discretion by reference to the interests of the Noteholders, the Trustee shall assume, notwithstanding any express notice to the contrary, that each Noteholder is the holder of all Coupons appertaining to each Note of which it is the holder. (B) Neither the Issuer nor the Trustee shall be required to give any notice to the Couponholders for any purpose under this Trust Deed and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with Condition 15. (C) Except as ordered by a court of competent jurisdiction or as required by law, the Issuer, the Issuing and Paying Agent and the Trustee may deem and treat the bearer of any Notes and the bearer of any Coupon as the absolute owner of such Notes or Coupon, as the case may be, (whether or not such Notes or Coupon shall be overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for the purpose of receiving payment thereof or on account thereof and for all other purposes and the Issuer, the Issuing and Paying Agent and the Trustee shall not be affected by notice to the contrary. All payments made to any such bearer shall be valid and, to the extent of the sums paid, effective to satisfy and discharge the liability for the moneys payable upon such Notes and Coupons. 20. PROVISIONS SUPPLEMENTAL TO THE TRUSTEES ACT, CHAPTER 337 OF SINGAPORE 27 By way of supplement to the Trustees Act, Chapter 337 of Singapore, it is expressly declared as follows:- (a) The Trustee may in relation to any of the Issue Documents act on the opinion, advice or certificate of, or any information obtained from, any lawyer, valuer, banker, securities company, broker, accountant, surveyor, auctioneer or other expert in Singapore or elsewhere whether obtained by the Trustee, the Issuer, any subsidiary or the Issuing and Paying Agent or otherwise, and shall not be responsible for any loss occasioned by so acting. Any such opinion, advice, certificate or information may be sent or obtained by letter, telegram, telex, cable or facsimile transmission and the Trustee shall not be liable for acting on any opinion, advice, certificate or information purporting to be conveyed by such means even though it shall contain some error or shall not be authentic. (b) The Trustee shall not be bound to give notice to any person of the execution of any of the Issue Documents. (c) The Trustee shall not be bound to make any enquiry or to take any steps to ascertain whether any Event of Default or Potential Event of Default has occurred and, until it shall have actual knowledge or shall have express notice to the contrary, the Trustee shall be entitled to assume without enquiry (it being the intention that it should assume without enquiry) that no such event has happened and that the Issuer is performing all its obligations under the Issue Documents and under the Notes and Coupons. (d) The Trustee shall not be responsible for having acted upon any resolution purporting to have been passed at any meeting of the Noteholders in respect whereof minutes have been made and signed even though it may subsequently be found that there was some defect in the constitution of such meeting or the passing of such resolution or that for any reason such resolution was not valid or binding upon the Noteholders or Couponholders. (e) The Trustee may call for and shall be at liberty to accept a certificate signed by any officer of the Issuer as to any fact or matter on which the Trustee may need or wish to be satisfied as sufficient evidence thereof and a like certificate that any properties or assets in the opinion of the person so certifying have a particular value or produce a particular income or are suitable for such company's purposes as sufficient evidence that they have that value or produce that income or are so suitable and a like certificate to the effect that any particular dealing, transaction, step or thing is in the opinion of the person so certifying expedient as sufficient evidence that it is expedient and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any loss that may be occasioned by its failing to do so or by its acting on any such certificate. 28 (f) In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry that no Notes are for the time being held by or on behalf of the Issuer or its subsidiaries. (g) The Trustee may hold or deposit the Issue Documents and any deed or documents relating to the Issue Documents or to the Notes in any safe deposit, safe or other receptacle selected by the Trustee, in any part of the world, or with any bank or banking company, or with any lawyer or firm of lawyers, of good repute, in any part of the world, and the Trustee shall not be responsible for or required to insure against any loss incurred in connection with any such holding or deposit and may pay all sums to be paid on account of or in respect of any such deposit. (h) The Trustee shall, as regards all the powers, trusts, rights, duties, authorities and discretions vested in it by the Issue Documents or by operation of law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and shall be in no way responsible for any loss, costs, damages, expenses or inconvenience which may result from the exercise or non-exercise thereof. (i) The Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money) and, provided the Trustee shall have exercised reasonable care in the selection of such agent, the Trustee shall not in any way be responsible for any misconduct or default on the part of any such person appointed by it under any of the Issue Documents or be bound to supervise the proceedings or acts of any such person. (j) Any Trustee of this Trust Deed being a lawyer, accountant, banker, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by him or any partner of his or by his firm on matters arising in connection with the trusts hereof and also his reasonable charges in addition to disbursements for all other work and business done and all time spent by him or his partner or firm on matters arising in connection herewith, including matters which might or should have been attended to in person by a trustee not being a lawyer, accountant, banker, broker or other professional person. (k) The Trustee shall not be liable to the Issuer or any Noteholder or Couponholder by reason of having accepted as valid or not having rejected any Note or Coupon purporting to be such and subsequently found to be forged or not authentic. 29 (l) Any consent given by the Trustee for the purposes of this Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit. (m) The Trustee shall not (unless ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder or Couponholder any confidential, financial, price sensitive or other information made available to the Trustee by the Issuer or its subsidiaries in connection with any of the Issue Documents and no Noteholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information. (n) The Trustee as between itself and the Noteholders and/or the Couponholders shall have full power to determine all questions and doubts arising in relation to any of the provisions of any of the Issue Documents and every such determination, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Noteholders and the Couponholders. (o) Where it is necessary or desirable for any purpose in connection herewith to convert any sum from one currency to another, it shall (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may reasonably be specified by the Trustee in its absolute discretion, and any rate, method and date so specified shall be binding on the Issuer, the Noteholders and the Couponholders. (p) The Trustee may determine whether or not an Event of Default or Potential Event of Default has occurred or is capable of remedy and if the Trustee shall determine that any such Event of Default or Potential Event of Default has or has not occurred or is or is not capable of remedy, such determination shall be conclusive and binding upon the Issuer, the Noteholders and the Couponholders. (q) The Trustee shall not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Notes nor for the delivery of the Notes to the persons entitled thereto. (r) The Trustee shall not be concerned with or responsible for any consolidation, amalgamation, merger or reconstruction of the Issuer or any sale or transfer of all or substantially all of the assets of the Issuer or the form or substance of any plan relating thereto or the consequences thereof to any Noteholder or Couponholder. (s) The Trustee shall not be concerned, and need not enquire, as to whether or not any Notes are issued in breach of the Programme Limit. 30 (t) The Trustee assumes no responsibility for the correctness of the Recitals to this Trust Deed (other than Recital (C) above) which shall be taken as statements by the Issuer, nor shall the Trustee by the execution of this Trust Deed be deemed to make any representation as to the validity, sufficiency or enforceability against the Issuer of this Trust Deed or any part thereof. Provided nevertheless that none of the provisions of this Trust Deed shall, in any case in which the Trustee has failed to show the degree of care and diligence required of it having regard to the provisions of this Trust Deed conferring on the Trustee any duties, powers, trusts, authorities or discretions, relieve or indemnify the Trustee from or against any liability for breach of trust or any liability which by virtue of any rule of law would otherwise attach to it in respect of any fraud, negligence, wilful default, breach of duty or breach of trust of which it or its employees or officers may be guilty in relation to its duties under this Trust Deed. 21. WAIVER The Trustee may, without the consent of the Noteholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, condition, event or act from time to time and at any time, but only if and in so far as in its opinion the interests of the Noteholders will not be materially prejudiced thereby:- (a) waive on such terms and conditions (if any) as may to it seem expedient, any breach by the Issuer of any provisions contained in the Issue Documents or the Notes, without prejudice to its rights in respect of any other or subsequent breach; (b) authorise on such terms and conditions (if any) as aforesaid, any act or thing which would but for this provision and such authorisation be in breach of any provision of the Issue Documents, the Notes or the Coupons; (c) determine on such terms and conditions (if any) as aforesaid that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of this Trust Deed; and (d) at the request of the Issuer waive or modify any terms and conditions imposed by it pursuant to paragraphs (a), (b) or (c) above or in connection with any consent given by it pursuant to any other provision of any of the Issue Documents. Provided always that the Trustee shall not exercise any powers conferred on it by this Clause in contravention of any express direction given by an Extraordinary Resolution or a request made pursuant to Condition 9, but no such direction or request shall affect any waiver, authorisation or determination previously given or made. Any such waiver, authorisation or determination shall be binding on the Noteholders and the Couponholders and if, but only if, the Trustee shall so require, shall be notified by or on behalf of the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition 15. 22. COMPETENCE OF A MAJORITY OF TRUSTEES 31 Whenever there shall be more than two Trustees having equal authority under this Trust Deed, the majority of such Trustees shall (provided such majority includes a trust corporation) be competent to execute and exercise all the duties, powers, trusts, rights, authorities and discretions vested by this Trust Deed in the Trustee generally. 23. INDEMNITY OF TRUSTEE Without prejudice to the right of indemnity by law given to trustees and subject to the proviso to Clause 20 the Trustee and every attorney, manager, delegate, agent or other person appointed by the Trustee under the provisions of this Trust Deed shall be entitled to be indemnified by the Issuer in respect of all liabilities, costs, charges and expenses properly incurred by it or him in relation to any of the Issue Documents or to the preparation and execution or purported execution of any of the Issue Documents or to the proper carrying out of the trusts of any of the Issue Documents or to the exercise of any trusts, rights, powers, authorities or discretions vested in it or him pursuant to any of the Issue Documents and against all actions, proceedings, costs, claims and demands in respect of any matter or thing properly done or omitted in any way relating to any of the Issue Documents and, failing due payment by the Issuer, the Trustee may in priority to any payments to the Noteholders and the Couponholders retain and pay out of any moneys in its or his hands arising from the trusts of this Trust Deed all sums necessary to effect such indemnity and also the remuneration of the Trustee as hereinbefore provided. 24. AMOUNTS DUE TO TRUSTEE The Issuer shall on demand by the Trustee or any attorney, agent or other person appointed by the Trustee pursuant to this Trust Deed pay every sum of money (other than payments in respect of the Notes or the Coupons) which shall from time to time be payable to any such person under any provisions of the Issue Documents together with interest at the rate of two per cent. per annum above the prime lending rate for Singapore Dollars quoted by The Development Bank of Singapore Ltd from time to time calculated from the date when the same shall have been advanced or paid or become payable or due to the date of payment by the Issuer (as well after as before, and as an independent obligation not merging with, any judgment) and the Issuer will on demand pay and satisfy or obtain the release of such person from any liabilities incurred by him pursuant to any of the Issue Documents. 25. ASSUMPTION OF PERFORMANCE OF COVENANTS The Trustee is hereby authorised and it is declared that it is entitled to assume without enquiry (in the absence of knowledge by or an express notice to it to the contrary) that the Issuer is duly performing and observing all the covenants and provisions contained in the Issue Documents, the Notes and the Coupons and on its part to be performed and observed and notwithstanding knowledge by or notice to the Trustee of any breach of any such covenant, condition, provision or obligation it shall be in the discretion of the Trustee whether to take any action or proceedings or to enforce the performance thereof and the Trustee shall not be bound to enforce the same or any of the covenants, conditions, provisions or obligations of the Issue Documents, the Notes or the Coupons unless and until in any of such cases the Trustee is so directed by an Extraordinary Resolution, or so requested in writing by the holder or holders of not less than 30 per cent. in principal amount of the Notes for the time being outstanding, and then only if it shall be indemnified to its 32 satisfaction against all actions, proceedings, costs, claims and demands to which it may render itself liable and all costs, charges, damages and expenses which it may incur by so doing. 26. TRUSTEE NOT PRECLUDED FROM ENTERING INTO CONTRACTS No Trustee of this Trust Deed nor any corporation related to the Trustee and no director or officer of the Trustee or any corporation related to the Trustee shall by reason of the fiduciary position of such Trustee be in any way precluded from making any contracts or entering into any transactions with the Issuer (or any of its subsidiaries) in the ordinary course of business, or from acting as an agent in respect of the Notes or the Coupons, whether directly or through a subsidiary or associated company, or from accepting the trusteeship of any other debenture stock, debentures or securities of the Issuer (or any of its subsidiaries), or any company in which the Issuer is interested and, without prejudice to the generality of this Trust Deed, it is expressly declared that such contracts and transactions include any contract or transaction in relation to the placing, underwriting, purchasing, subscribing for or dealing with or lending money upon the Notes or any other notes, warrants, stock, shares, debenture stock, debentures or other securities of the Issuer (or any of its subsidiaries), or any company in which the Issuer is interested or any contract of banking or insurance with the Issuer (or any of its subsidiaries) and that the Trustee shall not be accountable to the Noteholders or Couponholders or to the Issuer (or any of its subsidiaries) for any profits, fees, commissions, discounts or share of brokerage resulting from any such contracts or transactions and the Trustee shall also be at liberty to retain the same for its own benefit. 27. CONSENT BY TRUSTEE Where under any of the Issue Documents provision is made for the giving of any consent or the exercise of any discretion by the Trustee any such consent may be given and any such discretion may be exercised on such terms and conditions (if any) as the Trustee may think fit and may be given or exercised with retrospective effect. The Issuer shall observe and perform any such terms and conditions and the Trustee may at any time waive or agree a variation in such terms and conditions. 28. MODIFICATIONS (A) The Trustee may at any time or times without any consent or sanction of the Noteholders or the Couponholders concur with the Issuer in making any modification (a) to this Trust Deed (other than any provision of this Trust Deed referred to in the proviso to paragraph 2 of Schedule 4) or any of the other Issue Documents which in the opinion of the Trustee it may be expedient to make, provided the Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Noteholders or (b) to this Trust Deed (including any provision of this Trust Deed referred to in the proviso to paragraph 2 of Schedule 4) or any of the other Issue Documents which in the opinion of the Trustee is of a formal, minor or technical nature, to correct a manifest error or to comply with mandatory provisions of Singapore law. Any such modification shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees in writing, the Issuer shall cause such modification to be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 15. 33 (B) The Trustee shall be entitled to, and if so requested by the Issuer shall, consent, on its own behalf, on behalf of the Noteholders and (if the Couponholders are deemed to constitute or are treated as a separate class of creditors of the Issuer from the Noteholders for the purposes thereof) on behalf of the Couponholders or any of them, to any such scheme for the reduction of share capital or reconstruction of the Issuer or any such merger, amalgamation or consolidation of the Issuer with any other company as shall have been effectively approved by the Trustee or approved or assented to by the Noteholders by an Extraordinary Resolution of the Noteholders (if such approval or assent is required under the Conditions and/or this Trust Deed) and to any addition or modification thereto or condition which any court or other authority of applicable jurisdiction may think fit to approve or impose. 29. DELEGATION BY TRUSTEE The Trustee may, in the execution and exercise of all or any of the trusts, powers, authorities and discretions vested in it by any of the Issue Documents, act by a responsible officer or officers for the time being of the Trustee and the Trustee may also, with the consent of the Issuer (such consent not to be unreasonably withheld), provided that no such consent shall be required if an Event of Default has occurred, whenever it thinks it expedient in the interests of the Noteholders, whether by power of attorney or in such other manner as it may think fit, delegate to any person or persons or fluctuating body of persons selected by it all or any of the trusts, rights, powers, duties, authorities and discretions vested in it by any of the Issue Documents and any such delegation may be made upon such terms and conditions (including power to sub-delegate with the approval of the Trustee) and subject to such regulations as the Trustee may in the interests of the Noteholders, think fit and, provided that the Trustee shall have exercised reasonable care in the selection of such delegate, it shall not be under any obligation to supervise the proceedings of and shall not be in any way or to any extent responsible for any loss incurred by any misconduct or default on the part of any such delegate or sub-delegate. The Trustee shall give notice to the Issuer of the appointment of any delegate as aforesaid and shall procure that any delegate shall give notice to the Issuer of any appointment of any sub-delegate. 30. APPOINTMENT OF TRUSTEE AS ATTORNEY The Issuer hereby, in order to secure the interest of, and the performance of the obligations owed to, the Trustee under this Trust Deed, irrevocably appoints the Trustee (including any attorney of the Trustee appointed by it for the purpose) and every such agent appointed under Clause 20(i) to be its attorney and on its behalf and in its name or otherwise at any time after an Event of Default has occurred to execute and do all such assurances, deeds, acts and things which it may or ought to do under the covenants and provisions contained in this Trust Deed and generally in its name and on its behalf to exercise all or any of the rights, powers, authorities and discretions conferred by this Trust Deed on the Trustee or any such attorney or agent and (without prejudice to the generality of the foregoing) to seal and deliver and otherwise perfect any deed, assurance, agreement, instrument or act which it or he may deem proper in or for the purpose of exercising any of such rights, powers, authorities and discretions and the Issuer hereby ratifies and confirms and agrees to ratify and confirm whatsoever any such attorney shall do or purport to do by virtue of this Clause and all moneys expended by any such attorney shall be deemed to be expenses incurred by the Trustee under this Trust Deed. 34 31. APPOINTMENT, RETIREMENT AND REMOVAL OF TRUSTEE (A) The power of appointing new Trustees of this Trust Deed shall be vested in the Issuer but no person shall be so appointed who shall not have previously been approved by an Extraordinary Resolution of Noteholders in respect of the Notes of all Series. A trust corporation shall at all times be a Trustee of this Trust Deed and may be sole Trustee of this Trust Deed. Any appointment of a new Trustee or new Trustees of this Trust Deed shall as soon as practicable thereafter be notified by the Issuer to the Issuing and Paying Agent and to the Noteholders in accordance with Condition 15. (B) Any Trustee may retire at any time upon giving not less than three months' notice in writing to the Issuer or such shorter notice as the Issuer may agree without assigning any reason and without being responsible for any costs occasioned by such retirement and the Noteholders shall have power, exercisable by Extraordinary Resolution of Noteholders in respect of the Notes of all Series, to remove any Trustee provided that the retirement or removal of any sole trustee shall not become effective until a trust corporation is appointed as successor Trustee. The Issuer undertakes that, if a sole Trustee or sole trust corporation gives notice of retirement or an Extraordinary Resolution is passed for its removal under this Clause, it shall procure that another trust corporation be appointed as Trustee. (C) The Trustee shall, notwithstanding the provisions of sub-Clause (A) above, have power, with the consent of the Issuer (such consent not to be unreasonably withheld), provided that no such consent shall be required if an Event of Default has occurred by notice in writing to the Issuer to appoint any person either to act as separate Trustee, or as co-Trustee jointly with the Trustee:- (a) if the Trustee considers such appointment to be in the interests of the Noteholders; (b) for the purpose of conforming with any legal requirement, restriction or condition in any jurisdiction in which any particular act is to be performed; or (c) for the purpose of obtaining (or facilitating the obtaining) in any jurisdiction a judgment, or the enforcement in any jurisdiction against the Issuer or any of its subsidiaries of either a judgment already obtained or any of the provisions of this Trust Deed. The Issuer hereby irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Any person so appointed shall (subject to the provisions of this Trust Deed) have such trusts, rights (including as to reasonable remuneration), powers, duties, authorities and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any person so appointed. At the request of the Trustee, the Issuer shall forthwith execute all such documents and do all such things as may be required to perfect such appointment or removal and hereby irrevocably appoints the Trustee to be its attorney in its 35 name and on its behalf to do the same. Such a person shall (subject always to the provisions hereof) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee hereby) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. Such remuneration as the Trustee may pay to such person, together with any attributable costs, charges and reasonable expenses incurred by it in performing its function as such separate Trustee or co-Trustee, shall for the purposes of this Trust Deed be treated as costs, charges and expenses reasonably incurred by the Trustee. Before appointing such person to act as separate Trustee or co-Trustee the Trustee shall (unless it is not, in the opinion of the Trustee, reasonably practicable to do so) give notice to the Issuer of its intention to make such appointment (and the reason therefor) and shall give due consideration to representations made by the Issuer concerning such appointment. 32. NOTIFICATION TO THE STOCK EXCHANGE The Issuer agrees that the Trustee may give notice in writing to the Stock Exchange of the occurrence of any Event of Default unless prior to such notification, such Event of Default has been remedied, and the Issuer hereby authorises and consents to such notification by the Trustee. 33. POWERS OF TRUSTEE TO BE ADDITIONAL The powers conferred by this Trust Deed upon the Trustee shall be in addition to any powers which may from time to time be vested in it by general law or as the holder of any of the Notes. 34. CURRENCY INDEMNITY (A) Any amount received or recovered in respect of any sum payable by the Issuer under or in connection with this Trust Deed, the Notes and the Coupons, including damages, in a currency (such currency being referred to as the "Relevant Currency") other than the currency in which such sum is expressed to be due under this Trust Deed or the Notes (the "Contractual Currency") (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer or otherwise) will only constitute a discharge to the Issuer to the extent of the Contractual Currency amount which the Trustee, any Noteholder or any Couponholder is able to purchase with the Relevant Currency so received or recovered on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). (B) If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed, the Notes or the Coupons, the Issuer will indemnify it against any loss sustained by it as a result. In any event, the Issuer will indemnify the recipient against the cost of making any such purchases. (C) These indemnities constitute a separate and independent obligation from the other obligations in this Trust Deed, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and/or any Noteholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust 36 Deed, the Notes and/or the Coupons or any judgment or order. No proof or evidence of any actual loss may be required. 35. COMMUNICATIONS All communications under this Trust Deed shall be by facsimile or in writing delivered by hand or sent by prepaid registered post. Each communication shall be made to the relevant party at the facsimile number or address marked for the attention of the person from time to time designated in writing by the Issuer or, as the case may be, the Trustee for the purpose. The initial facsimile number, address and person so designated by the Issuer and the Trustee are set out below:- The Issuer ST Assembly Test Services Ltd, 5, Yishun Street 23, Singapore 768442. Telephone Number: 751 1822/751 1851 Facsimile Number: 755 1585/755 3153 Attention: Mr Tan Lay Koon/Ms Pearlyne Wang The Trustee British and Malayan Trustees Limited, 17, Phillip Street, #08-00, Grand Building, Singapore 048695. Telephone Number: 535 0260 Facsimile Number: 535 1258 Attention: Mr John Chew A communication will be deemed received (if by facsimile) when despatched and receipt in good order is acknowledged by telephone, (if writing by hand) when left at the address required by this Clause or (if in writing sent by prepaid registered post) within two days after being sent by prepaid registered post addressed to the relevant party at that address, in each case in the manner required by this Clause. 36. PARTIAL INVALIDITY The illegality, invalidity or unenforceability of any provision of this Trust Deed under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision. 37. GOVERNING LAW This Trust Deed shall be governed by, and construed in accordance with, the laws of Singapore. 37 S C H E D U L E 1 PART I FORM OF DEFINITIVE NOTE ST ASSEMBLY TEST SERVICES LTD (Incorporated with limited liability in Singapore) [Denomination] Series No. [ ] Certificate No. [ ] S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME [Title of Issue] This Note forms one of the Series of Notes referred to above of ST Assembly Test Services Ltd (the "Issuer") designated as specified in the title hereof. The Notes are constituted by a Trust Deed (the "Trust Deed") dated 10th January, 2002 made between (1) the Issuer and (2) British and Malayan Trustees Limited (the "Trustee"), as trustee for the holders of the Notes. The Notes are subject to, and have the benefit of, the Trust Deed and the Terms and Conditions endorsed hereon (the "Conditions"). The issue of the Notes was authorised by resolutions of the Board of Directors of the Issuer passed on 25th September, 2001. The Issuer for value received hereby unconditionally promises to pay to the bearer on the Maturity Date stated above (if this Note is stated to be a Fixed Rate Note or Hybrid Note) or on the Interest Payment Date (as defined in the Conditions) falling in the Redemption Month stated above (if this Note is stated to be a Floating Rate Note, Variable Rate Note or Hybrid Note) or on such earlier date as the Redemption Amount may become payable in accordance with the Conditions upon presentation and surrender of this Note a principal sum equal to the Redemption Amount stated above and to pay interest on the said principal sum from the Interest Commencement Date stated above at the Interest Rate stated above (if this Note is stated to be a Fixed Rate Note), at the rates determined in accordance with Condition 4(II) (if it is stated to be a Floating Rate Note or Variable Rate Note) or at the Interest Rate stated above and at the rates determined in accordance with Condition 4(III) (if it is stated to be a Hybrid Note) in arrear on the dates for payment provided for in the Conditions together with such other amounts (if any) as may be payable, all subject to and in accordance with the Conditions and the provisions of the Trust Deed. 38 This Note shall not become valid or obligatory for any purpose unless and until the Certificate of Authentication hereon has been signed by or on behalf of Citicorp Investment Bank (Singapore) Limited, as Issuing and Paying Agent. IN WITNESS whereof the Issuer has caused this Note to be duly signed on its behalf. ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Duly Authorised Officer Issued as of the Issue Date specified above. CERTIFICATE OF AUTHENTICATION This Note is authenticated by or on behalf of the Issuing and Paying Agent, Citicorp Investment Bank (Singapore) Limited. By: ------------------------------------------ duly authorised signatory (Without recourse, warranty or liability) - -------------------------------------------------------------------------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. 39 On the reverse:- TERMS AND CONDITIONS OF THE NOTES [The Terms and Conditions that are set out in Part II of Schedule 1 to the Trust Deed as amended by and incorporating any additional provisions forming part of such Terms and Conditions and set out in the relevant Pricing Supplement will be set out here] Issuing and Paying Agent and Agent Bank Citicorp Investment Bank (Singapore) Limited, 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653. 40 S C H E D U L E 1 PART II TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions which, subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be endorsed on the Notes in definitive form issued in exchange for the Global Note(s) representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive Notes or Certificates, as the case may be. References in the Conditions to "Notes" are to the Notes of one Series only, not to all Notes that may be issued under the Programme, details of the relevant Series being shown on the face of the relevant Notes and in the relevant Pricing Supplement:- The Notes are constituted by a Trust Deed (the "Trust Deed") dated 10th January, 2002 made between (1) the Issuer and (2) British and Malayan Trustees Limited (the "Trustee", which expression shall wherever the context so admits include such company and all other persons for the time being the trustee or trustees of the Trust Deed), as trustee for the Noteholders (as defined below), and (where applicable) the Notes are issued with the benefit of a deed of covenant (the "Deed of Covenant") dated 10th January, 2002, relating to the Notes executed by the Issuer. The Issuer has entered into an Agency Agreement (the "Agency Agreement") dated 10th January, 2002 made between (1) the Issuer, (2) Citicorp Investment Bank (Singapore) Limited, as issuing and paying agent (in such capacity, the "Issuing and Paying Agent") and agent bank (in such capacity, the "Agent Bank"), and (3) the Trustee, as trustee. The Noteholders and the holders of the coupons (the "Coupons") appertaining to the interest-bearing Notes (the "Couponholders") are bound by and are deemed to have notice of all of the provisions of the Trust Deed, the Agency Agreement and the Deed of Covenant. Copies of the Trust Deed, the Agency Agreement and the Deed of Covenant are available for inspection at the principal office of the Trustee for the time being and at the specified office of the Issuing and Paying Agent for the time being. 1. FORM, DENOMINATION AND TITLE (a) Form and Denomination (i) The Notes of the Series of which this Note forms part (in these Conditions, the "Notes") are issued in bearer form in each case in the Denomination Amount shown hereon. 41 (ii) This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note or a Hybrid Note (depending upon the Interest Basis shown on its face). (iii) Notes are serially numbered and issued with Coupons attached, save in the case of Notes that do not bear interest in which case references to interest (other than in relation to default interest referred to in Condition 6(f)) in these Conditions are not applicable. (b) Title (i) Title to the Notes and the Coupons appertaining thereto shall pass by delivery. (ii) Except as ordered by a court of competent jurisdiction or as required by law, the holder of any Note or Coupon shall be deemed to be and may be treated as the absolute owner of such Note or of such Coupon, as the case may be, for the purpose of receiving payment thereof or on account thereof and for all other purposes, whether or not such Note or Coupon shall be overdue and notwithstanding any notice of ownership, theft or loss thereof or any writing thereon made by anyone, and no person shall be liable for so treating the holder. (iii) For so long as any of the Notes is represented by a Global Note and such Global Note is held by The Central Depository (Pte) Limited (the "Depository"), each person who is for the time being shown in the records of the Depository as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by the Depository as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such principal amount of Notes other than with respect to the payment of principal, interest and any other amounts in respect of the Notes, for which purpose the bearer of the Global Note shall be treated by the Issuer, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and subject to the terms of the Global Note (and the expressions "Noteholder" and "holder of Notes" and related expressions shall be construed accordingly). Notes which are represented by the Global Note will be transferable only in accordance with the rules and procedures for the time being of the Depository. (iv) In these Conditions, "Global Note" means the relevant Temporary Global Note representing each Series or the relevant Permanent Global Note representing each Series, "Noteholder" means the bearer of any Definitive Note and "holder" (in relation to a Definitive Note or Coupon) means the bearer of any Definitive Note or Coupon, "Series" means (a) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (i) expressed to be consolidated and forming a single series and (ii) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (b) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest and "Tranche" means Notes which are identical in all respects (including as to listing). 42 (v) Words and expressions defined in the Trust Deed or used in the applicable Pricing Supplement (as defined in the Trust Deed) shall have the same meanings where used in these Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail. 2. STATUS The Notes and Coupons of all Series constitute direct, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law or the Trust Deed) of the Issuer from time to time outstanding. 3. NEGATIVE PLEDGE In the Trust Deed, the Issuer has covenanted that, so long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer will not, and will ensure that none of its Principal Subsidiaries will, create or have outstanding any mortgage, charge, pledge or other security interest over the whole or any part of its undertakings, assets, property or revenues, present or future, where such mortgage, charge, pledge or other security interest is given, or is intended to be given, to secure the indebtedness of, or guaranteed by, the Issuer or any of its Principal Subsidiaries unless such mortgage, charge, pledge or other security interest is forthwith extended equally and rateably to the indebtedness of the Issuer in respect of the Notes, except for:- (a) liens arising solely by operation of law (or by an agreement evidencing the same) in the ordinary course of its business in respect of indebtedness which either (i) has been due for less than 14 days or (ii) is being contested in good faith and by appropriate means; and (b) any security created or to be created with the prior consent of the Trustee. 4. (I) INTEREST ON FIXED RATE NOTES (a) Interest Rate and Accrual Each Fixed Rate Note bears interest on its Calculation Amount (as defined in Condition 4(II)(h)) from the Interest Commencement Date in respect thereof and as shown on the face of such Note at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Reference Date or Reference Dates shown on the face of such Note in each year and on the Maturity Date shown on the face of such Note if that date does not fall on a Reference Date. The first payment of interest will be made on the Reference Date next following the Interest Commencement Date (and if the Interest Commencement Date is not a Reference Date, will amount to the Initial Broken Amount shown on the face of such 43 Note), unless the Maturity Date falls before the date on which the first payment of interest would otherwise be due. If the Maturity Date is not a Reference Date, interest from the preceding Reference Date (or from the Interest Commencement Date, as the case may be) to the Maturity Date will amount to the Final Broken Amount shown on the face of the Note. Interest will cease to accrue on each Fixed Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(I) to the Relevant Date (as defined in Condition 7). (b) Calculations In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be calculated on the Fixed Rate Day Basis shown on the face of such Note. (II) INTEREST ON FLOATING RATE NOTES OR VARIABLE RATE NOTES (a) Interest Payment Dates Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note, and such interest will be payable in arrear on each date ("Interest Payment Date") which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the "Specified Number of Months") after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date (and which corresponds numerically with such preceding Interest Payment Date or the Interest Commencement Date, as the case may be), provided that the Agreed Yield (as defined in Condition 4(II)(c)) in respect of any Variable Rate Note for any Interest Period (as defined below) relating to that Variable Rate Note shall be payable on the first day of that Interest Period. If any Interest Payment Date would otherwise fall on a day which is not a business day (as defined below), it shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month. In any such case as aforesaid or if there is no date in the relevant month which corresponds numerically with the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date (i) the Interest Payment Date shall be brought forward to the immediately preceding business day and (ii) each subsequent Interest Payment Date shall be the last business day of the month which is the last of the Specified Number of Months after the month in which the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall have fallen. The period beginning on the Interest Commencement Date and ending on the first Interest Payment Date and each successive period beginning on an Interest Payment Date and ending on the next succeeding Interest Payment Date is herein called an "Interest Period". Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal is improperly withheld or refused, in 44 which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(II) to the Relevant Date. (b) Rate of Interest - Floating Rate Notes (i) Each Floating Rate Note bears interest at a floating rate determined by reference to a benchmark as stated on the face of such Floating Rate Note, being (in the case of Notes which are denominated in Singapore dollars) SIBOR (in which case such Note will be a SIBOR Note) or Swap Rate (in which case such Note will be a Swap Rate Note) or in any case (or in the case of Notes which are denominated in a currency other than Singapore dollars) such other benchmark as is set out on the face of such Note. Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Note. The "Spread" is the percentage rate per annum specified on the face of such Note as being applicable to the rate of interest for such Note. The rate of interest so calculated shall be subject to paragraph (d) below. The rate of interest payable in respect of a Floating Rate Note from time to time is referred to in these Conditions as the "Rate of Interest". (ii) The Rate of Interest payable from time to time in respect of each Floating Rate Note will be determined by the Agent Bank on the basis of the following provisions:- (1) in the case of Floating Rate Notes which are SIBOR Notes:- (A) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period which appears on the Reuters Screen SIBOS Page (or such other Screen Page as may be provided hereon) and as adjusted by the Spread (if any); (B) if no such rate appears on the Reuters Screen SIBOS Page (or such other replacement page thereof), the Agent Bank will, at or about the Relevant Time on such Interest Determination Date, determine the Rate of Interest for such Interest Period which shall be the rate which appears on Telerate Page 7310 of the Dow Jones Telerate Service (or such other replacement page thereof), being the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period and as adjusted by the Spread (if any); (C) if no such rate appears on Telerate Page 7310 (or such other replacement page thereof or if no rate appears on such other Screen Page as may be provided hereon) or if Telerate Page 7310 (or such other replacement page thereof or such other Screen Page as may be provided hereon) is unavailable for 45 any reason, the Agent Bank will request the principal Singapore offices of each of the Reference Banks to provide the Agent Bank with the rate at which deposits in Singapore dollars are offered by it at approximately the Relevant Time on the Interest Determination Date to prime banks in the Singapore interbank market for a period equivalent to the duration of such Interest Period commencing on such Interest Payment Date in an amount comparable to the aggregate principal amount of the relevant Floating Rate Notes. The Rate of Interest for such Interest Period shall be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of such offered quotations and as adjusted by the Spread (if any), as determined by the Agent Bank; (D) if on any Interest Determination Date two but not all the Reference Banks provide the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be determined in accordance with (C) above on the basis of the quotations of those Reference Banks providing such quotations; and (E) if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and as adjusted by the Spread (if any) or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the prime lending rates for Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); (2) in the case of Floating Rate Notes which are Swap Rate Notes:- (A) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each 46 Interest Period, determine the Rate of Interest for such Interest Period which shall be the Average Swap Rate for such Interest Period (determined by the Agent Bank as being the rate which appears under the caption "ASSOCIATION OF BANKS IN SINGAPORE SIBOR AND SWAP OFFER RATE FIXING AT 11 A.M. SINGAPORE TIME" and the row headed "SGD" on Telerate Page 50157 of the Dow Jones Telerate Service (or such other page as may replace Telerate Page 50157 for the purpose of displaying the swap rates of leading reference banks) at or about the Relevant Time on such Interest Determination Date and for a period equal to the duration of such Interest Period) and as adjusted by the Spread (if any); (B) if on any Interest Determination Date, no such rate is quoted on Telerate Page 50157 (or such other replacement page as aforesaid) or Telerate Page 50157 (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will determine the Average Swap Rate (which shall be rounded up, if necessary, to the nearest 1/16 per cent.) for such Interest Period in accordance with the following formula:- In the case of Premium:- 365 (Premium x 36500) Average Swap Rate = --- x SIBOR + ----------------- 360 (T x Spot Rate) (SIBOR x Premium) 365 + ----------------- x --- (Spot Rate) 360 In the case of Discount:- 365 (Discount x 36500) Average Swap Rate = --- x SIBOR - ------------------ 360 (T x Spot Rate) (SIBOR x Discount) x 365 - ------------------ --- (Spot Rate) 360 where:- SIBOR = the rate which appears under the caption "SINGAPORE INTERBANK OFFER RATES (US$)" and the column headed "Fixing" on Telerate Page 7311 of the Dow Jones Telerate Service (or such other page as may replace Telerate Page 7311 for the purpose of displaying Singapore interbank United States dollar offered rates of leading reference banks) at or 47 about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Spot Rate = the rate (determined by the Agent Bank) to be the arithmetic mean (rounded up, if necessary, to the nearest four decimal places) of the rates quoted by the Reference Banks and which appear under the caption "SINGAPORE BANKS RATES AT 11 A.M. SGP TIME" and the column headed "Spot" on Telerate Page 50162 of the Dow Jones Telerate Service (or such other page as may replace Telerate Page 50162 for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; Premium or Discount = the rate (determined by the Agent Bank) to be the arithmetic mean (rounded up, if necessary, to the nearest four decimal places) of the rates quoted by the Reference Banks for a period equal to the duration of the Interest Period concerned which appear under the caption "SINGAPORE BANKS RATES AT 11 A.M. SGP TIME" on Telerate Page 50162 of the Dow Jones Telerate Service (or such other page as may replace Telerate Page 50162 for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; and T = the number of days in the Interest Period concerned. 48 The Rate of Interest for such Interest Period shall be the Average Swap Rate (as determined by the Agent Bank) and as adjusted by the Spread (if any); (C) if on any Interest Determination Date any one of the components for the purposes of calculating the Average Swap Rate under (B) above is not quoted on the relevant Telerate Page (or such other replacement page as aforesaid) or the relevant Telerate Page (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of the Reference Banks to provide the Agent Bank with quotations of their Swap Rates for the Interest Period concerned at or about the Relevant Time on that Interest Determination Date and the Rate of Interest for such Interest Period shall be the Average Swap Rate for such Interest Period (which shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the Swap Rates quoted by the Reference Banks to the Agent Bank) and as adjusted by the Spread (if any). The Swap Rate of a Reference Bank means the rate at which that Reference Bank can generate Singapore dollars for the Interest Period concerned in the Singapore interbank market at or about the Relevant Time on the relevant Interest Determination Date and shall be determined as follows:- In the case of Premium:- 365 (Premium x 36500) Swap Rate = --- x SIBOR + ----------------- 360 (T x Spot Rate) (SIBOR x Premium) 365 + ----------------- x --- (Spot Rate) 360 In the case of Discount:- Swap Rate = 365 (Discount x 36500) --- x SIBOR - ------------------ 360 (T x Spot Rate) (SIBOR x Discount) 365 - ------------------ x --- (Spot Rate) 360 where:- SIBOR = the rate per annum at which United States dollar deposits for a period equal to the duration of the Interest Period concerned are being offered by that Reference Bank to prime banks in the Singapore interbank 49 market at or about the Relevant Time on the relevant Interest Determination Date; Spot Rate = the rate at which that Reference Bank sells United States dollars spot in exchange for Singapore dollars in the Singapore interbank market at or about the Relevant Time on the relevant Interest Determination Date; Premium = the premium that would have been paid by that Reference Bank in buying United States dollars forward in exchange for Singapore dollars on the last day of the Interest Period concerned in the Singapore interbank market; Discount = the discount that would have been received by that Reference Bank in buying United States dollars forward in exchange for Singapore dollars on the last day of the Interest Period concerned in the Singapore interbank market; and T = the number of days in the Interest Period concerned; and (D) if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with quotations of their Swap Rate(s), the Average Swap Rate shall be determined by the Agent Bank to be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and the Rate of Interest for the relevant Interest Period shall be the Average Swap Rate (as so determined by the Agent Bank) and as adjusted by the Spread (if any), or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such 50 quotation, the Rate of Interest for the relevant Interest Period shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the prime lending rates for Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); and (3) in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate Notes or which are denominated in a currency other than Singapore dollars, the Agent Bank will determine the Rate of Interest in respect of any Interest Period at or about the Relevant Time on the Interest Determination Date in respect of such Interest Period as follows:- (A) if the Primary Source for the Floating Rate is a Screen Page (as defined below), subject as provided below, the Rate of Interest in respect of such Interest Period shall be:- (aa) the Relevant Rate (as defined below) (where such Relevant Rate on such Screen Page is a composite quotation or is customarily supplied by one entity); or (bb) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Screen Page, in each case appearing on such Screen Page at the Relevant Time on the Interest Determination Date, and as adjusted by the Spread (if any); (B) if the Primary Source for the Floating Rate is Reference Banks or if paragraph (b)(ii)(3)(A)(aa) applies and no Relevant Rate appears on the Screen Page at the Relevant Time on the Interest Determination Date or if paragraph (b)(ii)(3)(A)(bb) applies and fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre (as defined below) at the Relevant Time on the Interest Determination Date and as adjusted by the Spread (if any); and (C) if paragraph (b)(ii)(3)(B) applies and the Agent Bank determines that fewer than two Reference Banks are so quoting Relevant Rates, the Rate of Interest shall be the Rate 51 of Interest determined on the previous Interest Determination Date. (iii) On the last day of each Interest Period, the Issuer will pay interest on each Floating Rate Note to which such Interest Period relates at the Rate of Interest for such Interest Period. (c) Rate of Interest - Variable Rate Notes (i) Each Variable Rate Note bears interest at a variable rate determined in accordance with the provisions of this paragraph (c). The interest payable in respect of a Variable Rate Note on the first day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the "Agreed Yield" and the rate of interest payable in respect of a Variable Rate Note on the last day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the "Rate of Interest". (ii) The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect of each Variable Rate Note for each Interest Period shall, subject as referred to in paragraph (c)(iv) below, be determined as follows:- (1) not earlier than 9 a.m. (Singapore time) on the ninth business day nor later than 3 p.m. (Singapore time) on the third business day prior to the commencement of each Interest Period, the Issuer and the Relevant Dealer (as defined below) shall endeavour to agree on the following:- (A) whether interest in respect of such Variable Rate Note is to be paid on the first day or the last day of such Interest Period; (B) if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Interest Amount (as defined below) for such Variable Rate Note for such Interest Period shall be zero); and (C) if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in respect of such Variable Rate Note for such Interest Period (an "Agreed Rate") and, in the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period; and (2) if the Issuer and the Relevant Dealer shall not have agreed either an Agreed Yield or an Agreed Rate in respect of such Variable Rate Note for such Interest Period by 3 p.m. (Singapore time) on the third 52 business day prior to the commencement of such Interest Period, or if there shall be no Relevant Dealer during the period for agreement referred to in (1) above, the Rate of Interest for such Variable Rate Note for such Interest Period shall automatically be the rate per annum equal to the Fall Back Rate (as defined below) for such Interest Period. (iii) The Issuer has undertaken to the Issuing and Paying Agent and the Agent Bank that it will as soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note is determined but not later than 10.30 a.m. (Singapore time) on the next following business day:- (1) notify the Issuing and Paying Agent and the Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period; and (2) cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable Rate Note to be notified by the Issuing and Paying Agent to the relevant Noteholder at its request. (iv) For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest Period for which there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no Relevant Dealer in respect of the Variable Rate Note(s) shall be the rate (the "Fall Back Rate") determined by reference to a benchmark as stated on the face of such Variable Rate Note(s), being (in the case of Variable Rate Notes which are denominated in Singapore dollars) SIBOR (in which case such Variable Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable Rate Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable Rate Notes which are denominated in a currency other than Singapore dollars) such other benchmark as is set out on the face of such Variable Rate Note(s). Such rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Variable Rate Note. The "Spread" is the percentage rate per annum specified on the face of such Variable Rate Note as being applicable to the rate of interest for such Variable Rate Note. The rate of interest so calculated shall be subject to paragraph (d) below. The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be determined by the Agent Bank in accordance with the provisions of Condition 4(II)(b)(ii) above (mutatis mutandis) and references therein to "Rate of Interest" shall mean "Fall Back Rate". (v) If interest is payable in respect of a Variable Rate Note on the first day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Agreed Yield applicable to such Variable Rate Note for such Interest Period on the first day of such Interest Period. If interest is payable in respect of a Variable Rate Note on the last day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Interest Amount for such Variable Rate Note for such Interest Period on the last day of such Interest Period. 53 (d) Determination of Rate of Interest and Calculation of Interest Amounts and Redemption Amounts The Agent Bank will, as soon as practicable after the Relevant Time on each Interest Determination Date or such other time on such date as the Agent Bank may be required to calculate any Redemption Amount in respect of any Notes, determine the Rate of Interest and calculate the amount of interest payable (the "Interest Amounts") in respect of each Calculation Amount of the relevant Floating Rate Notes or Variable Rate Notes for the relevant Interest Period or calculate the Redemption Amount in respect of such Notes. The Interest Amounts shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying such product by the actual number of days in the Interest Period concerned (including the first, but excluding the last, day of such Interest Period), divided by the FRN Day Basis or, as the case may be, VRN Day Basis shown on the face of such Note and rounding the resultant figure to the nearest cent. The determination of the Rate of Interest, the Interest Amounts and the Redemption Amount by the Agent Bank shall (in the absence of manifest error) be final and binding upon all parties. (e) Notification of Rate of Interest and Interest Amounts The Agent Bank will cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date and, if required to be calculated, the Redemption Amount to be notified to the Issuing and Paying Agent and the Issuer and (in the case of Floating Rate Notes) to be notified to Noteholders in accordance with Condition 15 as soon as possible after their determination but in no event later than the second business day thereafter. The Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If the Floating Rate Notes or, as the case may be, Variable Rate Notes become due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of the Floating Rate Notes or, as the case may be, Variable Rate Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest and Interest Amounts need to be made unless the Trustee requires otherwise. (f) Determination of Rate of Interest by the Trustee The Trustee shall (if the Agent Bank does not at any material time determine the Rate of Interest) determine or procure the determination of such Rate of Interest in accordance with the provisions of this Condition 4. In doing so, the Trustee shall apply the foregoing provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects, it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. (g) Agent Bank and Reference Banks The Issuer will procure that, so long as any Floating Rate Note or Variable Rate Note remains outstanding, there shall at all times be three Reference Banks and an Agent Bank. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank or the Agent Bank is unable or unwilling to act as such or if the Agent Bank fails duly to establish the Rate of Interest for any Interest Period or 54 to calculate the Interest Amounts or the Redemption Amount, the Issuer will appoint the Singapore office of a leading bank or merchant bank engaged in the Singapore interbank market to act as such in its place. The Agent Bank may not resign its duties without a successor having been appointed as aforesaid. (h) Definitions As used in these Conditions:- "Benchmark" means the rate specified as such in the applicable Pricing Supplement; "business day" means:- (i) (in the case of Notes denominated in Singapore dollars) a day (other than a Saturday or Sunday) on which commercial banks are open for business in Singapore; and (ii) (in the case of Notes denominated in a currency other than Singapore dollars), a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets are open for business in Singapore and the principal financial centre for that currency; "Calculation Amount" means the amount specified as such on the face of any Note, or if no such amount is so specified, the Denomination Amount of such Note as shown on the face thereof; "Interest Commencement Date" means the Issue Date or such other date as may be specified as the Interest Commencement Date on the face of such Note; "Interest Determination Date" means, in respect of any Interest Period, that number of business days prior thereto as is set out in the applicable Pricing Supplement or on the face of the relevant Note; "Reference Banks" means the institutions specified as such hereon or, if none, three major banks selected by the Agent Bank in the interbank market that is most closely connected with the Benchmark; "Relevant Currency" means the currency in which the Notes are denominated; "Relevant Dealer" means, in respect of any Variable Rate Note, the Dealer party to the Programme Agreement referred to in the Agency Agreement with whom the Issuer has concluded or is negotiating an agreement for the issue of such Variable Rate Note pursuant to the Programme Agreement; "Relevant Financial Centre" means, in the case of interest to be determined on an Interest Determination Date with respect to any Floating Rate Note or 55 Variable Rate Note, the financial centre with which the relevant Benchmark is most closely connected or, if none is so connected, Singapore; "Relevant Rate" means the Benchmark for a Calculation Amount of the Relevant Currency for a period (if applicable or appropriate to the Benchmark) equal to the relevant Interest Period; "Relevant Time" means, with respect to any Interest Determination Date, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Relevant Currency in the interbank market in the Relevant Financial Centre; and "Screen Page" means such page, section, caption, column or other part of a particular information service (including, but not limited to, the Reuters Monitor Money Rates Service ("Reuters") and the Dow Jones Telerate Service ("Telerate")) as may be specified hereon for the purpose of providing the Benchmark, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Benchmark. (III) INTEREST ON HYBRID NOTES (a) Interest Rate and Accrual Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note. (b) Fixed Rate Period (i) In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Fixed Rate Period at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Reference Date or Reference Dates shown on the face of the Note in each year and on the last day of the Fixed Rate Period if that date does not fall on a Reference Date. (ii) The first payment of interest will be made on the Reference Date next following the first day of the Fixed Rate Period (and if the first day of the Fixed Rate Period is not a Reference Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the last day of the Fixed Rate Period falls before the date on which the first payment of interest would otherwise be due. If the last day of the Fixed Rate Period is not a Reference Date, interest from the preceding Reference Date (or from the first day of the Fixed Rate Period, as the case may be) to the last day of the Fixed Rate Period will amount to the Final Broken Amount shown on the face of the Note. (iii) Where the due date of redemption of any Hybrid Note falls within the Fixed Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, 56 payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) to the Relevant Date. (iv) In the case of a Hybrid Note, interest in respect of a period of less than one year will be calculated on the Fixed Rate Day Basis shown on the face of the Note during the Fixed Rate Period. (c) Floating Rate Period (i) In respect of the Floating Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Floating Rate Period, and such interest will be payable in arrear on each date ("Interest Payment Date") which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the "Specified Number of Months") after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the first day of the Floating Rate Period (and which corresponds numerically with such preceding Interest Payment Date or the first day of the Floating Rate Period, as the case may be). If any Interest Payment Date would otherwise fall on a day which is not a business day, it shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month. In any such case as aforesaid or if there is no date in the relevant month which corresponds numerically with the preceding Interest Payment Date or, as the case may be, the first day of the Floating Rate Period (i) the Interest Payment Date shall be brought forward to the immediately preceding business day and (ii) each subsequent Interest Payment Date shall be the last business day of the month which is the last of the Specified Number of Months after the month in which the preceding Interest Payment Date or, as the case may be, the first day of the Floating Rate Period shall have fallen. (ii) The period beginning on the first day of the Floating Rate Period and ending on the first Interest Payment Date and each successive period beginning on an Interest Payment Date and ending on the next succeeding Interest Payment Date is herein called an "Interest Period". (iii) Where the due date of redemption of any Hybrid Note falls within the Floating Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation thereof, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) and the Agency Agreement to the Relevant Date. (iv) The provisions of Condition 4(II)(b) shall apply to each Hybrid Note during the Floating Rate Period as though references therein to Floating Rate Notes are references to Hybrid Notes. 5. REDEMPTION AND PURCHASE (a) Final Redemption 57 Unless previously redeemed or purchased and cancelled as provided below, this Note will be redeemed at its Redemption Amount on the Maturity Date shown on its face (if this Note is shown on its face to be a Fixed Rate Note or Hybrid Note) or on the Interest Payment Date falling in the Redemption Month shown on its face (if this Note is shown on its face to be a Floating Rate Note, Variable Rate Note or Hybrid Note). (b) Purchase at the Option of Issuer If so provided hereon, the Issuer shall have the option to purchase all or any of the Fixed Rate Notes, Floating Rate Notes, Variable Rate Notes or Hybrid Notes at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Noteholders shall be bound to sell such Notes to the Issuer accordingly. To exercise such option, the Issuer shall give irrevocable notice to the Noteholders within the Issuer's Purchase Option Period shown on the face hereof. Such Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. In the case of a purchase of some only of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be purchased, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on the Singapore Exchange Securities Trading Limited, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any purchase of Notes. (c) Purchase at the Option of Noteholders (i) Each Noteholder shall have the option to have all or any of his Variable Rate Notes purchased by the Issuer at their Redemption Amount on any Interest Payment Date and the Issuer will purchase such Variable Rate Notes accordingly. To exercise such option, a Noteholder shall deposit any Variable Rate Notes to be purchased with the Issuing and Paying Agent at its specified office together with all Coupons relating to such Variable Rate Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent within the Noteholders' VRN Purchase Option Period shown on the face hereof. Any Variable Rate Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Variable Rate Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Variable Rate Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. (ii) If so provided hereon, each Noteholder shall have the option to have all or any of his Fixed Rate Notes, Floating Rate Notes or Hybrid Notes purchased by the Issuer at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Issuer will purchase such Notes accordingly. To exercise such option, a Noteholder 58 shall deposit any Notes to be purchased with the Issuing and Paying Agent at its specified office together with all Coupons relating to such Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent within the Noteholders' Purchase Option Period shown on the face hereof. Any Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Notes may be held, resold or surrendered to the Issuing and Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. (d) Redemption at the Option of the Issuer If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within the Issuer's Redemption Option Period shown on the face hereof, redeem all or, if so provided, some of the Notes at their Redemption Amount or integral multiples thereof and on the date or dates so provided. Any such redemption of Notes shall be at their Redemption Amount, together with interest accrued to the date fixed for redemption. All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition. In the case of a partial redemption, the notice to Noteholders shall also contain the certificate numbers of the Notes to be redeemed, which shall have been drawn in such place and in such manner as may be fair and reasonable in the circumstances, taking account of prevailing market practices, subject to compliance with any applicable laws. So long as the Notes are listed on the Singapore Exchange Securities Trading Limited, the Issuer shall, comply with the rules of such Stock Exchange in relation to the publication of any redemption of Notes. (e) Redemption at the Option of Noteholders (i) If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note on the date or dates so provided at its Redemption Amount, together with interest accrued to the date fixed for redemption. To exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with the Issuing and Paying Agent at its specified office, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent within the Noteholders' Redemption Option Period shown on the face hereof. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. (ii) In the event that Singapore Technologies Pte Ltd ceases to hold (either directly or indirectly through any one or more of its wholly-owned subsidiaries) at least 51 per cent. of the issued ordinary share capital of the Issuer for the time being, the Issuer will, at the option of the holder of any Note, redeem such Note at its Redemption Amount (together with interest accrued to the date fixed for redemption) on the date falling 45 days from the date of the exercise by the holder of such option. The Issuer will give prompt notice to the Noteholders of the occurrence of the event referred to in this Condition 5(e)(ii) in accordance with Condition 15. To exercise such option, a Noteholder shall deposit any Notes to be 59 redeemed with the Issuing and Paying Agent at its specified office together with all Coupons relating to such Notes which mature after the date fixed for redemption, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent, no later than 30 days from the date of the Issuer's notice to the Noteholders of the occurrence of such event (or such longer period, not exceeding 45 days, as the Issuer may notify to the Noteholders in such notice). Any Notes so deposited may not be withdrawn (except as provided in the Agency Agreement). (f) Redemption for Taxation Reasons If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not in part, on any Reference Date or Interest Payment Date (as the case may be) or, if so specified hereon, at any time on giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable), at their Redemption Amount (together with interest accrued to (but excluding) the date fixed for redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7, or increase the payment of such additional amounts, as a result of any change in, or amendment to, the laws (or any regulations, rulings or other administrative pronouncements promulgated thereunder) of Singapore or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws, regulations, rulings or other administrative pronouncements, which change or amendment is made public on or after the Issue Date or any other date specified in the Pricing Supplement, and (ii) such obligations cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Issuing and Paying Agent a certificate signed by a duly authorised officer of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or is likely to become obliged to pay such additional amounts as a result of such change or amendment. (g) Purchases The Issuer and any of its subsidiaries may at any time purchase Notes at any price (provided that they are purchased together with all unmatured Coupons relating to them) in the open market or otherwise, provided that in any such case such purchase or purchases is in compliance with all relevant laws, regulations and directives. Notes purchased by the Issuer or any of its subsidiaries may be surrendered by the purchaser through the Issuer to the Issuing and Paying Agent for cancellation or may at the option of the Issuer or relevant subsidiary be held or resold. For the purposes of these Conditions, "directive" includes any present or future directive, regulation, request, requirement, rule or credit restraint programme of any relevant agency, authority, central bank department, government, legislative, minister, ministry, official, public or statutory corporation, self-regulating organisation, or stock exchange. 60 (h) Cancellation All Notes purchased by or on behalf of the Issuer or any of its subsidiaries may be surrendered for cancellation by surrendering each such Note together with all unmatured Coupons to the Issuing and Paying Agent at its specified office and, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold. 6. PAYMENTS (a) Principal and Interest Payments of principal and interest in respect of the Notes will, subject as mentioned below, be made against presentation and surrender of the relevant Notes or Coupons, as the case may be, at the specified office of the Issuing and Paying Agent by a cheque drawn in the currency in which payment is due on, or, at the option of the holders, by transfer to an account maintained by the payee in that currency with, a bank in the principal financial centre for that currency. (b) Payments subject to law etc. All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments. (c) Appointment of Agents The Issuing and Paying Agent and its specified office are listed below. The Issuer reserves the right at any time to vary or terminate the appointment of the Issuing and Paying Agent and to appoint additional or other Issuing and Paying Agents, provided that it will at all times maintain an Issuing and Paying Agent having a specified office in Singapore. Notice of any such change or any change of any specified office will promptly be given to the Noteholders in accordance with Condition 15. The Agency Agreement may be amended by the Issuer, the Issuing and Paying Agent and the Trustee, without the consent of any holder, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained therein or in any manner which the Issuer, the Issuing and Paying Agent and the Trustee may mutually deem necessary or desirable and which does not, in the reasonable opinion of the Issuer, the Issuing and Paying Agent and the Trustee, adversely affect the interests of the holders. (d) Unmatured Coupons (i) Fixed Rate Notes and Hybrid Notes should be surrendered for payment together with all unmatured Coupons (if any) relating to 61 such Notes (and, in the case of Hybrid Notes, relating to interest payable during the Fixed Rate Period), failing which an amount equal to the face value of each missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears to the total principal due) will be deducted from the Redemption Amount due for payment. Any amount so deducted will be paid in the manner mentioned above against surrender of such missing Coupon within a period of five years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 8). (ii) Subject to the provisions of the relevant Pricing Supplement upon the due date for redemption of any Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured Coupons relating to such Note (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period) (whether or not attached) shall become void and no payment shall be made in respect of them. (iii) Where any Floating Rate Note, Variable Rate Note or Hybrid Note is presented for redemption without all unmatured Coupons relating to it (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period), redemption shall be made only against the provision of such indemnity as the Issuer may require. (iv) If the due date for redemption or repayment of any Note is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Note. (e) Non-business days Subject as provided in the relevant Pricing Supplement, if any date for the payment in respect of any Note or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day. (f) Default Interest (i) If on or after the due date for payment of any sum in respect of Notes denominated in Singapore dollars, payment of all or any part of such sum shall not be made against due presentation of such Notes or, as the case may be, the Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum determined by the Issuing and Paying Agent to be equal to one per cent. and the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the respective prime lending rates for Singapore dollars quoted by The Development Bank of Singapore Ltd. The Issuer shall pay any unpaid interest accrued on the amount so unpaid on the last business day of the calendar month in which such interest accrued and any interest payable under this paragraph (f)(i) which is not paid on the last 62 business day of the calendar month in which it accrued shall be added to the overdue sum and itself bear interest accordingly. (ii) If on or after the due date for payment of any sum in respect of Notes denominated in a currency other than Singapore dollars, payment of all or any part of such sum shall not be made against due presentation of such Notes or, as the case may be, the Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum determined by the Issuing and Paying Agent to be equal to one per cent. per annum above the cost to the Issuing and Paying Agent (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on it by any relevant authority or authorities) of funding by whatever means the Issuing and Paying Agent determines to be appropriate an amount equal to the unpaid sum for such period (not exceeding three months) as the Issuing and Paying Agent considers appropriate. So long as the default continues then such rate shall be re-calculated on the same basis at intervals of such duration as the Issuing and Paying Agent may select, save that the amount of unpaid interest at the above rate accruing during the preceding such period shall be added to the amount in respect of which the Issuer is in default and itself bear interest accordingly. (iii) Interest at the rate(s) determined in accordance with this paragraph (f)(i) or (f)(ii) shall be calculated on the Fixed Rate Day Basis (in the case of a Fixed Rate Note or a Hybrid Note during its Fixed Rate Period), the FRN Day Basis (in the case of a Floating Rate Note or a Hybrid Note during its Floating Rate Period) or the VRN Day Basis (in the case of a Variable Rate Note) and the actual number of days elapsed, shall accrue on a daily basis and shall be immediately due and payable by the Issuer. 7. TAXATION All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, in relation to Notes denominated in Singapore Dollars, the Issuer will not pay any additional amounts in respect of any such deduction or withholding from payments in respect of such Notes and Coupons for, or on account of, any such taxes, duties, assessments or governmental charges and, in relation to Notes which are not denominated in Singapore Dollars, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment:- (a) by or on behalf of a holder who is subject to such taxes, duties, assessments or governmental charges by reason of his being connected with Singapore otherwise than by reason only of the holding of such Note or Coupon or the receipt of any sums due in respect of such Note or Coupon (including, without limitation, the 63 holder being a resident of, or a permanent establishment in, Singapore); or (b) more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to such additional amounts on presenting the same for payment on the last day of such period of 30 days. As used in these Conditions, "Relevant Date" in respect of any Note or Coupon means the date on which payment in respect thereof first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date falling seven days after that on which notice is duly given to the Noteholders in accordance with Condition 15 that, upon further presentation of the Note or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon presentation, and references to "principal" shall be deemed to include any premium payable in respect of the Notes, all Redemption Amounts and all other amounts in the nature of principal payable pursuant to Condition 5, "interest" shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 4 and any reference to "principal" and/or "premium" and/or "Redemption Amounts" and/or "interest" shall be deemed to include any additional amounts which may be payable under these Conditions. 8. PRESCRIPTION The Notes and Coupons shall become void unless presented for payment within five years from the appropriate Relevant Date for payment. 9. EVENTS OF DEFAULT If any of the following events ("Events of Default") occurs and is continuing the Trustee at its discretion may, and if so requested by holders of at least 30 per cent. in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, give notice to the Issuer that the Notes are immediately repayable, whereupon the Redemption Amount of such Notes together with accrued interest to the date of payment shall become immediately due and payable:- (a) the Issuer does not pay any sum payable by it under any of the Notes or the Issue Documents within five business days of its due date; (b) the Issuer does not perform or comply with any one or more of its obligations (other than the payment obligation of the Issuer referred to in paragraph (a)) under the Trust Deed or any of the Notes and (except where the Trustee certifies that such default is, in its opinion, incapable of remedy, in which case no such written notice shall be required) such failure continuing for a period of 14 days after the Trustee has given notice to the Issuer requiring the same to be remedied; (c) any representation or warranty by the Issuer in the Trust Deed or in any document delivered under the Trust Deed is not complied with in 64 any respect or is or proves to have been incorrect in any respect when made or deemed repeated; (d) (i) any indebtedness of the Issuer or any of its Principal Subsidiaries for borrowed monies is declared due and payable or accelerated (in each case) prior to its stated maturity as a result of the occurrence of an event of default, howsoever called; (ii) the Issuer or any of its Principal Subsidiaries defaults in the repayment or discharge of any such indebtedness when due or at the expiration of any grace period originally applicable thereto or permitted under the agreement or other document evidencing or constituting either such indebtedness; or (iii) the Issuer or any of its Principal Subsidiaries fails to pay when properly called upon to do so any guarantee of indebtedness for borrowed monies; (e) the Issuer or any of its Principal Subsidiaries being adjudicated, or otherwise being declared by any legal process to be, insolvent, or becoming insolvent, or admitting, in writing its inability to pay its debts, or being deemed unable (within the meaning of Section 254 of the Companies Act, Chapter 50 of Singapore) to pay its debts as they mature or become due, or stopping, suspending or threatening to stop or suspend payment of all or a substantial part of its debts, or beginning negotiations or taking any proceedings or other steps with a view to the readjustment, rescheduling or deferral of all its indebtedness (or of a substantial part of its indebtedness which it will or might otherwise be unable to pay when due) or proposing or making any assignment or arrangement or composition with or for the benefit of its creditors or any class of creditors (within the meaning of Section 210 of the Companies Act, Chapter 50 of Singapore); (f) a distress, execution or other legal process being levied or enforced upon or sued out against all or a substantial part of the business, undertaking or assets of the Issuer or any of its Principal Subsidiaries and such distress, execution or other process is not dismissed, removed or discharged within 14 days of the date of such distress, execution or other process being levied, enforced upon or sued out; (g) any security on or over the assets of the Issuer or any of its Principal Subsidiaries becomes enforceable; (h) an order being made or a resolution being passed for the winding up or dissolution of the Issuer or any of its Principal Subsidiaries otherwise than a winding up or dissolution for the purposes of or pursuant to an amalgamation, consolidation, reorganisation or reconstruction not involving insolvency and the terms thereof having been previously certified in writing by the Trustee not to be, in its opinion, materially prejudicial to the interests of the Noteholders; 65 (i) a receiver, judicial manager, trustee, agent or similar officer being appointed of or in relation to the Issuer or any of its Principal Subsidiaries or of the whole or a substantial part of the business, undertaking or assets of the Issuer or any of its Principal Subsidiaries; (j) the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or a substantial part of its business or (otherwise than as permitted by the provisions of the Trust Deed) disposes or threatens to dispose of the whole or a substantial part of its property or assets (in each case, otherwise than for the purposes of such a consolidation, amalgamation, merger or reconstruction as is referred to in sub-paragraph (h) above); (k) a moratorium is agreed or declared in respect of all or any part of the indebtedness of the Issuer or any of its Principal Subsidiaries or any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or a substantial part of the assets of the Issuer or any of its Principal Subsidiaries; (l) any action, condition or thing (including the obtaining of any necessary consent) at any time required to be taken, fulfilled or done for any of the purposes stated in Clause 14(c) of the Trust Deed is not taken, fulfilled or done, or any such consent ceases to be in full force and effect without modification or any condition in or relating to any such consent is not complied with (unless that consent or condition is no longer required or applicable); (m) it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Issue Documents or any of the Notes; (n) any of the Issue Documents or any of the Notes ceases for any reason (or is claimed by the Issuer not) to be the legal and valid obligations of the Issuer, binding upon it in accordance with its terms; (o) any litigation, arbitration or administrative proceeding (other than those of a frivolous or vexatious nature) is current or pending (i) to restrain the exercise of any of the rights and/or the performance or enforcement of or compliance with any of the obligations of the Issuer under the Trust Deed or any of the Notes or (ii) which affects or is likely to affect the ability of the Issuer to perform any of its payment or other material obligations under the Trust Deed or any of the Notes; (p) any event occurs which, under the law of any relevant jurisdiction, has an analogous or equivalent effect to any of the events mentioned in paragraph (e), (f), (g), (h), (i) or (k); and 66 (q) the Issuer or any of its Principal Subsidiaries being declared by the Minister of Finance to be a declared company under the provisions of Part IX of the Companies Act, Chapter 50 of Singapore, and in the case of any of the events in paragraphs (b), (c) and (l), the Trustee shall have certified in writing to the Issuer that the event is, in its opinion, materially prejudicial to the interests of the Noteholders. In this Condition, "Principal Subsidiaries" means at any particular time, any subsidiary of the Issuer:- (1) whose profits before tax, as shown by the accounts (consolidated in the case of a subsidiary which itself has subsidiaries) of such subsidiary, based upon which the latest audited consolidated accounts of the Issuer and its subsidiaries have been prepared, are at least 20 per cent. of the profits before tax of the Issuer and its subsidiaries as shown by such audited consolidated accounts; or (2) whose total assets, as shown by the accounts (consolidated in the case of a subsidiary which itself has subsidiaries) of such subsidiary, based upon which the latest audited consolidated accounts of the Issuer and its subsidiaries have been prepared, are at least 20 per cent. of the total assets of the Issuer and its subsidiaries as shown by such audited consolidated accounts, provided that if any such subsidiary (the "transferor") shall at any time transfer the whole or a substantial part of its business, undertaking or assets to another subsidiary or the Issuer (the "transferee") then:- (aa) if the whole or substantially the whole of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall thereupon cease to be a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary; and (bb) if part only of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall remain a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary unless immediately following such transfer, the profits before tax or the total assets of the transferor or, as the case may be, the transferee fall below 20 per cent. of the profits before tax or, as the case may be, the total assets of the Issuer and its subsidiaries, as determined in accordance with paragraph (1) or, as the case may be, paragraph (2) above. Any subsidiary which becomes a Principal Subsidiary by virtue of (aa) above or which remains or becomes a Principal Subsidiary by virtue of (bb) above shall continue to be a Principal Subsidiary until the date of issue of the first audited consolidated accounts of the Issuer and its subsidiaries prepared as at a date later than the date of the relevant transfer which show the profits before tax or total assets, as the case may be, of 67 such subsidiary, as shown by the accounts (consolidated in the case of a company which itself has subsidiaries) of such subsidiary, based upon which such audited consolidated accounts have been prepared, to be less than 20 per cent. of the profits before tax or total assets, as the case may be, of the Issuer and its subsidiaries as shown by such audited consolidated accounts. A report by the Auditors for the time being of the Issuer, who shall also be responsible for producing any pro-forma accounts required for the above purposes, that in their opinion a subsidiary is or is not a Principal Subsidiary shall, in the absence of manifest error, be conclusive, Provided always that any reference in these Conditions to the Principal Subsidiaries of the Issuer shall not include Winstek Semiconductor Corporation. 10. ENFORCEMENT OF RIGHTS At any time after the Notes shall have become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce repayment of the Notes, together with accrued interest, but it shall not be bound to take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by Noteholders holding not less than 30 per cent. in principal amount of the Notes outstanding and (b) it shall have been indemnified by the Noteholders to its satisfaction. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails or neglects to do so within a reasonable period and such failure or neglect shall be continuing. 11. MEETING OF NOTEHOLDERS AND MODIFICATIONS The Trust Deed contains provisions for convening meetings of Noteholders of a Series to consider any matter affecting their interests, including modification by Extraordinary Resolution of the Notes of such Series (including these Conditions insofar as the same may apply to such Notes) or any of the provisions of the Trust Deed. The Trustee or the Issuer at any time may, and the Trustee upon the request in writing by Noteholders holding not less than one-tenth of the principal amount of the Notes of any Series for the time being outstanding shall, convene a meeting of the Noteholders of that Series. An Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders, whether present or not and on all relevant Couponholders, except that any Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest Amounts on the Notes, (b) to reduce or cancel the principal amount of, or any premium payable on redemption of, the Notes, (c) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates of interest or the basis for calculating any Interest Amount in respect of the Notes, (d) to vary any method of, or basis for, calculating the Redemption Amount, (e) to vary the currency or currencies of payment or denomination of the Notes, (f) to take any steps that as specified hereon may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply or (g) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, will only be binding if passed at a meeting of the Noteholders (or at any adjournment thereof) at which a special quorum (provided for in the Trust Deed) is present. 68 The Trustee may agree, without the consent of the Noteholders or Couponholders, to (a) any modification of any of the provisions of the Trust Deed which in the opinion of the Trustee is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of Singapore law and (b) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed which is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon as practicable. In connection with the exercise of its functions (including but not limited to those in relation to any proposed modification, waiver, authorisation or substitution) the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders. These Conditions may be amended, modified, or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series. 12. REPLACEMENT OF NOTES AND COUPONS If a Note or Coupon is lost, stolen, mutilated, defaced or destroyed it may be replaced, subject to applicable laws, at the specified office of the Issuing and Paying Agent, or at the specified office of such other Issuing and Paying Agent as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders in accordance with Condition 15, on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note or Coupon is subsequently presented for payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of such Note or Coupon) and otherwise as the Issuer may require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued. 13. FURTHER ISSUES The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes having the same terms and conditions as the Notes of any Series and so that the same shall be consolidated and form a single Series with such Notes, and references in these Conditions to "Notes" shall be construed accordingly. 14. INDEMNIFICATION OF THE TRUSTEE The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking proceedings to enforce repayment unless indemnified to its satisfaction. The Trust Deed also contains a provision entitling the Trustee to enter into business transactions with the Issuer or any of its subsidiaries without accounting to the Noteholders or Couponholders for any profit resulting from such transactions. 69 15. NOTICES Notices to the holders will be valid if published in a daily newspaper of general circulation in Singapore (or, if the holders of any Series of Notes can be identified, notices to such holders will also be valid if they are given to each of such holders). It is expected that such publication will be made in the Business Times. Notices will, if published more than once or on different dates, be deemed to have been given on the date of the first publication in such newspaper as provided above. Couponholders shall be deemed for all purposes to have notice of the contents of any notice to the holders in accordance with this Condition 15. Until such time as any Definitive Notes (as defined in the Trust Deed) are issued, there may, so long as the Global Note(s) is or are held in its or their entirety on behalf of the Depository, be substituted for such publication in such newspapers the delivery of the relevant notice to the Depository for communication by it to the Noteholders, except that if the Notes are listed on the Singapore Exchange Securities Trading Limited and the rules of such exchange so require, notice will in any event be published in accordance with the previous paragraph. Any such notice shall be deemed to have been given to the Noteholders on the seventh day after the day on which the said notice was given to the Depository. Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Issuing and Paying Agent. Whilst the Notes are represented by a Global Note, such notice may be given by any Noteholder to the Issuing and Paying Agent through the Depository in such manner as the Issuing and Paying Agent and the Depository may approve for this purpose. Notwithstanding the other provisions of this Condition, in any case where the identity and addresses of all the Noteholders are known to the Issuer, notices to such holders may be given individually by recorded delivery mail to such addresses and will be deemed to have been given when received at such addresses. 16. GOVERNING LAW The Notes and the Coupons are governed by, and shall be construed in accordance with, the laws of Singapore. 17. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 2001 No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 2001. Issuing and Paying Agent Citicorp Investment Bank (Singapore) Limited, 300, Tampines Avenue 5, #07-00, 70 Tampines Junction, Singapore 529653. 71 S C H E D U L E 1 PART III FORM OF COUPON FOR FIXED RATE NOTES AND HYBRID NOTES On the front:- ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME Series No. [ ] [Title of Issue] Coupon for [ ] due on [ ], [ ]*. This Coupon is payable to bearer (subject to the Conditions endorsed on the Note to which this Coupon appertains, which shall be binding upon the holder of this Coupon whether or not it is for the time being attached to such Note) at the specified office of the Issuing and Paying Agent set out on the reverse hereof (or any further or other Issuing and Paying Agents or specified offices duly appointed or nominated and notified to the Noteholders). ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Duly Authorised Officer * Applicable to Hybrid Notes during the Fixed Rate Period only. - -------------------------------------------------------------------------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. - -------------------------------------------------------------------------------- On the reverse:- Issuing and Paying Agent Citicorp Investment Bank (Singapore) Limited, 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653. 72 S C H E D U L E 1 PART IV FORM OF COUPON FOR FLOATING RATE NOTES, VARIABLE RATE NOTES AND HYBRID NOTES On the front:- ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME Series No. [ ] [Title of Issue] Coupon for the amount of interest due on the [Interest Payment Date falling in](1)/[first day of the Interest Period ending in](2) [ ], [ ] (and which is subject to adjustment in accordance with the Conditions referred to below). This Coupon is payable to bearer (subject to the Conditions endorsed on the Note to which this Coupon appertains, which shall be binding upon the holder of this Coupon whether or not it is for the time being attached to such Note) at the specified office of the Issuing and Paying Agent set out on the reverse hereof (or any further or other Issuing and Paying Agents or specified offices duly appointed or nominated and notified to the Noteholders). If the Note to which this Coupon appertains shall have become due and payable before the maturity date of this Coupon, this Coupon shall become void and no payment shall be made in respect of it. ST ASSEMBLY TEST SERVICES LTD By: -------------------------------- Duly Authorised Officer 73 On the reverse:- Issuing and Paying Agent Citicorp Investment Bank (Singapore) Limited, 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653. - -------------------------------------------------------------------------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. - -------------------------------------------------------------------------------- Notes:- (1) in the case of Floating Rate Notes, Variable Rate Notes and (during the Floating Rate Period only) Hybrid Notes. (2) in the case of Variable Rate Notes 74 S C H E D U L E 2 FORM OF TEMPORARY GLOBAL NOTE ST ASSEMBLY TEST SERVICES LTD (Incorporated with limited liability in Singapore) S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME Series No. [ ] Tranche No. [ ] [Title of Issue] TEMPORARY GLOBAL NOTE This is a Temporary Global Note in respect of an issue of notes ("Notes"), having an aggregate principal amount equal to the Denomination Amount stated above constituted by a Trust Deed (the "Trust Deed") dated 10th January, 2002 made between ST Assembly Test Services Ltd (the "Issuer") and British and Malayan Trustees Limited, as trustee for the holders of the Notes. Authority to Issue The issue of the Notes was authorised by resolutions of the Board of Directors of the Issuer passed on 25th September, 2001. Interpretation and Definitions References in this Temporary Global Note to the "Conditions" are to the Terms and Conditions applicable to the Notes (which are in the form set out in Part II of Schedule 1 to the Trust Deed) as such form is supplemented and/or modified and/or superseded by the provisions of this Temporary Global Note. Other capitalised terms used in this Temporary Global Note shall have the meanings given to them in the Conditions or the Trust Deed. Promise to Pay The Issuer for value received hereby unconditionally promises to pay to the bearer of this Temporary Global Note on the Maturity Date stated below (if this Temporary Global Note is stated to be a Fixed Rate Note or Hybrid Note) or on the Interest Payment Date falling in the Redemption Month stated below (if this Temporary Global Note is stated to be a Floating Rate Note, Variable Rate Note or Hybrid Note) or on such earlier date as the Redemption Amount may become repayable in accordance with the Conditions upon presentation and surrender of this Temporary Global Note the Redemption Amount in respect of the 75 aggregate principal amount of Notes represented by this Temporary Global Note and (unless this Temporary Global Note does not bear interest) to pay interest in respect of such aggregate principal amount of Notes from the Interest Commencement Date stated below at the Interest Rate stated below (if this Temporary Global Note is stated below to be a Fixed Rate Note), at the rates determined in accordance with Condition 4(II) (if this Temporary Global Note is stated to be a Floating Rate Note or a Variable Rate Note) or at the Interest Rate stated below and at the rates of interest determined in accordance with Condition 4(III) (if it is stated to be a Hybrid Note) in arrear on the dates for payment provided for in the Conditions together with such other amounts (if any) as may be payable, all subject to and in accordance with the Conditions and the provisions of the Trust Deed [; provided, however, that no payments shall be made on this Temporary Global Note prior to the Exchange Date (as defined herein) in respect of Notes represented by this Temporary Global Note unless the Issuing and Paying Agent shall have received, prior to the date of each such payment, certification of non-U.S. beneficial ownership by The Central Depository (Pte) Limited (the "Depository") substantially in the form of the certificate attached as Exhibit A to the effect that the Depository has received a certificate substantially in the form of the certificate attached as Exhibit B; and provided, further, such certification shall be deemed a request to exchange this Temporary Global Note as provided herein if such certification is received more than 40 days after the issue date of the Notes. On or after the Exchange Date, no payments will be made on this Temporary Global Note unless exchange of this Temporary Global Note for interests in the Permanent Global Note (as defined herein) is improperly withheld or refused](1). The aggregate principal amount from time to time of this Temporary Global Note shall be an amount equal to the aggregate principal amount of the Notes as shall be shown by the latest entry in the relevant column of the Principal Schedule hereto, which shall be completed by or on behalf of the Issuing and Paying Agent upon (i) the issue of Notes initially represented hereby, [(ii) the exchange of the whole or a part of this Temporary Global Note for interests in the Permanent Global Note (as defined herein),](1) [(ii) the exchange in whole (but not in part) of this Temporary Global Note for Definitive Notes (as defined herein),](2), (iii) the redemption, purchase or cancellation of Notes represented hereby, (iv) payments of principal in respect of this Temporary Global Note [and/or](4) [(v) exchanges for Direct Rights under the Deed of Covenant](3), all as described below. [The permanent global Note (the "Permanent Global Note") to be issued on exchange for interests in this Temporary Global Note will be substantially in the form set out in Schedule 3 to the Trust Deed](1). [So long as Notes are represented by this Temporary Global Note and this Temporary Global Note is held by the Depository, transfers of beneficial interests in this Temporary Global Note will be effected only through records maintained by the Depository.](3) Exchange [The Issuer hereby irrevocably undertakes that it will, not later than the date falling [three calendar months] after the Issue Date (the "Exchange Date"), exchange this Temporary Global Note (free of charge to the holder) for bearer Notes in definitive form ("Definitive Notes") in an aggregate principal amount equal to the principal amount of this Temporary Global Note submitted for exchange.](2) 76 [On or after the Exchange Date (as defined herein), this Temporary Global Note may be exchanged in whole or in part (free of charge to the holder) by its presentation and, on exchange in full, surrender to or to the order of the Issuing and Paying Agent for interests in the Permanent Global Note in an aggregate principal amount equal to the principal amount of this Temporary Global Note submitted for exchange and with respect to which there shall also be presented to the Issuing and Paying Agent a certificate dated no earlier than the Exchange Date from the Depository substantially in the form of the certificate attached as Exhibit A. "Exchange Date" means a day falling not less than 40 days from the issue date of the Notes after the day on which the notice in writing has been given to the Issuing and Paying Agent by the Depository acting on behalf of an Accountholder (as defined below) requiring exchange and on which commercial banks are open for business in Singapore. Upon the whole or part of this Temporary Global Note being exchanged for the Permanent Global Note, the Permanent Global Note shall be exchangeable in accordance with its terms for Definitive Notes.](1) [The Definitive Notes for which this Temporary Global Note may be exchangeable shall be duly executed and authenticated, shall have attached to them all Coupons in respect of interest that has not already been paid on this Temporary Global Note and shall be substantially in the form set out in Part I of Schedule 1 to the Trust Deed.](2) Upon any exchange of this Temporary Global Note for [an equivalent interest in the Permanent Global Note]/[Definitive Notes](4), the portion of the principal amount hereof so exchanged shall be endorsed by or on behalf of the Issuing and Paying Agent in the Principal Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so exchanged and endorsed. Upon exchange (or payment) in whole, this Temporary Global Note shall be deemed fully paid and shall be cancelled by the Issuing and Paying Agent and, unless otherwise instructed by the Issuer, the cancelled Temporary Global Note shall be returned to the Issuer. Benefit of Conditions Except as otherwise specified herein, this Temporary Global Note is subject to the Conditions and the provisions of the Trust Deed and, until the whole of this Temporary Global Note is exchanged for [equivalent interests in the Permanent Global Note]/[Definitive Notes](4), the holder of this Temporary Global Note shall in all respects be entitled to the same benefits as if it were the holder of [the Permanent Global Note in respect of interests in which it may be exchanged]/[the Definitive Notes for which it may be exchanged](4) as if [the Permanent Global Note]/[such Definitive Notes](4) had been issued on the Issue Date, except that the holder of this Temporary Global Note shall not be entitled to receive any payment hereon except as provided herein. Payments [No person shall be entitled to receive any payment in respect of the Notes represented by this Temporary Global Note that falls due on or after the Exchange Date unless, upon due presentation of this Temporary Global Note for exchange, delivery of Definitive Notes is improperly withheld or refused by or on behalf of the Issuer.](2) 77 If any payment in full of principal is made in respect of any Note represented by this Temporary Global Note, the portion of this Temporary Global Note representing such Note shall be cancelled and the amount so cancelled shall be endorsed by or on behalf of the Issuing and Paying Agent in the Principal Schedule hereto (such endorsement being prima facie evidence that the payment in question has been made) whereupon the principal amount hereof shall be reduced for all purposes by the amount so cancelled and endorsed. If any other payments are made in respect of the Notes represented by this Temporary Global Note, a record of each such payment shall be endorsed by or on behalf of the Issuing and Paying Agent on such Payment Schedule hereto (such endorsement being prima facie evidence that the payment in question has been made). [Accountholders In accordance with the requirements of the Depository, for so long as any of the Notes is represented by this Temporary Global Note and this Temporary Global Note is held by the Depository, each person who is for the time being shown in the records of the Depository as the holder of a particular principal amount of such Notes (each an "Accountholder") shall be deemed to be (and shall be treated by the Issuer, the Issuing and Paying Agent, all other agents of the Issuer and the Trustee as) the holder of such principal amount of Notes for all purposes (including, without limitation, for the purpose of giving notices under the Conditions) other than with respect to the payment of principal, interest and other amounts in respect of the Notes, the right to which shall be vested, as against the Issuer, solely in the bearer of this Temporary Global Note, in accordance with and subject to its terms. Each Accountholder must look solely to the Depository for its share of each payment made to the bearer of this Temporary Global Note. Any certificate or other document issued by the Depository as to the principal amount of Notes standing to the account of any Accountholder shall be conclusive and binding for all purposes save in the case of manifest error. The Issuer covenants in favour of the Trustee and each Accountholder that it will make all payments in respect of the principal amount of Notes for the time being shown in the records of the Depository as being held by the Accountholder and represented by this Temporary Global Note to the bearer of this Temporary Global Note and acknowledges the rights of each Accountholder under the Deed of Covenant (the "Deed of Covenant", which expression shall include any amendments and/or supplements thereto and/or restatements thereof made from time to time) dated 10th January, 2002 executed by the Issuer in relation to the Notes.](3) Cancellation Cancellation of any Note represented by this Temporary Global Note that is required by the Conditions to be cancelled shall be effected by reduction in the principal amount of this Temporary Global Note representing such Note on its presentation to or to the order of the Issuing and Paying Agent for endorsement in the Principal Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so cancelled and endorsed. [Direct Rights 78 If there shall occur any event of default entitling the Trustee to declare all of the Notes to be due and payable, as provided in the Conditions, the Trustee may exercise the right to declare Notes represented by this Temporary Global Note due and payable in the circumstances described in the Conditions by stating in a notice given to the Issuer (the "default notice") the principal amount of Notes (which may be less than the outstanding principal amount of this Temporary Global Note) which is being declared due and payable. Following the giving of the default notice, the holder of the Notes represented by this Temporary Global Note may (subject as provided below) elect that direct rights ("Direct Rights") under the provisions of the Deed of Covenant shall come into effect in respect of a principal amount of Notes up to the aggregate principal amount in respect to which such default notice has been given. Such election shall be made by notice to the Issuing and Paying Agent and presentation of this Temporary Global Note to or to the order of the Issuing and Paying Agent for reduction of the principal amount of Notes represented by this Temporary Global Note by such amount as may be stated in such notice and by endorsement of the Principal Schedule hereto of the principal amount of Notes in respect of which Direct Rights have arisen under the Deed of Covenant. Upon each such notice being given, this Temporary Global Note shall become void to the extent of the principal amount stated in such notice, save to the extent that the appropriate Direct Rights shall fail to take effect. No such election may however be made on or before the Exchange Date unless the holder elects in such notice that the exchange for such Notes shall no longer take place.](3) Notices Notices required to be given in respect of the Notes represented by this Temporary Global Note may be given by their being delivered (so long as this Temporary Global Note is held on behalf of the Depository) to the Depository, or otherwise to the holder of this Temporary Global Note rather than by publication as required by the Conditions, except that so long as the Notes are listed on Singapore Exchange Securities Trading Limited and the rules of that exchange so require, notices in respect of such Notes shall also be published in a daily newspaper in the English language having general circulation in Singapore. Others No provision of this Temporary Global Note shall alter or impair the obligation of the Issuer to pay the principal and premium (if any) of and interest on the Notes when due in accordance with the Conditions. This Temporary Global Note shall not become valid or obligatory for any purpose unless and until the Certificate of Authentication hereon has been signed by or on behalf of Citicorp Investment Bank (Singapore) Limited as Issuing and Paying Agent. This Temporary Global Note shall be governed by, and construed in accordance with, the laws of Singapore. 79 IN WITNESS whereof the Issuer has caused this Temporary Global Note to be executed under its Common Seal and signed manually on its behalf by two Directors or a Director and the Secretary of the Issuer. ST ASSEMBLY TEST SERVICES LTD ----------------------------------- Director ----------------------------------- Director/Secretary Dated as of the Issue Date specified above. CERTIFICATE OF AUTHENTICATION This Temporary Global Note is authenticated by or on behalf of the Issuing and Paying Agent, Citicorp Investment Bank (Singapore) Limited. By: --------------------------------------- duly authorised signatory (Without recourse, warranty or liability) - -------------------------------------------------------------------------------- ANY UNITED STATES PERSON WHO HOLDS THIS OB LIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. - -------------------------------------------------------------------------------- Notes:- (1) Insert where Temporary Global Note is to be exchanged for Permanent Global Note. (2) Insert where Temporary Global Note is to be exchanged for Definitive Notes. (3) Insert where Temporary Global Note is to be deposited with the Depository. (4) Delete as appropriate. 80 PRINCIPAL SCHEDULE Part I Principal Amount of Notes Represented by this Temporary Global Note The following (i) issue of Notes initially represented by this Temporary Global Note, [(ii) exchanges of the whole or a part of this Temporary Global Note for interests in the Permanent Global Note,](1) [(ii) exchange in whole (but not in part) of this Temporary Global Note for Definitive Notes,](2) (iii) redemption, purchase or cancellation of interests in this Temporary Global Note, (iv) payments of principal in respect of this Temporary Global Note [and/or](4), [(v) exchanges for Direct Rights under the Deed of Covenant](3) have been made, resulting in the principal amount of this Temporary Global Note specified in the latest entry in the fourth column below:-
REASON FOR DECREASE IN AMOUNT OF PRINCIPAL AMOUNT DECREASE IN OF THIS TEMPORARY PRINCIPAL AMOUNT PRINCIPAL AMOUNT GLOBAL NOTE OF THIS TEMPORARY NOTATION MADE BY OF THIS (EXCHANGE, GLOBAL NOTE ON OR ON BEHALF OF TEMPORARY GLOBAL CANCELLATION OR ISSUE OR THE ISSUING AND DATE NOTE PAYMENT) FOLLOWING DECREASE PAYING AGENT - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ ----------------- - ------------- ----------------- ----------------- ------------------ -----------------
81 Part II Direct Rights The principal amount of Notes in respect of which Direct Rights have arisen under the Deed of Covenant is shown by the latest entry in the third column below:-
ADDITIONAL PRINCIPAL AGGREGATE PRINCIPAL AMOUNT OF NOTES IN AMOUNT SUBJECT TO NOTATION BY OR ON RESPECT OF WHICH DIRECT RIGHTS BEHALF OF THE DIRECT RIGHTS HAVE FOLLOWING SUCH ISSUING AND DATE BEEN ELECTED ELECTION PAYING AGENT - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- ----------------- - ---------------- -------------------- -------------------- -----------------
82 PAYMENT SCHEDULE The following payments in respect of this Temporary Global Note have been made:-
NOTATION MADE BY AMOUNT OF AMOUNT OF OR ON BEHALF OF DUE DATE OF DATE OF INTEREST DUE INTEREST THE ISSUING AND PAYMENT PAYMENT AND PAYABLE PAID PAYING AGENT - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------ - ----------------- --------------- --------------- --------------- ------------------
83 THE SCHEDULE [Insert the provisions of the relevant Pricing Supplement that relate to the Conditions or the Global Notes as the Schedule] 84 [EXHIBIT A FORM OF CLEARING SYSTEM CERTIFICATE OF NON-U.S. CITIZENSHIP AND RESIDENCY ST ASSEMBLY TEST SERVICES LTD (the "Issuer") [Title of Issue] Security Code: [ ] ISIN No. [ ] (the "Notes") This is to certify that, based solely on certificates we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set out below (our "Member Organisations") substantially to the effect required in the Temporary Global Note in respect of the Notes, as of the date hereof [ ] principal amount of the Notes (1) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States persons"), (2) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) ("financial institutions")) purchasing for their account or for resale, or (b) acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (3) above (whether or not also described in clause (1) or (2)) have certified that they have not acquired the Notes for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. Any such certification by electronic transmission satisfies the requirements set forth in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(3) (ii). We will retain all certifications from our Member Organisations for the period specified in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(3)(i). We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the Temporary Global Note excepted in such certificates and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisation with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof. 85 As used therein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, America Samoa, Wake Island and the Northern Mariana Islands. If the Notes are of a category contemplated in Section 230.903(b)(3) of Regulation S under the United States Securities Act of 1933, as amended (the "Act") then this is also to certify with respect to such nominal amount of Notes set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such nominal amount, certifications with respect to such portion, substantially to the effect set forth in the Temporary Global Note in respect of the Notes. We understand that this certificate is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceedings. Yours faithfully, The Central Depository (Pte) Limited By: Dated: --------------------------------- ----------------------------- Authorised Signatory [Not earlier than the Exchange Date (as defined in the Temporary Global Note)] 86 EXHIBIT B FORM OF CERTIFICATE OF NON-U.S. CITIZENSHIP AND RESIDENCY ST ASSEMBLY TEST SERVICES LTD (the "Issuer") [Title of Issue] Security Code: [ ] ISIN No. [ ] (the "Notes") To: The Central Depository (Pte) Limited This is to certify that as of the date hereof, and except as set out below, the Notes held by you for our account (1) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source ("United States person(s)"), (2) are owned by United States person(s) that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) ("financial institutions")) purchasing for their own account or for resale, or (b) acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (3) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Notes is a United States or foreign financial institution described in clause (3) above (whether or not also described in clause (1) or (2)) this is to further certify that such financial institution has not acquired the Notes for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. If the Notes are of the category contemplated in Section 230.903(b)(3) of Regulation S under the United States Securities Act of 1933, as amended (the "Act") then this is also to certify that, except as set forth below (i) in the case of debt securities, the Notes are beneficially owned by (a) non-U.S. person(s) or (b) U.S. person(s) who purchased the Notes in transactions which did not require registration under the Act; or (ii) in the case of equity securities, the Notes are owned by (aa) non-U.S. person(s) (and such person(s) are not acquiring the Notes for the account or benefit of U.S. person(s)) or (bb) U.S. person(s) who purchased the Notes in a transaction which did not require registration under the Act. If this certification is being delivered in connection with the exercise of warrants pursuant to Section 230.903(b)(5) of Regulation S under the Act, then this is further to certify that, except as set forth below, the Notes are being exercised by and on behalf of non-U.S. 87 person(s). As used in this paragraph the term "U.S. person" has the meaning given to it by Regulation S under the Act. As used herein, "United States" means the United States of America (including the States and the District of Columbia) and its "possessions" including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. We undertake to advise you promptly by tested telex on or prior to that date on which you intend to submit your certificate relating to the Notes held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certificate applies as of such date. This certificate excepts and does not relate to [ ] principal amount of such interest in the Notes in respect of which we are not able to certify and as to which we understand exchange for an equivalent interest in the Permanent Global Note (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify. We understand that this certificate is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceedings. Dated: ---------------------------------- By: -------------------------------------- [Name of person giving certificate] As, or as agent for, the beneficial owner(s) of the above Notes to which this certificate relates.](1) 88 S C H E D U L E 3 FORM OF PERMANENT GLOBAL NOTE ST ASSEMBLY TEST SERVICES LTD (Incorporated with limited liability in Singapore) S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME Series No. [ ] Tranche No. [ ] [Title of Issue] PERMANENT GLOBAL NOTE This is a Permanent Global Note in respect of an issue of notes ("Notes"), having an aggregate principal amount equal to the Denomination Amount stated below constituted by a Trust Deed (the "Trust Deed") dated 10th January, 2002 made between ST Assembly Test Services Ltd (the "Issuer") and British and Malayan Trustees Limited, as trustee for the holders of the Notes. Authority to Issue The issue of the Notes was authorised by resolutions of the Board of Directors of the Issuer passed on 25th September, 2001. Interpretation and Definitions References in this Permanent Global Note to the "Conditions" are to the Terms and Conditions applicable to the Notes (which are in the form set out in Part II of Schedule 1 to the Trust Deed) as such form is supplemented and/or modified and/or superseded by the provisions of this Permanent Global Note. Other capitalised terms used in this Permanent Global Note shall have the meanings given to them in the Conditions or the Trust Deed. Promise to Pay The Issuer for value received hereby unconditionally promises to pay to the bearer of this Permanent Global Note on the Maturity Date stated below (if this Permanent Global Note is stated to be a Fixed Rate Note or Hybrid Note) or on the Interest Payment Date falling in the Redemption Month stated below (if this Permanent Global Note is stated to be a Floating Rate Note, Variable Rate Note or Hybrid Note) or on such earlier date as the Redemption Amount may become repayable in accordance with the Conditions upon presentation and surrender of this Permanent Global Note the Redemption Amount in respect of the aggregate principal amount of Notes represented by this Permanent Global Note and to 89 (unless this Permanent Global Note does not bear interest) pay interest in respect of such aggregate principal amount of Notes from the Interest Commencement Date stated below at the Interest Rate stated below (if this Permanent Global Note is stated below to be a Fixed Rate Note) or at the rates determined in accordance with Condition 4(II) (if this Permanent Global Note is stated to be a Floating Rate Note or a Variable Rate Note) or at the Interest Rate stated below and at the rates of interest determined in accordance with Condition 4(III) (if it is stated to be a Hybrid Note) in arrear on the dates for payment provided for in the Conditions together with such other amounts (if any) as may be payable, all subject to and in accordance with the Conditions and the provisions of the Trust Deed. The aggregate principal amount from time to time of this Permanent Global Note shall be an amount equal to the aggregate principal amount of the Notes as shall be shown by the latest entry in the relevant column of the Principal Schedule hereto, which shall be completed by or on behalf of the Issuing and Paying Agent upon [(i) the issue of Notes initially represented hereby,](1) [(i) the exchange of the whole or a part of the Temporary Global Note initially representing the Notes for a corresponding interest herein,](2) (ii) the exchange in whole (but not in part) of this Permanent Global Note for Definitive Notes (as defined herein), (iii) the redemption, purchase or cancellation of Notes represented hereby, (iv) payments of principal in respect of this Permanent Global Note and/or [(v) exchange for Direct Rights under the Deed of Covenant](3), all as described below. [So long as Notes are represented by this Permanent Global Note and this Permanent Global Note is held by The Central Depository (Pte) Limited (the "Depository"), transfers of beneficial interests in this Permanent Global Note will be effected only through records maintained by the Depository.](3) Exchange This Permanent Global Note is exchangeable, on or after the Exchange Date, in whole (but not in part), free of charge to the holder, for bearer Notes in definitive form ("Definitive Notes") if this Permanent Global Note is held by or on behalf of the Depository and (i) an event of default (as defined in the Conditions) has occurred and is continuing, (ii) the Depository has closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise), (iii) the Depository has announced an intention permanently to cease business and no alternative clearing system is available or (iv) the Depository has notified the Issuer that it is unable or unwilling to act as depository for the Notes and to continue performing its duties set out in the Depository Agreement dated 10th January, 2002 made between the Issuer and the Depository and no alternative clearing system is available. In any such case, this Permanent Global Note will be exchanged, on or after the Exchange Date (as defined herein) at the Issuing and Paying Agent's specified office for Definitive Notes in the Denomination Amount stated below, having attached to them all Coupons in respect of interest which has not already been paid on this Permanent Global Note and substantially in the form set out in Part I of Schedule 1 to the Trust Deed, and the Issuing and Paying Agent shall deliver in exchange for this Permanent Global Note, Definitive Notes in an aggregate principal amount equal to the principal amount of this Permanent Global Note. "Exchange Date" means a day falling not less than 60 days after the day on which the notice in writing has been given to the Issuing and Paying Agent by the Depository acting on behalf of an Accountholder (as defined herein) requesting exchange and on which commercial banks are open for business in Singapore. 90 Upon exchange (or payment) in whole this Permanent Global Note shall be deemed fully paid and shall be cancelled by the Issuing and Paying Agent and, unless otherwise instructed by the Issuer, the cancelled Permanent Global Note shall be returned to the Issuer. Benefit of Conditions Except as otherwise specified herein, this Permanent Global Note is subject to the Conditions and the provisions of the Trust Deed and, until the whole of this Permanent Global Note is exchanged for Definitive Notes, the holder of this Permanent Global Note shall in all respects be entitled to the same benefits as if it were the holder of Definitive Notes for which it may be exchanged as if such Definitive Notes had been issued on the Issue Date, except that the holder of this Permanent Global Note shall not be entitled to receive any payment hereon except as provided herein. Payments No person shall be entitled to receive any payment in respect of the Notes represented by this Permanent Global Note that falls due on or after the Exchange Date unless, upon due presentation of this Permanent Global Note for exchange, delivery of Definitive Notes is improperly withheld or refused by or on behalf of the Issuer or the Issuer does not perform or comply with any one or more of what are expressed to be its obligations under any Definitive Notes. Payments in respect of this Permanent Global Note shall be made to its holder against presentation and (if no further payment falls to be made on it) surrender of it and at the specified office of the Issuing and Paying Agent or of any paying agent provided for in the Conditions. A record of each such payment shall be endorsed on the Principal or Payment Schedule hereto, as appropriate, by the Issuing and Paying Agent, which endorsement shall (until the contrary is proved) be prima facie evidence that the payment in question has been made. [Accountholders In accordance with the requirements of the Depository, for so long as any of the Notes is represented by this Permanent Global Note and this Permanent Global Note is held by the Depository, each person who is for the time being shown in the records of the Depository as the holder of a particular principal amount of such Notes (each an "Accountholder") shall be deemed to be (and shall be treated by the Issuer, the Issuing and Paying Agent, all other agents of the Issuer and the Trustee as) the holder of that principal amount of Notes for all purposes (including, without limitation, for the purpose of giving notices under the Conditions) other than with respect to the payment of principal, interest and other amounts in respect of the Notes, the right to which shall be vested, as against the Issuer, solely in the bearer of this Permanent Global Note, in accordance with and subject to its terms. Each Accountholder must look solely to the Depository for its share of each payment made to the bearer of this Permanent Global Note. Any certificate or other document issued by the Depository as to 91 the principal amount of Notes standing to the account of any Accountholder shall be conclusive and binding for all purposes save in the case of manifest error. The Issuer covenants in favour of the Trustee and each Accountholder that it will make all payments in respect of the principal amount of Notes for the time being shown in the records of the Depository as being held by the Accountholder and represented by this Permanent Global Note to the bearer of this Permanent Global Note and acknowledges the rights of each Accountholder under the Deed of Covenant (the "Deed of Covenant", which expression shall include any amendments and/or supplements thereto and/or restatements thereof made from time to time) dated 10th January, 2002 executed by the Issuer in relation to the Notes.](3) Prescription Claims in respect of principal and interest (as each is defined in the Conditions) in respect of this Permanent Global Note shall become void unless it is presented for payment within a period of five years from the appropriate Relevant Date. Meetings The holder of this Permanent Global Note shall (unless this Permanent Global Note represents only one Note) be treated as two persons for the purposes of any quorum requirements of a meeting of Noteholders and, at any such meeting, as having one vote in respect of each principal amount of Notes equal to the minimum Denomination Amount of the Notes for which this Permanent Global Note may be exchanged. Cancellation Cancellation of any Note represented by this Permanent Global Note that is required by the Conditions to be cancelled shall be effected by reduction in the principal amount of this Permanent Global Note representing such Note on its presentation to or to the order of the Issuing and Paying Agent for endorsement in the Principal Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so cancelled and endorsed. Direct Rights If there shall occur any event of default entitling the Trustee to declare all of the Notes to be due and payable, as provided in the Conditions, the Trustee may exercise the right to declare Notes represented by this Permanent Global Note due and payable in the circumstances described in the Conditions by stating in the notice given to the Issuing and Paying Agent and the Issuer (the "default notice") the principal amount of Notes (which may be less than the outstanding principal amount of this Permanent Global Note) which is being declared due and payable. Following the giving of the default notice, the holder of the Notes represented by this Permanent Global Note may (subject as provided below) elect that direct rights ("Direct Rights") under the provisions of the Deed of Covenant shall come into effect in respect of a principal amount of Notes up to the aggregate principal amount in respect to which such default notice has been given. Such election shall be made by notice to the Issuing and 92 Paying Agent and presentation of this Permanent Global Note to or to the order of the Issuing and Paying Agent for reduction of the principal amount of Notes represented by this Permanent Global Note by such amount as may be stated in such notice and by endorsement of the Principal Schedule hereto of the principal amount of Notes in respect of which Direct Rights have arisen under the Deed of Covenant. Upon each such notice being given, this Permanent Global Note shall become void to the extent of the principal amount stated in such notice, save to the extent that the appropriate Direct Rights shall fail to take effect. No such election may however be made on or before the Exchange Date unless the holder elects in such notice that the exchange for such Notes shall no longer take place. Purchase Notes may only be purchased by the Issuer or any of its subsidiaries if they are purchased together with the right to receive all future payments of interest thereon. Issuer's Options Any option of the Issuer provided for in the Conditions shall be exercised by the Issuer giving notice to the Noteholders within the time limits set out in and containing the information required by the Conditions, except that the notice shall not be required to contain the serial numbers of Notes drawn in the case of a partial exercise of an option and accordingly no drawing of Notes shall be required. Noteholders' Options Any option of the Noteholders provided for in the Conditions may be exercised by the holder of this Permanent Global Note giving notice to the Issuing and Paying Agent within the time limits relating to the deposit of Notes with the Issuing and Paying Agent set out in the Conditions substantially in the form of the notice available from the Issuing and Paying Agent, except that the notice shall not be required to contain the certificate numbers of the Notes in respect of which the option has been exercised, and stating the principal amount of Notes in respect of which the option is exercised and at the same time presenting this Permanent Global Note to the Issuing and Paying Agent for notation accordingly in the Option Schedule hereto. Notices Notices required to be given in respect of the Notes represented by this Permanent Global Note may be given by their being delivered (so long as this Permanent Global Note is held on behalf of the Depository) to the Depository, or otherwise to the holder of this Permanent Global Note rather than by publication as required by the Conditions, except that so long as the Notes are listed on Singapore Exchange Securities Trading Limited and the rules of that exchange so require, notices in respect of such Notes shall also be published in a daily newspaper in the English language having general circulation in Singapore. Others No provision of this Permanent Global Note shall alter or impair the obligation of the Issuer to pay the principal and premium of and interest on the Notes when due in accordance with the Conditions. 93 This Permanent Global Note shall not become valid or obligatory for any purpose unless and until the Certificate of Authentication hereon has been signed by or on behalf of Citicorp Investment Bank (Singapore) Limited as Issuing and Paying Agent. This Permanent Global Note shall be governed by, and construed in accordance with, the laws of Singapore. IN WITNESS whereof the Issuer has caused this Permanent Global Note to be executed under its Common Seal and signed manually on its behalf by two Directors or a Director and the Secretary of the Issuer. ST ASSEMBLY TEST SERVICES LTD ----------------------------------- Director ----------------------------------- Director/Secretary Dated as of the Issue Date specified above. CERTIFICATE OF AUTHENTICATION This Permanent Global Note is authenticated by or on behalf of the Issuing and Paying Agent, Citicorp Investment Bank (Singapore) Limited. By: ------------------------------------------ Duly authorised signatory (Without recourse, warranty or liability.) - -------------------------------------------------------------------------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. - -------------------------------------------------------------------------------- Notes:- (1) Insert where Notes are to be initially represented on issue by a Permanent Global Note. 94 (2) Insert where Notes are to be initially represented on issue by a Temporary Global Note. (3) Insert where Permanent Global Note is to be deposited with the Depository. 95 PRINCIPAL SCHEDULE Part I Principal Amount of Notes Represented by this Permanent Global Note The following [(i) issue of Notes initially represented by this Permanent Global Note,](1) [(i) exchanges of interests in the Temporary Global Note for interests in this Permanent Global Note,](2) (ii) exchange in whole (but not in part) of this Permanent Global Note for Definitive Notes, (iii) redemption, purchase or cancellation of interests in this Permanent Global Note, (iv) payments of principal in respect of this Permanent Global Note and/or (v) exchange for Direct Rights under the Deed of Covenant have been made, resulting in the principal amount of this Permanent Global Note specified in the latest entry in the fourth column:-
REASON FOR INCREASE/DECREASE IN PRINCIPAL AMOUNT OF AMOUNT OF INCREASE/ THIS PERMANENT GLOBAL PRINCIPAL AMOUNT OF DECREASE IN NOTE (ISSUE, THIS PERMANENT NOTATION MADE BY PRINCIPAL AMOUNT EXCHANGE, GLOBAL NOTE OR ON BEHALF OF OF THIS PERMANENT CANCELLATION OR FOLLOWING SUCH THE ISSUING AND DATE GLOBAL NOTE DECREASE PAYMENT) INCREASE/DECREASE PAYING AGENT - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- ----------------- - ------------- ------------------- --------------------- ------------------- -----------------
96 Part II Direct Rights The principal amount of Notes in respect of which Direct Rights have arisen under the Deed of Covenant is shown by the latest entry in the third column below:-
ADDITIONAL PRINCIPAL AGGREGATE PRINCIPAL AMOUNT OF NOTES IN AMOUNT SUBJECT TO NOTATION BY OR ON RESPECT OF WHICH DIRECT RIGHTS BEHALF OF THE DIRECT RIGHTS HAVE FOLLOWING SUCH ISSUING AND DATE BEEN ELECTED ELECTION PAYING AGENT - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- -------------------- - ----------------- --------------------- --------------------- --------------------
97 INTEREST SCHEDULE Payments of Interest The following payments of interest in respect of this Permanent Global Note have been made:-
NOTATION MADE BY OR ON BEHALF OF THE DUE DATE OF AMOUNT OF INTEREST AMOUNT OF ISSUING AND PAYMENT DATE OF PAYMENT DUE AND PAYABLE INTEREST PAID PAYING AGENT - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- --------------- - ---------------- ------------------ --------------------- -------------- ---------------
98 OPTION SCHEDULE Exercise of Noteholders' Option The following exercises of the option of the Noteholders provided for in the Conditions have been made in respect of the stated principal amount of this Permanent Global Note:-
PRINCIPAL AMOUNT OF THIS PERMANENT GLOBAL NOTE IN RESPECT OF DATE ON WHICH NOTATION MADE BY OR ON DATE OF WHICH OPTION IS EXERCISE OF SUCH BEHALF OF THE ISSUING EXERCISE EXERCISED OPTION IS EFFECTIVE AND PAYING AGENT - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- ----------------------- - --------------- ----------------------- ---------------------- -----------------------
99 THE SCHEDULE [Insert the provisions of the relevant Pricing Supplement that relate to the Conditions or the Global Notes as the Schedule] 100 S C H E D U L E 4 PROVISIONS FOR MEETINGS OF NOTEHOLDERS Except as otherwise indicated, these provisions are applicable separately to each Series of Notes. INTERPRETATION 1. In this Schedule:- (a) references to a meeting are to a meeting of Noteholders of a single Series of Notes and include, unless the context otherwise requires, any adjournment; (b) references to "Notes" and "Noteholders" are only to the Notes of the Series in respect of which a meeting has been, or is to be, called and to the holders of those Notes, respectively; (c) "agent" means a holder of a voting certificate or a proxy for a Noteholder; (d) "block voting instruction" means an instruction issued in accordance with paragraphs 8 to 14; (e) "Extraordinary Resolution" means a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority of at least 75 per cent. of the votes cast; (f) "voting certificate" means a certificate issued in accordance with paragraphs 5, 6, 7 and 14; and (g) references to persons representing a proportion of the Notes are to Noteholders or agents holding or representing in the aggregate at least that proportion in principal amount of the Notes for the time being outstanding. POWERS OF MEETINGS 2. A meeting shall, subject to the Conditions and without prejudice to any powers conferred on other persons by this Trust Deed, have power by Extraordinary Resolution:- (a) to sanction any proposal by the Issuer or the Trustee for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Noteholders and/or the Couponholders against the Issuer, whether or not those rights arise under this Trust Deed, the Notes or the Coupons or otherwise; 101 (b) to sanction the exchange or substitution for the Notes of, or the conversion of the Notes into, shares, bonds or other obligations or securities of the Issuer or any other entity; (c) to assent to any modification of this Trust Deed, the other Issue Documents, the Notes or the Coupons proposed by the Issuer or the Trustee; (d) to authorise the Trustee or any other person to concur in and do anything necessary to carry out and give effect to an Extraordinary Resolution; (e) to give any authority, direction or sanction which under this Trust Deed or the Notes is required to be given by Extraordinary Resolution; (f) to appoint any persons (whether Noteholders or not) as a committee or committees to represent the Noteholders' interests and to confer on them any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution; (g) to approve the substitution of any entity for the Issuer (or any previous substitute) as principal debtor under this Trust Deed, the Notes or the Coupons; and (h) to approve a person proposed by the Issuer to be appointed as a new Trustee under this Trust Deed and to remove any Trustee for the time being thereof, provided that the special quorum provisions in paragraph 18 shall apply to any Extraordinary Resolution (a "special quorum resolution") for the purposes of sub-paragraph (b) or (g), any of the proposals listed in Condition 11 or any amendment to this proviso. CONVENING A MEETING 3. Each of the Issuer and the Trustee may at any time convene a meeting. If the Trustee receives a written request by Noteholders holding at least one-tenth in principal amount of the Notes of any Series for the time being outstanding and is indemnified to its satisfaction against all costs and expenses, the Trustee shall convene a meeting of the Noteholders of that Series. Every meeting shall be held at a time and place agreed between the Issuer and the Trustee. 4. At least 21 days' notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the Noteholders. A copy of the notice shall be given by the party convening the meeting to the other parties. The notice shall specify the day, time and place of meeting and the nature of the resolutions to be proposed and shall explain how Noteholders may appoint proxies, obtain voting certificates and use block voting instructions and the details of the time limits applicable. 102 ARRANGEMENTS FOR VOTING 5. If a holder of a Note wishes to obtain a voting certificate in respect of it for a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the meeting with the Issuing and Paying Agent or to the order of the Issuing and Paying Agent with a bank or other depository nominated by the Issuing and Paying Agent for the purpose. The Issuing and Paying Agent shall then issue a voting certificate in respect of it. 6. A voting certificate shall:- (a) be a document in the English language; (b) be dated; (c) specify the meeting concerned and the serial numbers of the Notes deposited; and (d) entitle, and state that it entitles, its bearer to attend and vote at that meeting in respect of those Notes. 7. Once the Issuing and Paying Agent has issued a voting certificate for a meeting in respect of a Note, it shall not release the Note until either:- (a) the meeting has been concluded; or (b) the voting certificate has been surrendered to the Issuing and Paying Agent. 8. If a holder of a Note wishes the votes attributable to it to be included in a block voting instruction for a meeting, then, at least 48 hours before the time fixed for the meeting, (a) he must deposit the Note for that purpose with the Issuing and Paying Agent or to the order of the Issuing and Paying Agent with a bank or other depository nominated by the Issuing and Paying Agent for the purpose and (b) he or a duly authorised person on his behalf must direct the Issuing and Paying Agent how those votes are to be cast. The Issuing and Paying Agent shall issue a block voting instruction in respect of the votes attributable to all Notes so deposited. 9. A block voting instruction shall:- (a) be a document in the English language; (b) be dated; (c) specify the meeting concerned; (d) list the total number and serial numbers of the Notes deposited, distinguishing with regard to each resolution between those voting for and those voting against it; (e) certify that such list is in accordance with Notes deposited and directions received as provided in paragraphs 8, 11 and 14; and 103 (f) appoint a named person (a "proxy") to vote at that meeting in respect of those Notes and in accordance with that list. A proxy need not be a Noteholder. 10. Once the Issuing and Paying Agent has issued a block voting instruction for a meeting in respect of the votes attributable to any Notes:- (a) it shall not release the Notes, except as provided in paragraph 11, until the meeting has been concluded; and (b) the directions to which it gives effect may not be revoked or altered during the 48 hours before the time fixed for the meeting. 11. If the receipt for a Note deposited with the Issuing and Paying Agent in accordance with paragraph 8 is surrendered to the Issuing and Paying Agent at least 48 hours before the time fixed for the meeting, the Issuing and Paying Agent shall release the Note and exclude the votes attributable to it from the block voting instruction. 12. Each block voting instruction shall be deposited at least 24 hours before the time fixed for the meeting at the registered office of the Issuer or such other place as the Trustee shall designate or approve, and in default it shall not be valid unless the chairman of the meeting decides otherwise before the meeting proceeds to business. If the Trustee requires, a notarially certified copy of each block voting instruction shall be produced by the proxy at the meeting but the Trustee need not investigate or be concerned with the validity of the proxy's appointment. 13. A vote cast in accordance with a block voting instruction shall be valid even if it or any of the Noteholders' instructions pursuant to which it was executed has previously been revoked or amended, unless written intimation of such revocation or amendment is received from the Issuing and Paying Agent by the Issuer at its specified office (or such other place as may have been specified by the Issuer for the purpose) or by the chairman of the meeting in each case at least 24 hours before the time fixed for the meeting. 14. No Note may be deposited with or to the order of the Issuing and Paying Agent at the same time for the purposes of both paragraph 5 and paragraph 8 for the same meeting. CHAIRMAN 15. The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting the Noteholders or agents present shall choose one of their number to be chairman, failing which the Issuer may appoint a chairman. The chairman need not be a Noteholder or agent. The chairman of an adjourned meeting need not be the same person as the chairman of the original meeting. 104 ATTENDANCE 16. The following may attend and speak at a meeting:- (a) Noteholders and agents; (b) the chairman; (c) the Issuer and the Trustee (through their respective representatives) and their respective financial and legal advisers; and (d) the Dealers and their advisers. No one else may attend or speak. QUORUM AND ADJOURNMENT 17. No business (except choosing a chairman) shall be transacted at a meeting unless a quorum is present at the commencement of business. If a quorum is not present within 15 minutes from the time initially fixed for the meeting, it shall, if convened on the requisition of Noteholders, be dissolved. In any other case it shall be adjourned until such date, not less than 14 days nor more than 42 days later, and time and place as the chairman may decide. If a quorum is not present within 15 minutes from the time fixed for a meeting so adjourned, the meeting shall be dissolved. 18. Two or more Noteholders or agents present in person shall be a quorum:- (a) in the cases marked "No minimum proportion" in the table below, whatever the proportion of the Notes which they represent; and (b) in any other case, only if they represent the proportion of the Notes shown by the table below.
- ------------------------------------------------------------------------------------------------------ COLUMN 1 COLUMN 2 COLUMN 3 - ------------------------------------------------------------------------------------------------------ Purpose of Meeting Any meeting except Meeting previously one referred to adjourned through in column 3 want of a quorum ------------------------------------------------------------------- Required proportion Required proportion - ------------------------------------------------------------------------------------------------------ To pass a 75 per cent. 25 per cent. special quorum resolution - ------------------------------------------------------------------------------------------------------ To pass any other A clear majority No minimum proportion Extraordinary Resolution - ------------------------------------------------------------------------------------------------------ Any other purpose 10 per cent. No minimum proportion - ------------------------------------------------------------------------------------------------------
105 19. The chairman may with the consent of (and shall if directed by) a meeting adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph or paragraph 17. 20. At least 10 days' notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. No notice need, however, otherwise be given of an adjourned meeting. VOTING 21. Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the Issuer, the Trustee or one or more persons representing two per cent. of the Notes. 22. Unless a poll is demanded a declaration by the chairman that a resolution has or has not been passed shall be conclusive evidence of the fact without proof of the number or proportion of the votes cast in favour of or against it. 23. If a poll is demanded, it shall be taken in such manner and (subject as provided below) either at once or after such adjournment as the chairman directs. The result of the poll shall be deemed to be the resolution of the meeting at which it was demanded as at the date it was taken. A demand for a poll shall not prevent the meeting continuing for the transaction of business other than the question on which it has been demanded. 24. A poll demanded on the election of a chairman or on a question of adjournment shall be taken at once. 25. On a show of hands every person who is present in person and who produces a Note or a voting certificate or is a proxy has one vote. On a poll every such person has one vote in respect of each principal amount equal to the minimum denomination of such Series of Notes so produced or represented by the voting certificate so produced or for which he is a proxy. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way. 26. In case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to any other votes which he may have. EFFECT AND PUBLICATION OF AN EXTRAORDINARY RESOLUTION 27. An Extraordinary Resolution shall be binding on all the Noteholders, whether or not present at the meeting, and on all the Couponholders and each of them shall be bound to give effect to it accordingly. The passing of such a resolution shall be conclusive evidence that the circumstances justify its being passed. The Issuer shall give 106 notice of the passing of an Extraordinary Resolution to Noteholders within 14 days but failure to do so shall not invalidate the resolution. MINUTES 28. Minutes shall be made of all resolutions and proceedings at every meeting and duly entered in the books to be from time to time provided for that purpose by the Issuer or the Trustee and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted. 29. The holder of a Global Note shall (unless such Global Note represents only one Note) be treated as two persons for the purposes of any quorum requirements of a meeting of Noteholders. 30. A resolution in writing of which notice has been given to all Noteholders in accordance with the Conditions and signed by or on behalf of the holders of not less than 90 per cent. in principal amount of the Notes who for the time being are entitled to receive notice of a meeting in accordance with the provisions herein contained shall for all purposes be as valid and effectual as an Extraordinary Resolution passed at a meeting of such Noteholders duly convened and held in accordance with the provisions herein contained. Such resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Noteholders. SEPARATE SERIES 31. The foregoing provisions of this Schedule shall have effect subject to the following provisions:- (a) meetings of holders of the Notes of separate Series will normally be held separately; (b) a resolution that affects one Series alone shall be deemed to have been duly passed if passed at a separate meeting of the holders of the Notes of the Series concerned; (c) a resolution that affects the holders of the Notes of more than one Series but does not give rise to a conflict of interest between the holders of the Notes of the different Series concerned shall be deemed to have been duly passed if passed at a single meeting of the holders of the Notes of the relevant Series; and (d) a resolution that affects the holders of the Notes of more than one Series and gives or may give rise to a conflict of interest between the holders of the Notes of the different Series concerned shall be deemed to have been duly passed only if it shall be duly passed at separate meetings of the holders of the Notes of the relevant Series. 107 FURTHER REGULATIONS 32. Subject to all other provisions contained in this Trust Deed, the Trustee may without the consent of the Noteholders prescribe such further regulations regarding the holding of meetings of Noteholders and attendance and voting thereat as the Trustee may in its sole discretion determine, including particularly (but without prejudice to the generality of the foregoing) such regulations and requirements as the Trustee thinks reasonable:- (a) so as to satisfy itself that persons are in fact Noteholders who purport to requisition a meeting in accordance with paragraph 3 above or who purport to make any requisition to the Trustee in accordance with this Trust Deed; and (b) in connection with the provisions of paragraph 16 above so as to satisfy itself that persons who purport to attend or vote at any meeting of the Noteholders are entitled to do so in accordance with this Trust Deed. 108 I N W I T N E S S W H E R E O F this Trust Deed has been executed as of the date stated at the beginning. The Issuer The Common Seal of ) ST ASSEMBLY TEST SERVICES LTD ) COMMON SEAL AFFIXED was hereunto affixed ) in the presence of:- ) sd. HARRY H DAVOODY Director - ------------------------------------ sd. LOOI LEE HWA Secretary - ------------------------------------ I, LEONG FANG YUN , an Advocate and Solicitor of the Supreme Court in the Republic of Singapore practising in Singapore hereby certify that on the 10th day of January , 2002 the Common Seal of ST Assembly Test Services Ltd was duly affixed to this Trust Deed at Singapore in our presence in accordance with the Memorandum and Articles of Association of ST Assembly Test Services Ltd (which Memorandum and Articles of Association have been produced and shown to me). Witness my hand this 10th January, 2002. sd. LEONG FANG YUN The Trustee The Common Seal of ) BRITISH AND MALAYAN TRUSTEES LIMITED ) COMMON SEAL AFFIXED was hereunto affixed ) in the presence of:- ) sd. COLIN LEE YUNG-SHIH Director - ------------------------------------------- sd. JOHN CHEW General Manager - ------------------------------------------- 109 EX-4.8 6 u91877ex4-8.txt AGENCY AGREEMENT DATED JANUARY 10, 2002 EXHIBIT 4.8 CONFORMED COPY DATED 10TH JANUARY, 2002 ST ASSEMBLY TEST SERVICES LTD AS ISSUER CITICORP INVESTMENT BANK (SINGAPORE) LIMITED AS ISSUING AND PAYING AGENT AND AGENT BANK - AND - BRITISH AND MALAYAN TRUSTEES LIMITED AS TRUSTEE ---------------------------------------------------------- AGENCY AGREEMENT RELATING TO ST ASSEMBLY TEST SERVICES LTD S$500,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME ---------------------------------------------------------- 36 ROBINSON ROAD #18-01 [ALLEN & GLEDHILL LOGO] CITY HOUSE SINGAPORE 068877 C O N T E N T S
CLAUSE TITLE PAGE - ------ ----- ---- 1 INTERPRETATION 1 2 APPOINTMENT OF AGENTS 3 3 ISSUE OF THE NOTES 4 4 PAYMENT 7 5 FORFEITURE OF UNCLAIMED REDEMPTION MONEYS 9 6 EARLY REDEMPTION AND EXERCISE OF OPTIONS 9 7 CANCELLATION, DESTRUCTION AND RECORDS 11 8 ISSUE OF REPLACEMENT NOTES 12 9 NOTICES 13 10 DOCUMENTS AND FORMS 13 11 INTEREST RATE FIXING FOR FLOATING RATE NOTES AND HYBRID NOTES 14 12 INTEREST RATE FIXING FOR VARIABLE RATE NOTES 15 13 DETERMINATION OF REDEMPTION AMOUNTS 16 14 INDEMNITY 16 15 GENERAL 17 16 CHANGES IN AGENTS 18 17 COMMISSIONS, FEES AND EXPENSES 19 18 COMMUNICATIONS 19 19 GOVERNING LAW 21 FIRST SCHEDULE -- FORM OF EXERCISE NOTICE 22 SECOND SCHEDULE -- FORM OF PURCHASE NOTICE 24
T H I S A G R E E M E N T is made on 10th January, 2002 B E T W E E N:- (1) ST ASSEMBLY TEST SERVICES LTD (the "Issuer"); (2) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED as issuing and paying agent (the "Issuing and Paying Agent"); (3) CITICORP INVESTMENT BANK (SINGAPORE) LIMITED as agent bank (the "Agent Bank"); and (4) BRITISH AND MALAYAN TRUSTEES LIMITED as trustee (the "Trustee", which expression shall include any other trustee for the time being of the Trust Deed referred to below). W H E R E A S:- (A) The Issuer has entered into the Programme Agreement (as defined below) pursuant to which the Issuer may issue from time to time medium term notes in an aggregate principal amount outstanding at any one time not exceeding the Programme Limit (as defined below). (B) Each issue of Notes (as defined below) will initially be represented either (1) by a Temporary Global Note exchangeable for Definitive Notes or for a Permanent Global Note which will be exchangeable as described therein for Definitive Notes or (2) by a Permanent Global Note which will be exchangeable as described therein for Definitive Notes. (C) The Notes will be constituted by a Trust Deed (the "Trust Deed") dated the date of this Agreement between the Issuer and the Trustee. (D) The Issuer wishes to provide for the appointment of agents to act on its behalf in relation to issues of Notes made pursuant to the Programme Agreement. (E) This Agreement is the Agency Agreement described in Clause 1(A) of the Trust Deed. The Issuer has requested the Agents (as defined below) and the Agents have agreed, to act in relation to the Notes in the manner set out in this Agreement and the Trustee, in its capacity as such, approves its terms by the execution of this Agreement. I T I S A G R E E D as follows:- 1. INTERPRETATION (A) Definitions:- In this Agreement, except where the context requires otherwise:- (1) "Agents" means the Issuing and Paying Agent and the Agent Bank or either of them and shall include such other Agent or Agents as may be appointed from time to time hereunder; 1 "CDP System" means the computerised system operated by the Depository whereby Securities Accounts are maintained by Depositors with the Depository and, inter alia, transfers of the Notes are effected electronically between Securities Accounts; "Depositors" means, at any time, persons (including Depository Agents) having any Notes standing to the credit of their Securities Accounts at that time; "Depository" means The Central Depository (Pte) Limited; "Depository Agent" means a corporation authorised by the Depository to maintain Sub-Accounts; "Depository Agreement" means the depository agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, and (2) the Depository, as depository, as amended, varied or supplemented from time to time; "Notes" means medium term notes of the Issuer issued or to be issued pursuant to the Programme Agreement and constituted by the Trust Deed (and shall, where the context so admits, include the Global Notes and the Definitive Notes); "Programme Agreement" means the Programme Agreement dated 10th January, 2002 made between (1) the Issuer, as issuer, (2) Citicorp Investment Bank (Singapore) Limited, as arranger, and (3) Citicorp Investment Bank (Singapore) Limited, as dealer, as amended, varied or supplemented from time to time; "Programme Limit" means, subject to the Programme Agreement, S$500,000,000 or its equivalent in other currencies; "Securities Accounts" means the securities accounts of the Depositors maintained with the Depository (but does not include Sub-Accounts); "SGX-ST" means the Singapore Exchange Securities Trading Limited; "Stock Exchange" means the SGX-ST or any other or further stock exchange(s) on which any Notes may from time to time be listed, and references in this Agreement to the "relevant Stock Exchange" shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are from time to time, or are intended to be, listed; and "Sub-Accounts" means the securities sub-accounts maintained by each Depository Agent for its own account and for the account of its clients; 2 (2) expressions defined in the Programme Agreement, the Trust Deed or in the Conditions of the Notes (the "Conditions") shall have the same meanings in this Agreement unless the context otherwise requires; (3) references to "Clauses" and "Schedules" are to be construed as references to clauses of, and schedules to, this Agreement; (4) the headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement; and (5) references in this Agreement to the Depository shall, wherever the context so permits, be deemed to include references to any additional or alternative clearing system approved by the Issuer, the Issuing and Paying Agent and the Trustee. (B) Contracts (Rights of Third Parties) Act 2001: A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 2001 to enforce any term of this Agreement. 2. APPOINTMENT OF AGENTS (A) Appointment: The Issuer appoints the Agents as its agents in respect of the Notes in accordance with the provisions of this Agreement and of the Conditions at their respective specified offices referred to in the Notes (or, in the case of the Issuing and Paying Agent, at its office in Singapore specified for the purposes of Clause 16) and the Agents accept such appointments. Except in Clause 16, references to the Agents are to them acting solely through such respective offices. (B) Agents' Duties: The obligations of the Agents are several and not joint. Each Agent shall be obliged to perform only such duties as are specifically set out in this Agreement, the Conditions and the Procedures Memorandum and any duties necessarily incidental to them. No implied duties or obligations shall be read into any such documents. No Agent shall be obliged to perform additional duties set out in any Pricing Supplement and thereby incorporated into the Conditions unless it shall have previously agreed to perform such duties. If the Conditions are amended on or after a date on which any Agent accepts any appointment in a way that affects the duties expressed to be performed by such Agent, it shall not be obliged to perform such duties as so amended unless it has first approved the relevant amendment. No Agent shall be under any obligation to take any action under this Agreement that it expects, and has so notified the Issuer in writing, will result in any expense to or liability of such Agent, the payment of which is not, in its reasonable opinion, assured to it within a reasonable time. (C) Issuing and Paying Agent to act for Trustee: The Issuing and Paying Agent shall, on notice in writing by the Trustee made at any time after an Event of Default has occurred in relation to a particular Series of Notes and until notified in writing by the Trustee to the contrary, so far as permitted by any applicable law:- (1) act as the Issuing and Paying Agent of the Trustee under the Trust Deed and the Notes of such Series on the terms of this Agreement 3 (with consequential amendments as necessary and except that the Trustee's liability under this Agreement for the indemnification, remuneration and all other expenses of the Issuing and Paying Agent will be limited to the amounts for the time being held by the Trustee in respect of such Series on the terms of the Trust Deed) and thereafter to hold all Notes and Coupons of such Series and all moneys, documents and records held by them in respect of Notes and Coupons of such Series to the order of the Trustee; or (2) deliver all Notes and Coupons of such Series and all moneys, documents and records held by them in respect of the Notes and Coupons of such Series to the Trustee or as the Trustee directs in such notice, provided that such notice shall be deemed not to apply to any documents or records which the Issuing and Paying Agent is obliged not to release by any law or regulation. (D) Notices of Change of Trustee: The Issuer shall forthwith give notice to each of the Agents of any change in the person or persons comprising the Trustee. 3. ISSUE OF THE NOTES (A) Preconditions to Issue: The Issuer shall not agree to any Issue Date unless it is a business day. Before issuing any Notes that are intended to be cleared through a clearing system other than the Depository the Issuer shall inform the Issuing and Paying Agent of its wish to issue such Notes and shall agree with the Issuing and Paying Agent the procedure for issuing such Notes, which agreement shall cover the time, date and place for the delivery of the relative Global Note by the Issuing and Paying Agent, whether such delivery is to be free of payment or against payment, an appropriate method for determining non-U.S. beneficial ownership of Notes in accordance with applicable U.S. law and the method by which the Issuing and Paying Agent is to receive any payment, and hold any moneys, on behalf of the Issuer. (B) Notification of Issue: Not later than 2.00 p.m. (Singapore time) on the second business day (or by such later time as may be agreed from time to time by the Issuer and the Issuing and Paying Agent) preceding the Issue Date of each Tranche to be issued, the Issuer shall notify to the Issuing and Paying Agent all such information as the Issuing and Paying Agent may require for it to carry out its functions as contemplated by this Clause, and in particular the details required for it to complete the relevant Global Note, whether the relevant Global Note is to be deposited with the Depository and the aggregate principal amount of Notes of each Tranche to be subscribed by each relevant Dealer and the account of the Dealer to which delivery should be made. (C) Issue and Delivery of Global Notes: Upon receipt by the Issuing and Paying Agent of the information from the Issuer referred to in sub-Clause (B) above enabling it, and instructions, to do so, the Issuing and Paying Agent shall complete a Temporary Global Note or, as the case may be, a Permanent Global Note in an aggregate principal amount equal to that of the Tranche to be issued. If the Issuing and Paying Agent is not in possession of any Temporary Global Note or Permanent Global Note at the time of any issue for completion of the relevant details as contemplated in the foregoing provisions of 4 this sub-Clause (C), the Issuer shall complete the Temporary Global Note or, as the case may be, Permanent Global Note and deliver the same to the Issuing and Paying Agent for authentication not later than 3.45 p.m. (Singapore time) on the business day (or by such later time as may be agreed from time to time by the Issuer and the Issuing and Paying Agent) preceding the Issue Date of that Tranche. Immediately before the issue of any Global Note, the Issuing and Paying Agent shall authenticate it. Following authentication of any Global Note and upon receipt of confirmation from the Issuer that it has received the subscription moneys due to the Issuer, the Issuing and Paying Agent shall:- (1) if any Global Note is to be deposited with the Depository and cleared through the CDP System, deliver such Global Note to the Depository not later than 2.00 p.m. (Singapore time) on the Issue Date (or such other date and time as the Depository may require); and (2) in any other case, deliver such Global Note at such time, on such date, to such person and in such place as may have been agreed between the Issuer and the Issuing and Paying Agent. (D) Exchange for Permanent Global Notes and Definitive Notes: On and after the due date for exchange of any Temporary Global Note which is exchangeable for a Permanent Global Note and upon certification as to non-U.S. beneficial ownership in the form attached to the relevant Temporary Global Note, if the relevant Temporary Global Note is issued pursuant to U.S. Treas. Reg. 1.163-5(c)2(i)(D) (the "D Rules"), the Issuing and Paying Agent shall, on presentation to it or to its order of such Temporary Global Note, complete a Permanent Global Note, authenticate it and procure the exchange of interests in such Temporary Global Note for interests in an equal principal amount of a Permanent Global Note in accordance with such Temporary Global Note. On or after the due date for exchange of any Global Note which is exchangeable for Definitive Notes, the Issuing and Paying Agent shall, on presentation to it or to its order of such Global Note, procure the exchange of interests in such Global Note for Definitive Notes with Coupons attached (other than any which mature on or before the relevant date for exchange) in a principal amount equal to that portion of such Global Note submitted for exchange in accordance with such Global Note. On exchange in full of any Global Note, the Issuing and Paying Agent shall cancel it and, unless otherwise instructed by the Issuer, return it to the Issuer. (E) Form and Availability of Notes and Coupons: The Global Notes shall be affixed with the Common Seal of the Issuer and signed manually by two Directors or a Director and the Secretary of the Issuer. The Definitive Notes and the Coupons shall be signed manually or in facsimile by a duly authorised officer of the Issuer. The Issuer may adopt and use the signature of any Director, the Secretary or, as the case may be, a duly authorised officer of the Issuer at the date of signing a Note or Coupon even if, before the Note or Coupon is issued, he ceases for whatever reason to hold such office or, as the case may be, be so authorised, and Notes and Coupons issued in such circumstances shall nevertheless be valid and binding obligations of the Issuer. Definitive Notes and Coupons shall be security printed in accordance with all applicable stock exchange requirements. (F) Details of Notes Delivered: As soon as practicable after delivering any Global Note or Definitive Note, the Issuing and Paying Agent shall supply, in such format as it shall from time to time agree with the Issuer, all relevant details of the Notes delivered to the Issuer, the other Agent and the Trustee. 5 (G) Notes not to be issued: If any Note in respect of which information has been supplied under sub-Clause (B) above is not to be issued on a given Issue Date, the Issuer shall immediately (and, in any event, prior to the Issue Date) notify the Issuing and Paying Agent. If the Issuing and Paying Agent has received the notification in time for the relevant Note not to be issued, the Issuing and Paying Agent shall not thereafter issue or release the relevant Note(s) but shall cancel and, unless otherwise instructed by the Issuer, destroy them. (H) Outstanding Amount: The Issuing and Paying Agent shall, upon request from the Issuer or the Trustee, inform such person of the aggregate principal amount of Notes, or Notes of any particular Series, then outstanding at the time of such request and upon receipt from any Dealer, inform such Dealer of the aggregate principal amount of Notes then outstanding of any Series in relation to which Dealer is a Relevant Dealer. (I) Procedures Memorandum: The Issuer shall furnish a copy of the Procedures Memorandum from time to time in effect to the Issuing and Paying Agent and the Trustee. The parties agree that all issues of Notes shall be made in accordance with the Procedures Memorandum unless the Issuer, the Trustee, the Relevant Dealer(s) (or, in the case of a Syndicated Issue, the Lead Manager(s)) and the Issuing and Paying Agent agree otherwise in respect of any issue. The Procedures Memorandum may only be amended with the consent of the Issuing and Paying Agent, the Trustee and the Issuer. (J) Depository Agreement: In relation to Notes which are represented by Global Notes which have been deposited with the Depository and without prejudice to Clause 17, the Issuing and Paying Agent agrees that, notwithstanding that the Issuer may have entered into separate arrangements with the Depository, it will:- (1) perform its duties and obligations under this Agreement in respect of such Notes insofar as they apply to such Notes; (2) (where applicable and without prejudice to Clause 2(B)) carry out the duties and obligations of the Issuer under Clauses 4.1, 4.6, 4.7, 5.1, 5.3, 5.4, 5.5, 8.1, 9.1(a), 9.1(b) and 9.1(c) of the Depository Agreement in respect of such Notes on behalf of the Issuer; (3) render reasonable assistance to the Issuer upon its request to enable the Issuer to perform its other duties and obligations under the Depository Agreement in respect of such Notes; and (4) insofar as applicable, abide by and be bound by the CDP Terms (as defined in the Depository Agreement) as the same may be amended, modified or supplemented by the Depository from time to time, and insofar as applicable, abide by such procedures as may be established by the Depository from time to time for the clearing and settlement of trades or other transactions in the Notes in the CDP System. In the event that the Depository Agreement shall be amended or varied such that any of the obligations and duties of the Issuing and Paying Agent under paragraph (2) above is 6 affected, the Issuing and Paying Agent shall continue to carry out such affected duties and obligations unless such affected duties and obligations would not ordinarily be reasonably required of an issuing and paying agent and provided that the Issuing and Paying Agent deems it reasonably practicable for it to continue carrying out such affected duties and obligations. 4. PAYMENT (A) Payment to Issuing and Paying Agent: The Issuer will, not later than 11.00 a.m. (local time in the principal financial centre of the relevant currency) on each date on which any payment in respect of any Series of the Notes becomes due, transfer to the Issuing and Paying Agent such amount as may be required for the purposes of such payment. The Issuer will confirm to the Issuing and Paying Agent by 3.00 p.m. (Singapore time) on the business day prior to the due date for any such payment that irrevocable instructions have been issued by it for such payment to be made to the Issuing and Paying Agent. (B) Condition to payment by Issuing and Paying Agent: The Issuing and Paying Agent will forthwith notify the Issuer and the Trustee if it has not, by the time specified for its receipt, received the confirmation referred to in sub-Clause (A) above or by the due date for any payment due in respect of any Series of the Notes received the full amount so payable on such date. (C) Payment by Issuing and Paying Agent: (1) Subject to receipt by the Issuing and Paying Agent of the required amount, the Issuing and Paying Agent will, in accordance with the Conditions, pay or cause to be paid on behalf of the Issuer on and after each due date therefor the amounts due in respect of the relevant Series of the Notes. If any payment provided for in sub-Clause (A) above is made late but otherwise in accordance with the provisions of this Agreement the Issuing and Paying Agent will nevertheless make such payments in respect of the Notes. However, unless and until the full amount of any such payment has been made to or to the order of the Issuing and Paying Agent, it shall not be bound to make payments in respect of the Notes and Coupons as aforesaid. (2) If any moneys paid to the Issuing and Paying Agent towards payment of principal or interest in respect of the Notes are not so applied towards payment of principal or, as the case may be, interest in accordance with the Conditions due to the failure of the Noteholders to claim such payment, the Issuing and Paying Agent shall, provided such deposit is practicable and upon the request of the Issuer, deposit such moneys in an interest bearing account and subject to such terms and conditions as the Issuer shall approve. Any interest as such moneys may earn while on deposit, less any costs, charges or expenses properly incurred by the Issuing and Paying Agent in relation to the placing of such moneys in an interest-bearing account (including any penalties referred to below), shall be for the account of the Issuer and all costs, charges or expenses properly incurred by the Issuing and Paying Agent in relation to the placing of such moneys in an interest-bearing account (including, without limitation, any penalties imposed by the relevant bank or financial institution for the withdrawal by the Issuing and Paying Agent of such moneys prior to the maturity of such deposit) shall be borne by the Issuer. (D) Late Payment: If the Issuing and Paying Agent has not received by the due date for any payment in respect of any Series of the Notes the full amount payable on such date but receives such full amount later, it will forthwith:- 7 (1) so notify the Trustee; and (2) give notice to the relevant Noteholders in accordance with the Conditions that it has received such full amount. (E) Method of payment to Issuing and Paying Agent: All sums payable to the Issuing and Paying Agent under this Clause will be paid in the currency in which such sums are denominated and in immediately available and freely transferable funds or same day funds by transfer to such account of the Issuing and Paying Agent with such bank in Singapore as the Issuing and Paying Agent may from time to time notify the Issuer and the Trustee for this purpose. (F) Moneys held by Issuing and Paying Agent: The Issuing and Paying Agent may deal with moneys paid to it under this Agreement in the same manner as other moneys paid to it as a banker by its customers except that (1) it may not exercise any lien, right of set-off or similar claim in respect of them, (2) it shall not combine or consolidate such moneys with any other moneys or accounts and (3) it shall not, save as provided in paragraph (2) of sub-Clause (C) above, be liable to any person for interest on any sums held by it under this Agreement. (G) Partial Payments: If on presentation of a Note or Coupon related thereto only part of the amount payable in respect of it is paid (except as a result of a deduction of tax permitted by the Conditions), the Issuing and Paying Agent shall procure that it is enfaced with a memorandum of the amount paid and the date of payment and shall return it to the person who presented it. (H) Notification of Interest Payment: The Issuer shall notify (if it is not practicable for the Agent Bank to do so in the case of the first Interest Period), or procure that the Agent Bank notifies (in the case of each Interest Period thereafter), the Issuing and Paying Agent and the Trustee of the Rate of Interest for each Interest Period, the date of each Interest Payment Date and the Interest Amount payable on each Interest Payment Date forthwith upon their being determined (and of any adjustment thereto in accordance with the Conditions forthwith upon its being made). (I) Withholding/Deduction: The Issuing and Paying Agent shall make all payments of principal or interest in respect of the Notes or the Coupons after withholding or deduction for tax imposed or levied by or on behalf of Singapore or any authority thereof or therein and which are required by law to be withheld or deducted. Payment of the amounts withheld or deducted shall be made by the Issuing and Paying Agent to the relevant authority within such period as may be prescribed by law or such authority after payment of principal or interest to the holder of the Note or Coupon related thereto (as the case may be). Where the Issuer is not permitted under applicable law to make payments of principal or interest in respect of any Notes or Coupons without any such withholding or deduction for Singapore tax, no payment without deduction or withholding for Singapore tax shall be made unless the Issuing and Paying Agent shall have received a statutory declaration or other evidence satisfactory to the Issuing and Paying Agent confirming that the beneficial owner of such principal or interest is (1) a resident in Singapore for tax purposes or (2) a non-resident of Singapore who did not purchase the Notes using funds from its Singapore operations. If requested by the Issuer, the Issuing and Paying Agent will at the expense of 8 the Issuer furnish the holder of the Note or Coupon with a statement specifying the gross amount of principal or interest, the amount of tax deducted and the net amount of principal or interest paid or receivable. The Issuing and Paying Agent shall be liable to the Issuer for any tax not withheld in proper reliance in good faith upon any statutory declaration or other evidence. (J) Payments by the Depository: The provisions of this Clause apply only to Notes which are represented by Global Notes which are not deposited with the Depository and are not cleared through the CDP System and accordingly, where the Global Notes have been deposited with the Depository, the administrative procedures and other relevant provisions relating to the making of payments under the Notes by the Depository on behalf of the Issuer shall be separately agreed between the Issuer and the Depository. 5. FORFEITURE OF UNCLAIMED REDEMPTION MONEYS (A) Unclaimed Redemption Moneys: Any moneys paid to the Issuing and Paying Agent for the payment of the principal of or interest on any Notes or Coupons and remaining unclaimed for five years after the appropriate Relevant Date for payment shall, on written notice being given to the Issuing and Paying Agent by the Issuer, be repaid by the Issuing and Paying Agent to the Issuer, and all liability of the Issuing and Paying Agent under the Notes and the Coupons with respect to such moneys shall thereupon cease, provided that the Issuing and Paying Agent before being required to make any such repayment to the Issuer may, at the expense of the Issuer, cause to be published prior to the date of such repayment at least twice and at intervals of not less than 21 days in a leading English language newspaper in Singapore a notice that such moneys remain unclaimed and that after the date stated therein (not being less than 21 days after the date of the second such notice) any unclaimed balance of the said moneys then remaining including any accrued interest thereon, after deduction of all relevant expenses, shall be returned to the Issuer. (B) Moneys owing to Issuing and Paying Agent: Notwithstanding the foregoing, the Issuing and Paying Agent shall not be obliged to make any repayment to the Issuer so long as and to the extent that any amounts which should have been paid to or to the order of the Issuing and Paying Agent by the Issuer shall remain unpaid. 6. EARLY REDEMPTION AND EXERCISE OF OPTIONS (A) Notice to Issuing and Paying Agent: If the Issuer intends (other than consequent upon an Event of Default or any right of the holder to require redemption) to redeem all or any of the Notes of any Series before their stated maturity date or to exercise any Issuer's option in the Conditions it shall, at least 14 days before the latest date for the publication of the notice of redemption or of exercise of any Issuer's option required to be given to Noteholders, give notice of such intention to the Issuing and Paying Agent and to the Trustee stating the date on which such Notes are to be redeemed or such option is to be exercised and the principal amount of Notes to be redeemed or subject to the option. (B) Drawing on Partial Redemption or Exercise of Option: If some only of the Notes of a Series are to be redeemed, or subject to the exercise of an Issuer's option, on such date the Issuing and Paying Agent shall make the drawing that is required in accordance with the Conditions but shall give the Issuer and the Trustee reasonable notice 9 of the time and place proposed for such drawing and the Issuer and the Trustee shall be entitled to send representatives to attend such drawing. (C) Notice to Noteholders: The Issuing and Paying Agent shall publish any notice to holders of Notes required in connection with any such redemption or exercise of an Issuer's option and shall at the same time also publish a separate list of the certificate numbers of any Notes previously drawn and not presented either for payment or as may otherwise be required pursuant to any Issuer's option. Such notice shall specify the date fixed for redemption or exercise of any option, the redemption price, the manner in which redemption will be effected or the terms of the exercise of such option and, in the case of a partial redemption or exercise of any option and the certificate numbers of the Notes drawn. (D) Option Exercise Notices: The Issuing and Paying Agent will keep a stock of notices ("Exercise Notices") in the form set out in the First Schedule or in such other form as may be acceptable to the Issuing and Paying Agent, and will make such notices available on demand to Noteholders. The Issuing and Paying Agent with which a Note is deposited in a valid exercise of such Noteholder's option shall hold such Note (together with any Coupons relating to it deposited with it on behalf of the depositing Noteholder) on behalf of the depositing Noteholder (but shall not, save as provided below, release it) until the due date for redemption of, or exercise of the option relating to, the relevant Note(s) consequent upon the exercise of such option, when, in the case of an option to redeem, and subject as provided below, it shall present any such Note and Coupons to itself for payment of the amount due in accordance with the Conditions and shall pay such moneys in accordance with the directions of the Noteholder contained in the Exercise Notice. In the event of the exercise of any other option, the Issuing and Paying Agent shall take the steps required of it in the Conditions. If any such Note becomes immediately due and payable before the due date for its redemption or exercise of the option, or if upon due presentation payment of the amount due is improperly withheld or refused or exercise of the option is improperly denied, the Issuing and Paying Agent shall mail such Note (and any related Coupons) by uninsured post to, and at the risk of, the relevant Noteholder (unless the Noteholder otherwise requests and pays the costs of such insurance in advance to the Issuing and Paying Agent at the time of depositing the Note) to such address as may have been given by the Noteholder in the Exercise Notice. At the end of each period for the exercise of any such option, the Issuing and Paying Agent shall promptly notify the Issuer and the Trustee of the principal amount of the Notes in respect of which such option has been exercised with it together with their certificate numbers. (E) Purchase Notices: The Issuing and Paying Agent will keep a stock of notices ("Purchase Notices") in the form set out in the Second Schedule or in such other form as may be acceptable to the Issuing and Paying Agent, and will make such notices available on demand to Noteholders. Upon receipt of any Note deposited in the exercise of the Noteholders' option under Condition 5(c), the Issuing and Paying Agent shall hold such Note (together with any Coupons relating to it deposited with it) on behalf of the depositing Noteholder (but shall not, save as provided below, release it) until the due date for its purchase consequent upon the exercise of such option, when, subject as provided below, it shall present such Note and Coupons to itself for payment of the purchase moneys therefor (including interest accrued to such date) and shall pay such moneys in accordance with the directions of the Noteholder contained in the Purchase Notice. If, prior to such due date for its purchase, such Note becomes immediately due and payable or if upon due presentation payment of such purchase moneys is improperly withheld or refused, the Issuing and 10 Paying Agent shall mail such Note (and any related Coupons) by uninsured post to, and at the risk of, the relevant Noteholder (unless the Noteholder otherwise requests and pays the costs of such insurance in advance to the Issuing and Paying Agent at the time of depositing the Note) to such address as may have been given by the Noteholder in the Purchase Notice. At the end of each period for the exercise of any such option, the Issuing and Paying Agent shall promptly notify the Issuer and the Trustee of the principal amount of the Notes deposited with it together with their certificate numbers. 7. CANCELLATION, DESTRUCTION AND RECORDS (A) Cancellation by Issuing and Paying Agent: All Notes which are redeemed (together with such unmatured Coupons as are attached to or are surrendered with them at the time of such redemption), all Temporary Global Notes (which are fully exchanged for Permanent Global Notes or, as the case may be, Definitive Notes) or Permanent Global Notes (which are fully exchanged for Definitive Notes) and all Coupons which are paid in full shall be cancelled forthwith by the Issuing and Paying Agent. If the Issuer or any of its subsidiaries purchases any Notes that are to be cancelled in accordance with the Conditions, the Issuer shall forthwith cancel them or procure their cancellation, inform the Issuing and Paying Agent and send them to the Issuing and Paying Agent. (B) Certification of Payment Details: The Issuing and Paying Agent shall as soon as possible and in any event within one month after the end of each calendar quarter during which any such redemption, purchase, payment or surrender of any Notes or Coupons takes place furnish to the Issuer and the Trustee a certificate stating (to the extent that the relevant information has not already been given in routine reports and statements furnished to the Issuer) (1) the aggregate amount paid in respect of Notes that have been redeemed and cancelled and the aggregate amount paid in respect of any related Coupons that have been paid and cancelled or in respect of interest paid on a Global Note (other than Notes purchased by the Issuer or any of its subsidiaries and surrendered for cancellation and/or Coupons attached thereto and surrendered therewith), (2) the certificate numbers of such Notes, (3) the total number and maturity dates of such Coupons, (4) the certificate numbers of those Notes which have been purchased and cancelled as aforesaid and (5) the total number and maturity date of unmatured Coupons not surrendered with Definitive Notes redeemed or purchased and cancelled. (C) Destruction: Upon receipt of instructions from the Issuer, the Issuing and Paying Agent shall destroy the cancelled Notes and/or Coupons in its possession and shall furnish the Issuer and the Trustee with a destruction certificate which shall, in the case of Notes, give the certificate numbers of the Notes in numerical sequence and (where applicable) particulars of the Coupons attached thereto and, in the case of Coupons, show the total number and maturity dates of the Coupons destroyed. (D) Records and Reports: The Issuing and Paying Agent will:- (1) keep a full and complete record of all Notes and Coupons (other than serial numbers of Coupons except as regards unmatured Coupons not attached to or surrendered with Notes presented for redemption or cancellation) and of their redemption, purchase, payment, exchange, cancellation and destruction and of all replacement Notes 11 or Coupons issued in substitution for lost, stolen, mutilated, defaced or destroyed Notes or Coupons pursuant hereto; (2) in respect of Coupons of each maturity and Series, retain, until the expiry of five years after their due date for payment, a record of the total number of all paid Coupons of that maturity and Series and a record of the total number of Coupons of that maturity and Series still remaining unpaid; (3) make such records and Coupons (if any) available at all reasonable times to the Issuer and the Trustee; and (4) furnish to the Issuer and the Trustee such routine reports and statements as they may agree from time to time. 8. ISSUE OF REPLACEMENT NOTES (A) Stocks of Notes: The Issuer shall cause a sufficient quantity of additional forms of Definitive Notes and Coupons to be made available, upon request, to the Issuing and Paying Agent (in such capacity the "Replacement Agent") for the purpose of issuing replacement Notes or Coupons as provided below. (B) Replacement: The Replacement Agent shall, subject to and in accordance with the Conditions, all applicable legal and regulatory requirements and the following provisions of this Clause, issue replacement Notes or Coupons in place of Notes or Coupons which have been lost, stolen, mutilated, defaced or destroyed. (C) Conditions of replacement: The Replacement Agent shall not issue any replacement Note or Coupon unless and until the applicant therefor shall have:- (1) paid such costs (including the fees and costs of the Issuing and Paying Agent) as may be incurred in connection therewith; (2) furnished the Replacement Agent with such evidence (including evidence as to the certificate number of the Note or Coupon in question), security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note or Coupon is subsequently presented for payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of such Notes or Coupons) and otherwise as the Issuer may require; (3) surrendered to the Replacement Agent any mutilated or defaced Note or Coupon to be replaced; and (4) (if requested by the Issuer) advertised such loss in the Straits Times in accordance with Section 125 of the Companies Act, Chapter 50 of Singapore. (D) Cancellation of replaced Notes and Coupons: The Replacement Agent shall cancel any mutilated or defaced Notes or Coupons replaced by it pursuant to this Clause 12 and (to the extent that the relevant information has not already been given in routine reports and statements furnished to the Issuer and the Trustee) shall send the Issuer and the Trustee a certificate stating the certificate numbers of Notes or Coupons so cancelled and upon receipt of instructions from the Issuer, shall destroy such cancelled Notes or Coupons and send the Issuer and the Trustee a destruction certificate containing the information specified in Clause 7(C). In the case of mutilated or defaced Definitive Notes, the Replacement Agent shall ensure that (unless otherwise instructed by the Issuer as to evidence and indemnity) any replacement Note will only have attached to it Coupons corresponding to those attached to the mutilated or defaced Note presented for replacement. (E) Notice of presentation of replaced Notes: Whenever any Note or Coupon alleged to have been lost, stolen or destroyed in replacement of which a new Note or Coupon has been issued shall be presented to the Issuing and Paying Agent for payment or exchange, the Issuing and Paying Agent shall not pay or cause to be paid on behalf of the Issuer any principal or interest in respect of such Note or Coupon and shall send notice thereof to the Issuer. (F) Instructions of Issuer: The Replacement Agent shall issue replacement Notes or Coupons solely upon and in accordance with written instructions from the Issuer. The Issuer shall, as soon as practicable upon receipt from the Replacement Agent of any application for replacement of Notes or Coupons, instruct the Replacement Agent in writing as to the action to be taken with respect to such application. 9. NOTICES (A) Notices to Noteholders: At the request and expense of the Issuer, the Issuing and Paying Agent or the Agent Bank, as the case may be, shall arrange for the publication in accordance with the Conditions of all notices to Noteholders. Notices to the holders of Notes shall be published in accordance with the Conditions and, unless the Trustee otherwise directs, shall only be published in a form which has been approved by the Trustee. (B) Notices from Noteholders: The Issuing and Paying Agent shall promptly notify the Issuer, the relevant Noteholders and the Trustee of any notice received by it from a Noteholder whether electing to exchange a Global Note for Definitive Notes or otherwise. (C) Copies to Trustee: The Issuing and Paying Agent shall promptly send to the Trustee two copies of the form of every notice given to Noteholders for approval and of every such notice once published. 10. DOCUMENTS AND FORMS (A) Documents and Forms: The Issuer shall provide to the Issuing and Paying Agent:- (1) in the event that Definitive Notes of any Series are to be issued, (i) such Definitive Notes and any related Coupons duly executed on behalf of the Issuer, (ii) specimens of such Notes and Coupons and (iii) additional forms of such Notes and Coupons for the purpose of issuing replacements, at least 14 days before the Exchange Date for 13 the relative Global Note (and the Issuing and Paying Agent shall authenticate such Definitive Notes immediately before their issue); (2) all documents (including Exercise Notices and Purchase Notices) required under the Notes or by any Stock Exchange on which the Notes are listed to be available for issue or inspection during business hours (and the Issuing and Paying Agent shall make such documents so available to Noteholders); and (3) forms of voting certificates and block voting instructions, together with instructions as to how to complete, deal with and record the issue of such forms (and the Issuing and Paying Agent shall make such forms available to Noteholders and carry out the other functions required of it under Schedule 4 of the Trust Deed). (B) Notes etc. held by Issuing and Paying Agent: The Issuing and Paying Agent (1) acknowledges that all forms of Notes and Coupons delivered to and held by it pursuant to this Agreement shall be held by it as custodian only and it shall not be entitled to and shall not claim any lien or other security interest on such forms, (2) shall only use such forms in accordance with this Agreement, (3) shall maintain all such forms in safe custody, (4) shall take such security measures as may reasonably be necessary to prevent their theft, loss or destruction and (5) shall keep an inventory of all such forms and make it available to the Issuer and the Trustee at all reasonable times. 11. INTEREST RATE FIXING FOR FLOATING RATE NOTES AND HYBRID NOTES (A) Floating Rate Notes: The Issuer hereby requests the Agent Bank to act as its agent in relation to the Notes for the purpose of calculating and publishing the Rate of Interest from time to time applicable to any Floating Rate Notes and any Hybrid Notes and all matters incidental thereto (as set out in the Conditions) and the Agent Bank agrees to act as such agent. The Agent Bank shall in this regard perform the duties expressed to be performed by it in this Clause and in the Conditions. (B) Rate of Interest: For the purposes of sub-Clause (A) above, the Agent Bank shall maintain a record of the quotations obtained by it and all rates determined and all other action taken by it for the purposes of sub-Clause (A) above and shall from time to time on request deliver to the Issuer a certified copy of such record. (C) Continuing Obligations: If any Floating Rate Note or any Hybrid Note becomes due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of such Note after the date of the notice given under such Condition shall nevertheless continue to be calculated as previously by the Agent Bank in accordance with the provisions (amended as necessary) of the Conditions but no publication of such Rate of Interest and Interest Amounts need be made unless the Trustee otherwise requires. The first period in respect of which interest shall be so calculated shall commence on the expiry of the Interest Period during which the Floating Rate Notes become so payable. 14 12. INTEREST RATE FIXING FOR VARIABLE RATE NOTES (A) Variable Rate Notes: The Issuer hereby requests the Agent Bank to act as its agent in relation to the Notes for the purpose of calculating the Rate of Interest from time to time applicable to any Variable Rate Note and all matters incidental thereto (as set out in the Conditions) and the Agent Bank agrees to act as such agent. The Agent Bank shall in this regard perform the duties expressed to be performed by it in this Clause and in the Conditions. (B) Rate of Interest: For the purposes of sub-Clause (A) above, the Agent Bank shall maintain a record of the quotations obtained by it and all rates determined and all other action taken by it for the purposes of sub-Clause (A) above and shall from time to time on request deliver to the Issuer a certified copy of such record. (C) Agreed Yield/Agreed Rate: (1) The Issuer undertakes as soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note for any Interest Period for such Variable Rate Note is determined, but not later than 10.30 a.m. (Singapore time) on the next following business day after the business day during which the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note is determined, to notify the Issuing and Paying Agent and the Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period. The Issuing and Paying Agent agrees to notify the relevant Noteholder, at its request, of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period. (2) Failure to comply with this sub-Clause (C) shall not affect the validity of the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note determined in accordance with the Conditions. (D) Determination by Agent Bank: The Agent Bank shall determine, in accordance with Condition 4(II)(c), the Rate of Interest applicable to those Variable Rate Notes of each Series for each Interest Period (or part thereof, as the case may be) for which there is neither an Agreed Yield nor an Agreed Rate or no Relevant Dealer in respect of such Variable Rate Notes, calculate the Interest Amounts payable on the presentation and surrender of the Coupons appertaining to such Variable Rate Notes (rounding to the nearest cent, half a cent being rounded upwards) for the relevant Interest Period (or part thereof) and determine the relevant Interest Payment Date all subject to and in accordance with the Conditions. (E) Notification of Rate of Interest: In relation to each Interest Period, as soon as practicable but in any event not later than 5.00 p.m. (Singapore time) on each Interest Determination Date, the Agent Bank shall cause the Rate of Interest for each Variable Rate Note, the Interest Amounts for each Variable Rate Note and the Interest Payment Date to be notified to the Issuer and the Issuing and Paying Agent. (F) Continuing Obligations: If any Variable Rate Note becomes due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of such Variable Rate Note after the date of notice given under such Condition shall nevertheless continue to be calculated as previously by the Agent Bank in accordance with the provisions (amended as necessary) of the Conditions but no publication of such Rate of Interest and 15 Interest Amounts need be made unless the Trustee otherwise requires. The first period in respect of which interest shall be so calculated shall commence on the expiry of the Interest Period during which the Variable Rate Notes become so payable. 13. DETERMINATION OF REDEMPTION AMOUNTS (A) Redemption Amount: The Issuer hereby requests the Agent Bank to act as its agent in relation to those Notes the redemption amount of which is not their principal amount for the purpose of calculating each Redemption Amount from time to time payable in respect of such Notes and all matters incidental thereto (as set out in the Conditions) and the Agent Bank agrees to act as such agent. The Agent Bank shall in this regard perform the duties expressed to be performed by it in the Conditions of the relevant Notes. (B) Calculation: For the purposes of sub-Clause (A) above, the Agent Bank shall:- (1) as soon as practicable after determining any Redemption Amount notify the Issuer, the Issuing and Paying Agent, the Trustee and, if the relevant Notes are listed or are to be listed on a Stock Exchange and the rules of such Stock Exchange require, such Stock Exchange thereof; (2) maintain a record of the source and method of its determination of each Redemption Amount and shall from time to time on request deliver to the Issuer a certified copy of such record; and (3) if it does not for any reason at any material time determine any Redemption Amount, forthwith notify the Issuer that such determination has not been made. (C) Other Calculations: The provisions of this Clause shall apply mutatis mutandis to any other calculation which is expressed to be made by the Agent Bank in the Conditions relating to any Notes. 14. INDEMNITY (A) By Issuer: The Issuer will indemnify each of the Agents against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all costs, charges and expenses paid or incurred in disputing or defending any of the foregoing) which it may incur or which may be made against it arising out of, as a result of or in connection with its appointment or the exercise of its powers and performance of its duties hereunder except such as may result from the breach by it of the terms of this Agreement or from its own wilful default, negligence or bad faith or that of its officers or employees. (B) By Agents: Each of the Agents shall severally indemnify the Issuer against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all 16 costs, charges and expenses paid or incurred in disputing or defending any of the foregoing) which the Issuer may incur or which may be made against it as a result the breach by such Agent of the terms of this Agreement or its wilful default, negligence or bad faith or that of its officers or employees. 15. GENERAL (A) No Agency or Trust: In acting under this Agreement and in connection with the Notes, the Agents shall not have any obligations towards or relationship of agency or trust with any of the Noteholders or Couponholders and shall only be obliged to perform the duties set out specifically in this Agreement, the Conditions and the Procedures Memorandum and any duties necessarily incidental to them. (B) Holder to be treated as Owner: Except as otherwise required by law, each Agent shall treat the holder of a Note or Coupon as its absolute owner as provided in the Conditions and shall not be liable for doing so. (C) No Lien: No Agent shall exercise any lien, right of set-off or similar claim against any Noteholder in respect of moneys payable by it under this Agreement. (D) Taking of Advice: Each of the Agents may consult on any legal matter relating to this Agreement or the Notes any legal adviser selected by it in consultation with the Issuer, who may be an employee of or legal adviser to the Issuer, and it shall be protected and shall incur no liability for action taken, or suffered to be taken, with respect to such matter in good faith and in accordance with the opinion of such legal adviser. (E) Note and Document believed to be Genuine: Each of the Agents shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Note or Coupon or other document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (F) List of Authorised Persons: The Issuer shall provide the Issuing and Paying Agent for itself and for delivery to each other Agent with a copy of the certified list of persons authorised to take action on behalf of the Issuer in connection with this Agreement and to execute Notes or Coupons and shall notify the Issuing and Paying Agent and each other Agent immediately in writing if any of such persons ceases to be so authorised or if any additional person becomes so authorised and, unless and until notified of any such change, each of the Agents shall be entitled to rely upon the certificate(s) delivered to them most recently and all instructions given in accordance with such certificate(s) shall be binding upon the Issuer. (G) Other Relationships: Neither any Agent nor any other person whether acting for itself or in any other capacity will be precluded from becoming the owner of, or acquiring any interest in, or holding or disposing of any Note or Coupon or any securities of the Issuer with the same rights as it would have had if such Agent were not acting as Agent or from entering into or being interested in any contracts or transactions with the Issuer or from acting on, or as depository, trustee or agent for, any committee or body of holders of any securities of the Issuer and will not be liable to account for any profit. 17 (H) Validity of Agreement: None of the Agents shall be responsible for the validity of this Agreement, the Notes or the Coupons or any security in respect thereof or for any act done or omitted in connection herewith. 16. CHANGES IN AGENTS (A) Appointment and Termination of Appointment: In relation to any Series of Notes, the Issuer may at any time appoint additional Issuing and Paying Agents and/or terminate the appointment of the Issuing and Paying Agent or the Agent Bank by giving to the entity concerned not less than 60 days' notice to that effect, which notice shall expire not less than 30 days before or after any due date for payment of the Notes or Coupons comprising that Series. Upon any letter of appointment being executed by or on behalf of the Issuer and any person appointed as an Agent, such person shall become a party to this Agreement as if originally named in it and shall act as such Agent in respect of that or those Series of Notes in respect of which it is appointed. (B) Resignation: In relation to any Series of Notes, either Agent may resign its appointment hereunder at any time by giving to the Issuer (except in the case of the Issuing and Paying Agent) and the Issuing and Paying Agent not less than 60 days' notice to that effect, which notice shall expire not less than 30 days before or after any due date for payment of the Notes or Coupons comprising that Series. (C) Condition to Resignation and Termination: No resignation by or (subject to sub-Clause (F) below) termination of the appointment of the Issuing and Paying Agent or the Agent Bank shall, however, take effect until a new Issuing and Paying Agent or Agent Bank (as the case may be), which shall be a bank, merchant bank or other financial institution in good standing with a specified office in Singapore and approved by the Trustee (such approval not to be unreasonably withheld), has been appointed. No resignation by or termination of the appointment of the Issuing and Paying Agent shall take effect if as a result of such resignation or termination there would cease to be an Issuing and Paying Agent with a specified office in Singapore as required by the Conditions. (D) Change of Office: Any Agent may change the address of its office, in which event it shall give to the Issuer, the Issuing and Paying Agent and the Trustee not less than 21 days' prior notice to that effect, giving the address of the new office and the date upon which such change is to take effect. (E) Notices: The Issuer shall give to Noteholders in accordance with the Conditions and the Trustee not less than 30 days' notice of any such proposed appointment, termination, resignation or change of which it is aware. (F) Automatic Termination in Certain Events: The appointment of any Agent shall forthwith terminate if at any time such Agent becomes incapable of acting or if it is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver, judicial manager, administrator or other similar official of all or any substantial part of its property or admits in writing its inability to pay or meet its debts as they mature or suspends payment thereof, or if a resolution is passed or an order made for the winding up or dissolution of such Agent, or if a receiver, judicial manager, administrator or other similar official of such Agent or all or any substantial part of its property is appointed, or if any order 18 of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law, or if any public officer takes charge or control of such Agent or its property or affairs for the purpose of rehabilitation, conservation or liquidation. (G) Delivery of Records on Termination: If the appointment of the Issuing and Paying Agent is terminated it shall, on the date on which such termination takes effect, pay to the successor Issuing and Paying Agent any amount held by it for payment in respect of the Notes or Coupons and shall deliver to its successor all records maintained by it pursuant to this Agreement and all Notes and Coupons held by it. (H) Successor Corporations: Any corporation into which any Agent may be merged or converted or any corporation with which such Agent may be consolidated or any corporation resulting from any merger, conversion or consolidation to which such Agent shall be a party shall, to the extent permitted by applicable law, be the successor Agent under this Agreement without any further formality. Notice of any such merger, conversion or consolidation shall forthwith be given to the Issuer, the Trustee and the other Agents. (I) Liabilities of Parties: The termination of appointment or resignation of any of the Agents shall not prejudice the rights of any party hereto against the others for any liabilities incurred prior to such termination or resignation. 17. COMMISSIONS, FEES AND EXPENSES (A) Fees: The Issuer will, in respect of the services to be performed by the Agents under this Agreement, pay to the Issuing and Paying Agent the commissions and fees at the times and in the manner set out in a letter dated 10th January, 2002 from the Issuing and Paying Agent to the Issuer and countersigned by the Issuer and the Issuer need not concern itself with the apportionment of such moneys as between the Issuing and Paying Agent and the other Agents. (B) Costs: The Issuer shall pay to each of the Agents all out-of-pocket expenses (including legal, printing, advertising, telex, postage and insurance expenses, the fees and expenses of legal advisers and any applicable value added tax, sales, stamp, issue, registration, documentary or other taxes and duties) as may be properly incurred by it (as evidenced by the relevant receipts and invoices) in connection with its services under this Agreement. (C) Taxes and Duties: The Issuer will pay all goods and services, value added, stamp or other documentary taxes or duties, if any, to which this Agreement or the issue of the Notes or the Coupons (including the issue of the Global Notes and the exchange thereof for definitive Notes) may be subject. (D) No Deduction or Withholding: All payments of fees hereunder will be made without deduction or withholding for or on account of any taxes, duties or other levies (including but not limited to any taxes, duties or levies on the supply of goods and services). 18. COMMUNICATIONS 19 (A) Notices: Except as otherwise provided hereunder any communication shall be in writing and sent by hand, prepaid registered post, facsimile or telephone (with confirmation in writing):- in the case of the Issuer, to it at:- ST Assembly Test Services Ltd, 5, Yishun Street 23, Singapore 768442. Telephone Number: 751 1822/751 1851 Facsimile Number: 755 1585/755 3153 Attention: Mr Tan Lay Koon/Ms Pearlyne Wang in the case of either of the Agents, to it care of:- Citicorp Investment Bank (Singapore) Limited, 300, Tampines Avenue 5, #07-00, Tampines Junction, Singapore 529653. Telephone Number: 4268042 Facsimile Number: 4268056 Attention: Ms Kumari Mohan and, in the case of the Trustee, to it at:- British and Malayan Trustees Limited, 17, Phillip Street, #08-00, Grand Building, Singapore 048695. Telephone Number: 535 0260 Facsimile Number: 535 1258 Attention: Mr John Chew or any other address of which notice in writing has been given to the parties in accordance with this Clause. A communication will be deemed received (if by telephone) when made, (if by facsimile transmission) when despatched and receipt in good order is acknowledged by telephone, (if in writing delivered by hand) when left at the address required by this sub-Clause (A) or (if in writing sent by prepaid registered post) within two days after being sent by prepaid registered post addressed to the relevant party at that address, in each case in the manner required by this Clause. Every communication shall be irrevocable unless not acted upon. (B) Notices through Issuing and Paying Agent: All communications relating to this Agreement between the Issuer and any of the Agents or between the Agents 20 themselves shall be made (except where otherwise expressly provided) through the Issuing and Paying Agent. (C) Instructions to the Issuing and Paying Agent: Instructions to the Issuing and Paying Agent hereunder shall be given in the manner contemplated by sub-Clause (A) above or by such other electronic means of transmission as may be agreed in writing between the Issuer and the Issuing and Paying Agent from time to time and the Issuing and Paying Agent shall incur no liability to the Issuer in acting under this Agreement upon any instructions contemplated hereby which the recipient thereof believed in good faith to have been given by a person mentioned in a certificate current for the purposes of Clause 15(F). In the event that a discrepancy exists between the telephonic instructions and the written confirmation given by, or on behalf of, the Issuer or, in the absence of a written confirmation, the telephonic instructions will be deemed to be the controlling and proper instructions. 19. GOVERNING LAW This Agreement is governed by, and shall be construed in accordance with, the laws of Singapore and each of the parties hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the Singapore courts and waives any objection on the grounds of venue or forum non conveniens or any similar grounds. 21 THE FIRST SCHEDULE FORM OF EXERCISE NOTICE ST ASSEMBLY TEST SERVICES LTD S$500,000,000 Multicurrency Medium Term Note Programme Series No: [ ] By depositing this duly completed Notice with the Issuing and Paying Agent for the Notes of the above Series (the "Notes") the undersigned holder of such of the Notes as are surrendered with this Notice and referred to below irrevocably exercises its option to have such Notes, or the principal amount of Notes specified below redeemed under Condition 5(e) of the Notes. This Notice relates to Notes in the aggregate principal amount of , in -------- the case of Definitive Notes bearing the following certificate numbers:- ------------------------------------------ ------------------------------------------ ------------------------------------------ If the Notes to which this Notice relates are to be returned, they should be returned by post to:- ------------------------------------------ ------------------------------------------ ------------------------------------------ PAYMENT INSTRUCTIONS Please make payment in respect of the above Notes as follows:- *(a) by [currency] cheque drawn on a bank in [the principal financial centre of the currency] and mailed to the above address. *(b) by transfer to the following [currency] account:- Bank: ------------------------------------------- Branch Address: --------------------------------- ------------------------------------------------- 22 Branch Code: ------------------------------------ Account Number: --------------------------------- Account Name: ----------------------------------- Signature of holder: ---------------------------- To be completed by the Issuing and Paying Agent Received by: ------------------------------------ [Signature and stamp of the Issuing and Paying Agent] At its office at: ------------------------------- ------------------------------------------------- ------------------------------------------------- On: --------------------------------------------- *Delete as appropriate Notes:- 1. The Agency Agreement provides that Notes so returned will be by post, uninsured and at the risk of the Noteholder, unless the Noteholder otherwise requests and pays the costs of such insurance in advance to the Issuing and Paying Agent at the time of depositing the Note. 2. This Exercise Notice is not valid unless all of the paragraphs requiring completion are duly completed. 3. The Issuing and Paying Agent shall not in any circumstances be liable to the depositing Noteholder or any other person for any loss or damage arising from any act, default or omission of the Issuing and Paying Agent in relation to the Notes or any of them unless such loss or damage was caused by the fraud or negligence of the Issuing and Paying Agent or its directors, officers or employees. 23 THE SECOND SCHEDULE FORM OF PURCHASE NOTICE ST ASSEMBLY TEST SERVICES LTD S$500,000,000 Multicurrency Medium Term Note Programme Series No: [ ] By depositing this duly completed Notice with the Issuing and Paying Agent for the Notes of the above Series (the "Notes") the undersigned holder of such of the Notes as are surrendered with this Notice and referred to below irrevocably exercises its option to require ST Assembly Test Services Ltd to purchase such Notes on the Interest Payment Date falling on under Condition ----------------- 5(c)[(i)/(ii)] of the Notes. This Notice relates to Notes in the aggregate principal amount of , in -------- the case of Definitive Notes bearing the following certificate numbers:- ------------------------------------------ ------------------------------------------ ------------------------------------------ If the Notes to which this Notice relates are to be returned, they should be returned by post to:- ------------------------------------------ ------------------------------------------ ------------------------------------------ PAYMENT INSTRUCTIONS Please make payment in respect of the above Notes as follows:- *(a) by [currency] cheque drawn on a bank in [the principal financial centre of the currency] and mailed to the above address. *(b) by transfer to the following [currency] account:- Bank: ------------------------------------------- Branch Address: --------------------------------- ------------------------------------------------- 24 Branch Code: ------------------------------------ Account Number: --------------------------------- Account Name: ----------------------------------- Signature of holder: ---------------------------- To be completed by the Issuing and Paying Agent Received by: ------------------------------------ [Signature and stamp of the Issuing and Paying Agent] At its office at: ------------------------------- ------------------------------------------------- ------------------------------------------------- On: --------------------------------------------- *Delete as appropriate Notes:- (1) The Agency Agreement provides that Notes so returned will be sent by post, uninsured and at the risk of the Noteholder, unless the Noteholder otherwise requests and pays the costs of such insurance in advance to the Issuing and Paying Agent at the time of depositing the Note. (2) This Purchase Notice is not valid unless all of the paragraphs requiring completion are duly completed. (3) The Issuing and Paying Agent shall not in any circumstances be liable to the depositing Noteholder or any other person for any loss or damage arising from any act, default or omission of the Issuing and Paying Agent in relation to the Notes or any of them unless such loss or damage was caused by the fraud or negligence of the Issuing and Paying Agent or its directors, officers or employees. 25 I N W I T N E S S W H E R E O F this Agreement has been entered into on the date stated at the beginning. The Issuer ST ASSEMBLY TEST SERVICES LTD By: sd. HARRY H DAVOODY Witness: sd. LEONG FANG YUN ------------------- ------------------ Name: HARRY H DAVOODY Name: LEONG FANG YUN ------------------- ------------------ Title: DIRECTOR Address: SOLICITOR ------------------- ------------------
The Issuing and Paying Agent CITICORP INVESTMENT BANK (SINGAPORE) LIMITED By: sd. RONALD LOW ------------------- Name: RONALD LOW ------------------- Title: MANAGING DIRECTOR ------------------- The Agent Bank CITICORP INVESTMENT BANK (SINGAPORE) LIMITED By: sd. RONALD LOW ------------------- Name: RONALD LOW ------------------- Title: MANAGING DIRECTOR ------------------- The Trustee BRITISH AND MALAYAN TRUSTEES LIMITED 26 By: sd. COLIN LEE YUNG-SHIH ----------------------- Name: COLIN LEE YUNG-SHIH ----------------------- Title: DIRECTOR ----------------------- 27 EX-8.1 7 u91877ex8-1.txt LIST OF SUBSIDIARIES EXHIBIT 8.1 SUBSIDIARIES OF ST ASSEMBLY TEST SERVICES LTD: ST Assembly Test Services, Inc. Jurisdiction of Incorporation: Delaware, United States FastRamp Test Services, Inc. Jurisdiction of Incorporation: Delaware, United States Winstek Semiconductor Corporation Jurisdiction of Incorporation: Taiwan, R.O.C. -----END PRIVACY-ENHANCED MESSAGE-----