Document:

<PAGE>   1
                                                                   EXHIBIT 10.19

                             Dated December 19, 1997

                    CHARTERED SEMICONDUCTOR MANUFACTURING LTD

                                     - and -

                 LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD.

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

                             JOINT VENTURE AGREEMENT

                        ---------------------------------
<PAGE>   2
                                 C O N T E N T S

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

2.             FORMATION OF THE COMPANY                                   10

3.             BUSINESS PLAN; SCOPE AND OBJECTIVE                         11

4.             COMPLETION                                                 14

5.             BOARD OF DIRECTORS                                         19

6.             BUSINESS OF THE COMPANY                                    28

7.             SHAREHOLDERS' OBLIGATIONS AND RIGHTS                       29

8.             MANAGEMENT OF THE COMPANY                                  34

9.             GENERAL MEETINGS                                           19

10.            TRANSFER OF SHARES                                         19

11.            FINANCE                                                    39

12.            DIVIDEND POLICY                                            39

13.            WARRANTIES AS TO AUTHORITY                                 39

14.            DEFAULT                                                    40

15.            GENERAL OBLIGATIONS OF SHAREHOLDERS                        49

16.            PREVALENCE OF AGREEMENT                                    49

17.            DURATION AND TERMINATION                                   49
</TABLE>

                     The Company - CSM - Lucent Confidential
<PAGE>   3
<TABLE>
<S>            <C>                                                      <C>
18.            CONFIDENTIAL INFORMATION                                   53

19.            NOTICES AND GENERAL                                        55
</TABLE>

               SCHEDULE A          -   COLLATERAL AGREEMENTS

               SCHEDULE 5(L)       -   CERTAIN EMPLOYEES

               SCHEDULE 7(B)(ii)   -   SCHEDULED COMPANIES

               SCHEDULE 7(C)       -   PARTNERSHIP FEE ADJUSTMENTS

               SCHEDULE 7(D)       -   INSURANCE PRINCIPLES

               SCHEDULE 10(E)(ii)  -   RESTRICTED PURCHASERS

               APPENDIX A          -   COMPANY BUSINESS PLAN

               APPENDIX B          -   ASSURED SUPPLY AND
                                       DEMAND AGREEMENT

               APPENDIX C          -   LICENSE AND TECHNOLOGY
                                       TRANSFER AGREEMENT

               APPENDIX D          -   CSM SERVICE SUPPORT AGREEMENT

               APPENDIX E          -   MEMORANDUM AND ARTICLES
                                       OF ASSOCIATION

               APPENDIX F          -   ACKNOWLEDGEMENT LETTER

               APPENDIX G          -   TAX INDEMNITY AGREEMENT

               APPENDIX H          -   FORM OF LUCENT CERTIFICATE AND OPINION

                                       3

                     The Company - CSM - Lucent Confidential
<PAGE>   4
               APPENDIX I          -   FORM OF CSM CERTIFICATE AND CSM IN-HOUSE
                                       OPINION

                                       4

                     The Company - CSM - Lucent Confidential
<PAGE>   5
        THIS JOINT VENTURE AGREEMENT (this "Agreement") is made on DECEMBER 19,
1997 BETWEEN:

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

(2)     LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD. ("Lucent"), a company
        incorporated in Singapore, with its principal place of business at 3,
        Kallang Sector, Kolam Ayer Industrial Park, Singapore 349278.

        W H E R E A S:-

(A) CSM and Lucent are desirous of establishing and operating a joint venture
company in Singapore for the purpose of undertaking and carrying on the Business
(as defined below) with the goal of enabling the parties to develop and have
manufactured technologically advanced wafers faster, more efficiently and at a
low cost.

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

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

        1.      DEFINITIONS AND INTERPRETATION.

(A)     Definitions

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

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

+

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            The Company - CSM - Lucent Confidential
<PAGE>   6
        "Affiliate" means, with respect to any Person, any other Person,
directly or indirectly controlled by, controlling or under common control with
such Person. For purposes of this Agreement, the term "control" means the power
to direct the management and policies of a Person, whether through the ownership
of voting securities, by agreement or otherwise. An Affiliate shall remain an
Affiliate only as long as such control exists;

        "Articles" means the Articles of Association of the Company as such
Articles may be amended from time to time. The Articles upon incorporation of
the Company shall be in the form attached hereto as Appendix E;

        "Assured Supply and Demand Agreement" has the meaning ascribed thereto
in item 1 of Schedule A and shall be in the form attached hereto as Appendix B;

        "Auditors" means the auditors of the Company selected by the Board of
Directors as provided in Clause 5(I)(e);

       "Board" means the Board of Directors of the Company, as such Board may be
constituted from time to time;

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

        "Collateral Agreements" means the agreements referred to in Schedule A,
as each such agreement may be amended from time to time;

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

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

        "Company Fab" means the fab commonly referred to by the parties as "Fab
3B" at Woodlands Industrial Park D, Singapore;

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

                                       6

                     The Company - CSM - Lucent Confidential
<PAGE>   7
        "Completion Date" means the date falling 30 days after the date of
incorporation of the Company (or such other date as the parties may agree in
writing);

        "CSM Service Support Agreement" has the meaning ascribed thereto in item
 3 of Schedule A and shall be in the form attached hereto as Appendix D;

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

        "Director" means any member of the Board ;

        "External Borrowings" means all and any liabilities of, or amounts due
from, the Company to any third party (including, without limitation, banks,
financial institutions or governmental agencies) for borrowed money, excluding
loans from Shareholders;

        "Fair Market Value" means, with respect to the shares in the capital of
the Company held by the selling Shareholder (the "Selling Shareholder"), the
fair market value of such shares that would be obtained in an arms' length
negotiated transaction between an informed and willing purchaser under no
compulsion to purchase and an informed and willing seller under no compulsion to
sell. In determining fair market value, due consideration shall be given to
(without limitation) the following :

        (1)    it shall be assumed that the Company is a going concern;

        (2)    net realizable value of the Company's assets and liabilities;

        (3)    value of the Company's intangible assets;

        (4)    it shall be assumed that the willing buyer is the non-selling
               Shareholder (the "Buying Shareholder");

        (5)    the prevailing market conditions of the semiconductor industry in
               general and the subcontract wafer manufacturing sector in
               particular;

        (6)    effects which the sale will have on contracts/agreements before
               and after the sale of shares held by the Selling Shareholder;

                                       7

                     The Company - CSM - Lucent Confidential
<PAGE>   8
        (7)    the Company's existing technologies and customer base;

        (8)    the Company's accessibility to existing and future technologies
               and customers of the Buying Shareholder and its subsidiaries, and
               the associated true costs of access to such technologies and
               customers;

        (9)    the level of the Buying Shareholder's ability to support the
               Company after the sale of shares held by the Selling Shareholder;
               and

        (10)   the duration and impact of the transition (i.e., the effect (if
               any) which the withdrawal of technologies, services, guaranteed
               loading levels, etc. will have on the Company).

        Fair Market Value of the shares in the capital of the Company held by
the Selling Shareholder shall be determined as follows:

        (1)  promptly upon delivery by the applicable Shareholder of a FMV
             Determination Request pursuant to Clause 10, 14 or 17, the parties
             shall consult with each other in good faith as to the appropriate
             Fair Market Value. If the parties determine the Fair Market Value
             by mutual consent within 21 days of the date of delivery of a FMV
             Determination Request ("FMV Request Date") or within 21 days of the
             Termination Date, as applicable, the value so determined shall be
             Fair Market Value.

        (2)  If the parties fail to determine Fair Market Value by mutual
             consent within 21 days of the FMV Request Date or within 21 days of
             the Termination Date, as applicable, each Shareholder shall within
             30 days of the FMV Request Date or within 30 days of the
             Termination Date, as applicable, appoint an appraiser. If one
             Shareholder appoints an appraiser within such 30 day period and the
             other Shareholder fails to appoint an appraiser within such 30 day
             period, the sole appraiser so appointed shall in good faith
             determine Fair Market Value within 45 days of the FMV Request Date
             or within 45 days of the Termination Date, as applicable, and the
             value so determined shall be Fair Market Value.

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                     The Company - CSM - Lucent Confidential
<PAGE>   9
        (3)  If each Shareholder appoints an appraiser within such 30 day
             period, such two appraisers shall consult with each other in good
             faith as to Fair Market Value. If the appraisers determine Fair
             Market Value by mutual consent within 45 days of the FMV Request
             Date or within 45 days of the Termination Date, as applicable, the
             value so determined shall be Fair Market Value.

        (4)  If the two appraisers fail to determine Fair Market Value by mutual
             consent within 45 days of the FMV Request Date or within 45 days of
             the Termination Date, as applicable, the appraisers shall within 55
             days of the FMV Request Date or within 55 days of the Termination
             Date, as applicable, appoint a third appraiser. If, within such 55
             day period, the two appraisers fail to appoint a third appraiser,
             either Shareholder may, on behalf of other Shareholder, apply to
             the International Chamber of Commerce (London Office) for
             appointment of a third appraiser.

        (5)  The third appraiser shall in good faith make a determination of
             Fair Market Value within 20 days of its appointment. As soon as the
             third appraiser has delivered its appraisal (the "Third
             Appraisal"), such Third Appraisal shall be compared with the
             appraisals given by the other two appraisers and if such Third
             Appraisal is between the appraisals given by the other two
             appraisers, such Third Appraisal shall be Fair Market Value. In the
             event the Third Appraisal is higher than (or the same as) the
             higher of the first two appraisals, Fair Market Value shall be the
             higher of the first two appraisals and if the Third Appraisal is
             lower than (or the same as) the lower of the first two appraisals,
             Fair Market Value shall be the lower of the first two appraisals.

        Subject to Clause 17, Fair Market Value of the shares of the Company
held by Lucent or CSM shall be determined for the value of such shares as of the
FMV Request Date or the Termination Date, as applicable. If Fair Market Value is
determined pursuant to Clause 10, all costs of determination of Fair Market
Value shall be borne by the Affected Shareholder. If Fair Market Value is
determined pursuant to Clause 14, all costs of determination of Fair Market
Value shall be borne by the Defaulting Shareholder. If the Fair Market Value is
determined pursuant to Clause 17, all costs of determination of Fair Market
Value shall be borne by Lucent or CSM, as specified in Clause 17;

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                     The Company - CSM - Lucent Confidential
<PAGE>   10
        "FMV Determination Request" means a written request by one of the
Shareholders to determine Fair Market Value for purposes of Clause 10, 14 or 17,
as the case may be;

        "Indebtedness" means, as to any Person, any obligation to pay money to
another Person in the future (except for current accounts payable in exchange
for the receipt of goods or services) which obligations shall become due with
the passage of time and without the performance of any actions by a third party,
including without limitation: (i) indebtedness created, issued or incurred by
any such Person for borrowed money; (ii) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments; (iii) all
indebtedness arising or created under any conditional sale or other title
retention agreement with respect to property acquired by such Person; (iv) all
obligations of such Person as lessee under leases that have been or should be,
in accordance with Singapore GAAP, recorded as capital leases; (v) all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities and (vi) any guarantees of any financial
obligations of any other Person;

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

        "License and Technology Transfer Agreement" has the meaning ascribed
 thereto in item 2 of Schedule A and shall be in the form attached hereto as
 Appendix C;

        "Lucent Fiscal Month" means the 12 fiscal monthly periods of Lucent
Technologies Inc. as such monthly periods may be determined by Lucent
Technologies Inc. from time to time for each Lucent Fiscal Year which monthly
periods, once determined, shall be conveyed in writing to CSM by Lucent prior to
the commencement of each Lucent Fiscal Year;

        "Lucent Fiscal Quarter" means the four fiscal quarterly periods of
Lucent Technologies Inc. as such quarterly periods may be determined by Lucent
Technologies Inc. from time to time for each Lucent Fiscal Year;

        "Lucent Fiscal Year" means the fiscal year of Lucent Technologies Inc.
which currently  ends on September 30 of each calendar year;

                                       10

                     The Company - CSM - Lucent Confidential
<PAGE>   11
        "Memorandum" means the Memorandum of Association of the Company, as such
Memorandum may be amended from time to time. The Memorandum upon incorporation
of the Company shall be in the form attached hereto as Appendix E;

        "Net Book Value" means the net worth (assets less liabilities) of the
Company as of the most recently audited balance sheet date as updated to the Net
Book Value Request Date or the Termination Date, as applicable. The net worth of
the Company is derived by adding the original cost value of the Company's assets
less normal charges for depreciation and other adjustments as prescribed by
Singapore GAAP, and subtracting the liabilities of the Company.

        Net Book Value shall be determined as of the Net Book Value Request Date
or the Termination Date, as applicable. Net Book Value shall be determined as
follows:

            (1)Promptly upon delivery by the applicable Shareholder of a Net
               Book Value Determination Request pursuant to Clause 14 or 17, the
               parties shall consult with each other in good faith as to the
               appropriate Net Book Value. Net Book Value shall be determined as
               of the most recent audited balance sheet as updated to the Net
               Book Value Request Date or the Termination Date, as applicable.
               If the parties determine Net Book Value by mutual consent within
               21 days of the Net Book Value Request Date or within 21 days of
               the Termination Date, as applicable, the value so determined
               shall be the Net Book Value.

            (2)If the parties fail to determine Net Book Value by mutual consent
               within 21 days of the Net Book Value Request Date or within 21
               days of the Termination Date, as applicable, the Auditors shall
               in good faith determine the Net Book Value within 35 days of the
               Net Book Value Request Date or within 35 days of the Termination
               Date, as applicable, and the value so determined shall be the Net
               Book Value.

        If the Net Book Value is determined pursuant to Clause 14, all costs of
determination of the Net Book Value shall be borne by the Defaulting
Shareholder. If the Net Book Value is determined pursuant to Clause 17, all
costs of determination of the Net Book Value shall be borne by Lucent or CSM, as
specified in Clause 17.

                                       11

                     The Company - CSM - Lucent Confidential
<PAGE>   12
        For purposes of Clauses 14 and 17, once Net Book Value is determined,
the parties agree that such Net Book Value shall be multiplied by Lucent's then
Shareholding Percentage in determining the applicable purchase price for the
shares in the capital of the Company then held by Lucent.

        "Net Book Value Determination Request" means a written request by one of
the Shareholders to determine the Net Book Value for purposes of Clause 14 or
17, as the case may be;

        "Net Book Value Request Date" means the date a Net Book Value
Determination Request is delivered by one of the Shareholders for purposes of
Clause 14 or 17, as the case may be;

        "Partnership Fee" means the amount payable by Lucent to CSM in
accordance with Clause 7(C);

        "Person" means any individual, partnership, association, joint venture,
corporation, trust, unincorporated organization or government, or agency or
political subdivision thereof;

        "Schedule of Authorizations" means the schedule of authorizations
enumerating the powers of the General Manager, which may be amended from time to
time. The initial Schedule of Authorizations shall be determined by the Board in
its first Board meeting;

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

        "Shareholding Percentage" means the percentage of all Ordinary shares
beneficially owned by the relevant Shareholder in the total issued share capital
(comprising Class A and Class B Ordinary shares) of the Company as of an
applicable date;

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

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

                                       12

                     The Company - CSM - Lucent Confidential
<PAGE>   13
        "Site" means a site in Woodlands, Singapore, designated as private lot
number A12787(a) and (b) as further described in the Sub-Lease Agreement;

        "Sub-Lease Agreement" has the meaning ascribed thereto in Clause
4(B)(x);

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

        "Tax Indemnity Agreement" has the meaning ascribed thereto in item 5 of
Schedule A and shall be in the form attached hereto as Appendix G;

        "Termination Date" has the meaning ascribed thereto in Clause 17(A);

        "Total Shareholder Funds" means the share capital of the Company plus
 capital reserves and retained earnings of the Company as of an applicable date;
 and

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

(B)     Interpretation

(i)     Any reference in this Agreement to:-

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

        (b)     "financial year" means the period beginning on 1 January and
                ending on 31 December of a given year, except that the first
                financial year of the Company shall begin on the date of
                incorporation of the Company and end on 31 December 1998;

        (c)     "fab" means wafer fabrication facility;

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

        (e)     "wafers" means semiconductor wafers; and

                                       13

                     The Company - CSM - Lucent Confidential
<PAGE>   14
        (f)     the headings are for convenience only and shall not affect the
                interpretation of this Agreement.

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

(iii) The expression "holding company" shall bear the meaning ascribed thereto
in Section 5 of the Act.

2.      FORMATION OF THE COMPANY

(A)     Formation

        Prior to the Completion Date, CSM shall procure the formation and
incorporation in Singapore of a private company limited by shares (the
"Company") under the Act and the Company shall be called SILICON MANUFACTURING
PARTNERS PTE LTD.

(B)     Memorandum and Articles

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

(C)     Initial Subscribers

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

3.      BUSINESS PLAN; SCOPE AND OBJECTIVES

(A)     Purpose

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                     The Company - CSM - Lucent Confidential
<PAGE>   15
        Each of CSM and Lucent expressly acknowledges that the Company is being
formed solely for the limited purpose set forth in Clause 6(A). Subject to the
provisions of Clause 7(B), each of CSM and Lucent further agrees that neither
party has any obligation to the other or to the Company to bring business
opportunities to the Company or to the other Shareholder and each is free to
take advantage of such opportunities on its own or with third parties.

(B)     Business Plan

        The business plan of the Company (the "Company Business Plan") which has
been approved by the parties is for a period of five years and is attached
hereto as Appendix A. The Board of Directors shall review and update the Company
Business Plan at least annually, not later than November 1 of each financial
year of the Company commencing November 1, 1998, to ratify or amend plan
information and objectives for the next financial year (the "Annual Plan") and
include plan information and objectives for the financial year next succeeding
the last year then covered by the Company Business Plan so that the Company
Business Plan shall at all times during the term of this Agreement consist of a
rolling five-year plan for the Company. In the event that the Board of Directors
is unable to agree by any such November 1 on the Annual Plan for the financial
year next succeeding the last year then covered by the Company Business Plan,
then the plan information and objectives for the last year then shown in the
Company Business Plan shall be controlling for the next succeeding financial
year. In the case of any inconsistency between this Agreement and the Company
Business Plan, this Agreement, insofar as it is applicable, shall control. The
Shareholders shall take all appropriate actions to cause the Company to
implement and comply with the terms of the Company Business Plan as such Company
Business Plan may be modified or amended by the Board from time to time.

(C)     Authorized Capital

        The parties agree that the authorised share capital of the Company shall
on incorporation be S$1,000,000,000 divided into 490,000,000 Class A Ordinary
shares of S$1 each and 510,000,000 Class B Ordinary shares of S$1 each. The
rights, preferences and privileges of the Class A Ordinary shares and the Class
B Ordinary shares shall be set forth in the Articles.

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                     The Company - CSM - Lucent Confidential
<PAGE>   16
(D)     Committed Capital Contribution

        Each of the Shareholders agrees and undertakes that it shall, at such
times and in such amounts as are set forth in the Company Business Plan, make
capital contributions by way of subscription, in cash, for shares in the capital
of the Company of up to an aggregate of S$208,250,000 for CSM and S$216,750,000
for Lucent (the "Committed Capital Contribution").

(E)     Share Capital on Completion Date

        The parties agree that the issued and paid-up share capital of the
Company shall on incorporation be S$2 divided into two Class A Ordinary shares
of S$1 each. On the Completion Date and contemporaneously with the execution of
the Collateral Agreements, the issued and paid-up share capital of the Company
shall be increased, in accordance with Clause 4(D), from S$2 divided into two
Class A Ordinary shares of S$1 each to S$15,000,000 divided into 7,350,000 Class
A Ordinary shares of S$1 each and 7,650,000 Class B Ordinary shares of S$1 each
which issued and paid-up share capital shall be held by the parties in the
following Shareholding Percentages:

<TABLE>
<CAPTION>
                      Percentage of
                      Total Issued          Number and Type
                      Ordinary Shares       Ordinary Shares       Paid in Capital
                      ---------------       ---------------       ---------------

<S>             <C>   <C>                   <C>                   <C>
        CSM     :     49 per cent.          7,350,000             S$7,350,000
                                            Class A Shares

        Lucent  :     51 per cent.          7,650,000             S$7,650,000
                                            Class B Shares
</TABLE>

(F)     Calls for Capital Contributions

        (i) Each of the Shareholders further severally agrees that, subject to
the aggregate Committed Capital Contribution and as set forth in the Company
Business Plan, it shall

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                     The Company - CSM - Lucent Confidential
<PAGE>   17
make such capital contributions required of it in proportion to its Shareholding
Percentage as at the date of the call for such capital contributions. If either
Shareholder (the "Non-Contributing Shareholder") fails to subscribe for its
Shareholding Percentage of the call, the other Shareholder who has so subscribed
for its Shareholding Percentage of such call shall, without prejudice to any
other rights and remedies such Shareholder may have, be entitled (but shall not
be obliged) to subscribe for the Non-Contributing Shareholder's Shareholding
Percentage at the applicable subscription price.

        (ii) All calls for capital contributions in accordance with the Company
Business Plan shall be made upon 7 days' written notice to the Shareholders.

(G)     Increases in Capital

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

(H)     Additional Capital

        The Shareholders agree that if the Board shall determine that additional
capital is required by the Company in excess of the Committed Capital
Contribution, each Shareholder shall have the right, but not the obligation, to
subscribe for additional shares in proportion (as nearly as practicable) to its
Shareholding Percentage at the relevant time. If a Shareholder fails to
subscribe for its proportion of the additional shares, its additional shares
will be offered to the other Shareholder at the applicable subscription price.

(I)     Nominee Shares

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

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                     The Company - CSM - Lucent Confidential
<PAGE>   18
the Completion, without the prior consent of Lucent, CSM shall not, and shall
not permit any of the nominees to, incur any liabilities or obligations on
behalf of the Company, and shall not cause the Company to incur any liabilities
or obligations.

(J)     Ordinary Shares

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

4.      COMPLETION

(A)     Completion

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

(B)     Conditions to Completion of CSM

        The obligation of CSM to consummate the transactions contemplated hereby
are subject to and conditioned upon the fulfillment of each of the following
conditions, any or all of which may be waived in writing in whole or in part by
CSM:

        (i) The representations and warranties of Lucent contained in Clause 13
        shall be true and correct at and as of the Completion Date as though
        such representations and warranties were made at and as of such
        Completion Date.

        (ii) Lucent shall have performed and complied with all agreements,
        covenants and conditions on its part required by this Agreement to be
        performed or complied with prior to or at the Completion Date.

        (iii) On or prior to the Completion Date, neither Lucent nor any of its
        Affiliates shall have received any notice of any threatened litigation
        or regulatory proceeding being instituted or contemplated, and no such
        litigation or proceedings shall be pending, which challenge the legality
        of this Agreement or the Collateral Agreements or the transactions
        contemplated

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                     The Company - CSM - Lucent Confidential
<PAGE>   19
        hereby or thereby or would have, individually or in the aggregate, a
        material adverse effect on the transactions contemplated hereby or
        thereby.

        (iv) CSM, Lucent and the Company shall have received and/or obtained an
        indicative letter of approval from the Singapore Economic Development
        Board stating that the Company will obtain Pioneer status.

        (v) (A) An indicative offer letter for a loan from the Singapore
        Economic Development Board equal to or greater than S$240,000,000 and
        (B) confirmatory letters from other lenders of the availability of loan
        financing equal to or greater than S$200,000,000 shall have been
        obtained, each in form and substance reasonably satisfactory to CSM and
        its counsel.

        (vi) The members of the Board of Directors, the General Manager, and the
        Financial Controller shall have been selected in accordance with the
        provisions of Clauses 5 and 8.

        (vii) An employee staffing, recruitment, compensation, incentives and
        benefits plan for the Company shall have been developed and approved by
        CSM.

        (viii) There shall have been delivered to CSM an officer's certificate
        and a secretary's certificate of Lucent and an opinion of counsel to
        Lucent in the forms attached hereto as Appendix H.

        (ix) Lucent shall have executed an acknowledgment letter in the form
        attached hereto as Appendix F.

        (x) The Company and CSM shall have entered into a sub-lease agreement
        for CSM to sublease to the Company a portion of the building and
        facility systems in Fab 3B (the "Sub-Lease Agreement"), which Sub-Lease
        Agreement (a) shall be in form and substance mutually satisfactory to
        Lucent, CSM and each of their respective counsel and (b) shall have been
        approved by the JTC, if such approval is required.

(C)     Conditions to Completion of Lucent

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                     The Company - CSM - Lucent Confidential
<PAGE>   20
        The obligation of Lucent to consummate the transactions contemplated
hereby are subject to and conditioned upon the fulfillment of each of the
following conditions, any or all of which may be waived in writing in whole or
in part by Lucent:

         (i) The representations and warranties of CSM contained in Clause 13
         shall be true and correct at and as of the Completion Date as though
         such representations and warranties were made at and as of such
         Completion Date.

        (ii) CSM shall have performed and complied with all agreements,
        covenants and conditions on its part required by this Agreement to be
        performed or complied with prior to or at the Completion Date.

        (iii) On or prior to the Completion Date, neither CSM nor any of its
        Affiliates shall have received any notice of any threatened litigation
        or regulatory proceeding being instituted or contemplated, and no such
        litigation or proceedings shall be pending, which challenge the legality
        of this Agreement or the Collateral Agreements or the transactions
        contemplated hereby or thereby or would have, individually or in the
        aggregate, a material adverse effect on the transactions contemplated
        hereby.

        (iv)Lucent, CSM and the Company shall have received and/or obtained an
        indicative letter of approval from the Singapore Economic Development
        Board stating that the Company will obtain Pioneer status

        (v) (A) An indicative offer letter for a loan from the Singapore
        Economic Development Board equal to or greater than S$240,000,000 and
        (B) confirmatory letters from other lenders of the availability of loan
        financing equal to or greater than S$200,000,000 shall have been
        obtained, each in form and substance reasonably satisfactory to Lucent
        and its counsel.

        (vi)The members of the Board of Directors, the General Manager, and the
        Financial Controller shall have been selected in accordance with Clauses
        5 and 8.

        (vii) An employee staffing, recruitment, compensation, incentives and
        benefits plan for the Company shall have been developed and approved by
        Lucent.

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                     The Company - CSM - Lucent Confidential
<PAGE>   21
        (viii) CSM shall have executed an acknowledgment letter in the form
        attached hereto as Appendix F.

        (ix) There shall have been delivered to Lucent (a) an officer's
        certificate and a secretary's certificate of CSM and an opinion of
        in-house counsel of CSM, in each case in the forms attached hereto as
        Appendix I and (b) an opinion of Allen & Gledhill in form and substance
        satisfactory to Lucent.

        (x) The Company and CSM shall have entered into the Sub-Lease Agreement,
        which Sub-Lease Agreement (a) shall be in form and substance mutually
        satisfactory to Lucent, CSM and each of their respective counsel and (b)
        shall have been approved by the JTC, if such approval is required.

                                       21

                     The Company - CSM - Lucent Confidential
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(D)     Application for Shares; Collateral Agreements; Pre-Completion Covenants

        (1)     On the Completion Date:

        (i)     CSM shall make an unconditional application in writing to the
                Company for the allotment to CSM for cash at par for 7,349,998
                Class A Ordinary shares of S$1 each in the capital of the
                Company and CSM shall pay the sum of S$7,349,998 to the Company
                by way of a cashier's order, or bank draft drawn on a licensed
                bank in Singapore and made out in favour of the Company, or wire
                transfer, or such other means acceptable to the parties;

        (ii)    Lucent shall make an unconditional application in writing to the
                Company for the allotment to Lucent for cash at par for
                7,650,000 Class B Ordinary shares of S$1 each in the capital of
                the Company and Lucent shall pay the sum of S$7,650,000 to the
                Company by way of a cashier's order, or bank draft drawn on a
                licensed bank in Singapore and made out in favour of the
                Company, or wire transfer, or such other means acceptable to the
                parties;

        (iii)   each of the parties shall procure the entry by the Company into,
                and CSM and Lucent shall enter into, the Assured Supply and
                Demand Agreement;

        (iv)    each of the parties shall procure the entry by the Company into,
                and CSM and Lucent shall enter into the License and Technology
                Transfer Agreement; and

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

        (2) During the period from the date hereof and until the Completion
Date, (a) CSM covenants and agrees to use all commercially reasonable efforts
and take all commercially reasonable actions necessary to obtain the consents,
approvals and

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                     The Company - CSM - Lucent Confidential
<PAGE>   23
authorizations from any third parties, including, without limitation, those
consents, approvals and authorizations identified in Clause 4(B)(iv), required
to be obtained or made in connection with the transactions contemplated by this
Agreement and (b) CSM and Lucent shall use commercially reasonable efforts to
(1) agree on a mutually acceptable Sub-Lease Agreement and (2) cause the JTC to
approve such Sub-Lease Agreement to the extent such approval is required. In
addition, CSM agrees to notify and consult with Lucent to jointly develop and
prepare any submissions which may be made to the Singapore Economic Development
Board or any other Singapore governmental agency or body in connection with this
Agreement.

(E)     Allotment of Shares

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

5.      BOARD OF DIRECTORS

(A)     Number

        Unless otherwise agreed by CSM and Lucent, the Board shall consist of
five Directors.

(B)     Composition

(i)     Subject to sub-Clauses (5)(B)(ii) and (iii) below, the Board shall
        consist of:

        (a)     two persons appointed by CSM with the approval of Lucent, such
                approval not to be unreasonably withheld  (who shall be
                designated as "CSM Directors"); and

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                     The Company - CSM - Lucent Confidential
<PAGE>   24
        (b)     three persons appointed by Lucent with the approval of CSM, such
                approval not to be unreasonably withheld (who shall be
                designated as "Lucent Directors").

(ii)    CSM shall be entitled to appoint as Director(s) 2 persons for so long as
        CSM's Shareholding Percentage is equal to or exceeds 25 per cent., and
        one person for so long as CSM's Shareholding Percentage is equal to or
        exceeds 10 per cent. Notwithstanding the foregoing, in the event CSM's
        Shareholding Percentage is equal to or exceeds 51 per cent, CSM shall be
        entitled to appoint 3 Directors.

(iii)   Lucent shall be entitled to appoint as Director(s) 3 persons for so long
        as Lucent's Shareholding Percentage is equal to or exceeds 51 per cent.;
        2 persons for so long as Lucent's Shareholding Percentage is equal to or
        exceeds 25 per cent, and one person for so long as Lucent's Shareholding
        Percentage is equal to or exceeds 10 per cent.

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

(v)     For so long as CSM has the power under this Agreement or otherwise as a
        Shareholder of the Company to appoint at least two Directors, it shall
        ensure that at least one Director appointed by it is ordinarily resident
        in Singapore.

(C)     Right of Appointment and Replacement

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

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                     The Company - CSM - Lucent Confidential
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(D)     Notice in Writing

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

(E)     Further Director

        Subject to sub-Clauses 5(B)(i), (ii) and (iii), whenever for any reason
a person appointed by a Shareholder ceases to be a Director, that Shareholder
shall be entitled to appoint forthwith a Director in his stead.

(F)     Alternate Director

        Each Shareholder shall be entitled at any time and from time to time to
appoint a person to act as an alternate director for each Director nominated by
such Shareholder and to terminate the appointment of such alternate director in
compliance with the Articles. Such alternate director shall be appointed with
the consent of the other Shareholder, which consent shall not be unreasonably
withheld. Such alternate director shall be entitled while holding office as such
to receive all notices of meetings of the Board and to attend and vote as a
Director at any such meetings at which the Director for whom such alternate
director is acting as an alternate is not present and generally to exercise all
the powers, rights, duties and authorities and to perform all functions of his
appointment as could have been exercised by such absent Director. Further, such
alternate director shall be entitled to exercise the vote of any such Director
at any meetings of the Board and if such alternate director represents more than
one Director such alternate director shall be counted for quorum purposes by the
number of Directors he represents and shall be entitled to one vote for every
Director he represents. In addition, each Shareholder acknowledges and agrees
that any Director nominated by such Shareholder and approved by the other
Shareholder may be appointed as the alternate director of any one or more of the
other Director or Directors nominated by such Shareholder.

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                     The Company - CSM - Lucent Confidential
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(G)     Chairman

        For so long as CSM's Shareholding Percentage is at least 49 per cent.,
the Chairman of the Board shall be a Director nominated by CSM and approved by
Lucent. Subject to the Articles, the Chairman of the Board shall be responsible
for coordinating the activities of the Board of Directors, such as: (i)
introducing proposals to the Board of Directors on matters which require Board
of Directors' approval; (ii) with the advice and consent of the other Directors,
setting the agenda for the Board of Directors' meetings; (iii) convening and
presiding at the meetings of the Board of Directors; (iv) presiding at general
meetings of shareholders; and (v) circulating minutes for approval by the
Directors. The Chairman of the Board shall not have a second or casting vote and
shall not be empowered to bind the Company. The Board of Directors shall select
from among its members a Vice Chairman of the Board who shall act for the
Chairman of the Board in the event he is absent from or unable to act in any
meeting.

(H)     Meetings of Directors

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

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

(iii) In the event that a meeting of Directors duly convened cannot be held for
lack of a quorum, the meeting shall be adjourned to the same time and day of the
following week and at the same place or such other agreed upon date (within 30
days of the adjourned meeting date), place and time, and notice specifying the
date, place and time of such adjourned meeting shall be given to all Directors.

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

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

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

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

(I)     Important Matters Requiring Board's Special Approval

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                     The Company - CSM - Lucent Confidential
<PAGE>   28
         Subject to any requirements specified by law, by the Act or this
Agreement, none of the following actions shall be taken by the Company unless
such actions are unanimously approved by all of the CSM Directors and the Lucent
Directors duly represented at a meeting which is duly convened and where a
quorum is present:-

         (a)      all amendments to the Company Business Plan and to each Annual
                  Plan thereof;

         (b)      the disposal of the whole or substantially the whole of the
                  property or undertaking of the Company;

         (c)      execution of any agreement involving payments (i) in excess of
                  S$1,000,000 over its term or having a term longer than one
                  year if not approved as part of the Company Business Plan or
                  (ii) in excess of S$70,000,000 if approved as part of the
                  Company Business Plan;

         (d)      initiation or settlement of any claim or suit which is
                  material to the Company or outside the ordinary course of its
                  business;

         (e)      appointment or removal of the Auditors and the fixing of such
                  Auditor's fees;

         (f)      approval of limits of authority for the officers of the
                  Company and the Schedule of Authorizations;

         (g)      any proposal to change the capitalization of the Company or to
                  amend the Memorandum or Articles;

         (h)      the termination by the Company of any of the services
                  identified in Clause 10 (C) of the CSM Service Support
                  Agreement;

         (i)      granting of any loans to Directors or initiating or amending
                  any form of remuneration to Directors (including, without
                  limitation, golden parachute payments);

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                    The Company - CSM - Lucent Confidential

<PAGE>   29
         (j)      initiation or amendment of any material employee compensation,
                  incentive or benefits plan or any material employee
                  recruitment, disciplinary (as it relates solely to the
                  individuals holding the positions identified on Schedule
                  5(L)), or training policy.

         (k)      participation by employees of the Company in CSM's employee
                  share ownership scheme or the establishment of an employee
                  share option/ownership scheme for the Company;

         (l)      the entry by the Company into new markets outside of the
                  Business unless explicitly set forth in the Company Business
                  Plan;

         (m)      the termination or amendment of the Assured Supply and Demand
                  Agreement or the License and Technology Transfer Agreement;

         (n)      the exercise of any of the Company's borrowing powers unless
                  included in the Company Business Plan;

         (o)      the entry into any alliance unless explicitly set forth in the
                  Company Business Plan. For the purposes of this sub-paragraph
                  (o) the expression "alliance" means any transaction entered
                  into by the Company other than in the ordinary course of
                  business including, but not limited to, transactions (1)
                  pursuant to which the Company acquires, encumbers, transfers
                  or disposes of intellectual property or other technology
                  rights, (2) pursuant to which the Company is restricted as a
                  result of such transaction in the products or services which
                  it may provide to its customers, or (3) which create or grant
                  exclusive rights to another party or parties;

         (p)      the issue by the Company of any guarantee to secure the
                  Indebtedness of any person;

         (q)      approval of the audited annual accounts of the Company;

         (r)      a change in the Debt/Equity Ratio policy specified in Clause
                  11;

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

         (t)      the listing or registration of the shares in the capital of
                  the Company on any stock exchange or with any securities
                  exchange commission;

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

         (v)      any transfer of shares held by a Shareholder in the capital of
                  the Company unless in accordance with Clause 10, Clause 14(B)
                  or Clause 17;

         (w)      the subscription for, or acquisition or disposal of, any
                  shares or interests in any Person;

         (x)      the entry into any joint venture; and

         (y)      the declaration by the Company of any dividends other than in
                  accordance with the dividend policy set out in the Articles
                  and the determination of any reserves.

(J)      Facilitating Shareholder Actions

           In the event that any decision or action that is approved by the
  Board of Directors in accordance with Clause 5(I) above (the "Important Matter
  Decisions") requires the approval of the Shareholders under the Articles or
  under the Act, the Shareholders shall take all necessary and appropriate
  actions to procure such approval. In addition, the Shareholders shall take all
  necessary and appropriate actions to implement and comply with any decision or
  action approved by the Board which are not Important Matter Decisions to the
  extent such decision or action does not require the approval of the
  Shareholders under the Articles or the Act.

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                    The Company - CSM - Lucent Confidential
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(K)      Interested Party Transactions

   (i)   In this Agreement, an "interested party transaction" shall mean a
         transaction or arrangement (other than transactions or arrangements
         contemplated by this Agreement or any of the Collateral Agreements)
         involving the Company or its assets in which one of the Shareholders or
         any of its Affiliates has a direct or indirect interest (whether as
         supplier, purchaser, provider or receiver of information, services,
         goods or financing, employer or otherwise).

   (ii)  Notwithstanding the generality of Clause 5(I) or any other provision of
         this Agreement:

         (1)      each Shareholder shall ensure that it shall promptly and
                  timely disclose to the other Shareholder any interested party
                  transaction in which the first Shareholder is or may be
                  involved, together with a reasonably detailed description of
                  its actual or proposed involvement; and

         (2)      the Shareholder to whom such disclosure is required to be made
                  shall have the right to consent to any interested party
                  transaction; provided, such consent shall not be unreasonably
                  withheld.

(L)      Dismissal of Certain Employees

         In the event any Shareholder (the "Dismissing Shareholder") desires,
for any reason or no reason, that the Company dismiss or terminate the services
of any of the individuals holding the positions identified on Schedule 5(L) (the
"Affected Employee"), such Dismissing Shareholder must notify the other
Shareholder and the Company of its desire to dismiss such Affected Employee and
at such time the Dismissing Shareholder shall have a discussion with the other
Shareholder with respect to such proposed dismissal. In such event, the
Shareholders shall cause the Company to provide such Affected Employee with a
three month (six months in the event the Affected Employee is the General
Manager) probation period prior to such dismissal; provided, such three or six
month probation period may be waived if both Shareholders agree to do so. Within
10 days after the end of such three or six month probation period, as
applicable, the Dismissing Shareholder shall determine, in its sole discretion,
whether such Dismissing Shareholder still desires that the Company dismiss such
Affected Employee, and if so,

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                    The Company - CSM - Lucent Confidential
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shall notify the other Shareholder and the Company of its decision. If the
Dismissing Shareholder determines that it still desires that the Company dismiss
the Affected Employee, the Shareholders shall promptly cause the Company to
dismiss the Affected Employee. Notwithstanding any provision contained herein,
each Shareholder's right to exercise the dismissal rights granted under this
Clause 5(L) shall be limited to two individuals in any given quarter.

6.       BUSINESS OF THE COMPANY

(A)      Business

         The Shareholders agree that the business of the Company shall be the
operation and management of the Company Fab as an independent dedicated foundry
(the "Business"). The initial financial and business plans for the Company Fab
provide for an installed wafer manufacturing capacity of up to 26,000 wafers per
month based on 21 mask layers of Lucent's digital 0.25 micron technology.

(B)      Technology License and Development

(i)   The parties agree that the processes which the Company will run will
      include, without limitation, 0.25um and 0.18um process flows.

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

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

(C)      Assured Supply and Demand

         The Company shall make available to Lucent and CSM quantities of wafer
manufacturing capacity from the Company Fab on the terms and conditions of the
Assured Supply and Demand Agreement.

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                    The Company - CSM - Lucent Confidential
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(D)      Services

         CSM shall provide such services to the Company as contemplated in the
CSM Service Support Agreement. Each Shareholder acknowledges that certain rights
and obligations of the parties under the CSM Service Support Agreement shall
survive the termination of the CSM Service Support Agreement.

(E)      Sub-Lease of Company Fab Premises

         The Company shall enter into the Sub-Lease Agreement. The Sub-Lease
Agreement shall be subject to the JTC's approval, if so required by the JTC.

7.       SHAREHOLDERS' OBLIGATIONS AND RIGHTS

(A)      Shareholders' Obligations

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

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

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

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

         (iv)     the Company shall cause to be kept full and proper accounting
                  records relating to the business, undertakings and affairs of
                  the Company, which records shall be made available at all
                  reasonable times for

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                    The Company - CSM - Lucent Confidential
<PAGE>   34
                  inspection by the Shareholders or their representatives by
                  prior appointment during office hours;

         (v)      for each financial year, the Company shall, at its expense,
                  prepare annual accounts, in each case in accordance with
                  Singapore GAAP and in compliance with all applicable
                  legislation in respect of such financial year and shall
                  procure that such accounts are audited as soon as practicable
                  and shall supply copies of the same, both in draft and final
                  form, to each of the Shareholders within 90 days (in the case
                  of the draft form) and 120 days (in the case of the final
                  form) after the end of the financial year of the Company;

         (vi)     the Company shall, at its expense, (a) prepare interim
                  accounts of the Company covering the period beginning on
                  January 1 and ending on September 30 of each calendar year,
                  (b) procure that such interim accounts are audited within 60
                  days after the end of the Lucent Fiscal Year in accordance
                  with Singapore GAAP and in compliance with all applicable
                  legislation in respect of such interim period and (c) supply
                  copies of such audited interim accounts in final form to
                  Lucent within 60 days after the end of the Lucent Fiscal Year;

         (vii)    for purposes of Lucent's financial reporting and tax reporting
                  purposes, the Company shall prepare financial statements
                  conforming to U.S. GAAP for use by Lucent for such financial
                  periods as may be requested by Lucent. All costs and expenses
                  of an external accounting firm who shall prepare such
                  financial statements to conform to U.S. GAAP for the sole
                  benefit of Lucent shall be borne by Lucent. In addition, the
                  Company shall prepare and timely deliver all financial
                  statements and reports reasonably requested by Lucent,
                  including without limitation, the Financial Accounting
                  Standard 109 package. The Company shall prepare and timely
                  deliver all tax forms and other information returns or reports
                  reasonably requested by Lucent or required by the laws of the
                  United States, including without limitation, U.S. Treasury
                  Form 5471 and supporting schedules. All out-of-pocket costs
                  and expenses incurred by the Company in complying with
                  Lucent's requests under this sub-Clause 7(A)(vii) and which
                  are for the sole benefit of Lucent

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                    The Company - CSM - Lucent Confidential
<PAGE>   35
                  shall be borne by Lucent; provided, that in the case of fees
                  and expenses of any tax or legal advisors or other
                  professional consultants, such fees and expenses shall be
                  borne by Lucent only if the retention of such advisors or
                  consultants has been pre-approved by Lucent. Lucent shall
                  provide such assistance as is reasonably requested by the
                  Company in order for the Company to comply with this
                  sub-Clause 7(A)(vii).

         (viii)   the Company shall, at its expense, prepare and provide to each
                  of the Directors:-

                  (a)      unaudited and estimated monthly profit and loss
                           statements, cashflow, balance sheet and elimination
                           statements covering such items as requested by Lucent
                           from time to time ("Elimination Statements") by the
                           first Wednesday of the first week after the end of
                           each Lucent Fiscal Month ; unaudited and actual
                           monthly profit and loss statements, cashflow, balance
                           sheet and Elimination Statements within seven
                           calendar days after the end of each calendar month;

                  (b)      updated profit and loss, balance sheet and cashflow
                           forecast for the following 12 month period within
                           seven calendar days after the end of each calendar
                           month;

                  (c)      unaudited and estimated quarterly profit and loss
                           statements, cashflow, balance sheet and Elimination
                           Statements by the first Wednesday of the first week
                           after the end of each Lucent Fiscal Quarter;
                           unaudited and actual quarterly profit and loss
                           statements, cashflow, balance sheet and Elimination
                           Statements within seven calendar days after the end
                           of each Lucent Fiscal Quarter;

                  (d)      Unaudited annual profit and loss statements,
                           cashflow, balance sheet and Elimination Statements
                           covering the Lucent Fiscal Year within three calendar
                           days after the end of the Lucent Fiscal Year;

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                     The Company - CSM - Lucent Confidential
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                  in each case in accordance with Singapore GAAP, and

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

(B)      Undertaking of Non-Competition

(i)      Lucent agrees and undertakes that except as permitted under sub-Clauses
         (B)(ii), (iii) and (iv) below, Lucent's loadings in the Company Fab
         shall be solely for products with Lucent's brand name or for products
         to be sold as a packaged labeled product.

(ii)     Lucent shall first offer its Unutilised Wafer Capacity (as defined
         below) to CSM at prices to be mutually agreed between Lucent and CSM.
         If CSM declines to take all or some of such Unutilised Wafer Capacity
         within 10 days of Lucent's offer, Lucent shall be entitled to sell all
         of such Unutilised Wafer Capacity not purchased by CSM to any third
         party, subject to the restrictions set forth in sub-Clauses (B)(iii)
         and (iv) below. For purposes of this Agreement, the term "Unutilised
         Wafer Capacity" shall mean wafer capacity from the Company Fab which is
         not utilised by Lucent as required under the Assured Supply and Demand
         Agreement. For the avoidance of doubt, the phrase "wafer capacity"
         shall include the physical wafers produced by the Company Fab. Lucent
         and CSM acknowledge and agree that there may be multiple Unutilised
         Wafer Capacities Lucent may offer CSM pursuant to this sub-Clause
         (B)(ii) and accordingly, there may be multiple 24 month periods running
         concurrently for the multiple Unutilised Wafer Capacities offered as
         contemplated under sub-Clause (B)(iv) below.

(iii)    Lucent shall not sell, offer, transfer or otherwise dispose of such
         Unutilised Wafer Capacity to any of the companies or entities set out
         in Schedule 7(B)(ii) attached hereto (collectively, the "Scheduled
         Companies"), as such Schedule 7(B)(ii) may be amended from time to time
         upon mutual agreement between Lucent and CSM. Notwithstanding the
         foregoing, Lucent shall be permitted to

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         sell, offer, transfer or otherwise dispose of any Unutilised Wafer
         Capacity under this Clause 7(B) to the extent any of the unutilised
         wafers are sold by the Scheduled Companies as a packaged labeled
         product or to the extent such offer, sale, transfers or other
         disposition involves products with Lucent's brand name.

(iv)     With respect to each Unutilised Wafer Capacity offered but not taken by
         CSM under sub-Clause (B)(ii) above, Lucent may, subject to sub-Clause
         (B)(iii) above, sell such Unutilised Wafer Capacity to any third party
         for a period of 24 months effective from the date on which CSM first
         declined to take up such Unutilised Wafer Capacity. Upon the expiration
         of such 24 month period, Lucent shall have the right to either take up
         such Unutilised Wafer Capacity for Lucent's use in accordance with
         sub-Clause (B)(i) above or re-offer such Unutilised Wafer Capacity to
         CSM in accordance with sub-Clause (B)(ii) above.

(C)      Partnership Fee

         CSM shall be entitled to receive from Lucent a partnership fee
("Partnership Fee") equal to S$65 in respect of each wafer purchased by Lucent
from the Company which fee shall be adjusted pursuant to the formula set forth
on Schedule 7(C) attached hereto. The Partnership Fee shall accrue upon receipt
of the first accepted wafer by Lucent under the Assured Supply and Demand
Agreement.

(D)      Insurance Coverage

         On and after the Completion Date, Lucent and CSM shall negotiate in
good faith the appropriate type and level of insurance coverage for the Company
in accordance with the principles set forth on Schedule 7(D) attached hereto.

8.       MANAGEMENT OF THE COMPANY

(A)      General Manager; Financial Controller

         The General Manager of the Company shall be appointed by CSM in
consultation with Lucent. The General Manager shall be responsible for the day
to day running and management of the business of the Company within the limits
imposed by the Board, this Agreement, the Company Business Plan and the Schedule
of Authorizations. The Financial

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Controller of the Company shall be appointed by Lucent in consultation with CSM.
The Financial Controller shall be responsible for all financial matters of the
Company within the limits imposed by the Board, this Agreement and the Company
Business Plan.

(B)      Management Committee

         The Shareholders shall cause the Company to establish a Management
Committee based in Singapore comprising three members with one nominee of CSM,
one nominee of Lucent and the General Manager (the "Management Committee"). The
Management Committee will review and make recommendations to the General
Manager, as appropriate, on capacity and mix of processes and other operational
issues relating to the Company. The Management Committee will also provide
advice to the General Manager in connection with the preparation of the Company
Business Plan.

(C)      Employees

(i)      In addition to the employees of the Company, CSM and Lucent shall each
contribute such manpower resources, either on a contract or secondment basis, as
is contemplated by the Company Business Plan or as may be otherwise required by
the Company on such terms as may be agreed in writing with the Company.

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

9.       GENERAL MEETINGS

         No business shall be transacted at any general meeting of the Company
unless a quorum of Shareholders is present throughout the meeting. The quorum
for all general meetings (including any adjourned meetings) of Shareholders
shall comprise two Shareholders present throughout the meeting, comprising the
proxies or representatives of CSM and Lucent. In the event that a general
meeting duly convened cannot be held for lack of a quorum, the meeting shall be
adjourned to the same time and day of the following week

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and at the same place or such other agreed upon date (within 30 days of the
adjourned meeting date), place and time, and notice specifying the date, place
and time of such adjourned meeting shall be given to all Shareholders.

10.      TRANSFER OF SHARES

(A)      Meaning of "Transfer"

         In this Agreement, unless the context otherwise requires, any reference
to a "transfer" of securities or other voting interests of a Person shall
include (i) any transfer or other disposition of such securities or voting
interests or any interest therein, including, without limitation, by operation
of law, by court order, by judicial process, or by foreclosure, levy or
attachment; (ii) any sale, assignment, gift, donation, redemption, conversion or
other disposition of such securities or any interest therein, pursuant to an
agreement, arrangement, instrument or understanding by which legal title to or
beneficial ownership of such securities or any interest therein passes from one
Person to another Person or the same Person in a different legal capacity,
whether or not for value; and (iii) the granting of any security, interest,
lien, pledge, mortgage, hypothecation or charge in or extending or attaching to
such securities or interest therein.

(B)      Moratorium on Transfer

         Neither CSM nor Lucent shall transfer all or any part of its shares in
the capital of the Company to any Person during the term of the joint venture as
set out in Clause 17, unless with the prior written consent of the other
Shareholder or as expressly permitted by this Agreement.

(C)      Permitted Transfers

(i)(a)   For the purpose of this paragraph (i), the term "Permitted Transferee"
         in relation to CSM shall mean a wholly-owned subsidiary of CSM and in
         the case of Lucent, a wholly-owned subsidiary of Lucent (a "Lucent
         Sub") or a direct and/or indirect wholly-owned subsidiary of Lucent
         Technologies Inc. (an "LTI Sub"). For purposes of this sub-Clause (C),
         a Lucent Sub shall not be treated as an LTI Sub.

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   (b)   Subject to sub-Clause (D) below, each Shareholder (the "Transferor
         Corporation") shall be entitled to transfer all (and not some only) of
         the shares held by it in the capital of the Company to a Permitted
         Transferee; provided, in the event the net worth of a Permitted
         Transferee at the time of the proposed transfer or anytime thereafter
         is less than 95% of the net worth of the Transferor Corporation at the
         time of the completion of the proposed transfer, then prior to the
         completion of such proposed transfer or anytime thereafter, (x) CSM, in
         the case where CSM is the Transferor Corporation, shall execute a
         guarantee in favor of Lucent guaranteeing the payment obligations of
         its Permitted Transferee and (y) Lucent, (i) in the case where Lucent
         is the Transferor Corporation and Lucent Sub is the Permitted
         Transferee, shall execute a guarantee in favor of CSM guaranteeing the
         payment obligations of such Lucent Sub and (ii) in the case where
         Lucent is the Transferor Corporation and an LTI Sub is the Permitted
         Transferee, shall cause Lucent Technologies Inc. to execute a guarantee
         in favor of CSM guaranteeing the payment obligations of such LTI Sub.

   (c)   If however at any time after a transfer of shares is effected by the
         Transferor Corporation to a Permitted Transferee pursuant to
         sub-paragraph (b) above, the Permitted Transferee ceases, in the case
         of CSM, to be a wholly-owned subsidiary of CSM or, in the case of
         Lucent, ceases to be a Lucent Sub or an LTI Sub, as applicable, , it
         shall be the duty of the Transferor Corporation and the Permitted
         Transferee to notify the Board in writing that such event has occurred
         and both the Transferor Corporation and the Permitted Transferee shall
         jointly and severally undertake to procure and ensure that all (and not
         some only) of the shares held by the Permitted Transferee in the
         capital of the Company are, subject to the proviso in sub-paragraph (b)
         above, forthwith transferred to, in the case of CSM, a wholly-owned
         subsidiary of CSM or, in the case of Lucent, a Lucent Sub or an LTI
         Sub, as applicable.

(D)      Supplementary Provision

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

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                    The Company - CSM - Lucent Confidential
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as if an original party hereto in place of or in addition to the transferring
Shareholder (as the case may be).

(E)      Change in Control of Shareholder

(i)      Prior to the completion of a change in control of any Shareholder, such
Shareholder (the "Affected Shareholder") shall notify the Company and the other
Shareholder (the "Remaining Shareholder") in writing of such change in control.
In the event the Remaining Shareholder objects to such change in control, it
shall, within 30 days after notice from the Affected Shareholder, be entitled by
notice in writing to the Affected Shareholder (the "Objection Notice") to
require, (a) in the event the Affected Shareholder is CSM, CSM to purchase all
of the shares in the capital of the Company held by Lucent at Fair Market Value
and (b) in the event the Affected Shareholder is Lucent, Lucent to sell to CSM
all of the shares in the capital of the Company held by Lucent at Fair Market
Value. To exercise this right, the Remaining Shareholder shall first make a FMV
Determination Request to the Affected Shareholder (and shall provide a copy
thereof to the Company). Within 30 days of determination of Fair Market Value,
the Remaining Shareholder shall either provide notice to the Affected
Shareholder (and shall provide a copy thereof to the Company) that it has
elected to exercise its rights under this sub-Clause (E) or shall be deemed to
have waived such rights. The delivery of the Objection Notice shall for purposes
of determining Fair Market Value be deemed to be a FMV Determination Request. A
copy of the Objection Notice shall be promptly delivered to the Company. Subject
to any U.S., Singapore or other regulatory filings or notifications and/or the
receipt of any U.S., Singapore or other regulatory approvals or consents, if
any, the completion of the purchase and sale transaction contemplated under this
sub-Clause (E) shall occur simultaneously with or as soon as practicable after
the consummation of the change of control transaction of the Affected
Shareholder. Following the completion of the purchase and sale transaction
contemplated under this sub-Clause (E), Lucent and CSM shall be subject to the
ramp down provisions set forth in Clause 14(H) below.

(iii)    At the completion of the purchase and sale transaction contemplated
under this sub-Clause (E), CSM shall pay the purchase price for the shares of
the Company held by Lucent in the form of cash in Singapore Dollars by wire
transfer of immediately available funds to an account designated in writing by
Lucent against delivery by Lucent of certificates representing all such shares,
free and clear of any liens, claims, charges or

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                    The Company - CSM - Lucent Confidential
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encumbrances. Stamp duties in respect of the transfer of such shares shall be
paid by the Affected Shareholder.

         The restriction on transfer of shares contained in sub-Clause (B) above
and in the Articles shall not apply to such disposal.

(ii)     For the purpose of this sub-Clause (E), a change in control of any
Shareholder shall be deemed to have occurred if the voting control of, or more
than 50 percent. of the issued voting shares of, such Shareholder or of any
holding company of such Shareholder shall be acquired by any Person, or by any
two or more Persons acting in concert, other than by an Affiliate of such
Shareholder. However, a change in control of a Shareholder pursuant to or after
a listing on a stock exchange of the shares in the capital of such Shareholder
or of the holding company of such Shareholder or, in the case of Lucent, the
spin-off or sale of substantially all of Lucent Technologies Inc.'s
Microelectronics business ("ME"), shall not be deemed to be a change in control
of such Shareholder for the purposes of this sub-Clause (E); provided, in the
event substantially all of ME is sold to any of the Persons listed on Schedule
10(E)(ii), which Schedule may be amended from time to time as mutually agreed
upon by Lucent and CSM, such sale shall be deemed to be a change in control for
purposes of this sub-Clause (E). Each of the Shareholders undertakes to notify
the other Shareholders in writing of any change in control of such Shareholder
within ten days of it becoming aware of such a change in control or execution of
any agreement by any Person that would effect such change in control.

11.      FINANCE

         The Company shall be managed with a view toward maintenance by it of a
Debt/Equity Ratio of no greater than 1.5 to 1, that is, for every S$1 of Total
Shareholder Funds, there shall not be more than S$1.50 of External Borrowings.
In the event that the Debt/Equity Ratio exceeds 1.5 to 1, then the General
Manager shall immediately inform the Board of Directors and review his proposal
to re-establish such ratio at the next Board meeting.

12.      DIVIDEND POLICY

         It is not the intent of the Shareholders for the Company to accumulate
excess retained earnings beyond what is required by the Company Business Plan.
Accordingly, and

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                    The Company - CSM - Lucent Confidential
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in furtherance of the foregoing, each Shareholder shall take such action as may
be necessary to procure that the Company shall distribute all available cash to
and among the Shareholders during such times and in such amounts as contemplated
in the Articles.

13.      WARRANTIES AS TO AUTHORITY

         Each of the parties hereby represents and warrants to as of the date
hereof and on the Completion Date, and undertakes with the other parties as
follows:-

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

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

         (iii)    this Agreement is, and all other agreements and instruments of
                  such party contemplated hereby shall be, the legal, valid and
                  binding agreement of such party, enforceable against such
                  party in accordance with their terms subject as to enforcement
                  of remedies to applicable bankruptcy, insolvency,
                  reorganization and other laws affecting generally the
                  enforcement of the rights of creditors and subject to a
                  court's discretionary authority with respect to the granting
                  of a decree ordering specific performance or other equitable
                  remedies; and

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

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         (v)      There are no actions, suits, investigations or other
                  proceedings pending or threatened, no order, judgment or
                  decree of any court or other governmental agency and no facts
                  or circumstances which could reasonably be expected to give
                  rise to a claim, action, suit or proceeding which could
                  materially and adversely affect the Company or the
                  transactions contemplated hereby and by the Collateral
                  Agreements.

14.      DEFAULT

(A)      Defaults

         The following events shall constitute defaults ("Defaults") under this
Agreement:

         (i) a Shareholder:

            (1) is in breach of any of its representations or warranties set
                forth in Clause 13 (which breach, if under sub-Clause 13(iv) or
                (v), has a material adverse effect on the Company or on the
                transactions contemplated hereby or by the Collateral Documents)
                or any of its covenants set forth in sub-Clauses 3(D), 3(F),
                3(G), 4(D), 5(J), 7(B), 10(E), 14(D), 14(F) and 17(B);

            (2) fails to pay the Company such amounts which such Shareholder is
                required to pay under the Assured Supply and Demand Agreement
                with respect to any of its loadings;

            (3) is in breach of Article 2.01(a) (Delivery of Information)(in the
                case of Lucent) or Article 2.01(b) (Delivery of Information)(in
                the case of CSM) of the License and Technology Transfer
                Agreement, or Clause 10(C) or Clause 10(E) (in the case of CSM)
                of the CSM Service Support Agreement;

            (4) has intentionally breached Article 4.07 (Export) or Article 8.04
                (Confidentiality) of the License and Technology Transfer
                Agreement, Section 28 (Confidentiality) of the Assured Supply
                and Demand Agreement,

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                Section 9 (Compliance with Laws) or Clause 16 (Confidentiality)
                of the CSM Services Support Agreement and such intentional
                breach may cause injury (whether financial or otherwise) or have
                a negative impact (whether financial or otherwise) on the
                non-breaching Shareholder. In addition, the inability of the
                Company to occupy the Site for any reason (other than as a
                result of CSM exercising its legal rights after a material
                breach (which breach is not cured within the applicable cure
                period) by the Company under the Sub-Lease Agreement) shall also
                constitute a Default (the "Lease Default"); provided, in the
                event CSM is prohibited by law or regulation from (a) leasing or
                subleasing all of the sites located on CSM's campus (including,
                without limitation, the Company Fab, Fab 2, Fab 3A and Fab 4) to
                any Person, Lucent shall not have the right to exercise the
                remedy set forth in sub-Clause 14(D)(i)(4) and the purchase
                price set forth in sub-Clause 14(D)(i)(3) shall be higher of
                Fair Market Value and Net Book Value multiplied by Lucent's then
                Shareholding Percentage and (b) occupying all of the sites on
                CSM's campus (including, without limitation, the Company Fab,
                Fab 2, Fab 3A and Fab 4), Lucent shall not have the right to
                exercise any of the remedies set forth in sub-Clause 14(D)(i)(2)
                and 14(D)(i)(3). For the avoidance of doubt, subject to the
                foregoing sentence, any Lease Default shall entitle Lucent to
                exercise any of the remedies set forth in sub-Clause
                14(D)(i)(1),(3),(4) and (5).

         (ii) a Shareholder becomes bankrupt or insolvent;

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

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

         For purposes of this Agreement, the term "Defaulting Shareholder" shall
refer to the Shareholder who has caused the occurrence of any of the Defaults
identified in sub-

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                    The Company - CSM - Lucent Confidential
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Clause 14(A) and the term "Non-Defaulting Shareholder" shall refer to the
Shareholder who has not caused such Default.

(B)      Defaults with Opportunity to Remedy

         Upon the occurrence of a Default under paragraph (i) of sub-Clause
14(A) above, the Non-Defaulting Shareholder may give notice to the Defaulting
Shareholder specifying the Default and, in the case of a Default that is capable
of remedy, stipulating a period of not less than 60 days (or to the extent the
Non-Defaulting Shareholder elects to exercise the liquidation remedy set forth
in sub-Clause 14(D)(i)(4) or sub-Clause 14(D)(ii)(3), as applicable, not less
than 90 days; provided, any cure periods to which such Default may already be
subject under the Collateral Agreements shall be counted towards, and included
in, the 90 day period set forth in this sub-Clause 14(B)) during which such
Default shall be remedied or steps taken in pursuance thereof. For purposes of
this sub-Clause 14(B), a Default shall be considered capable of remedy if the
Defaulting Shareholder can comply with the term or condition in question in all
respects other than as to the time of performance. In the case of any genuine
disagreement between the Shareholders as to the facts giving rise to the
Default, the provisions of Clause 19(F) shall apply.

(C)      Events of Default

         An event of Default ("Event of Default") shall be deemed to occur (1)
upon issuance of any notice pursuant to sub-clause (B) above and, if applicable,
the passage of any remedial period provided pursuant to sub-clause (B) above,
and (2) upon occurrence of any Default referred to in paragraph (ii), (iii) or
(iv) of sub-clause (A) above.

(D)      Remedies

(i)      Lucent Remedies

         Upon the occurrence and during the continuation of any Event of Default
         caused by CSM, Lucent, as the Non-Defaulting Shareholder, shall,
         subject to the provisions of this Clause 14, have the following
         remedies, rights and options:

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            (1) Lucent may bring an action at a court of law for the specific
                performance by CSM of the terms of this Agreement or other
                applicable Collateral Agreement, as the case may be.

            (2) Only upon the occurrence and during the continuation of any
                Event of Default referred to in paragraph (ii), (iii) or (iv) of
                sub-Clause (A) above, Lucent shall have the right and option
                (the "Default Call Option") to purchase all, but not less than
                all, the shares in the capital of the Company held by CSM in
                accordance with the provisions of sub-Clause (F). The purchase
                price for such shares in respect of this Default Call Option
                shall be Fair Market Value.

            (3) Lucent shall have the right and option (the "Default Put
                Option") to require CSM to purchase all, but not less than all,
                the shares in the capital of the Company held by Lucent in
                accordance with the provisions of sub-Clause (F). The purchase
                price for such shares in respect of the Default Put Option shall
                be the higher of (i) 110% of Fair Market Value and (ii) Net Book
                Value multiplied by Lucent's then Shareholding Percentage;
                provided, in the event Lucent exercises (subject as to the
                enforcement of remedies to applicable bankruptcy, insolvency,
                reorganization and other similar laws affecting generally the
                rights of creditors) the Default Put Option as a result of any
                Event of Default referred to in paragraph (ii), (iii) or (iv) of
                sub-Clause (A) above, the purchase price for such shares shall
                be Fair Market Value.

            (4) Lucent shall have the right and option to cause the Company to
                sell its assets and properties and effect an orderly liquidation
                pursuant to sub-Clause (G).

            (5) Subject to the provisions of Clause 19(F), Lucent shall have
                such other rights and remedies that are available to it under
                applicable law or under the Collateral Agreements.

         For the avoidance of doubt, upon the completion of the purchase and
         sale transaction as contemplated under sub-Clause 14(D)(i)(3) above,
         Lucent shall not be entitled to exercise the remedy set forth in
         sub-Clause 14(D)(i)(4) above.

(ii) CSM Remedies

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         Upon the occurrence and during the continuation of any Event of Default
         caused by Lucent, CSM, as the Non-Defaulting Shareholder, shall,
         subject to the provisions of this Clause 14, have the following
         remedies, rights and options:

         (1) CSM may bring an action at a court of law for the specific
             performance by Lucent of the terms of this Agreement or other
             applicable Collateral Agreement, as the case may be.

         (2) CSM shall have the right and option (the "Default Call Option") to
             purchase all, but not less than all, the shares in the capital of
             the Company held by Lucent in accordance with the provisions of
             sub-Clause (F). The purchase price for such shares in respect of
             this Default Call Option shall be 90% of Fair Market Value;
             provided, in the event CSM exercises the Default Call Option as a
             result of the occurrence and during the continuation of any Event
             of Default referred to in paragraph (ii), (iii) or (iv) of
             sub-Clause (A) above, the purchase price for such shares shall be
             Fair Market Value.

         (3) CSM shall have the right and option to cause the Company to sell
             its assets and properties and effect an orderly liquidation
             pursuant to sub-Clause (G).

         (4) Subject to the provisions of Clause 19(F), CSM shall have such
             other rights and remedies that are available to it under applicable
             law or under the Collateral Agreements.

(E)      Waiver of Remedies

         The failure of any party hereof to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of any party thereafter to enforce each and every such provision. No waiver of
any Default or Event of Default shall be held to constitute a waiver of any
other or subsequent Default or Event of Default.

(F)      Put and Call Options

(i)  In order to exercise its Default Call Option or Default Put Option the
     Non-Defaulting Shareholder shall deliver to the Defaulting Shareholder, a
     FMV Determination Request

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     and, if applicable, a Net Book Value Determination Request. Upon issuance
     of such request or requests, the parties shall determine Fair Market Value
     and, if applicable, Net Book Value in accordance with the provisions of the
     respective definitions thereof. To the extent applicable, the
     Non-Defaulting Shareholder may require a concurrent determination of Fair
     Market Value and Net Book Value for purposes of both the Default Call
     Option and Default Put Option.

(ii) Within 30 days of determination of both Fair Market Value and Net Book
     Value, the Non-Defaulting Shareholder shall issue a notice to the
     Defaulting Shareholder specifying whether or not it plans to exercise the
     Default Call Option (to the extent applicable) or Default Put Option. In
     the event that the Non-Defaulting Shareholder provides notice of exercise
     of either option, subject to any U.S., Singapore or other regulatory
     filings or notifications and/or the receipt of any U.S., Singapore or other
     regulatory approvals or consents, if any, the completion for the purchase
     and sale of the shares shall take place 30 days after the date of provision
     of such election notice. Failure by the Non-Defaulting Shareholder to
     exercise its Default Call Option or Default Put Option shall not prejudice
     its right to make subsequent FMV Determination Requests or Net Book Value
     Determination Requests or subsequently exercise its Default Call Option or
     Default Put Option so long as an Event of Default has occurred and is
     continuing.

(iii) At the completion of the purchase and sale transaction contemplated under
     this sub-Clause (F), the Defaulting Shareholder shall pay the purchase
     price for the shares of the Company held by the Non-Defaulting Shareholder
     in the form of cash in Singapore Dollars by wire transfer of immediately
     available funds to an account designated in writing by the Non-Defaulting
     Shareholder against delivery by the Non-Defaulting Shareholder of
     certificates representing all such shares, free and clear of any liens,
     claims, charges or encumbrances. Stamp duties in respect of the transfer of
     such shares shall be paid by the Defaulting Shareholder.

(iv) If Lucent is the Non-Defaulting Shareholder and it elects to exercise the
     Default Call Option, CSM shall, if requested by Lucent and subject as to
     the enforcement of remedies to applicable bankruptcy, insolvency,
     reorganization and other similar laws affecting generally the rights of
     creditors, extend for a period not exceeding 3 years (the "Extended
     Period") the CSM Service Support Agreement on terms and conditions in
     effect under the then current CSM Service Support Agreement. In addition,
     CSM

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                    The Company - CSM - Lucent Confidential
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     covenants and agrees that it will use its best efforts to extend the
     Sub-Lease Agreement for the Extended Period; provided, in the event CSM is
     unable to do so, CSM agrees, subject as to the enforcement of remedies to
     applicable bankruptcy, insolvency, reorganization and other similar laws
     affecting generally the rights of creditors, to take all actions as
     requested by Lucent in order to provide Lucent the benefit of having 100%
     ownership of the Company during the Extended Period, which requests may
     include, without limitation, having supply of 100% of the wafer output
     Lucent would have been entitled to from the Company had the Sub-Lease
     Agreement been extended for the Extended Period.

(v)  In the event CSM elects to exercise the Default Call Option as a result of
     the occurrence of an Event of Default referred to paragraph (ii), (iii) or
     (iv) of sub-Clause (A) above, Lucent shall, if requested by CSM and subject
     as to the enforcement of remedies to applicable bankruptcy, insolvency,
     reorganization and other similar laws affecting generally the rights of
     creditors, extend for a period not exceeding 3 years the Assured Supply and
     Demand Agreement.

(G)      Sale of Assets and Liquidation of the Company

         Promptly upon notice by the Non-Defaulting Shareholder of its option
under sub-Clause (D)(i)(4) or (D)(ii)(3), as applicable, the parties shall take
and cause the Company to take all such actions as may be appropriate or
necessary to conduct an orderly sale of the Company's assets and properties in a
single transaction or series of related transactions. In connection with any
such sale, the parties and their respective Affiliates may not, directly or
indirectly, bid to purchase or otherwise acquire any of the assets and
properties of the Company. The proceeds of such sale shall be used to satisfy
the liabilities of the Company (including any liabilities to employees) and,
after making appropriate provisions as may be required under applicable law,
shall be distributed to the parties as liquidating distributions under the
Articles and applicable law. Thereafter, the parties shall take and cause the
Company to take all such actions as may be appropriate or necessary for the
winding up and dissolution of the Company.

(H)      Ramp Down Upon Change of Control, Default and Termination

         In the event CSM purchases all of the shares in the capital of the
Company held by Lucent pursuant to Clause 10(E) (Change of Control), Clause
14(D) (Defaults) or Clause

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17(A)(ii) (Early Termination), Lucent shall deliver to CSM a "Ramp Down Notice"
(as defined) on or within 45 days prior to the "Change of Control Closing," the
"Default Closing" or the "Termination Closing" (as defined). For purposes of
this Agreement, the terms:

(a)   "Ramp Down Notice" shall mean a written notice setting forth Lucent's
      request to purchase wafers from the Company or CSM over any period
      following the Change of Control Closing, the Default Closing or the
      Termination Closing, as applicable, and the terms and conditions under
      which such wafers shall be purchased; provided, (1) the ramp down may be
      linear (progressive) or non-linear (non-progressive); provided, if CSM and
      Lucent cannot mutually agree, then the ramp down must be linear, (2) the
      number of wafers requested may be any amount; provided, if CSM and Lucent
      cannot mutually agree, the number of wafers requested shall be the average
      loadings of Lucent during the financial quarter immediately prior to the
      occurrence of the change of control, the Event of Default or the
      termination, as applicable, and (3) CSM shall have the right to require
      the ramp down period to be for (x) a minimum of one year from the Change
      of Control Closing, the Default Closing or the Termination Closing in the
      event the ramp down period selected by Lucent is for less than one year,
      (y) a maximum of two years from the Change of Control Closing or the
      Default Closing, as applicable, in the event the ramp down period selected
      by Lucent is in excess of two years and (z) a maximum of one year from the
      Termination Closing in the event the ramp down period selected by Lucent
      is in excess of one year;

(b)   "Change of Control Completion" shall mean the completion of the purchase
      and sale of the shares in the capital of the Company held by Lucent
      pursuant to Clause 10(E) which completion shall take as contemplated under
      Clause 10(E);

(c)   "Default Completion" shall mean the completion of the purchase sale of the
      shares in the capital of the Company held by Lucent pursuant to Clause
      14(D) which completion shall take place as contemplated under Clause
      14(F); and

(d)   "Termination Completion" shall mean the completion of the purchase sale of
      the shares in the capital of the Company held by Lucent pursuant to Clause
      17(B) which completion shall take place as contemplated under Clause
      17(B).

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Within 15 days after receipt of the Ramp Down Notice, CSM shall notify Lucent as
to whether CSM accepts all of the terms and conditions set out in the Ramp Down
Notice or respond in writing as to any of its objections. If CSM raises any such
objections, the parties shall negotiate in good faith to either (a) make the
ramp down wafer purchases be subject to, if still effective, the Manufacturing
Agreement, dated as of January 1, 1995, as amended to date between Lucent
Technologies Inc. and CSM (the "Manufacturing Agreement") or (b) agree on a new
mutually acceptable wafer purchase agreement (the "New Purchase Agreement")
which shall be substantially similar to the Manufacturing Agreement and within
the parameters set forth in this Clause 14(H) prior to the Change of Control
Completion, the Default Completion or the Termination Completion; provided, the
parties acknowledge that neither the Change of Control Completion, the Default
Completion nor the Termination Completion may occur without the ramp down wafer
purchases becoming either subject to the Manufacturing Agreement or the parties
entering into a New Purchase Agreement.

15.      GENERAL OBLIGATIONS OF SHAREHOLDERS

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

16.      PREVALENCE OF AGREEMENT

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

17.      DURATION AND TERMINATION

(A)      Duration

         This Agreement shall take effect from the date hereof and, unless
otherwise agreed to by the parties, shall not terminate until the earliest of
(i) September 1, 1998 only if the Completion Date has not occurred prior to such
date; and (ii) two years from

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                    The Company - CSM - Lucent Confidential
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the date specified in a written termination notice (the "Termination Notice")
from either Shareholder to the Company and to the other Shareholder provided
that such notice shall not be delivered prior to the eighth anniversary of the
Completion Date (the effective date of such termination shall be referred to as
the "Termination Date"). In addition, this Agreement shall also be deemed
terminated upon the completion of the purchase and sale transactions
contemplated under Clause 10(E) and Clause 14(D).

(B)      Rights in Connection With Expiration of the Term

(i)      Within 60 days after receipt by Lucent of the Termination Notice from
CSM or within 45 days after delivery by Lucent of the Termination Notice to CSM,
Lucent shall notify CSM in writing whether Lucent elects to (i) relinquish all
of Lucent's rights set forth in Clause 5(B) and 5(I) and reduce its rights as
shareholder of the Company to the effect that it may elect only a minority of
the members of the Board (notice of such election shall be referred to as a
"Relinquishment Notice"), in which event the parties shall execute an amendment
to this Agreement to effect the foregoing within one week of the Relinquishment
Notice and the parties shall take all commercially reasonable actions to
effectuate such amendment, or (ii) continue to exercise its rights set forth in
Clause 5(B) and 5(I) and all of its rights as shareholder of the Company (notice
of such election shall be referred to as a "Non-Relinquishment Notice"). For
purposes of this Clause 17 and for purposes of determining Fair Market Value and
Net Book Value as of the FMV Request Date or Net Book Value Request Date, the
delivery of the Termination Notice shall be deemed to be the delivery of a FMV
Determination Request and a Net Book Value Determination Request and, for
purposes of determining Fair Market Value and Net Book Value as of the
Termination Date, a FMV Determination Request or Net Book Value Determination
Request, as applicable, shall be deemed to have been issued as of the
Termination Date. Upon delivery of the Termination Notice, the following shall
apply:

         (a) In the event CSM has delivered the Termination Notice and Lucent
             has delivered a Relinquishment Notice, CSM shall purchase from
             Lucent, and Lucent shall sell to CSM, all, but not less than all,
             of the shares in the capital of the Company held by Lucent at a
             purchase price equal to the higher of:

              (i) Fair Market Value as of the FMV Request Date;

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                    The Company - CSM - Lucent Confidential
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              (ii) Net Book Value as of the Net Book Value Request Date
                   multiplied by Lucent's then Shareholding Percentage; and

              (iii)Fair Market Value as of the FMV Request Date plus 33% of the
                   increase, if any, in Fair Market Value of all of the shares
                   in the capital of the Company as of the Termination Date from
                   Fair Market Value of all of the shares in the capital of the
                   Company as of the FMV Request Date

              All costs in determining Fair Market Value and Net Book Value
              pursuant to this sub-Clause 17(B)(i)(a) shall be borne by CSM.
              Subject to any U.S., Singapore, or other regulatory filings or
              notifications and/or the receipt of any U.S., Singapore or other
              regulatory approvals or consents, if any, the completion of the
              purchase and sale of such shares shall take place 30 days after
              final determination of Fair Market Value and Net Book Value as of
              the Termination Date.

          (b) In the event CSM has delivered the Termination Notice and Lucent
              has delivered to CSM a Non-Relinquishment Notice, CSM shall
              purchase from Lucent, and Lucent shall sell to CSM, all, but not
              less than all, of the shares in the capital of the Company held by
              Lucent at a purchase price equal to the higher of;

              (i)  Fair Market Value as of the Termination Date; and

              (ii) Net Book Value as of the Termination Date multiplied by
                   Lucent's then Shareholding Percentage.

              All costs in determining Fair Market Value and Net Book Value
              pursuant to this sub-Clause 17(B)(ii)(b) shall be borne by CSM.
              Subject to any U.S., Singapore or other regulatory filings or
              notifications and/or the receipt of any U.S., Singapore or other
              regulatory approvals or consents, if any, the completion of the
              purchase and sale of such shares shall take place 30 days after
              final determination of Fair Market Value and Net Book Value as of
              the Termination Date.

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                    The Company - CSM - Lucent Confidential
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         (c)      In the event Lucent has delivered the Termination Notice and
                  Lucent has also delivered a Relinquishment Notice, CSM shall
                  purchase from Lucent, and Lucent shall sell to CSM, all, but
                  not less than all, of the shares in the capital of the Company
                  held by Lucent at a purchase price equal to the higher of:

                  (i)      Fair Market Value as of the FMV Request Date; and

                  (ii)     Fair Market Value as of the FMV Request Date plus 33%
                           of the increase, if any, in Fair Market Value of all
                           of the shares in the capital of the Company as of the
                           Termination Date from Fair Market Value of all of the
                           shares in the capital of the Company as of the FMV
                           Request Date.

                  All costs in determining Fair Market Value pursuant to this
                  sub-Clause 17(B)(ii)(c) shall be borne by Lucent. Subject to
                  any U.S., Singapore or other regulatory filings or
                  notifications and/or the receipt of any U.S., Singapore or
                  other regulatory approvals or consents, if any, the completion
                  of the purchase and sale of such shares shall take place 30
                  days after final determination of Fair Market Value as of the
                  Termination Date.

         (d)      In the event Lucent has delivered the Termination Notice and
                  Lucent has also delivered a Non-Relinquishment Notice, CSM
                  shall purchase from Lucent, and Lucent shall sell to CSM, all,
                  but not less than all, of the shares in the capital of the
                  Company held by Lucent at Fair Market Value as of the
                  Termination Date. All costs in determining Fair Market Value
                  pursuant to this sub-Clause 17(B)(ii)(d) shall be borne by
                  Lucent. Subject to any U.S., Singapore or other regulatory
                  filings or notifications and/or the receipt of any U.S.,
                  Singapore or other regulatory approvals or consents, if any,
                  the completion of the purchase and sale of such shares shall
                  take place 30 days after final determination of Fair Market
                  Value as of the Termination Date.

(ii) At any of the applicable completions contemplated under Sub-Clause 17(B)(i)
above, CSM shall pay the purchase price for the shares of the Company held by
Lucent in the form of cash in Singapore Dollars by wire transfer of immediately
available funds to an account designated in writing by Lucent against delivery
by Lucent of certificates representing all such shares, free and clear of any
liens, claims, charges or encumbrances. Stamp duties in respect of the transfer
of such shares shall be paid by the Shareholder who

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                    The Company - CSM - Lucent Confidential
<PAGE>   56
bears the costs of determining Fair Market Value and Net Book Value (as
applicable) as set out above.

(iii) Following the Termination Date, the parties shall be subject to the ramp
down provisions set forth in Clause 14(H) above.

(C)      Effect of Expiration or Termination of Term

         Upon the expiration or earlier termination of this Agreement, the
         parties shall have no further obligations under this Agreement.
         Notwithstanding the generality of the foregoing, (1) the parties shall
         continue to have the liability and the obligation to fulfill their
         obligations under this Agreement that have matured on or prior to the
         date of expiration or termination of this Agreement and (2) the
         provisions of Clauses 6(D), 7(A)(vi), 14(D), 14(F), 14(G), 14 (H),
         17(B), 17(C), 18, 19(A), 19(B), 19(F) and 19(G) shall survive any such
         expiration or termination of this Agreement.

18.      CONFIDENTIAL INFORMATION

(A)      Communications Confidential

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

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                    The Company - CSM - Lucent Confidential
<PAGE>   57
five (5) years following the termination thereof. Neither Shareholder
shall disclose to the other competitively sensitive information concerning
either sales, transfer or use of wafers (i.e., pricing, cost, volume, capacity
and customer information) except as reasonably required under this Agreement
relating to any wafer fabrication facility operated, managed or controlled by
such Shareholder or in which such Shareholder has a non-controlling interest or
role. At the expiration or termination of this Agreement, written Confidential
Information will be returned to the party supplying such information or
destroyed immediately upon the request of such party and no copies, extracts or
other reproductions shall be retained by recipient. All documents, memoranda,
notes and other writings whatsoever prepared by recipient which contain the
Confidential Information shall be returned to such party or destroyed at such
party's request. Notwithstanding the foregoing, information shall not be deemed
confidential and the recipient shall have no obligation with respect to any such
information which was in the recipient's possession before receipt from the
discloser; which are rightfully received by the recipient without restriction
from a third party without a duty of confidentiality on the third party; which
are independently developed by recipient; or which are in the public domain
through no act or default on the part of the recipient, its Affiliates its
servants and/or agents, whereupon, to the extent that it is public, this
obligation shall cease. In addition, in the event a recipient becomes compelled
by law or regulatory authority to disclose any of the Confidential Information,
the recipient shall provide the discloser with prompt written notice so that the
discloser may seek protective order or other appropriate remedy or waive
compliance with the provisions of this Clause 18. In the event that such
protective order or other remedy is not obtained, or that the discloser waives
compliance with the provisions of this Clause 18, the recipient shall furnish
only that portion of the Confidential Information which it is required by law or
regulatory authority to disclose and will exercise its commercially reasonable
efforts to assure that confidential treatment will be accorded the Confidential
Information.

(B)        Shareholders' Obligations

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

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                    The Company - CSM - Lucent Confidential
<PAGE>   58
the Company whose duties will require them to possess, or have access to,
confidential information, shall sign confidentiality agreements with the Company
respecting the confidentiality of such information.

19.        NOTICES AND GENERAL

(A)        Notices

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

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

           Lucent       :       LUCENT TECHNOLOGIES MICROELECTRONICS PTE. LTD
                                3, Kallang Sector, Kolam Ayer Industrial Park

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                    The Company - CSM - Lucent Confidential
<PAGE>   59
                                Singapore 349278

                                Facsimile No.        :      (65) 840-2560
                                Attention            :      Managing Director

           with a copy to:      LUCENT TECHNOLOGIES INC.
                                Microelectronics Division
                                Two Oak Way
                                Berkeley Heights, NJ 07922-2727

                                Facsimile No.  001 908 508-8398
                                Attention:  Legal Department

           The Company:         SILICON MANUFACTURING PARTNERS PTE LTD
                                c/o Singapore Technologies Pte Ltd
                                89, Science Park Drive

                                #02-09/12

                                The Rutherford
                                Singapore Science Park
                                Singapore 118261

                                Facsimile No. : (65) 872-6390
                                Attention     : The Company Secretary
                                                Corporate Secretariat Department

(B)        Remedies

           No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise available at
law, in equity, by statute or otherwise, and each and every other remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity, by statute or otherwise. The
election of any one or more of such remedies by any of the Shareholders shall
not constitute a waiver by such Shareholder of the right to pursue any other
available remedies. No failure on the part of any Shareholder to exercise and no
delay on the part of any Shareholder in exercising any right hereunder will
operate as a release or waiver

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                    The Company - CSM - Lucent Confidential
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thereof, nor will any single or partial exercise of any right under this
Agreement preclude any other or further exercise of it.

(C)        Severance

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

(D)        Entire Agreement

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

(E)        Governing Law

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

(F)        Dispute Resolution and Arbitration

(i) In case any dispute or difference shall arise among the Shareholders as to
the construction of this Agreement or as to any matter or thing of whatsoever
nature arising hereunder or in connection herewith, including any question
regarding its existence, validity or termination, such dispute or difference
shall promptly be submitted to a committee comprised of one Board member from
each of the Shareholders. If such committee is unable to resolve such dispute
within 21 days of such submission, it shall submit the dispute to a committee
comprised of one senior manager from each Shareholder, being in the case of:-

           CSM          :    the President

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           Lucent       :    the Customer Satisfaction and Business Development
                             Vice President of  Lucent Technologies Inc.

If such senior managers are unable to resolve such dispute within 14 days of
such submission, it shall be submitted to a committee comprised of one senior
officer from each Shareholder being in the case of:-

           CSM          :     the Chairman of the Board of CSM
           Lucent       :     Vice President, Integrated Circuits Division of
                              Lucent Technologies Inc.

(ii)       If such senior officers are unable to resolve the dispute within 14
days of such submission, it shall be submitted to a single arbitrator to be
appointed by the Shareholders (the "Arbitrator"). If the Shareholders fail to
agree on an Arbitrator within 14 days after one Shareholder has given to the
other Shareholder a written request to concur in the appointment of an
Arbitrator, a single arbitrator (the "ICC Arbitrator") shall be appointed on the
request of any Shareholder within 10 days after the 14 day period by the
International Chamber of Commerce and such submission shall be a submission to
arbitration in accordance with the Rules of Conciliation and Arbitration of the
International Chamber of Commerce as presently in force by which the
Shareholders agree to be so bound. The Arbitrator or the ICC Arbitrator, as
applicable, shall have 14 days after his appointment to request and receive all
information (whether written or oral) relating to the dispute from Lucent, CSM
and the Company. Each of Lucent and CSM shall use its commercially reasonable
efforts to comply with all of such requests for information. Lucent and CSM
shall jointly cause the Company to comply with all of the Arbitrator's and the
ICC Arbitrator's requests for information. The place of arbitration shall be
London, England and the arbitration shall be conducted wholly in the English
language. The Arbitrator or the ICC Arbitrator, as applicable, shall render his
decision within 30 days after his appointment or, in the event the Arbitrator or
the ICC Arbitrator, as applicable, requires any hearings or proceedings with
respect to such arbitration, within 15 days after the completion of such
hearings or proceedings.

(G)        Announcements

           None of the parties shall divulge to any third party (except to their
respective professional advisers) any specific terms of this Agreement, or any
other agreement referred

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<PAGE>   62
to in, or executed in connection with, this Agreement, without the prior
agreement of the other parties in writing except as and to the extent that any
such party shall be so obligated by law or pursuant to the regulations of a
stock exchange or other regulatory body in which case the other party shall be
so advised and the parties shall use their best efforts to cause a mutually
agreeable release or statement to be made. In the event that this Agreement or
any of the Collateral Agreements are proposed to be disclosed to any such body
in whole or in part the parties agree to fully cooperate to limit the scope of
any such disclosure and to obtain an appropriate protective order if reasonably
practicable.

(H)        No Right To Bind Other Shareholders

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

(I)        Costs

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

(J)        Assignment

           Except to the extent permitted under Clause 10 hereof, the rights and
obligations under this Agreement may not be assigned by any party to any Person.

(K)        No Third Party Beneficiaries

           Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any Person other than the parties hereto, the Company and
their respective successors and permitted assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained.

(L)        US Tax Election

           CSM acknowledges that Lucent may, but shall not be required to, treat
the Company as a partnership for United States income tax purposes. If requested
by Lucent, the parties shall cause the Company to execute Treasury Form 8832 (or
any subsequent

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                    The Company - CSM - Lucent Confidential
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form(s) designated by the United States government) to classify the Company as a
partnership for U.S. tax purposes. In no event shall CSM or the Company be
required to take any action or execute any such form(s) if such action will
increase the tax liability of CSM or the Company. CSM and the Company shall
consult with Lucent prior to taking any position or making any filing which
relate to the Company with any United States federal or state taxing authority.
All out of pocket costs and expenses incurred by CSM or the Company in complying
with Lucent's requests under this Clause shall be borne by Lucent; provided,
that in the case of fees and expenses of any tax or legal advisors or other
professional consultants, such fees and expenses shall be borne by Lucent only
if the retention of such advisors or consultants has been pre-approved by
Lucent. In the event Lucent elects to treat the Company as a partnership for
U.S. income tax purposes, Lucent hereby agrees to enter into the Tax Indemnity
Agreement prior to the Company executing Treasury Form 8832 (or any subsequent
form(s) designated by the United States government).

(M)        Securities Filing by CSM

In the event that, in connection with a registration or listing of its
securities with any securities commission, exchange or other securities
regulatory or monitoring body, CSM is required under any applicable securities
laws or listing rules to provide to or to file with any securities commission,
exchange or other securities regulatory or monitoring body, any information with
respect to the Company, its business, this Agreement or any of the Collateral
Agreements, CSM shall provide prior notice of the same to Lucent. If requested
by Lucent, CSM shall file with the applicable securities authorities a request
for non-disclosure to the public of sensitive information with respect to the
Company or its business or contained in this Agreement or any of the Collateral
Agreements and shall take such steps as may reasonably be requested by Lucent to
obtain such confidential treatment; provided, that if such authorities refuse to
grant such confidential treatment or fail to respond which will delay the
registration statement or the offering document from going effective, CSM shall
be permitted to provide or file only that portion of such information that is
required under applicable securities laws or listing rules.

(N)        Waiver of Immunity

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           Each of CSM, Lucent and the Company hereby irrevocably agrees not to
claim and irrevocably waives any claim or right which it has or may hereafter
acquire under any law, regulation, treaty or international agreement to immunity
for itself, or any of its revenues, assets or properties or those of any of its
agencies or instrumentalities from the jurisdiction of any court (including but
not limited to any court of the United States of America or the State of New
Jersey) with respect to the enforcement of an arbitral award rendered pursuant
to Clause 19(F).

(O)        Assignment of Purchase Orders

           Each Shareholder acknowledges and agrees that on or prior to the
Completion Date, such Shareholder shall be required to assign to the Company all
purchase orders placed in support of the Company and contemplated under the
Company Business Plan which are in the name of such Shareholder or any of its
Affiliates.

(P)        Counterparts

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

(Q)        Settlements

           Notwithstanding any provision contained in this Agreement, prior to
the effectiveness of any termination of this Agreement or the completion of any
of the purchase and sale transactions contemplated in this Agreement, the
Shareholders, in its individual capacity and collectively, shall cause the
Company to take into account the final settlement of all accrued dividends and
loans from the Company to the Shareholders. The amount of loans, if any, from
the Company to a Shareholder and any accrued dividends allocated to such
Shareholder shall be determined and the amount so determined shall be netted
against each other. Any net settlement balance shall be payable by the Company
to a Shareholder or by a Shareholder to the Company, as applicable, to the
extent such amounts (as well as any retained earnings as determined pursuant to
the dividend policy set forth in the Articles) are not already taken into
account in any Fair Market Value or Net Book Value calculation, as applicable,
in connection with such termination or purchase and sale transaction.

                                       64

                    The Company - CSM - Lucent Confidential
<PAGE>   65
                                       65

                    The Company - CSM - Lucent Confidential
<PAGE>   66
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.

<TABLE>
<S>                                        <C>
CSM
---

SIGNED by TAN BOCK SENG                    )
President & CEO                            )
for and on behalf of                       )
CHARTERED SEMICONDUCTOR                    )
MANUFACTURING LTD                          )
in the presence of:-                       )_________________________________

________________________________
Name:

Lucent
------

SIGNED by  CURTIS  J. CRAWFORD             )
for and on behalf of                       )
LUCENT TECHNOLOGIES                        )
MICROELECTRONICS PTE. LTD.                 )
in the presence of:-                       )__________________________________

________________________________
Name:
</TABLE>

                    The Company - CSM - Lucent Confidential<PAGE>   1
                                                                    Exhibit 4.01

                  This Note is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of the
Depository named below or a nominee of the Depository. This Note is not
exchangeable for Notes registered in the name of a Person other than the
Depository or its nominee except in the limited circumstances described herein
and in the Indenture, and no transfer of this Note (other than a transfer of
this Note as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository) may be registered except in the limited circumstances described
herein.

                  Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (the
"Depository"), to the Company or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of the Depository (and any payment is made to Cede & Co. or to such other entity
as is requested by an authorized representative of the Depository), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

                                 CITIGROUP INC.
                        5.70% NOTES DUE FEBRUARY 6, 2004
REGISTERED                                                            REGISTERED

                                                  CUSIP: [                     ]
                                                      ISIN: US[                ]
                                                Common Code: [                 ]

No. R-                                                                     $

                  CITIGROUP INC., a Delaware corporation (the "Company", which
term includes any successor Person under the Indenture), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of $____________ on February 6, 2004 and to pay interest thereon from and
including February 7, 2001 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on February 6
and August 6 of each year, commencing August 6, 2001, at the rate of 5.70% per
annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note is registered at the close of business on the Record Date for
such interest, which shall be the January 15 or July 15 (whether or not a
Business Day) next preceding such Interest Payment Date.
<PAGE>   2
                  Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the holder on such Record Date and may
either be paid to the Person in whose name this Note is registered at the close
of business on a subsequent Record Date, such subsequent Record Date to be not
less than five days prior to the date of payment of such defaulted interest,
notice whereof shall be given to holders of Notes of this series not less than
15 days prior to such subsequent Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture.

                  Interest hereon will be calculated on the basis of a 360-day
year comprised of twelve 30-day months.

                  If either a date for payment of principal or interest on the
Notes or the Maturity of the Notes falls on a day that is not a Business Day,
the related payment of principal or interest will be made on the next succeeding
Business Day as if made on the date the payment was due. No interest will accrue
on any amounts payable for the period from and after the date for payment of
principal or interest on the Notes or the Maturity of the Notes. For these
purposes, "Business Day" means any day which is a day on which commercial banks
settle payments and are open for general business in The City of New York.

                  Payment of the principal of and interest on this Note will be
made at the office or agency of the Trustee maintained for that purpose in The
City of New York.

                  Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon has been
executed by the Trustee or by an authenticating agent on behalf of the Trustee
by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

                                       2
<PAGE>   3
                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.

Dated:  February 7, 2001

                                    CITIGROUP INC.

                                    By:_________________________________
                                    Title:  Treasurer

ATTEST:

By:___________________________
Assistant Secretary

                                       3
<PAGE>   4
                  This is one of the Notes of the series issued under the
within-mentioned Indenture.

Dated:  February 7, 2001

                                    THE BANK OF NEW YORK,
                                    as Trustee

                                    By:_________________________________
                                          Name:
                                          Title:

                                       4
<PAGE>   5
                  This Note is one of a duly authorized issue of Securities of
the Company (the "Notes"), issued and to be issued in one or more series under
the Indenture, dated as of March 15, 1987 (as amended and supplemented to date,
the "Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Notes
and of the terms upon which the Notes are, and are to be, authenticated and
delivered. This Note is one of the series designated on the face hereof,
initially limited in aggregate principal to $2,000,000,000.

                  If an event of default (as defined in the Indenture) with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.

                  The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Note upon compliance by the Company with
certain conditions set forth in Sections 11.03 and 11.04 thereof, which
provisions apply to this Note.

                  The Indenture contains provisions permitting the Company and
the Trustee, without the consent of the holders of the Securities, to establish,
among other things, the form and terms of any series of Securities issuable
thereunder by one or more supplemental indentures, and, with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of Securities at
the time outstanding which are affected thereby, to modify the Indenture or any
supplemental indenture or the rights of the holders of Securities of such series
to be affected, provided that no such modification will (i) extend the fixed
maturity of any Securities, reduce the rate or extend the time of payment of
interest thereon, reduce the principal amount thereof or the premium, if any,
thereon, reduce the amount of the principal of Original Issue Discount
Securities payable on any date, change the currency in which Securities are
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof, without the consent of the holder of
each Security so affected, or (ii) reduce the aforesaid percentage of Securities
of any series the consent of the holders of which is required for any such
modification without the consent of the holders of all Securities of such series
then outstanding, or (iii) modify, without the written consent of the Trustee,
the rights, duties or immunities of the Trustee.

                  No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency, herein
prescribed.

                  This Note is a Global Security registered in the name of a
nominee of the Depository. This Note is exchangeable for Notes registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances hereinafter described. Unless and until it is exchanged in whole
or in part for definitive Notes in certificated form, this Note

                                       5
<PAGE>   6
may not be transferred except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository.

                  The Notes represented by this Global Security are exchangeable
for definitive Notes in certificated form of like tenor as such Notes in
denominations of $1,000 and integral multiples thereof only if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Notes or (ii) the Depository ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, or (iii) the
Company in its sole discretion decides to allow the Notes to be exchanged for
definitive Notes in registered form. Any Notes that are exchangeable pursuant to
the preceding sentence are exchangeable for certificated Notes issuable in
authorized denominations and registered in such names as the Depository shall
direct. As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of definitive Notes in certificated form is registrable
in the register maintained by the Company in The City of New York for such
purpose, upon surrender of the definitive Note for registration of transfer at
the office or agency of the registrar, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
registrar duly executed by, the holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of this series and of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees. Subject to the
foregoing, this Note is not exchangeable, except for a Global Security or Global
Securities of this issue of the same principal amount to be registered in the
name of the Depository or its nominee.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.

         The Company will pay additional amounts ("Additional Amounts") to the
beneficial owner of any Note that is a non-United States person in order to
ensure that every net payment on such Note will not be less, due to payment of
U.S. withholding tax, than the amount then due and payable. For this purpose, a
"net payment" on a Note means a payment by the Company or a paying agent,
including payment of principal and interest, after deduction for any present or
future tax, assessment or other governmental charge of the United States. These
Additional Amounts will constitute additional interest on the Note.

         The Company will not be required to pay Additional Amounts, however, in
any of the circumstances described in items (1) through (12) below.

                                       6
<PAGE>   7
         (1)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner:

                  (a)      having a relationship with the United States as a
                           citizen, resident or otherwise;

                  (b)      having had such a relationship in the past or

                  (c)      being considered as having had such a relationship.

         (2)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner:

                  (a)      being treated as present in or engaged in a trade or
                           business in the United States;

                  (b)      being treated as having been present in or engaged in
                           a trade or business in the United States in the past
                           or

                  (c)      having or having had a permanent establishment in the
                           United States.

         (3)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner being or having been a:

                  (a)      personal holding company;

                  (b)      foreign personal holding company;

                  (c)      foreign private foundation or other foreign
                           tax-exempt organization;

                  (d)      passive foreign investment company;

                  (e)      controlled foreign corporation or

                  (f)      corporation which has accumulated earnings to avoid
                           United States federal income tax.

         (4)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the beneficial owner owning or having owned,
                  actually or constructively, 10 percent or more of the total
                  combined voting power of all classes of stock of the Company
                  entitled to vote.

For purposes of items (1) through (4) above, "beneficial owner" means a
fiduciary, settlor, beneficiary, member or shareholder of the holder if the
holder is an estate, trust, partnership, limited liability company, corporation
or other entity, or a person holding a power over an estate or trust
administered by a fiduciary holder.

         (5)      Additional Amounts will not be payable to any beneficial owner
                  of a Note that is a:

                  (a)      fiduciary;

                                       7
<PAGE>   8
                  (b)      partnership;

                  (c)      limited liability company or

                  (d)      other fiscally transparent entity

                  or that is not the sole beneficial owner of the Note, or any
                  portion of the Note. However, this exception to the obligation
                  to pay Additional Amounts will only apply to the extent that a
                  beneficiary or settlor in relation to the fiduciary, or a
                  beneficial owner or member of the partnership, limited
                  liability company or other fiscally transparent entity, would
                  not have been entitled to the payment of an Additional Amount
                  had the beneficiary, settlor, beneficial owner or member
                  received directly its beneficial or distributive share of the
                  payment.

         (6)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld solely by
                  reason of the failure of the beneficial owner or any other
                  person to comply with applicable certification,
                  identification, documentation or other information reporting
                  requirements. This exception to the obligation to pay
                  Additional Amounts will only apply if compliance with such
                  reporting requirements is required by statute or regulation of
                  the United States or by an applicable income tax treaty to
                  which the United States is a party as a precondition to
                  exemption from such tax, assessment or other governmental
                  charge.

         (7)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is collected or imposed by any method
                  other than by withholding from a payment on a Note by the
                  Company or a paying agent.

         (8)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld by reason of a
                  change in law, regulation, or administrative or judicial
                  interpretation that becomes effective more than 15 days after
                  the payment becomes due or is duly provided for, whichever
                  occurs later.

         (9)      Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment or other
                  governmental charge that is imposed or withheld by reason of
                  the presentation by the beneficial owner of a Note for payment
                  more than 30 days after the date on which such payment becomes
                  due or is duly provided for, whichever occurs later.

         (10)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any:

                  (a)      estate tax;

                  (b)      inheritance tax;

                  (c)      gift tax;

                                       8
<PAGE>   9
                  (d)      sales tax;

                  (e)      excise tax;

                  (f)      transfer tax;

                  (g)      wealth tax;

                  (h)      personal property tax or

                  (i)      any similar tax, assessment or other governmental
                           charge.

         (11)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any tax, assessment, or other
                  governmental charge required to be withheld by any paying
                  agent from a payment of principal or interest on a Note if
                  such payment can be made without such withholding by any other
                  paying agent.

         (12)     Additional Amounts will not be payable if a payment on a Note
                  is reduced as a result of any combination of items (1) through
                  (11) above.

         Except as specifically provided herein, the Company will not be
required to make any payment of any tax, assessment or other governmental charge
imposed by any government or a political subdivision or taxing authority of such
government.

         As used in this Note, "United States person" means:

         (a)      any individual who is a citizen or resident of the United
                  States;

         (b)      any corporation, partnership or other entity created or
                  organized in or under the laws of the United States;

         (c)      any estate if the income of such estate falls within the
                  federal income tax jurisdiction of the United States
                  regardless of the source of such income and

         (d)      any trust if a United States court is able to exercise primary
                  supervision over its administration and one or more United
                  States persons have the authority to control all of the
                  substantial decisions of the trust.

         Additionally, "non-United States person" means a person who is not a
United States person, and "United States" means the United States of America,
including the States and the District of Columbia, its territories, its
possessions and other areas within its jurisdiction.

         Except as provided below, the Notes may not be redeemed prior to
maturity.

         (1)      The Company may, at its option, redeem the Notes if:

                  (a)      the Company becomes or will become obligated to pay
                           Additional Amounts as described above;

                  (b)      the obligation to pay Additional Amounts arises as a
                           result of any change in the laws, regulations or
                           rulings of the United States, or an official position
                           regarding the application or interpretation of such
                           laws, regulations or rulings, which change is
                           announced or becomes effective on or after February
                           2, 2001 and

                                       9
<PAGE>   10
                  (c)      the Company determines, in its business judgment,
                           that the obligation to pay such Additional Amounts
                           cannot be avoided by the use of reasonable measures
                           available to it, other than substituting the obligor
                           under the Notes or taking any action that would
                           entail a material cost to the Company.

         (2)      The Company may also redeem the Notes, at its option, if:

                  (a)      any act is taken by a taxing authority of the United
                           States on or after February 2, 2001, whether or not
                           such act is taken in relation to the Company or any
                           affiliate, that results in a substantial probability
                           that the Company will or may be required to pay
                           Additional Amounts as described above;

                  (b)      the Company determines, in its business judgment,
                           that the obligation to pay such Additional Amounts
                           cannot be avoided by the use of reasonable measures
                           available to it, other than substituting the obligor
                           under the Notes or taking any action that would
                           entail a material cost to the Company and

                  (c)      the Company receives an opinion of independent
                           counsel to the effect that an act taken by a taxing
                           authority of the United States results in a
                           substantial probability that the Company will or may
                           be required to pay the Additional Amounts described
                           under above, and delivers to the Trustee a
                           certificate, signed by a duly authorized officer,
                           stating that based on such opinion the Company is
                           entitled to redeem the Notes pursuant to their terms.

Any redemption of the Notes as set forth in clauses (1) or (2) above shall be in
whole, and not in part, and will be made at a redemption price equal to 100% of
the principal amount of the Notes Outstanding plus accrued interest thereon to
the date of redemption. Holders shall be given not less than 30 days nor more
than 60 days prior notice by the Trustee of the date fixed for such redemption.

                  All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture. The Notes are
governed by the laws of the State of New York.

                                       10

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