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REDACTED FOR CONFIDENTIALITY
EXHIBIT 10.4
DATED 4 JULY, 1997
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
- and -
HEWLETT-PACKARD EUROPE B.V.
- and -
EDB INVESTMENTS PTE LTD
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OPTION AGREEMENT
RELATING TO
SHARES IN THE CAPITAL OF
CHARTERED SILICON PARTNERS PTE LTD
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C O N T E N T S
CLAUSE HEADING PAGE
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1. DEFINITIONS AND INTERPRETATION 1
2. CALL OPTIONS 3
3. PRICE 6
4. OPTION COMPLETION 6
5. WARRANTIES 7
6. PREVALENCE OF AGREEMENT 8
7. REMEDIES 8
8. COSTS 9
9. SUCCESSORS AND ASSIGNS 9
10. NOTICES 9
11. GOVERNING LAW 11
APPENDIX A - CALL OPTION NOTICE 00
XXXXXXXX X - PARTY A NOTICE 14
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T H I S A G R E E M E N T is made on 4 July, 0000 X X X X X X N:-
(1) CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("CSM"), a company
incorporated in Singapore with its registered office at 00, Xxxxxxxxx
Xxxxxxxxxx Xxxx X, Xxxxxx 0, Xxxxxxxxx 000000;
(2) HEWLETT-PACKARD EUROPE B.V. ("HP"), a company incorporated in The
Netherlands with its principal place of business at Xxxxxxxxx 00, 0000
XX Xxxxxxxxxx, Xxx Xxxxxxxxxxx; and
(3) EDB INVESTMENTS PTE LTD ("EDBI"), a company incorporated in Singapore
with its registered office at 000, Xxxxx Xxxxxx Xxxx, #00-00 Xxxxxxx
Xxxx Xxxxx, Xxxxxxxxx 000000.
W H E R E A S:-
(A) Pursuant to a Joint Venture Agreement dated 13 March, 1997 (the "Joint
Venture Agreement") made between the parties, the parties agreed to establish
Chartered Silicon Partners Pte Ltd (the "Company") as a joint venture company to
own and operate a wafer fabrication facility in Singapore.
(B) EDBI has agreed to grant to each of CSM and HP a call option, over
ordinary shares held or to be held by EDBI in the capital of the Company upon
the terms and conditions set out in this Agreement.
(C) It is a condition of Completion (as defined in the Joint Venture
Agreement) that this Agreement be entered into between the parties.
I T I S A G R E E D as follows:-
1. DEFINITIONS AND INTERPRETATION
In this Agreement and the Appendices, unless there is something in the
subject or context inconsistent therewith:-
(i) the following expressions bear the following meanings, namely:-
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"Call Option Notice" means a notice from an Option Holder to
EDBI substantially in the form set out in Appendix A;
"Call Option Period" means the period commencing from the
Completion Date and ending on the date falling five years from
such date (both dates inclusive);
"CSM Call Option" has the meaning ascribed thereto in Clause
2(A);
"CSM Option Shares" means such number of ordinary shares in the
capital of the Company for the time being held by EDBI as shall
be equal to nine per cent. of the total issued ordinary shares
for the time being in the capital of the Company;
"HP Call Option" has the meaning ascribed thereto in Clause
2(B);
"HP Option Shares" means such number of ordinary shares in the
capital of the Company for the time being held by EDBI as shall
be equal to ten per cent. of the total issued ordinary shares
for the time being in the capital of the Company;
"Option" means any of the following:-
(i) the CSM Call Option;
(ii) the HP Call Option; and
(iii) the Party A Option.
"Option Holder" means CSM or HP;
"Option Notice" means either of the following:-
(i) the Call Option Notice; and
(ii) the Party A Notice.
"Option Shares" means the CSM Option Shares and the HP Option
Shares;
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"Party A Notice" means a notice from an Option Holder to the
other Option Holder and EDBI substantially in the form set out
in Appendix B;
"Party A Option" has the meaning ascribed thereto in Clause
2(C)(v); and
"Singapore Dollars" means the lawful currency of Singapore;
(ii) all terms and references which are defined in the Joint
Venture Agreement but are not defined in this Agreement
shall have the same meaning ascribed thereto in the
Joint Venture Agreement; and
(iii) references to "Clauses" and the "Appendices" are to
clauses of, and the appendices to, this Agreement. The
headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
2. CALL OPTIONS
(A) CSM Call Option
In consideration of CSM acting under or in connection with the Joint
Venture Agreement, EDBI hereby grants to CSM a call option (the "CSM Call
Option"), being the right of CSM to require EDBI to sell to CSM free from all
liens, charges and other encumbrances and with all rights and advantages
attaching thereto, the CSM Option Shares at any time during the Call Option
Period.
(B) HP Call Option
In consideration of HP acting under or in connection with the Joint
Venture Agreement, EDBI hereby grants to HP a call option (the "HP Call
Option"), being the right of HP to require EDBI to sell to HP free from all
liens, charges and other encumbrances and with all rights and advantages
attaching thereto, the HP Option Shares at any time during the Call Option
Period.
(C) Exercise
(i) The CSM Call Option may be exercised by CSM by serving a Call Option Notice
on EDBI specifying the number of CSM Option Shares CSM wishes to purchase at any
time during the Call Option Period Provided that:-
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(a) the CSM Call Option may be exercised only twice in respect of
all or any part of the CSM Option Shares;
(b) the first exercise of the CSM Call Option shall be in respect of
either all the CSM Option Shares; or four per cent. of the total
issued ordinary shares for the time being in the capital of the
Company;
(c) the second exercise (if any) of the CSM Call Option shall be in
respect of the full balance of the CSM Option Shares at that
time held by EDBI;
(d) in respect of the Option Shares allotted on the same date, CSM
may exercise its right to purchase up to 9/19ths of such Option
Shares but CSM must purchase the Option Shares on a "FIFO"
basis, that is, the Option Shares allotted earliest must be
purchased first; and
(e) the CSM Call Option shall automatically lapse and become null
and void in the event that CSM sells or otherwise transfers
(other than to a Permitted Transferee or to any third party
approved by EDBI in writing) any ordinary shares in the capital
of the Company.
(ii) EDBI agrees that it shall, upon receiving a Call Option Notice from CSM,
sell to CSM free from all liens, charges and other encumbrances and with all
rights and advantages attaching thereto the number of CSM Option Shares
specified in the Call Option Notice.
(iii) The HP Call Option may be exercised by HP by serving a Call Option Notice
on EDBI specifying the number of HP Option Shares HP wishes to purchase at any
time during the Call Option Period Provided that:-
(a) the HP Call Option may be exercised only twice in respect of all
or any part of the HP Option Shares;
(b) the first exercise of the HP Call Option shall be in respect of
either all the HP Option Shares; or five per cent. of the total
issued ordinary shares for the time being in the capital of the
Company;
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(c) the second exercise (if any) of the HP Call Option shall be in
respect of the full balance of the HP Option Shares at that time
held by EDBI;
(d) in respect of the Option Shares allotted on the same date, HP
may exercise its right to purchase up to 10/19ths of such Option
Shares but HP must purchase the Option Shares on a "FIFO" basis,
that is, the Option Shares allotted earliest must be purchased
first; and
(e) the HP Call Option shall automatically lapse and become null and
void in the event that HP sells or otherwise transfers (other
than to a Permitted Transferee or to any third party approved by
EDBI in writing) any ordinary shares in the capital of the
Company.
(iv) EDBI agrees that it shall, upon receiving a Call Option Notice from HP,
sell to HP free from all liens, charges and other encumbrances and with all
rights and advantages attaching thereto the number of HP Option Shares specified
in the Call Option Notice.
(v) Notwithstanding any other provision of this Agreement but subject to
paragraph (vi) below, the parties agree that an Option Holder ("Party A") shall
have the right to require EDBI to sell to Party A (the "Party A Option") free
from all liens, charges and other encumbrances and with all rights and
advantages attaching thereto, any Option Shares which the other Option Holder
("Party B") has not exercised its option to acquire by the beginning of the
fifth year of the Call Option Period (the "Unacquired Option Shares") on and
subject to the following terms:-
(a) if Party A wishes to exercise the Party A Option, it shall serve
the Party A Notice on EDBI and Party B no earlier than the sixth
month of such fifth year;
(b) if Party B shall, prior to the expiry of the Call Option Period,
serve a Call Option Notice on EDBI in respect of the Unacquired
Option Shares, the Party A Option shall automatically lapse and
become null and void; and
(c) if Party B fails to serve a Call Option Notice prior to the
expiry of the Call Option Period, or if Party B serves written
notice on Party A and EDBI that it does not wish to acquire the
Unacquired Option Shares, completion of the sale and purchase of
the Unacquired Option Shares as between Party A and EDBI shall
take place on the date falling 30 days from (1) the date of
expiry of the Call Option Period; or (2) the date Party B
notifies Party A and EDBI that it does not wish to acquire the
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
Unacquired Option Shares (as the case may be) but otherwise in
accordance with Clause 4.
(vi) Party A shall have the right to exercise the Party A Option only upon
the satisfaction of the following conditions:-
(a) Party A has exercised it rights to purchase all the relevant
Option Shares pursuant to the Option granted to it under Clause
2 (A) or Clause 2 (B) (as the case may be); and
(b) Party A has obtained the written approval of EDBI (such approval
not to be unreasonably withheld) prior to Party A serving the
Party A Notice on Party B.
3. PRICE
The purchase price for each of the Option Shares shall be the sum equal
to ****
4. OPTION COMPLETION
(A) Completion of the sale and purchase of the relevant number of Option Shares
(the "Option Completion") pursuant to the exercise of an Option shall take place
at the registered office of the Company (or at such other place as the parties
to such Option may agree in writing) on the date falling 30 days from the date
of the Option Notice (in the case of the CSM Call Option and the HP Call Option
(as the case may be)) or on the date specified in Clause 2(C)(v)(c) (in the case
of the Party A Option), or such other date as the parties to such Option may
agree.
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(B) On each Option Completion:-
(i) EDBI shall deliver to the Option Holder a duly executed transfer
form together with the relative share certificates in respect of
the number of Option Shares specified in the Option Notice; and
(ii) the Option Holder shall pay to EDBI the purchase price for the
number of Option Shares specified in the Option Notice in
Singapore Dollars by way of a cashier's order, bank draft drawn
on a licensed bank in Singapore and made out in favour of EDBI,
or wire transfer, or such other means acceptable to the Option
Holder and EDBI.
(C) The restrictions on transfer of shares contained in the Joint Venture
Agreement and the Articles shall not apply to the sale and transfer of Option
Shares to either Option Holder pursuant to this Agreement.
5. WARRANTIES
(A) Warranties by EDBI
EDBI hereby warrants and undertakes to each of the Option Holders and
its successors in title (with the intent that the provisions of this sub-Clause
(A) shall continue to have full force and effect notwithstanding each Option
Completion) that:-
(i) it will not, in respect of any of the Option Shares, prior to the
expiry of the Call Option Period, sell, transfer, dispose of,
charge, pledge or encumber in any way its interest in that Option
Share except in accordance with this Agreement;
(ii) it is or will on each Option Completion be legally and
beneficially entitled to transfer the relevant Option Shares to
such Option Holder; and
(iii) the relevant Option Shares are or will on each Option Completion
be free from all and any charges, liens and other encumbrances
whatsoever.
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(B) Warranties by Option Holder
Each of the Option Holders hereby warrants and undertakes to EDBI and
its successors in title (with the intent that the provisions of this sub-Clause
(B) shall continue to have full force and effect notwithstanding each Option
Completion) that:-
(i) it will not sell, transfer and dispose of any of the Option
Shares acquired by it from EDBI pursuant to the exercise of an
Option until the expiration of the Lock-Up Period as determined
in paragraphs (a) and (b) of this Clause:-
(a) in respect of the Option Shares purchased pursuant to an
exercise of such Option during the first or second year
of the Option Period, the Lock-Up Period shall expire on
the expiry date of the moratorium on transfer of shares
by CSM and HP as specified in Clause 10(A)(i) of the
Joint Venture Agreement; and
(b) in respect of the Option Shares purchased pursuant to an
exercise of such Option during the third, fourth or
fifth year of the Option Period, the Lock-Up Period
shall expire on the date falling two years from the date
of exercise of such Option in respect of such Option
Shares; and
(ii) it will ensure that the Company does not declare any dividend
payments to the Shareholders during the period of six months
immediately following each exercise by either of the Option
Holders of its Option.
6. PREVALENCE OF AGREEMENT
In the event of any inconsistency or conflict between the provisions of
this Agreement and the provisions of the Articles, the provisions of this
Agreement shall as between the parties prevail.
7. REMEDIES
No failure on the part of any party to exercise and no delay on the part
of any party in exercising any right hereunder will operate as a release or
waiver thereof, nor will any single or partial exercise of any right under this
Agreement preclude any other or further exercise of it. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any right or
remedy provided by law.
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8. COSTS
Each party shall bear its own legal and other professional costs and
expenses incurred by it in connection with this Agreement. Each Option Holder
shall bear the stamp duty payable on the purchase by it of any Option Shares.
9. SUCCESSORS AND ASSIGNS
(A) Agreement Binding
This Agreement shall be binding on and shall inure for the benefit of
each party's successors and assigns.
(B) Assignment
In the event that any party (the "Transferor") transfers all of the
shares held by it in the capital of the Company to its Permitted Transferee
pursuant to Clause 10(D) of the Joint Venture Agreement, the Transferor shall
procure that its Permitted Transferee executes in such form as may be reasonably
required by and agreed between the other parties a deed of ratification and
accession under which the Permitted Transferee shall agree to be bound by and
shall be entitled to the benefit of this Agreement as if an original party
hereto in place of the Transferor. Unless and until a Permitted Transferee
executes such deed of ratification and accession, such Permitted Transferee
shall not be entitled to exercise its benefits hereunder.
10. NOTICES
All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
prepaid registered post (by air-mail if to or from an address outside Singapore)
with recorded delivery, or by facsimile transmission (provided that the receipt
of such facsimile transmission is confirmed by the dispatch of a hard copy of
the facsimile sent immediately thereafter by prepaid registered post) addressed
to the intended recipient thereof at its address or at its facsimile number set
out in this Agreement (or to such other address or facsimile number as a party
to this Agreement may from time to time duly notify the others in writing). Any
such notice, demand or communication shall be deemed to have been duly served,
if given or made by facsimile, immediately at the time of dispatch (provided
that the receipt of such facsimile transmission is confirmed by the dispatch of
a hard copy of the
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facsimile sent immediately thereafter by prepaid registered post) or, if given
or made by letter, immediately if delivered personally or 48 hours after posting
or, if given or made by air-mail, ten days after posting and in proving the same
it shall be sufficient to show that personal delivery was made or that the
envelope containing such notice was duly addressed, stamped and posted. The
addresses and facsimile numbers of the parties for the purpose of this Agreement
are:-
CSM : CHARTERED SEMICONDUCTOR MANUFACTURING LTD
00, Xxxxxxxxx Xxxxxxxxxx Xxxx X Xxxxxx 0
Xxxxxxxxx 000000
Facsimile No. : (00) 000 0000
Attention : Legal Department
HP : HEWLETT-PACKARD EUROPE B.V.
Xxxxxxxxx 00
0000 XX Xxxxxxxxxx
Xxx Xxxxxxxxxxx
Facsimile No. : (31)(00) 000 0000
Attention : Legal Department
With a copy to:- HEWLETT-PACKARD COMPANY 0000 Xxxxxxx
Xxxxxx MS 20 BQ Xxxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Facsimile No. : (01)(000) 000 0000
Attention : General Counsel
EDBI : EDB INVESTMENTS PTE LTD
000, Xxxxx Xxxxxx Xxxx
#00-00 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx 000000
Facsimile No. : (00) 000 0000
Attention : General Manager
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11. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of Singapore.
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I N W I T N E S S W H E R E O F the parties have entered into this Agreement
as of the date stated above.
CSM
SIGNED by TAN XXXX XXXX )
President & CEO )
for and on behalf of )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD )
in the presence of:- ) /s/ Tan Book Seng
--------------------------
/s/ Xxxxxx Hon
--------------------------
Name: Xxxxxx Hon, Senior Manager Legal
HP
SIGNED by XXXX X. XXXXX
General Manager, Integrated Circuit Business
Division )
for and on behalf of )
HEWLETT-PACKARD EUROPE B.V. )
in the presence of:- ) /s/ Xxxx X. Xxxxx
---------------------------
/s/ Xxxxxxxxx Xxxx
--------------------------
Name: Xxxxxxxxx Xxxx, Senior Attorney
EDBI
SIGNED by LIOW VOON KHEONG )
General Manager )
for and on behalf of )
EDB INVESTMENTS PTE LTD )
in the presence of:- ) /s/ Liow Voon Kheong
--------------------------
/s/ Xxxxxxx Xxx Xxxx Xx
--------------------------
Name: Xxxxxxx Xxx Xxxx Xx
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A P P E N D I X A
CALL OPTION NOTICE
To : EDB Investments Pte Ltd
From : [NAME OF OPTION HOLDER]
We refer to the Option Agreement (the "Option Agreement") dated [ ], 1997 made
between us. Terms defined in the Option Agreement have the same meaning herein.
We hereby give you notice that we require you to sell to us in accordance with
the terms and conditions of the Option Agreement, [SPECIFY NUMBER] of the Option
Shares, such sale to be completed on the date specified in Clause 4(A) of the
Option Agreement.
Yours faithfully
for and on behalf of
[NAME OF OPTION HOLDER]
By : ___________________
Name : ___________________
Title : ___________________
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A P P E N D I X B
PARTY A NOTICE
To : (1) EDB Investments Pte Ltd
(2) [NAME OF PARTY B]
From : [NAME OF PARTY A]
We refer to the Option Agreement (the "Option Agreement") dated [ ], 1997 made
between us. Terms defined in the Option Agreement have the same meaning herein.
If [NAME OF PARTY B] does not, prior to the expiry of the Call Option Period,
serve a Call Option Notice on EDBI in respect of the Unacquired Option Shares,
we hereby give you notice that we require EDBI to sell to us in accordance with
the terms and conditions of the Option Agreement, the Unacquired Option Shares,
such sale to be completed on the date specified in Clause 2(C)(v)(c) of the
Option Agreement.
Yours faithfully
for and on behalf of
[NAME OF PARTY A]
By : ___________________
Name : ___________________
Title : ___________________
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