IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE U.S.

Transcription

1 IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE U.S. IMPORTANT: You must read the following before continuing. The following disclaimer applies to the preliminary offering circular following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the preliminary offering circular. In accessing the preliminary offering circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ) OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S., EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE FOLLOWING PRELIMINARY OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT, IN WHOLE OR IN PART, IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your Representation: In order to be eligible to view this preliminary offering circular or make an investment decision with respect to the securities, investors must not be within the United States (within the meaning of Regulation S under the Securities Act). This preliminary offering circular is being sent at your request and by accepting the and accessing this preliminary offering circular, you shall be deemed to have represented to us that you are not within the U.S., the electronic mail address that you gave us and to which this e- mail has been delivered is not located in the U.S. and that you consent to the delivery of such preliminary offering circular by electronic transmission. You are reminded that this preliminary offering circular has been delivered to you on the basis that you are a person into whose possession this preliminary offering circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this preliminary offering circular to any other person. The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer in such jurisdiction. This preliminary offering circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of Yuanta Securities (Hong Kong) Company Limited (the Sole Lead Manager and Bookrunner ) or any person who controls the Sole Lead Manager and Bookrunner nor any director, officer, employee nor agent of the Sole Lead Manager and Bookrunner or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the preliminary offering circular distributed to you in electronic format and the hard copy version available to you on request from the Sole Lead Manager and Bookrunner.

2 Green River Holding Co. Ltd. (incorporated in the Cayman Islands with limited liability) U.S.$42,600,000 Zero Coupon Convertible Bonds due 2022 Green River Holding Co. Ltd. (the Issuer ) is offering U.S.$42,600,000 aggregate principal amount of Zero Coupon Convertible Bonds due 2022 (the Bonds ). Each of the Bonds represents direct, unconditional, unsubordinated and, subject to Terms and Conditions of the Bonds Interest and Certain Covenants Negative Pledge, unsecured obligations of the Issuer, and shall at all times rank pari passu and without any preference or priority among themselves and subject to Terms and Conditions of the Bonds Interest and Certain Covenants Negative Pledge, rank at least pari passu in priority of payment, with all other present and future direct, unconditional, unsubordinated and unsecured obligations of the Issuer, except for any obligation preferred by mandatory provisions of law. The Bonds will be issued in fully registered form, without coupons, in the denomination of U.S.$200,000 each or integral multiples thereof. Unless previously converted, redeemed or repurchased and cancelled, the Bonds may be converted into fully paid ordinary shares of par value of NT$10 each of the Issuer (the Shares ) at the option of the holders of the Bonds (the Bondholders ) at any time during the period from and including 7 March 2017 to and including 15 January 2022 except during any Closed Period (as defined in the Terms and Conditions of the Bonds (the Terms and Conditions of the Bonds )). The conversion price (subject to adjustment in certain circumstances, as described in the Terms and Conditions of the Bonds) (the Conversion Price ) will initially be NT$218 per share. The number of Shares to be issued on conversion shall be the principal amount of the Bonds (translated into NT$ at a fixed exchange rate of NT$ = U.S.$1.00, based on the Taipei Forex Inc. Taiwan Dollar 11:00 Fixing Rate on 18 January 2017) divided by the Conversion Price. See Terms and Conditions of the Bonds Conversion. Unless the Bonds have previously been converted, redeemed or repurchased and cancelled, the Issuer will redeem the Bonds at per cent. of the principal amount of the Bonds on 25 January 2022 (the Maturity Date ). The Issuer may also redeem the Bonds at any time on or after 12 months after the Issue Date and at least 40 days prior to the Maturity Date, in whole or in part, at their Early Redemption Amount (as defined in the Terms and Conditions of the Bonds) if the Closing Price (as defined in the Terms and Conditions of the Bonds) of the Shares (as defined in the Terms and Conditions of the Bonds) (translated into U.S. dollars at the Prevailing Rate) for 20 out of 30 consecutive Trading Days (as defined in the Terms and Conditions of the Bonds), the last of which occurs not more than five Trading Days prior to the date on which notice of such redemption is given, is at least 130 per cent. of the Conversion Price (translated into U.S. dollars at the Fixed Exchange Rate). The Issuer may also redeem the Bonds in whole, but not in part, at their Early Redemption Amount if (a) more than 90% of the principal amount of the Bonds has already been converted or redeemed, repurchased and cancelled and (b) the applicable redemption date does not fall within a Closed Period (as defined in the Terms and Conditions of the Bonds). See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption at the Option of the Issuer. The Issuer may redeem the Bonds in whole, but not in part, at their Early Redemption Amount if the Issuer has become obliged to pay Additional Amounts (as defined in the Terms and Conditions of the Bonds) as a result of any change in, or amendment to, the laws or regulations of the Cayman Islands or the ROC (or other jurisdiction in which the Issuer is then organised or resident for tax purpose) (subject to the non-redemption option of each Bondholder as described in the Terms and Conditions of the Bonds). See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption for Taxation Reasons. Each holder of the Bonds has the right to require the Issuer to redeem the Bonds in whole, or in part (being U.S.$200,000 in principal amount or an integral multiple thereof), at the Early Redemption Amount in the event of (a) the Shares ceasing to be listed or admitted for trading on the Taipei Exchange (the TPEx ) or (b) a Change of Control (as defined in the Terms and Conditions of the Bonds) with respect to the Issuer. See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption of the Bonds in the Event of Delisting and Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption of the Bonds in the Event of a Change of Control. The Shares are listed on the TPEx under stock code On 18 January 2017, the closing price of the Shares on the TPEx was NT$197. Approval in-principle has been received for the listing and quotation of the Bonds on the Official List of the Singapore Exchange Securities Trading Limited (the SGX-ST ). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Admission to the Official List of the SGX-ST and quotation of any Bonds on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its subsidiaries, its associated companies, the Bonds or the Shares. Investing in the Bonds involves significant risks. See Risk Factors on page 12. Issue Price: 100% The Bonds will be represented by beneficial interests in a global certificate (the Global Certificate ). The Global Certificate, in registered form, will be registered in the name of a nominee of, and deposited with, a common depositary of Euroclear Bank SA/NV, as operator of the Euroclear System ( Euroclear ) and Clearstream Banking S.A. ( Clearstream, Luxembourg ). Delivery of the Bonds in book-entry form only will be made on or about 25 January 2017 (the Closing Date ). The Bonds and the Shares issuable upon conversion of the Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and, subject to certain exceptions, may not be offered or sold within the United States. For a description of these and certain further restrictions on offers and sales of the Bonds and the Shares issuable upon conversion of the Bonds, and the distribution of this Offering Circular, see Subscription and Sale. Sole Lead Manager and Bookrunner Yuanta Securities (Hong Kong) Company Limited This Offering Circular is dated 18 January 2017.

3 The Issuer accepts full responsibility for the information contained in this document (the Offering Circular ) and, having made all reasonable enquiries, confirms that this Offering Circular contains all information with respect to the Issuer and its subsidiaries and affiliates (collectively, the Group ), the Bonds and the Shares which is material in the context of the issue and offering of the Bonds. The statements contained in this Offering Circular relating to the Issuer, the Group, the Bonds and the Shares are, in every material respect, true and accurate and not misleading. The opinions and intentions expressed in this Offering Circular with regard to the Issuer, the Group, the Bonds and the Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to the Issuer and are based on reasonable assumptions. There are no other facts in relation to the Issuer, the Group, the Bonds or the Shares the omission of which would, in the context of the issue and the offering of the Bonds, make any statement in this Offering Circular misleading in any material respect. Further, all reasonable enquiries have been made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements. Where information contained in this Offering Circular includes extracts from summaries of information and data from various published and private sources, the Issuer accepts responsibility for accurately reproducing such summaries and data. This Offering Circular does not constitute an offer of, or an invitation by or on behalf of Yuanta Securities (Hong Kong) Company Limited (the Sole Lead Manager and Bookrunner ), the Issuer, The Bank of New York Mellon, London Branch, as trustee (the Trustee ) or the Agents (as defined in the Terms and Conditions of the Bonds ) to subscribe for or purchase, any of the Bonds. The distribution of this Offering Circular and the offering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer and the Sole Lead Manager and Bookrunner to inform themselves about, and to observe, any such restrictions. This Offering Circular is not an offer or sale, directly or indirectly, of any Bonds in the ROC or to, or for the account or benefit of, any resident of the ROC. The Bonds may not be offered or sold directly or indirectly in the ROC. For a description of certain further restrictions on offers and sales of the Bonds and the distribution of this Offering Circular, see Subscription and Sale. No representation, warranty or undertaking, express or implied, is made, and no responsibility or liability is accepted, by the Sole Lead Manager and Bookrunner, the Trustee or any Agent as to the accuracy or completeness of the information contained in this Offering Circular or any other information supplied in connection with the Bonds and the Shares. Each person receiving this Offering Circular acknowledges that such person has not relied on the Sole Lead Manager and Bookrunner, the Trustee or any Agent nor on any person affiliated with the Sole Lead Manager and Bookrunner, the Trustee or any Agent, in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of the Issuer and the Group and the merits and risks involved in investing in the Bonds. Prospective investors should not construe anything in this Offering Circular as legal, business or tax advice. Each prospective investor should consult its own advisers as needed to make its investment decision and determine whether it is legally able to purchase the Bonds under applicable laws or regulations. No person is authorised to give any information or to make any representation not contained in this Offering Circular and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer, the Sole Lead Manager and Bookrunner, the Trustee or the Agents. The delivery of this Offering Circular at any time does not imply that the information contained in it is correct as of any time subsequent to its date. This Offering Circular has been prepared by the Issuer solely for use in connection with the proposed offering of the Bonds described in this Offering Circular. This Offering Circular is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire Bonds. Distribution of this Offering Circular to any person other than the prospective investor and any person i

4 retained to advise such prospective investor with respect to its purchase is unauthorised, and any disclosure of any of its contents without the Issuer s prior written consent is prohibited. Each prospective investor, by accepting delivery of this Offering Circular, agrees to the foregoing and to make no photocopies of this Offering Circular or any documents referred to in this Offering Circular. IN CONNECTION WITH THE ISSUE OF THE BONDS, YUANTA SECURITIES (HONG KONG) COMPANY LIMITED AS THE STABILISING MANAGER (THE STABILISING MANAGER ) OR ANY PERSON ACTING ON ITS BEHALF MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAWS AND RULES, OVER-ALLOT THE BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR ANY PERSON ACTING ON ITS BEHALF) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE BONDS AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE BONDS. CERTAIN DEFINITIONS In this Offering Circular, ROC or Taiwan refers to the island of Taiwan and other areas under the effective control of the Republic of China; United States and U.S. means the United States of America; PRC or China refers to the People s Republic of China and does not include Hong Kong, Macau and Taiwan; the ROC Company Act refers to the Company Act of the ROC; SFB or Securities and Futures Bureau refers to the ROC Securities and Futures Bureau, Financial Supervisory Commission, or its predecessor, the Securities and Futures Commission; and FSC refers to the ROC Financial Supervisory Commission. PRESENTATION OF FINANCIAL INFORMATION The Issuer publishes its financial statements in New Taiwan dollars, the lawful currency of the ROC. All references to United States dollars, U.S. dollars and U.S.$ are to United States dollars, and all references to New Taiwan dollars, NT dollars and NT$ are to New Taiwan dollars. Unless otherwise specified, where financial information in relation to the Issuer has been translated into U.S. dollars, it has been so translated, for convenience only, at the exchange rate of NT$31.27 = U.S.$1.00 (the Noon Buying Rate as set forth in the weekly H.10 statistical release of the Federal Reserve Board for 30 September 2016). All amounts translated into U.S. dollars as described above are provided solely for the convenience of the reader and no representation is made that the NT dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or NT dollars, as the case may be, at any particular rate or at all. For further information relating to exchange rates, see Exchange Rates. In this Offering Circular, where information has been presented in thousands or millions of units, amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding. References to information in billions of units are to the equivalent of a thousand million units. The Issuer s audited consolidated financial statements as of and for the years ended 31 December 2013, 2014 and 2015 included herein have been prepared and presented in accordance with the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations ii

5 Committee Interpretations and Committee Interpretations of IAS endorsed by the Republic of China (ROC) Financial Supervisory Commission (FSC) (together referred to herein as Taiwan IFRS ). The unaudited consolidated financial statements as of and for the three-month and the nine month periods ended 30 September 2015 and 2016included herein have been prepared and presented in accordance with International Accounting Standard 34 Interim Financial Reporting endorsed by the ROC FSC. Although there are differences between Taiwan IFRS and IFRS as issued by the International Accounting Standards Board, management of the Issuer has determined that those differences are deemed insignificant and would not have any material impact on the Issuer s consolidated financial statements. This Offering Circular contains certain information regarding the Group s EBITDA. EBITDA is not a standard measure under Taiwan IFRS. EBITDA is a widely used financial indicator of a company s ability to service and incur debt. EBITDA should not be considered in isolation or construed as an alternative to cash flows, profit for the year or any other measure of financial performance or as an indicator of the Group s operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. The Issuer has included EBITDA because it believes it is a useful supplement to cash flow data as a measure of the Group s performance and its ability to generate cash flow from operations to cover debt service and taxes. EBITDA presented in this Offering Circular may not be comparable to similarly titled measures presented by other companies. Investors should not compare the Group s EBITDA to EBITDA presented by other companies because not all companies use the same definition. Certain financial amounts presented herein may not correspond directly to the Group s financial statements included elsewhere herein or may not add up due to rounding. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Issuer has made forward-looking statements in this Offering Circular regarding, among other things, the Group s financial condition, future expansion plans and business strategy. Investors can identify some of these forward-looking statements by terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would and could or similar words. However, investors should note that these words are not the exclusive means of identifying forward-looking statements. The Issuer has based these forward-looking statements on its current expectations and projections about future events. Although the Issuer believes that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions, including, among other things: the intensely competitive industries in which the Group operates; risks relating to the Group s industries and the industry risks of its key clients; general economic, political and social conditions and developments in the Group s major markets such as Taiwan, Thailand and the PRC and other jurisdictions in which the Group operates its businesses; the actual amount of new and renewal businesses; risks associated with fluctuations in commodity prices which account for a significant portion of the production costs of the Group; regulations (including the risk of deregulation and of new and untested regulations) to which the Group s businesses are subject; the Group s ability to achieve or control future capital expenditure, loan growth, provisions, write-offs or collateral coverage; iii

6 the impact of mergers and acquisitions, competing demands for the Group s capital, and the risk of undisclosed liabilities; the amount of dividends received from the Group s subsidiaries and other investee companies; legal proceedings; and other risks identified in the Risk Factors section of this Offering Circular. The Issuer is under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing and the risks, uncertainties and assumptions discussed in Risk Factors and elsewhere in this Offering Circular, the forward-looking events discussed in this Offering Circular might not occur and the Issuer s actual results could differ materially from those anticipated in those forward-looking statements. ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE ROC Some of the Issuer s directors and executive officers and certain of the experts named in this Offering Circular are residents of the ROC, and a portion of its assets and these persons are located in the ROC. As a result, it may be difficult for investors to enforce against any of the judgments obtained in courts outside of the ROC against the Issuer or such persons in the ROC. The Issuer s ROC counsel Lee and Li has advised that any final judgment obtained against the Issuer or such persons in any court other than the courts of the ROC in respect of any legal suit or proceeding arising out of or relating to the Bonds or the Shares deliverable upon conversion of the Bonds will be recognised by the courts of the ROC without further review of the merits only if the court of the ROC in which enforcement is sought is satisfied with the following: the court rendering the judgment has jurisdiction over the subject matter according to the laws of the ROC; the judgment and the court proceedings resulting in the judgment are not contrary to the public order or good morals of the ROC; if the judgment was rendered by default by the court rendering the judgment, (i) the Issuer or such persons were duly served within a reasonable period of time within the jurisdiction of such court in accordance with the laws and regulations of such jurisdiction, or (ii) process was served on the Issuer or such persons with judicial assistance of the ROC; and judgments of the courts of the ROC are recognised and enforceable in the jurisdiction of the court rendering the judgment on a reciprocal basis. A party seeking to enforce a foreign judgment in the ROC would, except under limited circumstances, be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan) (the CBC ), for the remittance out of the ROC of any amounts recovered in respect of the judgment denominated in a currency other than NT dollars. ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE CAYMAN ISLANDS Ogier, the Issuer's Cayman Islands legal advisor, has advised that although there is no statutory enforcement in the Cayman Islands of judgments or orders obtained in the United Kingdom courts, the courts of the Cayman Islands will recognise and enforce such foreign judgment or order, without re-examination or relitigation of the matters adjudicated upon, if the judgment or order (i) is given by a foreign court of competent jurisdiction; (ii) is final and conclusive; (iii) is not in respect of a tax, fine or other penalty; (iv) was not obtained by fraud; and (v) is not of a kind, the enforcement of which is contrary to public policy in the iv

7 Cayman Islands. The courts of the Cayman Islands will apply the rules of Cayman Islands private international law to determine whether the foreign court is a court of competent jurisdiction. Subject to these limitations, the courts of the Cayman Islands will recognise and enforce a foreign judgment for a liquidated sum and may also give effect in the Cayman Islands to other kinds of foreign judgments, such as declaratory orders, orders for performance of contracts and injunctions. SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES The Group s corporate headquarters is located in Thailand and most of the Group s assets and operations are also located in Thailand. The Group s directors (excluding independent directors) are also situated in Thailand. As a result, potential investors may not be able to: effect service of process upon the Issuer or these persons outside Thailand, or enforce against the Issuer s judgments obtained in courts outside of Thailand, including judgments based in whole or in part on the federal securities laws of the United States. Under Thai law, judgments entered by a non-thai court, including actions under the civil liability provisions of securities laws of foreign jurisdictions, are not enforceable in Thailand. However, a judgment or order from a foreign court may, in the discretion of a court in Thailand, be admitted as evidence in a new proceeding instituted in that court, which would consider the issue on the evidence before it. See Risk Factors Risks Relating to Thailand Non-enforceability of non-thai judgments may limit an investor s ability to recover damages from the Group.. v

8 TABLE OF CONTENTS Page SUMMARY... 1 THE OFFERING... 3 SELECTED FINANCIAL INFORMATION OF THE ISSUER... 7 RISK FACTORS...12 USE OF PROCEEDS...28 MARKET PRICE INFORMATION OF SHARES...29 DIVIDENDS AND DIVIDEND POLICY...30 EXCHANGE RATES...31 CAPITALISATION AND INDEBTEDNESS...32 BUSINESS...33 BOARD OF DIRECTORS AND MANAGEMENT...46 TERMS AND CONDITIONS OF THE BONDS...49 THE GLOBAL CERTIFICATE...85 DESCRIPTION OF SHARE CAPITAL...87 TAIPEI EXCHANGE INDEX...94 TAXATION...97 CERTAIN ROC LEGAL REQUIREMENTS...99 SUBSCRIPTION AND SALE GENERAL INFORMATION INDEX TO FINANCIAL STATEMENTS... F-1 vi

9 Overview SUMMARY The Group was founded in January 2000 and was principally engaged in collecting rubber wood logs, timber and lumber and manufacturing, processing and selling solid wood panels for use in wood-based production industries across Asia-Pacific. Following the success of this business and having gained precision knowledge and experience, the Group shifted its focus to the manufacturing of particle boards in Since then, the Group has grown into one of the leading wood-based panel manufacturers in Thailand with an extensive global reach, exporting its products across Asia-Pacific and has established a wide network of local rubber wood vendors located across southern Thailand. The Issuer was incorporated in the Cayman Islands (Company Registration No ) on 14 January 2011 as a holding company for the Group. The Issuer s registered address is The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands. As at 30 September 2016, the Issuer s authorised share capital was NT$1,500,000,000, divided into 150,000,000 ordinary shares of a par value of NT$10 each, of which 74,030,000 shares were issued and outstanding. All ordinary shares presently issued by the Issuer are fully paid up and in registered form, and existing holders of such common shares are not subject to any capital calls. The ordinary shares of the Issuer have been listed on the TPEx since 27 October As at the close of business on 18 January 2017, based on the closing price of the ordinary shares of the Issuer on the TPEx at NT$197 per share, the market capitalisation of the Issuer was approximately NT$29.55 billion. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue amounted to approximately NT$2,325.1 million, NT$2,338.2 million and NT$1,948.1 million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue amounted to approximately NT$1,506.7 million and NT$1,935.8 million, respectively. Key Strengths and Competitive Advantages The Group believes that it has developed the following strengths and competitive advantages: Strong market position, in-depth expertise and precision knowledge. Strategic location of production bases in the heart of Thailand s rubber plantations to build wide and stable supplier network. Vertically integrated operations and extensive production capabilities. Experienced management team and staff with a strong track record. Business Strategies The Group s vision is to build a leading global green enterprise by conserving resources for sustainable development through the implementation of the following core business strategies: Further develop the Group s production capabilities to establish a comprehensive manufacturing value chain. Further diversify product portfolio with a focus on high value-add products. Maintain high standards of product quality and customer service to strengthen the Green River brand. 1

10 Expand into new markets and industries both domestically and internationally to raise the Group s market position and increase market share. Improve operational efficiency. 2

11 THE OFFERING The following is only a summary and is qualified in its entirety by reference to Terms and Conditions of the Bonds and the more detailed information contained elsewhere in this Offering Circular. Terms used in this summary and not otherwise defined shall have the meanings given to them in Terms and Conditions of the Bonds. Company Offering Green River Holding Co. Ltd.. U.S.$42,600,000 aggregate principal amount of Zero Coupon Convertible Bonds due 2022, convertible into fully paid ordinary shares with a par value of NT$10.00 each in the share capital of the Issuer. The Bonds are being offered in reliance on Regulation S under the Securities Act and outside the ROC. Issue Price 100% of the principal amount of the Bonds. Closing Date 25 January Maturity Date 25 January Form and Denomination The Bonds will be issued in fully registered form in the denomination of U.S.$200,000 each or integral multiples thereof without coupons attached. Interest Ranking Negative Pledge The Bonds do not bear interest. The Bonds constitute direct, unconditional, unsubordinated and, subject to provisions set out in Terms and Conditions of the Bonds Interest and Certain Covenants Negative Pledge, unsecured obligations of the Issuer ranking pari passu and without any preference or priority among themselves and, subject to the provisions set out in Terms and Conditions of the Bonds Interest and Certain Covenants Negative Pledge, rank at least pari passu in priority of payment, with all other present and future direct, unconditional, unsubordinated and unsecured obligations of the Issuer, except any obligation preferred by mandatory provisions of law. So long as any of the Bonds remains outstanding, the Issuer will not, and will ensure that none of its Principal Subsidiaries will create or have outstanding any mortgage, charge, lien, pledge or other form of encumbrance or security interest, upon the whole or any part of the undertaking, property, assets or revenues of the Issuer or such Principal Subsidiary, as the case may be, present or future, to secure any International Investment Securities or to secure any payment of any sum due in respect of or under any guarantee of or indemnity or other like obligation relating to any such International Investment Securities, without at the same time or prior thereto, according to the Bonds the same security as is created or subsisting to secure any such International Investment Securities, guarantee or indemnity or such other 3

12 Conversion Right Conversion Price Final Redemption Early Redemption Redemption at the Option of the Issuer security as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Bonds. Each holder of the Bonds has the right to convert any Bond into Shares subject to the terms set forth in the Terms and Conditions of the Bonds. Subject to and upon compliance with the provisions of the Terms and Conditions of the Bonds, the Bonds are convertible at any time on or after 7 March 2017 up to and including the close of business (at the place where such Bond is deposited for conversion) on 15 January 2022 (or if such day shall not be a Business Day at such place, on the immediately preceding Business Day at such place) or, if such Bond shall have been called for redemption prior to the Maturity Date, then up to the close of business (at the place aforesaid) on the date seven Business Days prior to the date fixed for redemption thereof or if such date shall not be a Business Day at such place, on the immediately preceding Business Day at such place, except during any Closed Period. NT$218 per Share. The number of Shares to be issued on conversion shall be the principal amount of the Bonds (translated into NT$ at a fixed exchange rate applicable on conversion of Bonds of NT$ = U.S.$1.00, based on the Taipei Forex Inc. Taiwan Dollar 11:00 Fixing Rate on 18 January 2017) divided by the Conversion Price. Unless previously converted or redeemed, repurchased and cancelled, the Bonds will be redeemed on the Maturity Date at a redemption price equal to % of the outstanding principal amount thereof. See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption at maturity. The Bonds may be redeemed at their redemption value prior to the Maturity Date under certain circumstances described below. At any time on or after the day falling 12 months after the Issue Date and at least 40 days prior to the Maturity Date, the Issuer may redeem the Bonds in whole or in part (being US$200,000 in principal amount or an integral multiple thereof) at their Early Redemption Amount if the Closing Price of the Shares (translated into U.S. dollars at the Prevailing Rate) for 20 out of 30 consecutive Trading Days, the last of which occurs not more than five Trading Days prior to the date on which notice of such redemption is given, is at least 130 per cent. of the Conversion Price (translated into U.S. dollars at the Fixed Exchange Rate). Notwithstanding the foregoing, the Issuer may, having given not less than 30 nor more than 60 days notice to the holders of the Bonds and the Trustee (which notice shall be irrevocable and delivered in accordance with Condition 7(I) and, in the case of notice to the Bondholders, Condition 14), redeem the Bonds in 4

13 Tax Redemption Redemption of the Bonds in the Event of Delisting Redemption of the Bonds in the Event of Change of Control Non-Redemption Option of the Holders Selling Restrictions whole, but not in part, at their Early Redemption Amount if (a) more than 90% of the principal amount of the Bonds has already been converted or redeemed, repurchased and cancelled and (b) the applicable redemption date does not fall within a Closed Period. See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption at the Option of the Issuer. The Issuer may redeem the Bonds in whole, but not in part, at their Early Redemption Amount if the Issuer has become obliged to pay Additional Amounts (as defined in Condition 8) as a result of any change in, or amendment to, the laws or regulations of the Cayman Islands or ROC (or any other jurisdiction in which the Issuer is then organised or resident for tax purposes) (subject to the non-redemption option of each Bondholder as described below). See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption for Taxation Reasons. Each holder of the Bonds has the right to require the Issuer to redeem the Bonds in whole or in part (being U.S.$200,000 in principal amount or an integral multiple thereof) at their Early Redemption Amount in the event the Shares cease to be listed or admitted to trading on the TPEx. See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption of the Bonds in the Event of Delisting. Each holder of the Bonds has the right to require the Issuer to redeem the Bonds in whole or in part (being U.S.$200,000 in principal amount or an integral multiple thereof) of such holder s Bonds on the Change of Control Put Date at their Early Redemption Amount in the event of a Change of Control with respect to the Issuer. See Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation Redemption of the Bonds in the Event of a Change of Control. If the Issuer gives a notice of redemption of the Bonds for taxation reasons, each holder of the Bonds shall have the right to elect that all and not part only of such holder s Bonds not be redeemed. Upon the exercise of the Non-Redemption Right, no Additional Amounts shall be payable on the payments due after the relevant date and, subject to certain conditions, such payments shall be made subject to deduction or withholding as required under applicable laws or regulations. See Terms and Conditions Redemption, Repurchase and Cancellation Redemption for Taxation Reasons. There are restrictions on the offer, sale and transfer of the Bonds and the Shares to be issued upon conversion of the Bonds in certain jurisdictions including the Cayman Islands, Hong Kong, the ROC, Singapore, Japan, the United Kingdom and the United 5

14 Governing Law Trustee Principal Agent Registrar and Transfer Agent Listing States. For a description of the restrictions on the distribution of this Offering Circular or any offering material and the offering, sale or delivery of the Bonds and the Shares to be issued upon conversion of the Bonds, see Subscription and Sale. English law. The Bank of New York Mellon, London Branch. The Bank of New York Mellon, London Branch. The Bank of New York Mellon (Luxembourg) S.A.. Approval in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. The Bonds will be traded on the SGX-ST in a minimum board lot size of U.S.$200,000 for so long as any of the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require. No application has been or will be made for the listing of the Bonds on any other stock exchange. Application will be made to the TPEx for the listing of, and permission to deal in, the Shares to be issued upon conversion of the Bonds. Trading Market for the Shares The Shares are listed on the TPEx under stock code There is no public market outside the ROC for the Shares. On 18 January 2017, the closing price of the Shares on the TPEx was NT$197 per Share. Use of Proceeds After deducting commissions and other estimated expenses, the net proceeds from this offering will be approximately U.S.$42,301,800. The Issuer plans to use the net proceeds from this offering to refinance its existing loans. 6

15 SELECTED FINANCIAL INFORMATION OF THE ISSUER The following tables present the selected consolidated financial and operating data of the Issuer. The summary consolidated financial information of the Issuer as of and for the years ended 31 December 2013, 2014 and 2015 are derived from the audited consolidated financial statements of the Issuer prepared in accordance with Taiwan IFRS and the notes thereto included elsewhere in this Offering Circular. The summary consolidated financial information as of and for the three month and the nine month periods ended 30 September 2015 and 2016 are derived from the unaudited but reviewed consolidated financial statements of the Issuer prepared in accordance with International Accounting Standard 34 Interim Financial Reporting endorsed by the ROC FSC and the notes thereto included elsewhere in this Offering Circular. In line with the announcement of the ROC FSC on 14 May 2009, the Issuer first adopted the 2010 version of the IFRS as endorsed by the ROC FSC (the 2010 Version Taiwan IFRS ) for the preparation of financial statements effective 1 January 2013, therefore the preparation and presentation of audited consolidated financial statements as of and for the years ended 31 December 2014 were based on the 2010 Version Taiwan IFRS. In April 2014, the ROC FSC announced that companies listed on the Taiwan Stock Exchange ( TWSE ) and Taipei Exchange (formerly known as the GreTai Securities Market) ( TPEx ), including the Issuer, should adopt the 2013 version of IFRS endorsed by the ROC FSC (the 2013 Version Taiwan IFRS ) and the related amendments to the Regulation Governing the Preparation of the Financial Reports by Securities Issuers for preparing and presenting their financial statements starting from 1 January Accordingly, the Issuer started adopting the 2013 Version Taiwan IFRS for financial statements beginning 1 January The adoption of 2013 Version Taiwan IFRS did not have a significant impact on the Group s reported assets, liabilities or equity. Please refer to note (3) of the Issuer s audited consolidated financial statements as of and for the year ended 31 December 2015 included elsewhere in this Offering Circular for further information. Although there are differences between Taiwan IFRS and IFRS as issued by the International Accounting Standards Board, the management of the Issuer has determined that those differences are deemed insignificant and would not have any material impact on the Issuer s consolidated financial statements. Consolidated Statements of Comprehensive Income Data For the year ended 31 December For the nine months ended 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions) Operating revenue... 2, , , , , Operating costs... (1,842.0) (1,734.1) (1,369.4) (43.8) (1,053.9) (1,248.1) (39.9) Gross profit Operating expenses... (301.2) (297.5) (283.1) (9.0) (201.0) (255.2) (8.2) Net operating profit Non-operating income and expenses... (39.7) (54.6) (20.8) (0.7) (21.9) (22.5) (0.7) Income before income taxes Income tax expenses 0.0 (0.3)

16 For the year ended 31 December For the nine months ended 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (gain)... (Expressed in millions) Net income Other comprehensive income (loss)... (37.2) 89.0 (110.9) (3.5) (119.4) (14.3) (0.5) Total comprehensive income Consolidated Statements of Financial Position As of 31 December As of 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions) Cash and cash equivalents Trade receivables, net Other receivables Inventories Other current assets Total current assets Property, plant and equipment... 1, , , , , Intangible assets Deferred tax assets Prepayments for equipment Other non-current assets Total non-current assets 1, , , , , Total assets... 2, , , , , Short-term loans Notes payable Trade payables Other payables Current tax liabilities

17 As of 31 December As of 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions) Current portion of longterm loans Current portion of liabilities under finance leases Other current liabilities Total current liabilities , , Long-term loans , , , Liabilities under finance lease Net defined benefit plan liabilities Other non-current liabilities Total long-term liabilities , , , Total liabilities , , , , Total equity... 1, , , , , Total liabilities and equity... 2, , , , , Consolidated Statements of Cash Flows For the year ended 31 December For the nine months ended 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions, except percentage data) Net cash flows from operating activities Net cash flows used in investing activities.... (66.5) (536.3) (1,445.1) (46.2) (1,274.2) (527.9) (16.9) Net cash from (used in) financing activities... (50.2) Effect of exchange rate changes on cash and cash equivalents (19.4) (0.6) (29.4) (16.0) (0.5) Net increase (decrease) in cash and cash (228.8) (7.3) (353.6)

18 For the year ended 31 December For the nine months ended 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions, except percentage data) equivalents... Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period

19 For the year ended 31 December For the nine months ended 30 September NT$ NT$ NT$ U.S.$ NT$ NT$ U.S.$ (Expressed in millions, except percentage data) Other Financial Data: Gross profit margin (%) (1) Operating margin (%) (2) Net margin (%) (3) EBITDA (4) EBITDA margin (%) (5) Notes: (1) Gross profit margin is calculated by dividing gross profit by operating revenue. (2) Operating margin is calculated by dividing net operating profit by operating revenue. (3) Net margin is calculated by dividing net income by operating revenue. (4) EBITDA is defined as income before income tax, plus depreciation, amortisation and interest expense. (5) EBITDA margin is calculated by dividing EBITDA by operating revenue. 11

20 RISK FACTORS Prior to investing in the Bonds, investors should carefully consider, together with all other information contained in this Offering Circular, the risks and uncertainties described below. The business, financial condition or results of operations of the Group may be materially adversely affected by any of these risks. The risks described below are not the only ones relevant to the Issuer, the Group or the Bonds. Additional risks and uncertainties not presently known to the Issuer, or which the Issuer currently deems immaterial, may also have a material adverse effect on an investment in the Bonds. Risks Relating to the Group s Business The margins of the Group s products may be impacted due to a number of external factors, including price fluctuations of raw materials and rising labour costs and exchange rate fluctuations. The Group s products face stiff competition both within Thailand and in other regions with resultant pressures on the Group s margins. The principal factors affecting the Group s sales, margins and profits include price fluctuations of raw materials due to seasonal changes, increases of costs associated with labour that the Group procures and exchange rate fluctuations, and within Thailand, the overall performance of the economy. Furthermore, the Group s products compete both in Thailand and in other regions with a number of companies possessing greater financial, marketing, manufacturing and technological resources, broader product lines, greater brand name recognition and larger installed customer bases than the Group. Rubber plantations are subject to damage due to various factors which are not within the Group s control. The volume and value of rubber wood that can be harvested from the rubber plantations the Group obtains its rubber wood from may be affected by natural disasters such as floods and other weather conditions and causes beyond the Group s control. All of the Group s production bases are located in Southern Thailand and the Group obtains most of its rubber wood from plantations located in the area. Southern Thailand suffers from constant heavy rains during the monsoon season in the later half of each year which may result in heavy flooding, causing difficulty in harvesting and resulting shortages in rubber wood. The rubber plantations are also susceptible to other climate-related risks including drought and long term climate change. In addition, like many agricultural projects, there is a risk of fire over the dry months or during storms due to a lightning strike. The occurrence of fires may be detrimental to the survival of the rubber plantations and may adversely affect the Group s production due to shortages of raw materials. A number of other physical risks such as disease, insects, fungus and other pests can also affect the rubber plantations. The majority of rubber trees in Southeast Asia are varieties which are highly susceptible to the South American leaf blight microcyclus ulei. Any of such insect or other pest infestations or diseases may cause widespread loss of rubber trees across any of the rubber plantations. The occurrence of any of these events would have a detrimental effect on one or more of the rubber plantations and the yield from those plantations at harvest which may cause a shortage of rubber wood. The Group s cost of raw materials may increase which would adversely affect the Group s business, financial condition and results of operations. The Issuer s investments in its subsidiaries and affiliates may require it to make significant additional capital contributions, shareholder financing or contingent support or obtain external financing. The Issuer has made significant investments in a number of its subsidiaries and affiliates. Some of these companies may expand their production capacity in the future and some of these future expansions may be significant, which may require substantial capital expenditures. These companies may require additional capital contributions, shareholder financing or contingent support, such as the provision of guarantees for 12

21 their bank financing activities, to fund their operations or expansions. There can be no assurance that the Issuer will have sufficient financial resources to meet its obligation (if any) to make additional capital contributions or shareholder financing to its subsidiaries and affiliates if and when it is required and that such additional capital contributions or shareholder financing will not have a material and adverse effect on its cash flow, operations and prospects with respect to its own business activities. If the cash generated by the Issuer s operations is not sufficient to enable it to meet its obligations to fund its subsidiaries and affiliates, the Issuer will need external financing. The Issuer s ability to obtain external financing in the future is subject to a variety of uncertainties, including its future financial condition, results of operations and cash flows, economic, political and other conditions in Taiwan and Thailand and regions outside Taiwan and Thailand and the liquidity of the Taiwan, Thailand and international capital markets. The Issuer s inability to obtain sufficient funding for its commitments with respect to its subsidiaries and affiliates and its future expansion plans could adversely affect the Group s business, financial condition and results of operations. The Group s continued growth may not be assured. A key element of the Group s long-term business strategy involves the expansion of its operations, and in particular, its operations in overseas markets, and the investment of new business initiatives in order to diversify its sources of income and profits, and to generate value for its shareholders. There are considerable risks associated with such expansion. For the Group to continue to grow its operations and invest in selected new businesses, the Group must continue to improve managerial, technical, operational and other resources to successfully integrate acquired businesses and to implement an effective management system. In order to fund the Group s ongoing operations and future growth, the Group needs to have sufficient internal sources of liquidity or access to additional financing from external sources. The Group may also be required to manage relationships with a greater number of customers, suppliers, contractors, service providers, creditors, shareholders and other third parties, as well as with investee companies. There can be no assurance that the Group will not experience issues such as capacity and capital constraints, delays, failures of management information systems, operational difficulties or difficulties in upgrading or expanding existing facilities, and in attracting, retaining and training an increasing number of personnel to manage and operate those facilities. There can also be no assurance that future growth and entry into new businesses will not adversely affect the Group s existing operations and will not have a material adverse effect on the Group s business, financial condition and results of operations. Adverse general economic conditions put downward pressure on the prices and demand for the Group s products and services. The Group s business is subject to changes in general economic conditions. The Group s products are used mainly in furniture and interior renovations. The Group s particle boards are mainly exported to developing countries across Asia while the Group s solid wood are mainly exported to the coastal cities in China where there is a high concentration of furniture factories. As such, the Group relies heavily on the furniture and interior furnishing industries which are susceptible to changes in consumer demand. Any difficulty in global credit and financial markets may result in a global economic downturn, which may adversely effect the prices of, and demand for, the Group s products as consumers may choose to delay purchasing or replacing existing furniture or embarking on home or office interior improvement works. Any slowdown in demand may put significant downward pressure on the prices of the Group s products, which may in turn result in a decrease in the profitability of the Group s products. The outlook for the world economy and financial markets remains uncertain. In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as a result of liberal monetary policy or 13

22 excessive foreign fund inflow, or both. The recent national referendum results whereby the United Kingdom voted to withdraw from the European Union have resulted in volatility in the global financial market, and are expected to create mid- to long-term economic uncertainty to the economy in the United Kingdom, the European Union and globally. Economic conditions in the PRC are sensitive to global economic conditions, and it is impossible to predict how the PRC economy will develop in the future and whether it may slow down due to a global crisis or experience a financial crisis. Instability in the global economy may materially and adversely affect markets that the Group operates in, which may lead to a decline in the general demand for the Group s services and products. In addition, a reduction in liquidity in the global financial markets and in the PRC may negatively affect the Group s liquidity. Therefore, instability in the global economy may materially and adversely affect the Group s business, financial condition and results of operations. The Group is dependent on its key customers for its revenues. For the years ended 2013, 2014 and 2015 and for the nine months ended 30 September 2015 and 2016, the Group s top two customers contributed 20.27%, 22.51%, 24.79%, 22.84% and 25.22%, respectively, of its total operating revenue. Maintaining close relationships with its key customers is essential to the Group s strategy and to the ongoing growth of the Group s businesses. There is no guarantee that the Group will retain the business of its existing key customers or the desired level of business from them. Failure to retain such business will result in a significant loss of revenues and the Group might also be unable to re-allocate its considerable customerspecific resources and assets in a timely manner or with ease. The Group s profitability also depends on the performance and business of its key customers. Accordingly, risks that could seriously harm the Group s key customers could harm the Group as well, including: loss of market share for the Group s key customers products; recession in the markets the Group s key customers operate in; failure of their products to gain widespread commercial acceptance; and their inability to manage their operations efficiently and effectively. The cyclical nature of the wood products industry and price fluctuations could adversely affect the Group s results of operations. The Group s results of operations are, and will continue to be, affected by the cyclical nature of the wood products industry. Market prices and demand for wood panels, solid wood and wood products have been, and in the future are expected to be, subject to cyclical fluctuations, which have a significant effect on the Group s business, results of operations and financial condition. The pricing in the wood panel and solid wood markets are affected by the prices of the ultimate wood products produced from these materials in the markets the Group exports to, including furniture, construction materials, flooring, pallets and other building accessories. The prices of wood products are also affected by the availability of wood substitutes. The markets for wood products are sensitive to changes in industry capacity and output levels, general timber industry conditions and cyclical changes in the world and Thailand economies, any of which can have a significant impact on selling prices of wood products. The demand for wood products is also substantially affected by the level of new construction activity, which is subject to fluctuations that may or may not correspond to overall economic trends. Decreases in the level of construction activity generally reduce demand for wood products. The demand for wood products is also affected by the level of interior decoration activity. These activities are, in turn, subject to fluctuations due to, among other factors: 14

23 changes in domestic and international economic conditions; changes in market prices of commodities; governmental regulations and policies; interest rates; population growth and changing demographics; and seasonal weather cycles (such as dry or hot summers, wet or cold winters and other factors affecting rubber tree growth). Cyclical changes in the wood products industry, including changes in demand and pricing for our products and the other factors described above, could have a material adverse effect on the Group s business, financial condition and results of operations. The wood products industry is highly competitive. The wood products industry is highly competitive in terms of price and quality. Wood products are subject to increasing competition from a variety of substitute products, including non-wood and engineered wood products. The Group s manufacturing plants face increasing competition from other large domestic and foreign-owned wood panel manufacturers in Thailand, as well as manufacturers in other countries selling into Thailand. In this regard, other manufacturers of wood panels are currently constructing new mills in Thailand that will substantially increase the production capacity of wood panels in Thailand. In addition, the Group also has to deal with competition with both domestic and overseas manufacturers and exporters of wood panels in each of the countries the Group exports its products to. The Group may not be able to compete effectively against these and other potential competitors. If the Group is not able to compete effectively in our different business lines, or if competition significantly increases, the Group s business, financial condition and results of operations could be materially and adversely affected. The Group is subject to financial and reputational risks due to quality and liability issues with respect to the products that it offers. The Group has the responsibility to ensure that the products it delivers will be free from defects and perform in accordance with agreed specifications. To the extent that products delivered by the Group to its customers do not, or are deemed not to, meet certain quality standards or specifications, the Group could be responsible for replacing any defective products, or, in certain circumstances, may have to offer discounts to the affected customers on future products. There is no assurance that the Group will be able to recover from any third party any losses incurred as a result of product liability in the future, or that defects in the products sold by the Group, regardless of whether it is responsible for such defects, would not adversely affect the Group s standing and reputation in the marketplace, or result in monetary losses and have a material adverse effect on the Group s business, financial condition and results of operations. The Group faces similar issues with respect to the services that the Group s various businesses provide. To the extent that the Group s services do not meet expected standards, the Group could face claims for damages as well as reputational harm. The Group depends on attracting and retaining key personnel, including key management personnel and research and development engineers. The success of each of the Group s businesses depends to a significant extent upon, among other factors, the continued service of the Group s respective key senior management, and the Group s skilled technical, research and development, managerial and sales personnel and on the ability of the Group s businesses to continue to attract, retain and motivate such personnel. A change in the senior management or the loss of the 15

24 services of senior management or other key personnel or the inability to attract new qualified personnel could limit the Group s competitiveness, interrupt its production processes, reduce the Group s manufacturing quality and cause customer dissatisfaction, all of which could lead to reduced profitability. Furthermore, the future growth of the Group s businesses will require the recruitment of additional skilled personnel. The competition for employees is intense and if the Group is unable to recruit additional skilled personnel as required, the Group s business and its ability to continue to grow could be harmed. The Group also tries to recruit and develop managerial personnel through management training programmes to ensure that the Group has a steady supply of such skilled personnel but there is no guarantee that the Group will be able to attract, retain and motivate such personnel or that such management training programmes are successful in achieving its aim of grooming quality managerial personnel. The Group does not maintain insurance with respect to the loss of any of its key personnel. Any outbreak of severe communicable diseases may materially affect the Group s operations and business. An outbreak of a contagious disease such as avian influenza, Severe Acute Respiratory Syndrome (SARS), or more recently, influenza A (H1N1), for which there is inadequate treatment or no known cure or vaccine, may potentially result in a quarantine of infected employees and related persons, and may adversely affect the Group s operations at one or more of the Group s facilities or the operations of the Group s customers or suppliers. The Group cannot predict at this time the impact that influenza A (H1N1) or any future outbreak of any other diseases could have on the Group s business and results of operations. Moreover, any future outbreak may disrupt the Group s operations. If any of the Group s employees is suspected of having contracted any contagious disease, the Group may, under certain circumstances, be required to quarantine such employees and the affected areas of the Group s premises. As a result, the Group may have to temporarily suspend part or all of its operations. Furthermore, any future outbreak may restrict the level of economic activity in affected regions which may also adversely affect the Group s businesses. As a result, there is no assurance that any future outbreak of contagious diseases would not have a material adverse effect on the Group s business, financial condition and results of operations. If the Group violates environmental regulations or if stringent new regulations are introduced, the Group may be subject to fines or restrictions or higher compliance costs that could cause the Group s operations to be delayed or interrupted and the Group s business to suffer. The Group is subject to a variety of laws and regulations in Thailand where its production facilities are located relating to the use, storage, discharge and disposal of chemical by-products of, and water used in, the Group s manufacturing processes. If more stringent compliance standards under environmental laws or regulations are imposed, or the results of future testing and analyses at the Group s operating facilities indicate that the Group is responsible for the release of hazardous substances, the Group may be subject to additional remediation liability. In addition, environmental regulations could require the Group to acquire costly equipment or to incur other significant compliance expenses. Future changes to existing environmental regulations may give rise to additional compliance-related costs or potential exposure to liability for environmental claims that may seriously affect the Group s business, financial condition and results of operations. Although the Group has not suffered material environmental claims in the past, any failure to comply with any present or future regulations could result in the assessment of damages or imposition of fines against the Group, suspension of production or a cessation of operations. 16

25 The Group s multinational operations subject it to various business, economic, political, regulatory and legal risks. The Group exports its products to 11 countries including Australia, China, Indonesia and Malaysia. As a result of the Group s international operations, the Group is affected by economic and political conditions in foreign countries, including the imposition of government controls, political and economic instability, trade restrictions, changes in tariffs, laws and policies affecting trade and investment, the lack of development of local infrastructure, labour unrest, differences in labour laws and difficulties in staffing, coordinating communications among and managing international operations, fluctuations in currency exchange rates, earnings, expatriation restrictions, difficulties in obtaining export licenses and misappropriation of intellectual property. If the Group cannot successfully manage the risks and challenges generally associated with multinational operations, it may have difficulty successfully completing orders which might lead to customer dissatisfaction and loss of future orders. Individual countries in which the Group does business also have particular risks. For example, some countries in which the Group operates have experienced periods of slow or negative growth, high inflation, significant currency devaluations or limited availability of foreign exchange. Furthermore, in countries such as the PRC, governmental authorities exercise significant influence over many aspects of the economy and their actions could have a significant effect on the Group and how it operates in those countries. Global or regional economic, political and social conditions could adversely affect the Group s business and operating results. External factors such as potential terrorist attacks, acts of war, financial crises or geopolitical and social turmoil in those parts of the world that serve as markets for the Group s products could significantly adversely affect the Group s business and operating results in ways that cannot presently be predicted. These uncertainties could make it difficult for the Group s customers and the Group to accurately plan future business activities. More generally, these geopolitical, social and economic conditions could result in increased volatility in worldwide financial markets and economies that could adversely impact the Group s sales. The Group maintains insurance coverage in such amounts and against such risks that are in accordance with industry practice. However, such insurance may not be adequate to cover all losses or liabilities that may arise from these external conditions. Therefore, any of these events or circumstances could adversely affect the Group s business and operating results. The Group s results may be negatively affected by foreign currency exchange rates. The Group conducts business in many international currencies through its worldwide operations, and as a result is subject to foreign exchange exposure due to changes in exchange rates of the various currencies. Changes in exchange rates can positively or negatively affect the Group s sales, gross margins and equity. The Group attempts to minimise currency exposure risk in a region in which the products are sold, thereby generating revenues and incurring expenses in the same currency, cost reduction and pricing actions, and working capital management. However, there can be no assurance that these actions will be fully effective in managing currency risk, especially in the event of a significant and sudden decline in the value of any of the international currencies of the rations, which could have an adverse effect on the Group s results of operations and financial condition. 17

26 Risks relating to Thailand Limitations on the enforceability of non-thai judgments and arbitration awards may limit an investor s ability to recover damages from the Group. The Group s corporate headquarters is located in Thailand and most of the Group s assets and operations are also located in Thailand. The Group s directors (excluding independent directors) are also situated in Thailand. As a result, it may be difficult for investors to effect service of process upon the Issuer or its directors and executive officers outside Thailand or enforce against them judgments obtained in courts outside of Thailand. Under Thai law, judgments entered by a non-thai court, including actions under the civil liability provisions of the securities laws of foreign jurisdictions, are not enforceable in Thailand. An investor would have to bring a separate action or claim in Thailand. Although a non-thai judgment could be introduced as evidence in a court proceeding in Thailand, a Thai court would be free to examine de novo issues arising in the case. Thus, to the extent investors are entitled to bring a legal action against the Group, they may be limited in their remedies and any recovery and any Thai proceeding may be limited depending on the relevant court s discretion. Economic, political, legal and regulatory conditions in Thailand may materially and adversely affect the Group s business, cashflows, financial condition, results of operations and prospects. The Group s corporate headquarters is located in Thailand and most of the Group s assets, operations and suppliers are also located in Thailand. The Group s directors (excluding independent directors) are also situated in Thailand. As such, the Group is subject to political, legal and regulatory conditions in Thailand that differ in certain significant respects from those prevailing in other countries with more developed economies. The Group s business and operations are subject to the changing economic and political conditions prevailing from time to time in Thailand. The government of Thailand has frequently intervened in the Thai economy and occasionally made significant changes in policy. The Thai government s policies have included, among other things, wage and price controls, capital controls and limits on imports. The Group s business, cash flows, financial condition, results of operations and prospects may be adversely affected by changes in the Thai government s policies. The Thai economy has gradually recovered from the Asian financial crisis in According to the Office of the National Economic and Social Development Board, Thailand s GDP grew by 4.2 per cent. in 2005, 5.0 per cent. in 2006, 5.4 per cent. in 2007 and 1.7 per cent. in However, as a result of the global economic crisis that worsened in 2008, Thailand s GDP decreased by 0.7 per cent. in In 2010, Thailand s economy recovered and GDP grew by 7.5 per cent., but this figure decreased to 0.8 per cent. for 2011 following the Japanese disasters in March 2011 and the heavy flooding in Thailand in the second half of The Thai economy rebounded in 2012 with an expansion of 7.2 per cent., as a result of improving domestic demand mainly stemming from various government stimulus packages, including post-flood rehabilitation. As the impact of such stimuli faded and external demand weakened, GDP growth in 2013 decelerated to 2.7 per cent., before slowing further to 0.8 per cent. in 2014 due to the uncertain political environment in Thailand. Although the weak economic conditions in Thailand s major trade partners continued to make exports unfavourable, government s investment efforts and recovered tourism activities helped support Thailand s GDP growth in 2015 to 2.8 per cent. However, there can be no assurance that Thailand s GDP will continue to grow in the future. There is also no assurance that current or future governments will adopt economic policies conducive to sustaining economic growth. Factors that may adversely affect the Thai economy include: 18

27 recessions or potential economic downturns in the United States, Europe, Asia or elsewhere in the world; exchange rate fluctuations; a prolonged period of inflation or change in regional interest rates; changes in taxation; natural disasters, including tsunamis, earthquakes, fires, floods, drought and similar events; scarcity of credit or other financing, resulting in lower demand for products and services provided by companies in the region; fluctuations in world oil prices and other commodity prices; other regulatory, political or economic developments in or affecting Thailand; recent and threatened terrorist activities in Southeast Asia; and a potential recurrence or outbreak of avian influenza, severe acute respiratory syndrome (SARS), the H1N1 virus or the contagious diseases in Thailand or other countries. The Group s results may be influenced in part by the political situation in Thailand which has been unstable from time to time in the past. Changes in government, recent political unrest and protests, as well as the failure of any coalition to develop, could result in the delay or curtailment of economic reforms in Thailand and decrease confidence in the Thai government and economy and the performance of Thai companies generally. There can be no assurance that the current or any future political instability in Thailand or any changes in the Thai government s policies or in Thailand s political environment will not have a material adverse effect on the Group s business, cash flows, financial condition, results of operations and prospects. See Political conditions and continued conflict in Thailand may have a direct impact on the Group s business. Political conditions and continued conflict in Thailand may have a direct impact on the Group s business. The Group s business, financial condition, results of operations and prospects may be influenced in part by the political situation in Thailand, which has been unstable from time to time since On 22 May 2014, Thailand s Army Commander-in-Chief Gen. Prayuth Chan-ocha declared a coup. The military imposed a curfew nationwide and subsequently lifted the law for certain major tourist destinations. The junta also announced the set-up of the National Council for Peace and Order ( NCPO ), comprising of leaders from the army, navy, air force and police. Gen. Chan-ocha as the Head of NCPO issued orders abrogating the 2007 Constitution and announcing the implementation of an interim constitution. A general election for a new democratic government is currently not expected until sometime in 2017 although a specific date has not yet been determined which may lead to a decline in public opinion and a political stalemate. Although the current political situation in Thailand is stable, there is no assurance that there will not be further political disruptions in the future. Past incidents of airport closures affected the import and export of goods and there is no assurance that future airport closures will not have the same, if not worse effects. Any social unrest caused by political instability may also create concerns amongst foreign buyers on whether goods can be delivered on time. Prolonged political instability in Thailand could have a material adverse effect on political, economic and legal conditions in Thailand. There can be no assurance that any future political 19

28 instability in Thailand or any changes in the Thai government s policies or in Thailand s political environment will not have a material adverse effect on the Group s business, cash flows, financial condition, results of operations and prospects. Downgrades of credit ratings of the Thai government and Thai banks and companies and the disruptions recently experienced in the international capital markets could adversely affect the Group s business. As at 7 December 2016, Thailand s sovereign foreign currency long-term debt was rated Baa1 with stable outlook by Moody s, BBB+ with stable outlook by Fitch and BBB+ with stable outlook by S&P and its short-term foreign currency debt was rated P-2 by Moody s, F2 by Fitch and A-2 by S&P. In the past, certain credit rating agencies have warned that Thailand's credit rating may be downgraded due to political uncertainties and the weakening of the fiscal economic condition. These credit ratings reflect an assessment of the Thai government s overall financial capacity to meet its payment obligations, and its ability or willingness to meet its financial commitments as they become due. There can be no assurance that international credit rating agencies will not downgrade the credit ratings of Thailand or Thai companies, including the Group s subsidiaries in Thailand in the future. Any such downgrade could have an adverse impact on the ability of the Thai government, the Group or other Thai companies to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. In addition, the availability of credit to entities operating within the emerging markets is significantly influenced by levels of investor confidence in such markets as a whole and so any factors that impact market confidence (for example, a decrease in credit ratings or state or central bank intervention in one market) could affect the price or availability of funding for entities within any of these markets. All these factors may have an adverse impact on the Group s business, cash flows, financial condition, results of operations and prospects and could adversely affect its level of competitiveness. Continued violence in southern Thailand, terrorist attacks and international and regional instability could adversely affect the Group s business, financial condition, results of operations and prospects. All of the Group s production bases are located in southern Thailand. Since January 2004, there have been a large number of casualties and injuries arising from violence particularly in southern Thailand, including most recently the fatal attacks in March 2012 in Yala and Hat Hai, as well as other fatal attacks in Bangkok and elsewhere. If such violence intensifies in southern Thailand, the Group s plants in the region may be forced to suspend operations which may affect the Group s ability to meet its orders to customers and materially and adversely affect the Group s business, financial condition and results of operations. Continued violence could also lead to widespread unrest in Thailand or a major terrorist incident in Thailand. If the security condition deteriorates and violence breaks out across Thailand, the Group s business, financial condition, results of operations and prospects may be materially and adversely affected. In addition, political or economic developments related to crises in the Middle East (including future terrorist attacks against targets in the Middle East), Southeast Asia or other regions, rumours or threats of terrorist attacks or war, actual conflicts involving the Middle East and trade disruptions could adversely affect the Thai economy and the global economy and could have a material adverse effect on the Group s business, financial condition, results of operations and prospects. 20

29 Risks Relating to the ROC Strained relations between the ROC and the PRC, and political developments in the ROC, could adversely affect the Group s business and the market value of the Bonds or Shares. The Group s financial condition and the market price of the Shares and Bonds may be affected by changes in the ROC governmental policies, taxation, inflation, interest rates, social instability and other political, economic, diplomatic or social developments in or affecting the ROC which are outside the Group s control. Taiwan has a unique international political status. The governments of both the PRC and the ROC assert sovereignty over Taiwan. The PRC government does not recognise the legitimacy of the government of the ROC. Although significant economic and cultural relations have been established in the past decade between Taiwan and the PRC, the PRC has refused to renounce the possibility that it might use force to gain control over Taiwan if Taiwan were to declare independence or if a foreign power were to interfere in Taiwan s domestic affairs. Relations between the PRC and the ROC have at times been strained. Strained relations could result in future military actions or economic sanctions or other disruptive activities undertaken by either government. Past tensions between the PRC and the ROC have on occasion depressed the market price of the securities of ROC companies. There is no assurance that any improvement in relations between the PRC and the ROC will materialise, or that relations between the PRC and the ROC will not deteriorate further. The trading prices of the Issuer s Shares may be adversely affected by the general activities of the TPEx and the economic performance of Taiwan. The Issuer s Shares are listed on the TPEx. The trading price of the Issuer s Shares may be affected by the general activities of the TPEx and the economic performance of Taiwan. The TPEx is smaller and, as a market, more volatile than the securities markets in a number of European countries. The TPEx has experienced substantial fluctuations in the prices and volumes of sales of listed securities, and there are currently limits on the range of daily price movements on the TPEx. From time to time, the ROC regulatory agencies have intervened in the Taiwan stock market during periods of extreme volatility. The TPEx Index experienced a 34.8 per cent. decrease in 2011, a 10.0 per cent. increase in 2012, a 25.4 per cent. increase in 2013, an 8.3 per cent. increase in 2014 and an 8.1 per cent. decrease in During the period from 1 January 2013 to 31 December 2015, the TPEx Index reached a low of on 24 August 2015, and peaked at on 1 July The TPEx is particularly volatile during times of political instability, such as when relations between the ROC and the PRC are strained. Moreover, the TPEx has experienced problems such as market manipulation, insider trading and payment defaults. The recurrence of these or similar problems could decrease the market price and liquidity of the Issuer s Shares. In response to past declines and volatility in the securities markets in Taiwan, and in line with similar activities by other countries in Asia, the ROC government formed the National Stabilisation Fund, which has purchased, and may from time to time purchase, shares of ROC companies to support these markets. In addition, other funds associated with the ROC government have in the past purchased, and may from time to time purchase, shares of ROC companies on the TPEx or other markets. In the future, market activity by government entities, or the perception that such activity is taking place, may take place or has ceased, may cause fluctuations in the market prices and liquidity of the Issuer s Shares. Holders of the Bonds may have difficulty enforcing any judgment obtained outside Taiwan against the Issuer or its directors or executive officers. Some of the Issuer s directors and executive officers reside in Taiwan. In addition, the assets of those persons are located in Taiwan. As a result, it may be difficult for holders of the Bonds to effect service of process upon the Issuer or those persons outside Taiwan. The Issuer has, however, irrevocably appointed an agent in England to receive service of process in any proceedings involving the Issuer based on any of the Bonds. Notwithstanding the foregoing, it may be difficult to enforce in the ROC courts judgments obtained against 21

30 the Issuer and its directors and executive officers in non-roc courts, including those obtained against the Issuer in an English court. See Enforceability of Foreign Judgments in the ROC. Risks Relating to this Offering An active trading market for the Bonds may not develop. The Bonds are a new issue of securities for which there is currently no trading market. The Issuer cannot predict whether an active trading market for the Bonds will develop or be sustained. If an active trading market were to develop, the Bonds could trade at prices that may be lower than the initial offering price. Whether or not the Bonds would trade at lower prices depends on many factors, including: the market price of the Shares, prevailing interest rates and the markets for similar securities; general economic conditions; and the Group s financial condition, historic financial performance and future prospects. If an active market for the Bonds fails to develop or be sustained, the trading price of the Bonds could be materially and adversely affected. Approval in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. However, there can be no assurance that the Issuer will be able to obtain or be able to maintain such a listing or that, if listed, a trading market will develop for the Bonds on the SGX-ST. The Issuer does not intend to apply for listing of the Bonds on any securities exchange other than the SGX-ST. The Bonds may not be publicly offered, sold, pledged or otherwise transferred in any jurisdiction where registration may be required. There are limitations on the ability of Bondholders to exercise conversion rights. Pursuant to the Terms and Conditions of the Bonds, the Bondholders will not be able to exercise their conversion right during any Closed Period, which is defined in the Terms and Conditions of the Bonds as including, (a) the 60-day period prior to the date of any of the Issuer s annual general shareholders meetings; (b) the 30-day period prior to the date of any of the Issuer s special shareholders meetings; (c) the period beginning on the 15th Trading Day (as defined below) prior to the first day of any closing period (being the period during which the Issuer s shareholders register is closed) for the determination of shareholders entitled to the receipt of stock or cash dividends, or to the right to participate in any rights issue, and ending on (and including) such record date; (d) the period beginning on the record date of a capital reduction to one day prior to the Trading Day on which the shares of the Issuer are relisted on the TPEx after such capital reduction; and (e) such other periods during which the Issuer may be required to close its shareholders register under Cayman Islands or ROC laws and regulations applicable from time to time. Trading Day means a day when the TPEx is open for business. Under current ROC law, regulations and policy, with respect to Bondholders who are PRC persons, except for Qualified Domestic Institutional Investors registered with the TWSE (the QDIIs ), PRC persons are not permitted to convert the Bonds into Shares and register as the Issuer s shareholders. The Issuer may not have the ability to redeem the Bonds in cash if investors exercise the early redemption right upon the occurrence of a change of control or delisting. Bondholders may require the Issuer to redeem for cash all or some of their Bonds upon a transaction or event constituting a change of control or delisting as described under Terms and Conditions of the Bonds Redemption, Repurchase and Cancellation. There may be a possibility that the Issuer may not have sufficient funds or other financial resources to make the required redemption in cash at such time or the ability to arrange necessary financing on acceptable terms. In addition, the Issuer s ability to redeem the Bonds in cash may be limited by law, by the terms of other agreements relating to the Issuer s senior debt and 22

31 by indebtedness and agreements that the Issuer may enter into in the future which may replace, supplement or amend the Issuer s existing or future indebtedness. If the exercise of the redemption right upon the occurrence of a change of control or delisting occurs at a time when the Issuer is prohibited from redeeming the Bonds, the Issuer could seek the consent of lenders to redeem the Bonds or could attempt to refinance the borrowings that contain this prohibition. If the Issuer is not able to obtain consent or refinance these borrowings, the Issuer could remain prohibited from redeeming the Bonds. The Issuer s failure to redeem Bonds would constitute an event of default, which might constitute a default under the terms of the Issuer s other indebtedness at that time. Bondholders entitlement to dividends and other rights in respect of the Issuer s Shares may be limited. Unless and until a Bondholder acquires Shares upon a conversion of the Bonds, such Bondholder will have no rights with respect to the Issuer s Shares, including any voting rights or rights to receive any regular dividends or other distributions with respect to the Issuer s Shares. Bondholders who acquire the Issuer s Shares upon the exercise of a conversion right will be entitled to exercise the rights of holders of the Issuer s Shares only as to actions for which the applicable record date occurs after the relevant Conversion Date. The returns of the Bondholders on the Bonds may depend on the value of the Issuer s Shares. The Terms and Conditions of the Bonds differ from those of ordinary debt securities because each Bond is convertible by the Bondholder into the Issuer s Shares. Accordingly, the Bonds may bear particular risks related to the Issuer s Shares in addition to the risks of the debt securities. It is difficult to predict whether the price of the Issuer s Shares will rise or fall. Trading prices of the Issuer s Shares will be influenced by the Issuer s operating results, and by complex and interrelated political, economic, financial and other factors that can affect the capital markets generally, the TPEx and the market segments of which the Issuer is a part. Depending on these factors, the value of the Issuer s Shares may become substantially lower than it is when the Bonds are initially purchased. In addition, the value of the shares to be delivered may vary substantially between the date on which conversion rights are exercised and the date on which such shares are delivered. The Bonds may be adversely affected by fluctuations in the trading prices of the Issuer s Shares. The market price of the Bonds may at any time be affected by fluctuations in the trading prices of the Issuer s Shares. There can be no certainty as to the effect, if any, that future issues or sales of the Shares, or the availability of such Shares for future issue or sale, will have on the market price of the Shares prevailing from time to time and therefore on the price of the Bonds. Sales of a substantial number of the Shares in the public market, or a perception in the market that such sales could occur, could adversely affect the prevailing market price of the Shares and the Bonds. The Group s results of operations, financial condition, future prospects and business strategy could affect the value of the Shares. The trading price of the Shares will be influenced by the Group s operational results (which in turn are subject to the various risks the businesses and operations are subject to) and by other factors such as changes in the regulatory environment that may affect the markets in which we operate and the capital markets in general. Corporate events such as share sales, reorganisations, takeovers or share buy-backs may also adversely affect the value of the Shares. Any decline in the price of the Shares would adversely affect the market price of the Bonds. Holders have limited anti-dilution protection. The Conversion Price of the Bonds will be adjusted in the event that there is a free distribution, bonus issue, division, consolidation and reclassification, declaration of dividends, rights issue, warrants issue, capital distribution or other adjustment, but only in the circumstances and only to the extent provided in Terms and Conditions of the Bonds Conversion.. There is no requirement that there should be an adjustment for every corporate or other event that may affect the value of the Shares. Events in respect of which no 23

32 adjustment is made may adversely affect the value of the Shares and, therefore, adversely affect the value of the Bonds. Future offers or sales of the Issuer s Shares may hurt the value of the Bonds. The market price of the Bonds and the Issuer s Shares could decline as a result of future sales of a large number of the Issuer s Shares or the perception that such issues, offers or sales could occur. If any existing shareholders offer or sell a large number of the Issuer s Shares, the market price for the Bonds or the Issuer s Shares could be depressed. The insolvency laws of the Cayman Islands and other jurisdictions in which the subsidiaries of the Issuer currently operate may differ from those of any other jurisdiction with which holders of the Bonds are familiar. Because the Issuer is incorporated under the laws of the Cayman Islands, an insolvency proceeding relating to the Issuer, even if brought in other jurisdictions, would likely involve insolvency laws in the Cayman Islands, the procedural and substantive provisions of which may differ from comparable provisions of bankruptcy law in other jurisdictions. The Issuer conducts its business operations through subsidiaries incorporated across different countries. The laws and regulations relating to bankruptcy and insolvency in these countries and the legal proceedings in that regard may significantly differ from those of other jurisdictions with which the holders of the Bonds are familiar. Investors should analyse the risks and uncertainties carefully before investing in the Bonds. Shareholders may have more difficulty protecting their interests under Cayman Islands law than they would under English law. Holders of the Bonds will become holders of the Shares upon exercise of their conversion rights under the Terms and Conditions of the Bonds. While the Bonds will be issued under a trust deed governed by English law, the Issuer was incorporated under the laws of the Cayman Islands. The Issuer s corporate affairs are governed by its memorandum and the articles of association and Cayman Islands law. The rights of shareholders and the responsibilities of management and the members of the board of directors of Cayman Islands companies are different from those applicable to a corporation incorporated in England or Europe. The shareholders of the Issuer may have more difficulty in protecting their interests in connection with actions taken by the management or directors of the Issuer than they would as public shareholders of an English or European corporation. An account number of Taiwan Depository & Clearing Corporation ( TDCC ) must be specified in any conversion notice. Delivery of the Issuer s Shares into which the Bonds may be converted will only be made through the bookentry system maintained by the TDCC. No physical share certificates will be delivered to the converting Bondholder (or its designee) upon conversion. Thus, a book-entry account number of TDCC maintained by the converting Bondholder or its designee must be specified in the conversion notice. Each Conversion Agent (as defined herein) will deem any conversion notice that does not include an account number of TDCC incomplete and will reject such conversion notice and will have no liability to any Bondholder or any other person for so doing. If the non-roc converting Bondholder (or its designee) does not have a TDCC bookentry account, the conversion notice executed by such converting Bondholder will not be valid unless and until such Bondholder (or its designee) registers with the TWSE as an offshore foreign institutional or individual investor or a QDII, obtains a foreign investor investment I.D. ( Foreign Investor Investment I.D. ) or a QDII identification and opens a TDCC account. The Issuer will deliver Shares through the bookentry system maintained by the TDCC within five Trading Days after such account is opened. 24

33 Non-ROC Bondholders who exercise their conversion rights with respect to the Bonds will be required to register with the TWSE and appoint a local agent, a tax guarantor and a custodian in the ROC as well as when applicable obtain the relevant regulatory approval. Under current ROC law, if a non-roc Bondholder (other than a PRC person) wishes to convert the Bonds and hold the Shares, such non-roc Bondholder will be required to register with the TWSE to obtain the Foreign Investor Investment I.D. for making investments in the ROC securities market prior to converting the Bonds into Shares. In addition, a non-roc Bondholder (other than a PRC person) will be required to appoint an eligible agent in the ROC to open a securities trading account with a local brokerage firm, a TDCC bookentry account and a bank account, to pay ROC taxes, remit funds, exercise shareholders rights and perform such other functions as such person may designate upon conversion. In addition, a non-roc Bondholder (other than a PRC person) will be required to appoint a custodian in the ROC to hold the securities in safekeeping, make confirmation, settle trades and report all relevant information. Without obtaining the Foreign Investor Investment I.D. and opening such accounts, a non-roc Bondholder cannot hold or subsequently sell the Shares converted from the Bonds on the TPEx or otherwise. In addition, these regulations may change from time to time. There can be no assurance that a non-roc Bondholder (other than a PRC person) will be able to register with the TWSE and open the requisite accounts in a timely manner. When a non-roc Bondholder exercises its conversion right with respect to the Bonds in order to receive Shares, that holder will be required to appoint an agent (a Tax Guarantor ) in the ROC. Such Tax Guarantor shall meet the qualifications set by the ROC Ministry of Finance and will act as the guarantor of such holder s tax payment obligations. Generally, evidence of the appointment of a Tax Guarantor and the approval of such appointment may be required as a condition to such holder s repatriation of profits. There can be no assurance that non-roc Bondholders will be able to appoint and obtain approval for a Tax Guarantor in a timely manner. Pursuant to the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors (the Mainland Investors Regulations ), only the QDIIs registered with the TWSE are permitted to convert the Bonds and hold the Issuer s Shares, and similar to other non-roc persons, in order to hold the Issuer s Shares, such QDIIs are required to appoint the agent, custodian and tax guarantor under the Mainland Investors Regulations. The QDIIs may not exceed the PRC ownership limits imposed by the relevant competent authority of Taiwan. The Trustee may request Bondholders to provide an indemnity and/or security and/or prefunding to its satisfaction. In certain circumstances (as specified in the Terms and Conditions of the Bonds and the Trust Deed and including, without limitation, the giving of notice to the Issuer pursuant to Condition 9 of the Terms and Conditions of the Bonds and the taking of enforcement steps pursuant to Condition 11 of the Terms and Conditions of the Bonds), the Trustee may (at its sole discretion) request Bondholders to provide an indemnity and/or security and/or prefunding to its satisfaction before it takes action on behalf of the Bondholders. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or prefunded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or prefunding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity or security or prefunding to it, in breach of the terms of the Trust Deed (as defined in the Terms and Conditions of the Bonds) and in such circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by the agreements and the applicable law, it will be for the Bondholders to take such action directly. 25

34 The Bonds will initially be represented by the Global Certificate and holders of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System. The Bonds are represented by the Global Certificate. Such Global Certificate has been deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the Global Certificate, investors will not be entitled to receive definitive Bonds. The relevant Clearing System will maintain records of the beneficial interests in the Global Certificate. While the Bonds are represented by the Global Bonds or Global Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems. While the Bonds are represented by the Global Certificate, the Issuer will discharge its payment obligations under the Bonds by making payments to the common depositary for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System to receive payments under the Bonds. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate. Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the Bonds. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System to appoint appropriate proxies. The Issuer may call the Bonds prior to maturity if it has or will become obligated to pay Additional Amounts as a result of certain changes in applicable tax law. The Issuer may call the Bonds prior to maturity if it has or will become obligated to pay Additional Amounts as a result of any change in, or amendment to, the laws or regulations of the ROC, the Cayman Islands or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations. In such an event, each Bondholder will have the right to elect that his Bond(s) shall not be redeemed but, in that case, no Additional Amounts will be payable on the electing Bondholder s Bonds after the relevant tax redemption date and payment of all amounts shall be made subject to the deduction of withholding of any taxation required to be withheld or deducted. See Terms and Conditions of the Bonds Redemption, Purchase and Cancellation Redemption for Taxation Reasons. Modification and waivers may be made in respect of the Terms and Conditions of the Bonds and the Trust Deed by the Trustee or less than all of the holders of the Bonds. The Terms and Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority. The Terms and Conditions of the Bonds also provide that the Trustee may agree, without the consent of Bondholders, to (i) any modification of any of the provisions of the Trust Deed which in the opinion of the Trustee is of a formal, minor or technical nature, is made to correct a manifest error or to comply with mandatory provisions of law, and (ii) any other modification (except as mentioned in the Trust Deed) and any waiver or authorisation of any breach or proposed breach of, or any failure to comply with, any of the provisions of the Trust Deed, the Agency Agreement or the Terms and Conditions of the Bonds which is in the opinion of the Trustee not materially prejudicial to the interests of the Bondholders. Any such modification, waiver or authorisation shall be binding on the Bondholders. The Bonds may be adversely affected by fluctuations in the exchange rate between NT dollar and U.S. dollar. 26

35 The principal of the Bonds are denominated in U.S. dollars whereas the Issuer s Share price is reported only in NT dollars. In order to determine the number of Shares issuable on conversion, the principal amount of the Bonds shall be translated into NT$ at a fixed exchange rate and such amount shall be divided by the then prevailing conversion price. As a result, fluctuations in the exchange rate between the NT dollar and the U.S. dollar will affect, among other things, the secondary market price of the Bonds, the economics of the conversion and the U.S. dollar equivalent value of the Shares issuable upon exercise of the Conversion Right. In addition, cash dividends, if any, in respect of the Shares issuable upon exercise of the Conversion Right will be paid in NT dollars. Accordingly, fluctuations in the exchange rate between the NT dollar and the U.S. dollar will affect, among other things, the U.S. dollar equivalent value of the amounts a holder of Shares will receive in respect of the dividends, and the U.S. dollar equivalent value of the proceeds which an investor would receive upon sale of the Shares issuable upon exercise of the Conversion Right. 27

36 USE OF PROCEEDS After deducting commissions and other estimated expenses, the net proceeds from this offering will be approximately U.S.$42,301,800. The Issuer plans to use the net proceeds from this offering to refinance its existing loans. 28

37 MARKET PRICE INFORMATION OF SHARES The Shares began trading on the TPEx on 27 October The table below sets forth, for the periods indicated, the high and low closing prices and the average volume of trading activity on the TPEx for such Shares and the highest and lowest of the daily closing values of the TPEx Index. On 18 January 2017, the reported closing price of the Shares was NT$197 per Share and the TPEx Index closed at Price per Share (NT$) ADTV in shares (in TPEx Index High Low Close 000) High Low Prices of shares trading on the TPEx have fluctuated substantially in the past and there are currently limits on the range of daily price movements. For more information about the TPEx, see The Securities Markets of the ROC. 29

38 DIVIDENDS AND DIVIDEND POLICY Subject to the Companies Law (Revised) of the Cayman Islands (the Cayman Companies Law ) and the Issuer s Memorandum and Articles of Association (the Articles of Association ), the Issuer in general meeting may declare dividends to be paid to shareholders in accordance with a proposal for distribution of profits prepared by the board of directors of the Issuer (the Board of Directors ) and approved by an ordinary resolution at any general meeting. The Board of Directors may declare dividends and distributions on shares in issue and authorise payment of the dividends or distributions out of the funds of the Issuer lawfully available. No dividend or distribution shall be paid except out of the realised or unrealised profits of the Issuer, or out of the share premium account or as otherwise permitted by the Cayman Companies Law. The following table sets forth the aggregate number of outstanding Shares entitled to dividends, the cash dividends per Share, stock dividends per Share and total Shares issued as stock dividends for the year ended 31 December Number of Shares Entitled to Dividend Cash Dividends per Share For the year ended 31 December Stock Dividends per Share Total fully paid ordinary Shares Issued as Stock Dividends , (NT$) (NT$) See Description of Share Capital Dividends and Distributions. For information as to ROC taxes on dividends and distributions, see Taxation ROC Taxation Shares Dividends. 30

39 EXCHANGE RATES The following table sets forth the average, high, low and period-end Noon Buying Rate between the NT dollar and U.S. dollar in the weekly H.10 statistical release of the Federal Reserve Board for the period indicated. No representation is made that the NT dollar amounts actually represent such U.S. dollar amounts or could have been, or could be, converted into U.S. dollars at the rate indicated, any other rate or at all. Year ended 31 December Noon Buying Rate Average (1) High Low At period-end (NT$ per U.S.$) January February March April May June July August September October November December Source: Federal Reserve Statistical Release, Board of Governors of the Federal Reserve System. 31

40 CAPITALISATION AND INDEBTEDNESS The following table sets forth the Issuer s consolidated capitalisation as of 30 September 2016 in accordance with Taiwan-IFRS, as adjusted to give effect to this offering. The as adjusted basis gives effect to the issuance of the Bonds without taking into account the bifurcation of embedded derivatives. Total borrowings current portion As of 30 September 2016 Actual Actual As Adjusted As Adjusted (NT$ 000) (U.S.$ 000) (NT$ 000) (U.S.$ 000) Short-term loans ,301 23, ,301 23,930 Current portion of corporate bonds payable Current portion of long-term debt ,110 10, ,110 10,685 Current portion of liability under finance lease... 2, , Total borrowings non-current portion 1,085,219 34,705 1,085,219 34,705 Long-term loans... 1,089,710 34,848 1,089,710 34,848 Liabilities under finance lease... 1, , Bonds to be issued (1) ,332,102 42,600 Equity 1,091,198 34,896 2,423,300 77,496 Common stock ,300 23, ,300 23,674 Capital reserve ,159 30, ,159 30,386 Retained earnings ,998 24, ,998 24,177 Other components of equity... (103,322) (3,304) (103,322) (3,304) Non-controlling interest... (19,852) (635) (19,852) (635) 2,323,283 74,298 2,323,283 74,298 Total capitalisation (2)... 3,414, ,194 4,746, ,794 Current portion of total borrowings and total capitalisation... 4,499, ,899 5,831, ,499 Notes: (1) The bifurcation of derivative instruments from the Bonds payable upon initial recognition under Taiwan IFRS was not taken into consideration for the adjusted basis. (2) Total capitalisation represents the sum of total borrowings non-current portion and equity. Except as otherwise disclosed in this Offering Circular, there has been no material change in the consolidated capitalisation and indebtedness of the Issuer since 30 September

41 Overview BUSINESS The Group was founded in January 2000 and was principally engaged in collecting rubber wood logs, timber and lumber and manufacturing, processing and selling solid wood panels for use in wood-based production industries across Asia-Pacific. Following the success of this business and having gained precision knowledge and experience, the Group shifted its focus to the manufacturing of particle boards in Since then, the Group has grown into one of the leading wood-based panel manufacturers in Thailand with an extensive global reach, exporting its products across Asia-Pacific and has established a wide network of local rubber wood vendors located across southern Thailand. The Issuer was incorporated in the Cayman Islands (Company Registration No ) on 14 January 2011 as a holding company for the Group. The Issuer s registered address is The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands. As at 30 September 2016, the Issuer s authorised share capital was NT$1,500,000,000, divided into 150,000,000 ordinary shares of a par value of NT$10 each, of which 74,030,000 shares were issued and outstanding. All ordinary shares presently issued by the Issuer are fully paid up and in registered form, and existing holders of such common shares are not subject to any capital calls. The ordinary shares of the Issuer have been listed on the TPEx since 27 October As at the close of business on 18 January 2017, based on the closing price of the ordinary shares of the Issuer on the TPEx at NT$197 per share, the market capitalisation of the Issuer was approximately NT$29.55 billion. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue amounted to approximately NT$2,325.1 million, NT$2,338.2 million and NT$1,948.1 million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue amounted to approximately NT$1,506.7 million and NT$1,935.8 million, respectively. Corporate Structure as of 30 September 2016 Green River Holding Co. Ltd % Green River Wood & Lumber Manufacturing (Thailand) Co., Ltd % Green River Parawood Co., Ltd % Green River Panels (Thailand) Co., Ltd % Thailand Nature Resource Co., Ltd. History and Development A brief summary of the Group s history is set out below: Time January 2000 Significant Events Incorporated Green River Wood & Lumber Manufacturing (Thailand) Co., 33

42 Ltd. ( GRW ) in Hat Yai, Thailand to carry out the Group s solid wood business. May 2001 July 2002 November 2002 April 2003 August 2003 July 2004 March 2005 May 2006 October 2006 December 2007 March 2008 September 2008 October 2008 GRW commenced production and sale of solid wood products. Expanded solid wood business with the incorporation of Green River Parawood Co., Ltd. ( GRP ) and the establishment of a network for rubber wood collection. GRP established a factory in Satun, Thailand to expand the Group s production capabilities and enhance material collection network in southern Thailand. GRP established a factory Trang, Thailand to expand the Group s production capabilities and enhance its material collection network in southern Thailand. GRP established a factory Khaochaison, Thailand to expand the Group s production capabilities and enhance its material collection network in southern Thailand. Initiated the Group s particle board business segment with the incorporation of Green River Panels (Thailand) Co., Ltd. ( GP ) in Hat Yai, Thailand. Successfully integrated rubber wood resources in southern Thailand by linking rubber plantation owners and rubber wood vendors through the incorporation of GRP and the setting up of factories throughout the southern Thailand. GP officially signed a business contract with Dieffenbacher to purchase a continuous press to be used in the Group s particle board production base to ensure that the Group s particle board manufacturing facilities continued to be technologically advanced. GP s particle board production base in Hat Yai, Thailand began mass production. GP s production line is fully installed. GP established an in-house quality control laboratory. GP s production line commenced operations and began mass production. The Group s particle boards acquired certification of EN SGS E1 and E2 grades. January 2009 The Group s particle boards acquired certification of USA CARB Phase 1. January 2010 The Group s particle boards acquired certification of SGS ISO9001:2008. The Group s particle boards acquired certification of USA CARB Phase 2. March 2010 Developed corporate social responsibility perspective focused on supporting charitable events organised by government or academic bodies 34

43 and environmental protection. June 2010 December 2010 January 2011 June 2011 August 2011 November 2011 Incorporated Thailand Nature Resource Co., Ltd. ( TNR ) in Thailand as a solid wood business unit. TNR established its main operations facility in Thung Yai, Thailand to carry out manufacturing and sales of solid wood. Incorporated the Issuer in the Cayman Islands as a holding company of the Group. TNR s Thung Yai facility commenced operations. GP is awarded the Environmental Protection Award by the Ministry of Industry of Thailand. Invested in automatic cutting, grinding and sanding to enhance GP s production line in order to substantially increase production efficiency and revenue generation. TNR established a branch in Ban Na San, Thailand. December 2011 January 2012 The Issuer acquired an equity interest of 93.14% in GP through a stock swap. The Issuer acquired a further equity interest of 6.86% in GP from GRW. GRP established branches in Prik, Thailand and Thunglong, Thailand. February 2012 The Issuer acquired an equity interest of 99.99% in GRW through a stock swap. TNR successfully acquired Fancy Wood Industries Co., Ltd s Phang Nga rubber wood plant. January 2013 July 2013 December 2013 October 2014 October 2015 June 2016 Initial public offering of the Issuer took place The Issuer s shares were listed and trading was commenced on the Emerging Stock Board of the TPEx. The Issuer increased its registered capital to NT$66 million. GP commenced construction of its second production line in Hat Yai, Thailand. The Issuer s shares commenced trading on the General Stock Board on the TPEx. GP s second production line began mass production. Key Strengths and Competitive Advantages The Group believes that it has developed the following strengths and competitive advantages: Strong market position, in-depth expertise and precision knowledge The Group benefits from its wealth of in-depth expertise and precision knowledge gained first by establishing itself as a solid wood manufacturer and setting up an extensive raw material procurement network before expanding into the particle boards segment as it is able to leverage its stable supply of raw materials across 35

44 products. GRW is one of the first companies in Thailand to manufacture solid wood and is also the first foreign company in Thailand equipped to allow for the treatment and processing of solid wood. The Group s focus on developing a continuous production line for its specific products has allowed the Group to gain a stronghold on the industry and has established the Group has one of the leading wood-based panel manufacturers in Thailand. The Group s products are also exported globally to 11 countries including Australia, China, Indonesia and Malaysia. Strategic location of production bases in the heart of Thailand s rubber plantations to build wide and stable supplier network Thailand is located in a tropical Southeast Asia monsoon region with annual temperatures never falling below 18 degree Celsius and with an average yearly rainfall of 1000 millimetres. Most of Thailand also comprise low mountains and plateaus with an abundance of forest life which makes the land optimal for the growth of rubber trees. The rubber trees in Thailand are considered high value-add crops and farmers typically start extracting rubber from the trees six to eight years after planting. The typical productive phase of the rubber trees last from 35 to 40 years with rubber yield decreasing as the tree nears the end of its economic life period. Once the economic life of a rubber tree comes to an end, the tree is chopped down and its branches, trunk and other parts are used as raw materials for furniture and other wood-based products. According to the International Rubber Study Group, global natural rubber production in 2015 was 12.3 million tonnes of which 92% was produced in the Asia-Pacific Region. Thailand has been the world s largest producer of natural rubber since the 1990s. In 2015, Thailand produced 4.5 million tonnes of natural rubber and exported about 3.7 million tonnes of natural rubber, accounting for approximately 36% of natural rubber production globally 1. According to information from the Thai Rubber Association, Thailand possesses massive rubber production capabilities across 67 different provinces and continues to rank as the world s largest producer of natural rubber. As of the date of this Offering Circular, approximately 60% of Thailand s production capacity is located in southern Thailand. The Group s particle board and solid wood production lines are strategically located across southern Thailand to capitalise on the region s abundant rubber plantations and ensure a constant supply of raw materials for the Group s production. The Group s close proximity to the rubber plantations has also allowed the Group to build a wide and stable network of suppliers and has established long-term relationships with these suppliers for raw materials which the Group utilises to increase asset turnover, improve its cost control ability and achieve good profit margin. The Group is also able to leverage on these established relationship and communication with suppliers to provide timely delivery of its raw material during the production process. Vertically integrated operations and extensive production capabilities The Group has developed vertically integrated operations by establishing a wide and stable network of raw material suppliers and building strong relationships with the customers that the Group supplies its products to. Upward integration ensures the Group is able to reduce production costs and that material supplies needed in the production and manufacture of the Group s products are readily available when needed, which would in turn ensure that the Group is able to meet customers time-to-volume product needs more effectively. In addition, the production of particle boards is highly automated and mechanised. The Group s production line runs continuously for 24 hours in a day and requires technologically advanced machinery, highly-skilled technicians and mechanical and service engineers to ensure that the production line is able to run smoothly and continuously. Leveraging the Group s extensive experience on the production of particle boards and technological improvements which allow for better control of quality indicators such as formaldehyde emission, consistency of the dimensions of the panels produced, sectional density, rate of water absorption 1 Source: Thailand Investment Review, August 2016 vol. 26 no. 8, Thailand Board of Investment 36

45 and swelling, the Group has established in-house production technologies and capabilities to ensure the quality of its particle boards and to improve production efficiency. The Group has invested and continues to invest in continually upgrading its extensive production capabilities to further optimise its manufacturing process. Experienced management team and staff with a strong track record The Group places great emphasis on quality human resources and continuously seeks to attract skilled professionals to enhance its products and optimise its production and manufacturing capabilities. The Group also benefits from an experienced management team. Many of its executives have spent many years in woodbased products industries. On average, the Issuer s senior management team has more than 10 years of experience in wood-based products industries. Through the leadership, drive and vision of the Group s management team, the Group has established itself as a market leader in Thailand with a respected brand name and one of the leading manufacturers of wood panels in Thailand with an extensive global reach within a short period of time. The Group believes that it has the management strength and access to talent to grow its existing operations and expand its businesses further internationally. Business Strategies The Group s vision is to build a leading global green enterprise by conserving resources for sustainable development through the implementation of the following core business strategies: Further develop the Group s production capabilities to establish a comprehensive manufacturing value chain The Group intends to strengthen its foothold in the particle board business segment by capitalising on the abundant rubber resources in southern Thailand and leveraging the Group s technical and internal management excellence to develop a complete manufacturing value chain covering research and development, manufacturing and product quality control. In 2015, the Group purchased a continuous press from Dieffenbacher in Germany to set up a second particle board production line to further improve production efficiency, increasing the Group s annual production capacity of particle boards to more than 600,000 m 3 and making it the second largest particle board manufacturer in Thailand in terms of volume produced as at the date of this Offering Circular. Further diversify product portfolio with a focus on high value-add products The Group is actively pursuing opportunities to leverage Thailand s abundant rubber wood resource to expand the Group s product lines and allow the Group to offer a broader range of complementary high-quality products to existing and future customers and to diversify the Group s revenue streams. The Group has continuously strengthened, and intends to continue to strengthen, its wood processing capabilities in order to develop higher value-add products which the Group believes will be able to command higher selling prices. For example, the Group invested in new equipment and technologies to expand its production line to include fully-automated capabilities for the application of melamine paper to its particle boards post-production. In doing so, the Group is able to offer its customers a total solution with full customisation of its products. In fully automating the application of melamine paper to its particle boards, the Group is also able to increase the production efficiency and quality of its melamine faced chipboards. Maintain high standards of product quality and customer service to strengthen the Green River brand The Group places great emphasis on product quality and has continuously invested in improving production technologies and processes to ensure that the Group s products are of consistent high quality. The Group also constantly strives to ensure that its products and plants meet international standards and have received international certifications such as EN SGS E1 and E2, USA CARB Phase 1, USA CARB Phase 2 and SGS 37

46 ISO9001:2008 certifications. The Group intends to continue to focus on obtaining further international certifications, such as applying for JIS E0 product certification, as the Group believes such certifications will increase customer confidence in its products and bolster its push to become a leading global particle board manufacturer. In addition, the Group intends to continue providing quality after-sales services to its customers and adapt product research and development according to the different needs of the Group s customers. The Group believes that the combination of sustained product quality and sensitivity to each customer s needs will strengthen the Green River brand to become synonymous with high standards of manufacturing skill and product quality. Expand into new markets and industries both domestically and internationally to raise the Group s market position and increase market share The Group intends to continue to strengthen its domestic and global market positioning. Domestically, the Group will continue to build on the stable sales network it has established and focus on improving product safety and environmental performance of its products to expand into new markets, such as the high grade particle board and green products markets. Internationally, the Group intends to leverage its proximity to countries such as Malaysia, Indonesia and India to further extend the Group s sales reach across Southeast Asia. The Group also has plans to further expand into China s key cities. As at 30 September 2016, revenue from sales of the Group s particle boards in China accounted for 12% of total revenue from sales of the Group s particle boards. Improve operational efficiency The Group intends to prioritise cost management as a core focus and evaluate and make necessary changes to the Group s current cost management structure to increase the Group s competitiveness. In order to do so, the Group plans to continue implementing the following strict cost controls in each stage of its manufacturing chain: Procurement costs the Group currently holds weekly procurement meetings to collate the prices of raw materials across regions and industry information in order to set a purchase price to avoid any misinformation leading to an increase in procurement costs. In addition, the Group also takes stock of its daily production volumes to more accurately gauge the amount of raw materials required in order to reduce capital requirements. Production costs the Group established an Energy Saving Committee in 2015 to review the Group s production process and implement plans to reduce energy usage. For example, the Group intends to install LED lighting across its production facilities to save power and to further upgrade its waste recycling and wood drying systems to increase power efficiency. The Group has also hired technical consultants to review its equipment maintenance process in order to increase operational efficiency. Inventory costs the Group generally employs a make-to-order production strategy which has led to an increase in the Group s inventory turnover rate in the last three years. The Group also intends to continue increasing product yield and decreasing the proportion of defective products to lower inventory costs. Lowering costs through technological innovation the Group was able to reduce improve the density of its particle boards and reduce the amount of glue used by improving on the initial stages of its wood processing through technological innovation. 38

47 Introduction of costs targets the Group established a system of cost targets on raw materials and power used in the production process, such as glue, wood, sandpaper, electricity and heat in order to incentivise its management and staff to actively seek out ways to lower costs. Business Overview The Group is principally engaged in the manufacturing, treatment, processing and sales of solid wood and particle boards. The Group relies mainly on export sales and as at the date of this Offering Circular, the Group s products are exported to 11 countries including Australia, China, Indonesia and Malaysia. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue amounted to approximately NT$2,325.1 million, NT$2,338.2 million and NT$1,948.1 million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue amounted to approximately NT$1,506.7 million and NT1,935.8 million, respectively. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue from domestic sales amounted to approximately NT$ million, NT$ million and NT$ million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue from domestic sales amounted to approximately NT$ million and NT$46.30 million, respectively. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue from sales to other countries and regions amounted to approximately NT$2, million, NT$2, million and NT$1, million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue from sales to other countries and regions amounted to approximately NT$1, million and NT$1, million, respectively. Products and Production The Group currently produces two types of products: particle boards and solid wood. The Group also produces melamine faced chipboards from its particle boards. The following table sets out the Group s total operating revenue breakdown by product, together with a percentage of total operating revenue for the periods indicated: Year ended 31 December (consolidated) Nine months ended 30 September (consolidated) (NT$m) % (NT$m) % (NT$m) % (U.S.$m) (NT$m) % (NT$m) % (U.S.$m) Particle boards... 1, , , , Solid wood... Operating Revenue... 1, , , , , , , As at the date of this Offering Circular, the Group has seven production bases located across southern Thailand in Satun, Trang, Kaochaison, Thung Yai, Songkhla, Prik and Thunglong. Particle boards The Group s particle boards business segment is conducted through the Issuer s subsidiary, GP. The Group s particle boards are used for construction, building of furniture, speaker boxes and other wood products. The Group also manufactures melamine faced chipboards made from the particle boards which are used for construction and building of furniture and other wood products. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue from sales of particle boards amounted to approximately NT$1, million, NT$1, million and NT$1, million, 39

48 respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue from sales of particle boards amounted to approximately NT$ million and NT$1, million, respectively. Production process of particle boards The Group s particle boards are made from waste rubber wood which is cut into chips and ground into flakes. These flakes are then dried and mixed with urea formaldehyde resin which are then hot-pressed into panels on continuous presses. The surfaces of the panels are sanded before being cut to standard sizes of 4 x 8 feet ( ft ) (1220 x 2440 milimetres ( mm )), 5 x 8 ft (1525 x 2440 mm), 6 x 8 ft (1830 x 2440 mm) and 4 x 6 ft (1220 x 1830 mm). The Group also produces particle boards in custom sizes based on customers specifications. The following diagram illustrates the process of production of particle boards: Rubber plantations Rubber wood waste Chipping Chips Flaking Flakes Resin blending Furniture and other wood products Particle boards Hot pressing Mats Mat forming Production process of melamine faced chipboards The Group s melamine faced chipboards are made by first laying melamine paper chosen according to each customer s pattern and colour specifications on finished particle boards. The materials are hot-pressed to produce melamine faced chipboards which are then cooled and its surface cleaned. The following diagram illustrates the process of production of melamine faced chipboards: Melamine Paper Lay up Particle boards Hot pressing Melamine faced chipboards Furniture and other wood products Solid wood The Group s solid wood business segment is conducted through the Issuer s subsidiaries, GRW, GRP and TNR. The Group s solid wood are used for building of furniture and other wood products. For the years ended 31 December 2013, 2014 and 2015, the Group s operating revenue from sales of solid wood amounted to approximately NT$1, million, NT$1, million and NT$ million, respectively. For the nine months ended 30 September 2015 and 2016, the Group s operating revenue from sales of solid wood amounted to approximately NT$ million and NT$ million, respectively. Production process of solid wood The Group s solid wood are made from logs which are cut into solid wood. The solid wood is then impregnated with various chemicals to prevent rotting and protect against weevils and other insects. In order to reduce the moisture content of the wood, the solid wood is then kiln-dried. Kiln-drying accelerates the drying process by controlling the moisture content and air-flow in the kilns. The kiln-dried solid wood are then graded and packed for use. The following diagram illustrates the process of production of solid wood: 40

49 Rubber plantations Logs Sawing Solid wood Impregnating Impregnated sawn timber Furniture and other wood products Solid wood Grading & packing Kiln-dried sawn timber Kiln-drying Sales and Marketing Customers The Group s customers are mainly furniture manufacturers, timber traders and processing plants which coat the Group s particle boards with melamine paper. The Group has a well-diversified customer portfolio and benefits from its strong reputation through customer referrals which allows the Group to expand its reach to new markets. The following table sets out the revenue contribution and percentage breakdown of each of the Group s customers contributing more than 10% of the Group s total operating revenue for the periods indicated: Year ended 31 December (consolidated) Nine months ended 30 September (consolidated) Customer NT$m % Customer NT$m % Customer NT$m % U.S.$m Customer NT$m % Customer NT$m % U.S.$m Foshan Create Material Import & Export Co., Ltd.( 佛山市創造材料進出口有限公司 Qaiser Resources (M) Sdn. Bhd Qaiser Resources (M) Sdn. Bhd Qaiser Resources (M) Sdn. Bhd Qaiser Resources (M) Sdn. Bhd PT. Timur Jaya Panel PT. Timur Jaya Panel PT. Timur Jaya Panel PT. Timur Jaya Panel Qaiser Resources (M) Sdn. Bhd Others... 1, Others 1, Others 1, Others 1, Others 1, Total... 2, Total 2, Total 1, Total 1, Total 1, Sales The following table sets out the percentage breakdown of the Group s operating revenue according to countries (based on the corporate locations of the Group s customers) for the periods indicated: Year ended 31 December (consolidated) Nine months ended 30 September (consolidated) (NT$m) % (NT$m) % (NT$m) % (U.S.$m) (NT$m) % (NT$m) % (U.S.$m) China... 1, Indonesia Malaysia Thailand Others Total... 2, , , , , Pricing The Group prices its products based on various factors including, but not limited to, market demand and supply. The Group does not typically enter into long-term purchase and sale agreements with its customers. Instead, the Group typically provides customers with a price quote before issuing a sales order once the customer agrees to the quoted price. 41

50 Raw Materials The Group s key raw materials include rubber wood waste (including logs, branches and slabs), formaldehyde resin and melamine paper. The Group does not own any rubber plantations or logging rights. Rubber wood waste The high amount of sugar in rubber wood and its natural characteristics which makes it prone to colour change, decay and insect infestations prevent any overstocking. Processing to prevent decay and drying must also take place as soon as possible after logging. As such, the Group has established an extensive supply chain network in southern Thailand to facilitate quick and easy access to the rubber wood supply in that region. The Group mainly sources from local rubber wood lumber traders, timber traders and sawmills, and from both companies and individual loggers, located in southern Thailand. The Group is able to leverage its particle boards and solid wood businesses which require bulk purchases of wood, shoots, bark, roots and many other parts of the rubber tree to negotiate for better prices of the raw materials purchased from suppliers which would prefer to supply to the Group to reduce the hassle of doing business with various purchasers instead. The Group has also actively expanded its supply network to ensure a stable supply of rubber wood waste and to avoid any risk of centralised purchasing. Formaldehyde resin The Group purchases its formaldehyde resin from many different suppliers across Thailand. Due to the large number of suppliers of this raw material, the Group believes it is always able to obtain high quality products from a wide range of suppliers. Melamine paper The Group requires its suppliers of impregnated paper to tailor their product according to the Issuer s specifications. The Group sources for this raw material from various suppliers across China, Malaysia and Thailand and due to the large number of suppliers of this raw material available, the Group believes it will always be able to find a supplier to produce melamine paper suited to its needs. In addition, one of the Group s seven production bases are equipped with capabilities for post-production processing of solid wood and small branches for use in the production of the Group s particle boards. Suppliers The Group mainly sources from quality and long-term vendors who offer high-quality and cost-effective materials in a timely manner. The Group determines the procurement amount based on customers orders, estimated production levels and safety stock levels. The Group does not enter into any supply contract with any of its suppliers. Instead, the Group maintains long-term cooperative relationships with its suppliers to ensure the stability of its sources of supply and to avoid any concentration risk in procurement or supply interruption risks. The following table sets out the cost and percentage breakdown of each of the Group s suppliers accounting for more than 10% of the Group s total purchasing costs for the raw materials for the periods indicated: Year ended 31 December (consolidated) Nine months ended 30 September (consolidated) Supplier NT$m % Supplier NT$m % Supplier NT$m % U.S.$m Supplier NT$m % Supplier NT$m % U.S.$m AICA AICA AICA AICA AICA ,43 Others... 1, Others 1, Others Others Others ,83 Total... 1, Total 1, Total 1, Total Total ,26 42

51 Distribution and Logistics The Group offers customers efficient logistics channels by land for its products within Thailand and Malaysia and by sea for other countries. All of the Group s production bases are also equipped with warehousing facilities. Competition The Group faces competition in the Thailand market as well as in the markets which the Group exports its products to. The Group s key competitor is the Vanachai Group. To maintain a competitive advantage and stable profitability, the Group will strive to build a comprehensive full manufacturing value chain in an effort to reduce production costs and increase operational efficiency. The Group is also actively pursuing opportunities to expand its product lines and offer customers a broader range of complementary high-quality products and diversify the Group s revenue streams to achieve long-term sustainability and stable profitability. Insurance The Group maintains insurance for its buildings and equipment and inventory located on its properties. This insurance covers loss resulting from fire or lightning, theft and flood. The Group also maintains insurance against various risks including those associated with the transportation of its products, business operations interruption, riots, strikes and tsunamis. All such policies are renewed annually. Trademarks and Licences As at 30 September 2016, the Group has registered 1 trademark in the ROC, 1 trademark in Thailand and 3 trademarks in Malaysia, South Korea and Vietnam. The Group is also in the process of registering 3 other trademarks in China, Indonesia and India. It is the Group s policy to enforce its rights if its trademarks are infringed. Research and Development As at 30 September 2016, the Group s R&D teams employed approximately 28 staffs focusing on improvement of the production process of its particle boards, product innovation and product quality control of its particle boards. The following table sets out the Group s R&D expenses and operating revenue and the Group s R&D expenses as a percentage of operating revenue for the periods indicated: Year ended 31 December Nine months ended 30 September (NT$m) R&D expense Operating revenue... 2, , , , , % of operating revenue (%) Environment The Group s production in its production bases do not involve high-pollution processes and do not generate significant pollution to the environment. The Group s production bases have each undergone an environmental impact assessment. In addition, the Group has also established departments overseeing operation, production, quality control and R&D. These departments are responsible for overseeing the quality 43

52 control of the products in order to meet the customers requirements, sending the Group s products to the SGS certification company for regular checks and ensuring that the composition of the Group s products are in compliance with the applicable regulations. The Group s operations are in compliance with environmental regulations of the relevant jurisdictions in which they are situated. The Group has also established a sound environmental management system and set up an internal team responsible for the maintenance and control of environmental health and safety. In addition, the Group has also installed environmental protection measures in its production process such as the Bag Filter: A1-A16, the Dryer Multi-Cyclone system and water purification and water cooling equipment to collect and filter wood powder and waste water discharged during the production process of dust and wood shavings. The Group was also awarded the Environmental Good Governance award by the Industrial Environmental Authority of Thailand in July Employees As at 30 March 2016, the Group employed 829 employees, of which 0.24%, 1.93% and 34.98% hold a doctorate degree, master s degree or bachelor s degree or other higher education qualification, respectively. The Group s remuneration policy is based on profit sharing and employee performance and also offers various employee benefits including social medical insurances per Thailand government s requirements, group insurances and travel insurances, free annual health check-ups, payroll or monetary gifts during maternity and paternity periods, sickness or hospitalisation due to public injury, leaves for weddings and other approved leaves, condolence gifts for funerals, various recreational events, and subsidies to assist in rental and transport costs. The Group is also equipped with recreational facilities for the enjoyment of its employees, including canteens, infirmaries, dormitories, gymnasiums and karaoke studios. The Group also implements continuous and comprehensive training programmes according to each employee s work function, abilities and individual career development to increase employees skill and knowledge levels and ensure that the Group s employees continue to grow and develop professionally along with the Group. These training programmes include training for new employees, general training relating to workplace safety, health and safety, product quality control, plant emergencies and language courses, specific training for different work functions, managerial training and technical training. For the year ended 31 December 2015, the Group conducted 143 training sessions with a total training time of hours which was attended by more than 1,060 employees and cost a total of approximately 570,000 Thai baht. The Group has not experienced any strikes or disruptions due to labour disputes. The Issuer believes the Group s relationships with its employees are good. Litigation Neither the Issuer nor any member of the Group is engaged in any material litigation or arbitration which it believes would have (or has had during the 12 months preceding the date hereof) a material effect on the Issuer s and its subsidiaries financial condition or operations nor is the Issuer aware that any such proceedings are pending or threatened. Properties The Group s land and land improvements had a book value of NT$ million and NT$30.51 million, respectively, in the Issuer s consolidated accounts as at 31 December As at 31 December 2015, the Group had mortgaged land (including land improvements) and buildings with book values of NT$ million and NT$ million, respectively, to secure its obligations to certain creditors and under various guarantees and other contingent liabilities. 44

53 The Group s land and land improvements had a book value of NT$ million and NT$ million, respectively, in the Issuer s consolidated accounts as at 30 September As at 30 September 2016, the Group had mortgaged land (including land improvements) and buildings with book values of NT$ million and NT$ million, respectively, to secure its obligations to certain creditors and under various guarantees and other contingent liabilities. 45

54 BOARD OF DIRECTORS AND MANAGEMENT The following table sets forth information on the directors and management of the Issuer: Name Title Green Source Investments Ltd. (Represented by Mr. Hsieh Jung-Hui) Chin Tai Holding Inc. (Represented by Mr. Li Mu-Wen) Forward Thinking Limited (Represented by Mr. Huang Teng Shih) Park Island Enterprises Limited (Represented by Mr. Du King-Ling) Professor Wu Ching-Sung Mr. Pai Pei-Lin Ms. Lin Wan-Ling Mr. Wang Sheng-Feng Ms. Wang Ping-Hsun Chairman Director and Chief Sales Officer Director and Chief Executive Officer Director Independent Director Independent Director Independent Director Chief Finance Officer Internal Audit Manager The business address of each director is Room. 606, 6F., No. 50, Section 1, Sinsheng South Road., Da an District, Taipei City 106, Taiwan. Set forth below is a short biography of each director or management of the Issuer. Mr. Hsieh Jung-Hui Chairman and representative of Green Source Investments Ltd. Mr. Hsieh is the founder of the Issuer and is also the representative of Green Source Investments Ltd., which is a corporate director of the Issuer. He has also served as chairman of the board of the Issuer since September He also serves as chairman of the board of the Issuer s subsidiaries, GRP, GP and TNR. Mr. Hsieh graduated from the Department of Civil Engineering of the National Cheng Kung University. He worked in Thailand as a young entrepreneur and returned to Taiwan to set up Standard Pallet International Co., Ltd. which was engaged in the pallets business. Mr. Hsieh founded the Issuer after his experience in the wood products industry led to further business opportunities in the rubber wood industry. Mr. Li Mu-Wen Representative of Chin Tai Holding Inc. and Chief Sales Officer Mr. Li has been a representative of Chin Tai Holding Inc., which is a corporate director of the Issuer, since September He also serves as Chief Sales Officer of the Issuer and its subsidiaries, GRW, GRP, GP and TNR. Mr. Li completed his master s degree in structural engineering at the University of Arizona. Before joining the Issuer, he served as Coordinating Manager of Continental Engineering Corporation, a company listed on the Taiwan Stock Exchange. Mr. Huang Teng Shih 46

55 Representative of Forward Thinking Limited and Chief Executive Officer Mr. Huang has been a representative of Forward Thinking Limited, which is a corporate director of the Issuer, since September He also serves as Chief Executive Officer of the Issuer and its subsidiaries, GRW, GRP, GP and TNR. Mr. Huang graduated from the Department of Water Resources and Conservation of Feng Chia University and obtained his master s degree in business administration from Ramkhamhaeng University in Thailand. Mr. Du King-Ling Representative of Park Island Enterprises Limited Mr. Du has been a representative of Park Island Enterprises Limited, which is a corporate director of the Issuer, since July He graduated from the Department of Marine Engineering of the National Taiwan Ocean University and obtained his master s degree in mechanical engineering from the University of Mississippi. Mr. Du started his career at China Steel Corporation in 1976 as an engineer and now serves as an executive vice president. He is also the chairman of the board of China Ecotek Corporation, an environmental protection engineering company. In 1998, Mr. Du was awarded the Engineering Medal by the Chinese Institute of Engineers, the highest honour granted to Chinese engineers in Taiwan, in recognition of his engineering expertise and outstanding contribution to the engineering profession. Professor Wu Ching-Sung Independent Director Professor Wu has been an independent director of the Issuer since July He obtained his doctorate s degree in business administration from the University of California. He is also an honorary professor at the Department of International Business of the National Taiwan University. In addition to the Issuer, Professor Wu also serves as a director of many public and private enterprises in Taiwan, such as Taiwan Tobacco & Liquor Corporation and Vanguard International Semiconductor Corporation. Mr. Pai Pei-Lin Independent Director Mr. Pai has been an independent director of the Issuer since July He obtained his doctorate s degree in electrical engineering from the University of California. Mr. Pai has nearly 30 years of experience in corporate management. He is also currently serving as vice president of Winbond Electronics Corporation. Ms. Lin Wan-Ling Independent Director Ms. Lin has been an independent director of the Issuer since June She graduated from the Accounting Department of Donghai University and worked for KPMG, Yuanta Huanan Securities Co., Ltd. s Underwriting Division and Dongyang Industrial Co., Ltd s Finance Department. Ms. Lin is a certified accountant with strong financial accounting expertise. She currently also serves as a special assistant to general manager and spokesperson of Anji Technology Co., Ltd. Mr. Wang Sheng-Feng Chief Finance Officer Mr. Wang is currently the Chief Finance Officer of the Issuer and its subsidiaries, GRW, GRP, GP and TNR. He graduated from the Accounting Department of Donghai University. Before joining the Issuer, he served as chief financial officer of Samya Technology Co Ltd. 47

56 Ms. Wang Ping-Hsun Internal Audit Manager Ms. Wang is currently the Internal Audit Manager of the Issuer and its subsidiaries, GRW, GRP, GP and TNR. She graduated from the Accounting Department of Aletheia University. Before joining the Issuer, she worked as a deputy manager in Deloitte & Touche Tohmatsu. 48

57 TERMS AND CONDITIONS OF THE BONDS The following is a description of the terms and conditions of the Bonds (the Conditions ) (except for the sentences in italics), which includes summaries of, and is subject to, the more detailed provisions of the Trust Deed referred to below. The issue of U.S.$42,600,000 aggregate principal amount of zero coupon convertible bonds due 2022 (the Bonds, which shall include, unless the context requires otherwise, any further Bonds issued in accordance with Condition 17 and consolidated and forming a single series therewith) of Green River Holding Co. Ltd. (the Issuer ) was authorised by a resolution of the board of directors of the Issuer adopted on 24 October The Bonds will be constituted by a trust deed (the Trust Deed ) dated on or about 25 January 2017 (the Issue Date ) between the Issuer and The Bank of New York Mellon, London Branch, as trustee (the Trustee, which term shall include all persons for the time being appointed as trustee or trustees under the Trust Deed) for the holders of the Bonds. The Issuer will also enter into a paying, conversion and transfer agency agreement (the Agency Agreement ) dated on or about the Issue Date with the Trustee, The Bank of New York Mellon (Luxembourg) S.A., as the registrar (the Registrar ) and the transfer agent (the Transfer Agent ) and The Bank of New York Mellon, London Branch as the principal paying agent and principal conversion agent (the Principal Agent ) and any other paying agents, conversion agents and transfer agents appointed thereunder (each a Paying Agent, a Conversion Agent and a Transfer Agent and together with the Principal Agent and the Registrar, the Agents ) in relation to the Bonds. The registrar, the transfer agent, the principal agent, the paying agents, the conversion agents and the other transfer agents for the time being are referred to below as the Registrar, the Transfer Agent, the Principal Agent, the Paying Agents (which expression shall include the Principal Agent), the Conversion Agents (which expression shall include the Principal Agent) and the Transfer Agents (which expression shall include The Bank of New York Mellon (Luxembourg) S.A., for so long as it is a Transfer Agent), respectively. Approval inprinciple has been received for the listing of the Bonds on the Official List of the Singapore Exchange Securities Trading Limited (the SGX-ST ). Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the principal office of the Trustee and at the specified office of the Principal Agent following prior written request and proof of holding to the satisfaction of the Trustee or, as the case may be, the Principal Agent. The holders of the Bonds are entitled to the benefit of the Trust Deed and are bound by, and are deemed to have notice of, all of the provisions of the Trust Deed and those provisions of the Agency Agreement applicable to them. 1 Status The Bonds constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 3(B), unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves and, subject to the provisions of Condition 3(B), rank at least pari passu in priority of payment, with all other present and future direct, unconditional, unsubordinated and unsecured obligations of the Issuer, except any obligation preferred by mandatory provisions of law. 2 Form, Denomination and Title (A) Form and Denomination The Bonds shall be issued in fully registered form, without coupons, in the denomination of U.S.$200,000 each or integral multiples thereof. The Bonds shall be offered, sold and transferred in the principal amount of U.S.$200,000 or an integral multiple thereof. 49

58 The Bonds shall initially be represented by a global certificate (the Global Certificate ), and only under the limited circumstances described in the Global Certificate and the Trust Deed shall definitive bond certificates (each a Definitive Certificate ) be issued to the holders of the Bonds in respect of their individual registered holdings. Each Definitive Certificate, if issued, shall be serially numbered and shall have an identifying number which shall be recorded on the relevant Definitive Certificate and in the register of holders of the Bonds that the Issuer shall procure to be kept by the Registrar. The Global Certificate shall be registered in the name of a nominee of, and deposited with, the common depositary of Euroclear Bank SA/NV ( Euroclear ) and Clearstream Banking S.A. ( Clearstream ). The Global Certificate shall contain or incorporate by reference the Conditions. The Bonds are not issuable in bearer form. (B) Title The Bonds shall be registered instruments, and title to the Bonds shall pass by transfer and registration of title in the register of holders of the Bonds. The holder of any Bond shall, except as ordered by a court of competent jurisdiction or as otherwise required by law, be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or loss of, the Definitive Certificate issued in respect of it), and no person shall be liable for so treating the holder. In these Conditions, Bondholder, holder and holder of the Bonds in relation to a Bond mean the person in whose name a Bond is registered in the register of holders of the Bonds. 3 Interest and Certain Covenants (A) Interest The Bonds do not bear any interest except in accordance with Condition 6(D). (B) Negative Pledge So long as any of the Bonds remains outstanding (as defined in the Trust Deed), the Issuer will not, and will ensure that none of its Principal Subsidiaries will create, or have outstanding, any mortgage, charge, lien, pledge or other form of encumbrance or security interest, upon the whole or any part of the undertaking, property, assets or revenues of the Issuer or such Principal Subsidiary, as the case may be, present or future, to secure any International Investment Securities (as defined below) or to secure any payment of any sum due in respect of or under any guarantee of or indemnity or other like obligation relating to any such International Investment Securities, without at the same time or prior thereto, according to the Bonds (a) the same security as is created or subsisting to secure any such International Investment Securities, guarantee or indemnity or (b) such other security as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Bonds. For the purposes of these Conditions: International Investment Securities means bonds, debentures, notes or other similar investment securities of the Issuer or any of its Principal Subsidiaries evidencing indebtedness with a maturity of not less than one year that (a) either (i) are by their terms payable, or confer a right to receive payment, in any currency other than NT dollars or (ii) are denominated or payable in NT dollars and more than 50 per cent. of the aggregate principal amount thereof is initially distributed outside the Republic of China (the ROC ) by the Issuer or any of its Principal Subsidiaries or with the authorisation of any of them; and (b) are for the time being, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange, quotation system or over- the- counter or other securities market; 50

59 Principal Subsidiary means, with respect to any Person, any Subsidiary (i) whose net sales, as shown by the latest audited financial statements (consolidated in the case of a Subsidiary which itself has Subsidiaries) of such Subsidiary, constitute at least 10% of the consolidated net sales of such Person and its consolidated Subsidiaries as shown by the latest audited consolidated financial statements of such Person or (ii) whose gross assets, as shown by the latest audited financial statements (consolidated in case of a Subsidiary which itself has Subsidiaries) of such Subsidiary constitute at least 10% of the gross assets of such Person and its consolidated Subsidiaries as shown by the latest audited consolidated financial statements of such Person; and Subsidiary means any entity whose financial statements at any time are required by law or in accordance with generally accepted accounting principles to be fully consolidated with those of the Issuer. (C) Mergers and Disposals The Issuer will not merge, amalgamate or consolidate with or into any other corporation or entity unless the Issuer is the surviving entity, or sell, convey, transfer, lease or otherwise dispose of all, or substantially all, of the assets of the Issuer, whether as a single transaction or a number of transactions, related or not, to any corporation, entity or person or to one or more members of any group under the common control of any corporation, entity or person unless: (i) the Issuer has notified the holders of the Bonds of such event in accordance with Condition 14; (ii) (iii) (iv) the Issuer and such corporation, entity or person have executed a deed supplemental to the Trust Deed, in form and substance satisfactory to the Trustee, and the supplemental trust deed includes the following: (a) the express assumption by such corporation, entity or person of the obligations of the Issuer under the Bonds, the Trust Deed and the Agency Agreement, including the covenants contained in this Condition 3(C) relating to subsequent mergers, amalgamations, consolidations, sales or transfers; (b) provisions for the convertibility of each Bond then outstanding into the class and amount of Shares and other securities, cash and other property receivable upon such consolidation, amalgamation, merger, sale or transfer by a holder of the number of Shares into which such Bonds would have been convertible immediately prior to such consolidation, amalgamation, merger, sale or transfer (assuming for such purpose that the Bonds were convertible at the time of such consolidation, amalgamation, merger, sale or transfer) at the Conversion Price as adjusted from time to time pursuant to the Trust Deed; and (c) provisions for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in the provisions of Condition 5(C); immediately after giving effect to any such consolidation, amalgamation, merger, sale or transfer, no default on any obligations which is material in the context of the Bonds then outstanding or Event of Default shall have occurred or be continuing or would result therefrom; and the corporation, entity or person formed by such consolidation, amalgamation or merger, or that acquired such assets, shall expressly agree, among other things, to indemnify each holder of the Bonds against any tax, assessment or governmental charge payable by withholding or deduction thereafter imposed on such holder solely as a consequence of such consolidation, amalgamation, merger, sale, conveyance, transfer, lease or disposal with respect to the payment of any amount in connection with the Bonds. The above provisions of this Condition 3(C) shall apply in the same way to any subsequent consolidations, amalgamations, mergers, sales or transfers. 51

60 In the event of any such consolidation, amalgamation, merger, sale, conveyance, transfer, lease or disposal, the provisions described under Condition 7(C) and Condition 8 will be applicable to the corporation, entity or person formed by such consolidation, amalgamation, merger, sale, conveyance, transfer, lease or disposal, and the holders of the Bonds will be entitled to the benefits under Condition 7(C), if applicable. 4 Transfers of Bonds; Issue of Certificates (A) Transfers A Bond may be transferred as follows: (i) in the case of a Bond represented by a Definitive Certificate, by depositing such certificate during normal business hours (being between 9.00 a.m and 3.00 p.m.) at the specified offices of the Registrar or any Transfer Agent, with the form of transfer on the back of such certificate duly completed and signed, or (ii) in the case of a Bond represented by the Global Certificate, by delivery at such specified office of a form of transfer duly completed and executed, and any other evidence that the Registrar or such Transfer Agent may require. The forms of transfer are available at the specified offices of the Registrar or any Transfer Agent during normal business hours. Transfers of interests in the Bonds evidenced by the Global Certificate shall be effected in accordance with the rules of the relevant clearing systems. (B) Delivery of New Definitive Certificates Each new Definitive Certificate to be issued on the transfer of the Bonds shall, within five Business Days of receipt by the Registrar or, as the case may be, any Transfer Agent of the relevant Definitive Certificate and the duly signed and completed form of transfer, be mailed by uninsured mail at the risk of the Bondholder entitled to the new Definitive Certificate to the address specified in the form of transfer. Where some but not all of the Bonds in respect of which a Definitive Certificate is issued are to be transferred, converted or redeemed, a new Definitive Certificate in respect of the Bonds not so transferred, converted or redeemed shall, within five Business Days of deposit or surrender of the original Definitive Certificate with or to the relevant Transfer Agent, be mailed by uninsured mail at the risk of the holder of the Bonds not so transferred, converted or redeemed to the address of such holder appearing on the register of holders of the Bonds. (C) Formalities Free of Charge Registration of transfer of the Bonds shall be effected without charge by or on behalf of the Issuer or any of the Agents, subject to payment (or the giving of such indemnity and/or security and/or prefunding as the Issuer or any of the Agents may require) in respect of any tax or other governmental charges which may be imposed in relation to it. (D) Restricted Transfer Period No holder of the Bonds may require the transfer of a Bond to be registered (i) during the period of 15 days ending on (and including) the due date for any payment of principal in respect of the Bond pursuant to Condition 6 and Condition 7(A), (ii) after the Bond has been selected for redemption pursuant to Condition 7(B) or Condition 7(C), (iii) following exercise by the Bondholder of its option to require the Issuer to redeem the Bond pursuant to Condition 7(D), Condition 7(E) or Condition 7(F) or (iv) following exercise by the holder of its option to convert the Bond pursuant to Condition 5(A). 52

61 (E) Provisions on Transfer All transfers of the Bonds and entries on the register of holders of the Bonds shall be made subject to the detailed provisions concerning transfer and registration of the Bonds set out in the Agency Agreement. Such provisions may not be changed without the prior written approval of the Trustee and the Registrar. A copy of the current provisions shall be available for inspection during normal business hours (being between 9.00 a.m and 3.00 p.m.) at the specified office of the Registrar or the Transfer Agents and shall be mailed (or sent via facsimile) by the Registrar to any Bondholder following prior written request and satisfactory proof of holding. For the purposes of this Condition 4: Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business in the city in which the specified office of the Registrar or the Transfer Agent with whom a Definitive Certificate is deposited in connection with a transfer is located. 5 Conversion The Issuer agrees in the Trust Deed that, within five Trading Days (as defined below) from each Conversion Date (as defined in Condition 5(B)(i)), it will issue and deliver the Shares, through the book-entry system maintained by the Taiwan Depository & Clearing Corporation (the TDCC ), to the converting holder or its designee, subject to applicable ROC laws and regulations and the provisions of the Trust Deed relating to the conversion. If a converting holder is a non-roc person and has not obtained foreign investor investment I.D. (a Foreign Investor Investment I.D. ) or a QDII (as defined below) identification, as the case may be, from the Taiwan Stock Exchange (the TWSE ) and not opened an account in the TDCC, the Issuer will deliver the Shares within five Trading Days through the book-entry system maintained by the TDCC after such non- ROC converting holder has obtained its Foreign Investor Investment I.D or a QDII identification, as the case may be, and opened its TDCC account. The Trust Deed provides, in summary, that the term Shares means, when used to refer to the class or classes of the Issuer s capital stock into which the Bonds are convertible and when used in certain other instances, only the Issuer s common shares, NT$10 par value per share, but when used elsewhere, including in Condition 5(C), such term also includes shares of any other class or classes of the Issuer s capital stock authorised after the date of the Trust Deed that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation or winding-up of the Issuer. (A) (i) Conversion Right Conversion Period Each holder of the Bonds has the right hereunder to convert any Bond into Shares subject to the terms set forth herein (the Conversion Right ). Subject to and upon compliance with the provisions of this Condition 5, the Conversion Right attaching to any Bond may be exercised, at the option of the Bondholder and as and to the extent provided herein, so that the Conversion Date (as defined in Condition 5(B)(i)) in respect of such exercise occurs at any time on or after 7 March 2017, which is the 41st calendar day after the Issue Date, up to and including the close of business (at the place where such Bond is deposited for conversion) on 15 January 2022, which is the 10th calendar day prior to the Maturity Date (as defined in Condition 7(A)) (or if such day shall not be a Business Day (as defined below) at such place, on the immediately preceding Business Day at such place) or, if such Bond shall have been called for redemption prior to the Maturity Date, then up to and including the close of business (at the place 53

62 aforesaid) on the date seven Business Days prior to the date fixed for redemption thereof or if such date shall not be a Business Day at such place, on the immediately preceding Business Day at such place (the Conversion Period ); provided, however, that the Conversion Right during any Closed Period (as defined below) shall be suspended and the Conversion Period shall not include any such Closed Period. The Issuer shall procure that the holders of the Bonds are given not less than 10 and not more than 60 days notice in accordance with Condition 14 of the commencement of any Closed Period. For the purposes of these Conditions: Closed Period means: (i) the 60-day period prior to the date of any of the Issuer s general shareholders meetings; (ii) the 30-day period prior to the date of any of the Issuer s special shareholders meetings; (iii) the period beginning on the 15th Trading Day (as defined below) prior to the first day of any closing period (being the period during which the Issuer s shareholders register is closed) for the determination of shareholders entitled to the receipt of stock or cash dividends, or to the right to participate in any rights issue, and ending on (and including) such record date; (iv) the period beginning on the record date of a capital reduction to one day prior to the Trading Day on which the shares of the Issuer are relisted on the Taipei Exchange ( TPEx ) after such capital reduction; and (v) such other periods during which the Issuer may be required to close its shareholders register under Cayman Islands or ROC laws and regulations applicable from time to time. Trading Day means a day when the TPEx is open for business. For the purposes of this Condition 5: Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, London, Hong Kong and Taipei and the city in which the specified office of the Conversion Agent with whom a Conversion Notice is deposited in connection with the conversion is located. Under current ROC laws, regulations and policy, a PRC person is not permitted to convert the Bonds and to register as a shareholder of the Issuer unless it is a qualified domestic institutional investor approved by the China Securities Regulatory Commission, China Banking Regulatory Commission or China Insurance Regulatory Commission ("QDII"), and provided that the total shareholding of PRC persons with respect to the Issuer cannot exceed 30%. In addition, there are restrictions on the amount remitted to Taiwan for investments by QDIIs, separately and jointly. Accordingly, the qualification criteria for a PRC person to make investment and the investment threshold imposed by the FSC and the TPEx might cause a Bondholder who is a PRC person to be unable to convert and hold the Shares issuable upon conversion of the Bonds. Under current ROC law, PRC person means an individual holding a passport issued by the PRC; a resident of any area of the PRC under the effective control or jurisdiction of the PRC (but not including a special administrative region of the PRC such as Hong Kong or Macau, if so excluded by applicable laws of the ROC); and save as aforesaid, any agency or instrumentality of the PRC; and any corporation, partnership or other entity organised under the laws of any such area or controlled by, or directly or indirectly having more than 30% of its capital owned by, or beneficially owned by any such person, resident, agency or instrumentality. Under current ROC law, a non-roc converting holder of the Bonds, before exercising its conversion right to convert the Bonds into Shares and be registered as the holder of Shares, is required to register with the TWSE and to appoint a local agent in the ROC with such qualifications as are set by the FSC. The local agent has the power to take the following actions on behalf of and as agent for the converting holder: open a securities trading account with a local brokerage firm and a NT dollar bank account, pay ROC withholding taxes, remit funds, exercise shareholders rights and perform such other 54

63 matters as may be designated by the converting holder. In addition, such non-roc converting holder must also appoint a custodian to hold the securities and any cash proceeds for safekeeping, confirm and settle trades and report all relevant information. Furthermore, the converting holder is required to appoint a tax guarantor for filing tax returns and making tax payments. Without meeting these requirements, the converting holder would not be able to receive, hold, sell or otherwise transfer the Shares into which the Bonds may have been converted on the TPEx or otherwise. (ii) Number of Shares Issuable on Conversion The number of Shares issuable upon conversion of any Bond shall be determined by dividing the principal amount of the Bond (translated into NT dollars at a fixed exchange rate of NT$ = U.S.$1.00, being the Fixed Exchange Rate ) by the Conversion Price (as defined in Condition 5(A)(iii)) in effect on the Conversion Date (as defined in Condition 5(B)(i)). If more than one Bond shall be deposited for conversion at any one time by the same holder of the Bonds, the number of Shares to be issued upon conversion thereof shall be calculated on the basis of the aggregate principal amount of the Bonds so deposited. Fractions of Shares shall not be issued on conversion, and the Issuer shall, upon conversion of the Bonds, pay cash in U.S. dollars a sum equal to such portion of the principal amount of the Bonds deposited for conversion as corresponds to any fraction of a Share not issued as aforesaid, with U.S.$0.50 being rounded upwards to U.S.$1.00, provided that such sum exceeds U.S.$ For the purpose of calculating the amount of such payment, the Issuer shall use the Fixed Exchange Rate. If the Conversion Right in respect of more than one Bond is exercised at any one time such that Shares are to be issued to the same person, the number of such Shares to be issued in respect thereof, and any fraction of a Share, shall be calculated on the basis of the aggregate principal amount of such Bonds being so converted. Any such sum shall be paid not later than five Trading Days after the relevant Conversion Date by U.S. dollar cheque drawn on, or by transfer to a U.S. dollar account maintained by the payee with, a bank in the United States, in accordance with instructions given by the relevant Bondholder in the Conversion Notice. (iii) Initial Conversion Price The price at which Shares shall be issued upon conversion (the Conversion Price ) shall initially be NT$218 per Share but shall be subject to adjustment in the manner provided in Condition 5(C). The conversion ratio (the Conversion Ratio ) is equal to the principal amount of each Bond converted into NT dollars at the Fixed Exchange Rate divided by the then Conversion Price. (iv) Revival on Default Notwithstanding the provisions of Condition 5(A)(i), if the Issuer defaults in making payment in full on the date fixed for redemption thereof in respect of any Bond that has been called for redemption prior to the Maturity Date, the Conversion Right attaching to such Bond will revive and/or will continue to be exercisable up to and including the close of business at the place where the relevant Conversion Notice (as defined in Condition 5B(i)) is deposited for conversion on the date upon which the full amount of the monies payable in respect of such Bond has been duly received by the Trustee or the Principal Agent and notice of such receipt has been duly given to the holders of the Bonds. (B) (i) Conversion Procedures Exercise Procedures; Conversion Notice; Deposit Date; Conversion Date To exercise the Conversion Right attaching to any Bond, a Bondholder must complete, execute and deposit at his own expense between 9:00 a.m. and 3:00 p.m. (local time at the specified office referred to below) on any Business Day on which the relevant Definitive Certificate, if issued, is presented for 55

64 conversion during the Conversion Period at the specified office of a Conversion Agent outside the ROC: (a) (b) (c) (d) a notice of conversion (a Conversion Notice ) in duplicate, duly completed and signed, in the then current form obtainable from the specified office of any Conversion Agent together with the relevant Definitive Certificate, if issued, in respect of the relevant Bond; the Conversion Notice must include certification that, at the time of such conversion, the converting holder is not in the United States, is not a US Person (as defined in Regulation S under the Securities Act) and is not converting Bonds on behalf of a US Person; any certificates and other documents as may be required under the law of the Cayman Islands, the ROC or the jurisdiction in which such Conversion Agent shall be located; and any amount required to be paid by the holder of the Bond referred to in Condition 5(B)(ii) below. Any of the above items deposited after 3:00 p.m. as specified above or on a day that is not a Business Day shall for all purposes be deemed to have been deposited with that Conversion Agent on the immediately succeeding Business Day. The Conversion Notice shall contain, among other things, (i) the appointment of a local agent; (ii) an irrevocable instruction to convert the Bonds into Shares; and (iii) any other information required by ROC laws and regulations. A Conversion Notice once deposited may not be withdrawn without the consent in writing of the Issuer. Holders of the Bonds who deposit a Conversion Notice on the Business Day immediately prior to a Closed Period or during a Closed Period will not be permitted to convert their Bonds until the ROC Business Day following the last day of that Closed Period which (if all other conditions to conversion have been fulfilled) will be deemed as the Conversion Date (as defined below) for such Bonds. Such holders shall not be registered as holders of the Shares until the Conversion Date. The price at which such Bonds shall be converted shall be the Conversion Price in effect on the Conversion Date. The Issuer will covenant in the Trust Deed that it will send to the Trustee (upon request by the Trustee) an officer s certificate, which certificate the Trustee may conclusively rely on, certifying to the best knowledge of such officer, there has been no change in the laws or regulations of the ROC affecting the conversion of the Bonds, including any change in the ROC laws or regulations in connection with any certificates or other documents required for the conversion of the Bonds. For the purposes of these Conditions: Deposit Date means the Business Day on which (i) the Definitive Certificate, if issued, in respect of the Bond to be converted, (ii) a duly signed and completed Conversion Notice (in duplicate), (iii) any certificates or other documents, as may be required, relating thereto, and (iv) the payments referred to in Condition 5(B)(ii) below, as may be required, have all been deposited with a Conversion Agent. Conversion Date means the ROC Business Day next following the Deposit Date that (a) is a Trading Day and (b) is not within a Closed Period. ROC Business Day means any day on which commercial banks in Taipei, the ROC are open for business. (ii) Taxes and Expenses As conditions precedent to the exercise of the Conversion Right attaching to any Bond, together with the delivery of the Conversion Notice, the Definitive Certificate, if issued, and any certificates or other documents as may be required, the holder of the Bond must pay, when the Bond is deposited for 56

65 conversion, to the relevant taxation authority(ies) all stamp, issue, registration and similar taxes or duties or transfer costs (if any) arising on conversion in the jurisdiction in which the Bond is deposited for conversion, and all stamp, issue, registration and similar taxes or duties or transfer costs payable to the relevant authorities in any jurisdiction upon the issue or delivery of Shares or any other property or cash upon conversion to, or to the order of a person other than, the converting holder of the Bond. Except as aforesaid, the Issuer shall pay the expenses arising in the Cayman Islands and/or the ROC and any other jurisdiction on the issue and delivery of Shares on conversion of the Bond and all fees and expenses of the Conversion Agents in connection therewith as provided in the Agency Agreement; provided that converting holders of the Bonds shall complete the relevant ROC investment registration with the TWSE and satisfy any other legal requirements for their receiving and holding of the Shares at their own expense. Neither the Trustee nor any of the Agents shall be responsible for determining whether any duties or taxes are payable on the amount thereof and shall not be responsible or liable for making payment of any such duties or taxes or for any failure by the Issuer or any holder to pay such duties or taxes. (iii) Holders of record With effect from the opening of business in the ROC on the Conversion Date, the Issuer shall deem the converting holder of a Bond as indicated in the Conversion Notice to have become the holder of record of the number of Shares to be issued upon such conversion, disregarding any retroactive adjustment of the Conversion Price referred to below prior to the time such retroactive adjustment shall have become effective. At such time, subject to Condition 5(B)(iv), the rights of such converting Bondholder with respect to the Bond deposited for conversion shall cease (except rights arising under Condition 5(B)(v)). (iv) Delivery of Shares On the Conversion Date, the Issuer shall register the converting holder of a Bond (or its designee) in the Issuer s register of shareholders as the owner of the number of Shares to be issued pursuant to Condition 5(B)(iii) upon conversion of such Bond. The Shares issued upon conversion of the Bonds will be fully paid and will in all respects rank pari passu with the Shares in issue on the relevant Conversion Date. Subject to any applicable limitations then imposed by Cayman Islands and/or ROC laws and regulations, the Issuer shall deliver in accordance with the Trust Deed and the request made in the relevant Conversion Notice as soon as practicable, and in any event within five Trading Days from the Conversion Date (subject to applicable law), for the benefit of the converting Bondholder the following: (a) (b) (c) the relevant Shares through book-entry transfer to an account registered in the name of the converting holder or its local agent at TDCC; any other property or cash (including, without limitation, cash payable pursuant to Condition 5(A)(ii)) required to be delivered upon conversion; and such documents as may be required by law to effect the delivery thereof. The Issuer has certain disclosure obligations and reporting obligations under ROC law and regulations if: (a) the person to be registered as a shareholder of the Issuer is a related party of the Issuer as defined in the ROC Regulations Governing the Preparation of Financial Reports by Securities Issuers and such person beneficially owns Shares received on conversion of the Bonds; or 57

66 (b) the person to be registered as a shareholder of the Issuer beneficially owns, immediately after receiving the Shares on conversion of the Bonds, a number of Shares exceeding 10 per cent. of the total number of Shares deliverable upon the conversion of the aggregate principal amount of all Bonds at the time of issue. Due to these obligations, the Agency Agreement provides that, if the Issuer so instructs, the Principal Agent may ask a converting holder of the Bonds to disclose the name of the person to be registered as the shareholder and to provide proof of identity and genuineness of any signature and other documents before it converts the Bonds. The conversion of the Bonds may be delayed until the Principal Agent receives the required information and evidence of compliance with relevant laws and regulations by the converting Bondholder. The information that a converting Bondholder may be required to provide includes the name and nationality of the person to be registered as a shareholder and the total number of Shares such person has or will receive as a result of the conversion of the Bonds it holds. In the event the conversion of a Bond shall result in a payment of cash or other property to the converting holder as provided above, the Issuer shall deliver a notice setting forth the above details to the address of the converting Bondholder appearing on the register of holders of the Bonds. (v) Retroactive Adjustment of Conversion Price If (a) the Conversion Date in relation to any Bond shall be on or after a date with effect from which an adjustment to the Conversion Price takes retroactive effect pursuant to any of the provisions referred to in Condition 5(C) and the Trust Deed and (b) the relevant Conversion Date falls on a date when the relevant adjustment has not been reflected in the Conversion Price, the Issuer shall, within 20 days after the date of such adjustment of the Conversion Price, issue and deliver by book entry to the local agent appointed by the converting Bondholder such number of Shares as is equal to the excess of (1) the number of Shares that would have been required to be issued and delivered on conversion of such Bond if the relevant retroactive adjustment had been made as of the said Conversion Date over (2) the number of Shares previously issued pursuant to such conversion; and in such event and in respect of such number of Shares, references in Conditions 5(B)(iii) and 5(B)(iv) to the Conversion Date shall be deemed to refer to the date upon which such retroactive adjustment becomes effective disregarding the fact that it becomes effective retroactively. (vi) Dividends and Other Entitlements The converting holder of a Bond shall be entitled to any annual dividend distributions of the Issuer if the Conversion Date is prior to the 15th Trading Day prior to the first day of the closing period for determining the identity of shareholders who are entitled to such dividend distributions. Save as set out in these Conditions, a holder of Shares issued on conversion of Bonds shall not be entitled to any rights the record date for which precedes the relevant Conversion Date. (vii) Conversion Agents The Issuer reserves the right, subject to the provisions of the Agency Agreement and with the prior written consent of the Trustee, to vary or terminate the appointment of any Conversion Agent and to appoint other Conversion Agents at any time; provided that the Issuer shall at all times maintain a Conversion Agent having a specified office in London. Notice of any such termination or appointment and of any changes in the specified offices of the Conversion Agents shall be given promptly by the Issuer to the holders of the Bonds in accordance with Condition

67 (viii) Availability of Shares The Issuer shall, for the benefit of holders of the Bonds, ensure that sufficient Shares, which are listed on the TPEx, are available as soon as possible and in any event within five Trading Days (or such number of Trading Days as stipulated by the relevant laws and regulations applicable from time to time) after the applicable Conversion Date. (C) Adjustments to Conversion Price The Conversion Price shall be subject to adjustment as follows, each such adjustment an Antidilution Adjustment. (i) Free Distribution and Bonus Issue of Shares and Declaration of Dividend in Shares If the Issuer shall (a) make a free distribution of Shares, (b) make a bonus issue of its Shares (excluding Shares issued pursuant to any employee stock bonus or profit-sharing arrangements) or (c) declare a dividend in Shares, then the Conversion Price shall be adjusted in accordance with the following formula: where: NCP = OCP x [N/(N + n)] NCP = the Conversion Price after such adjustment. OCP = the Conversion Price in effect (1) on the date when such distribution, bonus issue or dividend is declared or (2) on the relevant record date (if the Issuer has fixed a prior record date for the determination of shareholders entitled to receive any such distribution, bonus issue or dividend). N = the number of Shares outstanding (having regard to Condition 5(C)(xvi)) (1) at the time of issuance of such dividend, bonus issue or distribution or (2) at the close of business in the ROC on the relevant record date, as the case may be. n = the number of Shares to be distributed to shareholders as a dividend, bonus issue or distribution. No account is to be taken of, or credit given for, the par value of Shares issued as a dividend in Shares in calculating the appropriate conversion price adjustment, so that the full dilutive effect is provided for. Effective date of adjustment An adjustment made pursuant to this Condition 5(C)(i) shall become effective immediately on the relevant event referred to in this Condition 5(C)(i) becoming effective or, if a record date is fixed therefor, immediately after such record date; provided that in the case of a free distribution or bonus issue of Shares or dividend in Shares which must, under applicable laws of the Cayman Islands and/or ROC, be submitted for approval to a general meeting of shareholders or be approved by a meeting of the board of directors of the Issuer before being legally paid or made, and which is so approved after the record date fixed for the determination of shareholders entitled to receive such distribution, bonus issue or dividend, such adjustment shall, immediately upon such approval being given by such meeting, become effective retroactively to immediately after such record date. (ii) Division, Consolidation and Reclassification of Shares 59

68 If the Issuer shall (a) divide its outstanding Shares, (b) consolidate its outstanding Shares into a smaller number of Shares, or (c) re-classify any of its Shares into other securities of the Issuer, then the Conversion Price shall be appropriately adjusted so that the holder of any Bond on the Conversion Date in respect of which occurs after the coming into effect of the adjustment described in this Condition 5(C)(ii) shall be entitled to receive on exercise of the Conversion Right the number of Shares and/or other securities of the Issuer which it would have held or have been entitled to receive after the happening of any of the events described above had such Bond been converted immediately prior to the happening of such event (or, if the Issuer has fixed a prior record date for the determination of shareholders entitled to receive any such free distribution or bonus issue of Shares or other securities issued upon any such division, consolidation or re-classification, immediately prior to such record date), but without prejudice to the effect of any other adjustment to the Conversion Price made with effect from the date of the happening of such event (or such record date) or any time thereafter. For the avoidance of doubt, in the event the Issuer shall divide its outstanding Shares, the Conversion Price shall be adjusted in accordance with the following formula: where: NCP = OCP x [N/n] NCP = the Conversion Price after such adjustment. OCP = the Conversion Price in effect (1) at the time such division occurs or (2) on the relevant record date for determining the Shares subject to such division. N = the number of Shares outstanding (having regard to Condition 5(C)(xvi)) (1) at the time of such division or (2) at the close of business in the ROC on the relevant record date, as the case may be. n = the number of Shares outstanding after such division. Effective date of adjustment An adjustment made pursuant to this Condition 5(C)(ii) shall become effective immediately on the relevant event referred to in this Condition 5(C)(ii) becoming effective or, if a record date is fixed therefor, immediately after such record date; provided that in the case of a division, consolidation or reclassification of Shares which must, under applicable laws of the ROC, be submitted for approval to a general meeting of shareholders or be approved by a meeting of the board of directors of the Issuer before being legally paid or made, and which is so approved after the record date fixed for the determination of shareholders entitled to receive such distribution or bonus issue of Shares or other securities issued upon such division, consolidation or reclassification, such adjustment shall, immediately upon such approval being given by such meeting, become effective retroactively to immediately after such record date. (iii) Concurrent adjustment events If the Issuer shall declare a dividend in, or make a free distribution or bonus issue of, Shares which dividend, issue or distribution is to be paid or made to shareholders as of a record date which is also: (a) (b) the record date for the issue of any rights or warrants which requires an adjustment of the Conversion Price pursuant to Condition 5(C)(iv), 5(C)(v) or 5(C)(vi); the day immediately before the date of issue of any securities convertible into or exchangeable for Shares which requires an adjustment of the Conversion Price pursuant to Condition 5(C)(viii); 60

69 (c) (d) (e) the day immediately before the date of issue of any Shares which requires an adjustment of the Conversion Price pursuant to Condition 5(C)(ix); the day immediately before the date of issue of any rights, options or warrants which requires an adjustment of the Conversion Price pursuant to Condition 5(C)(x); or determined by the Issuer and notified by the Issuer to the Trustee in writing to be the relevant date for an event or circumstance which requires an adjustment to the Conversion Price pursuant to Condition 5(C)(xiii), then (except where such dividend, bonus issue or free distribution gives rise to a retroactive adjustment of the Conversion Price under Condition 5(C)(i) or 5(C)(ii)) no adjustment of the Conversion Price in respect of such dividend, bonus issue or free distribution shall be made under Condition 5(C)(i) or 5(C)(ii), but in lieu thereof an adjustment shall be made under Condition 5(C)(iv), 5(C)(v), 5(C)(vi), 5(C)(viii), 5(C)(ix), 5(C)(x) or 5(C)(xiii) (as the case may require) by including in the denominator of the fraction described therein the aggregate number of Shares to be issued pursuant to such dividend, bonus issue or free distribution. (iv) Rights issues to shareholders If the Issuer shall grant, issue or offer to the holders of Shares rights entitling them to subscribe for or purchase Shares, which expression shall include those Shares which are required to be offered to employees and persons other than shareholders in connection with such grant, issue or offer: (a) (b) at a consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) which is fixed on or prior to the record date mentioned below and is less than the Current Market Price (as defined in Condition 5(C)(xv)) per Share at such record date; or at a consideration per Share receivable by the Issuer which is fixed after the record date mentioned below and is less than the Current Market Price per Share on the date the Issuer fixes the said consideration, then the Conversion Price in effect on the record date (in a case within (a) above) for the determination of shareholders entitled to receive such rights or (in a case within (b) above) on the date the Issuer fixes the said consideration shall be adjusted in accordance with the following formula: = + + where: NCP = the Conversion Price after such adjustment. OCP = the Conversion Price before such adjustment. N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC (in a case within (a) above) on such record date or (in a case within (b) above) on the date the Issuer fixes the said consideration. n = the number of Shares initially to be issued upon exercise of such rights at the said consideration. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share specified in (a) or, as the case may be, (b) above. 61

70 Effective date of adjustment Subject as provided below, such adjustment shall become effective immediately after the latest date for the submission of applications for such Shares by shareholders entitled to the same pursuant to such rights or (if later) immediately after the Issuer fixes the said consideration but retroactively to immediately after the record date mentioned above. (v) Warrants issued to shareholders If the Issuer shall grant, issue or offer to the holders of Shares warrants entitling them to subscribe for or purchase Shares: (a) (b) at a consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) which is fixed on or prior to the record date for the determination of shareholders entitled to receive such warrants and is less than the Current Market Price per Share at such record date; or at a consideration per Share receivable by the Issuer which is fixed after the record date mentioned above and is less than the Current Market Price per Share on the date the Issuer fixes the said consideration, then the Conversion Price in effect (in a case within (a) above) on the record date for the determination of shareholders entitled to receive such warrants or (in a case within (b) above) on the date the Issuer fixes the said consideration shall be adjusted in accordance with the following formula: = + + where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC (in a case within (a) above) on such record date or (in a case within (b) above) on the date the Issuer fixes the said consideration. n = the number of Shares to be issued upon exercise of such warrants at the said consideration which, where no applications by shareholders entitled to such warrants are required, shall be based on the number of warrants issued. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share specified in (a) or, as the case may be, (b) above. Effective date of adjustment Subject as provided below, such adjustment shall become effective (i) where no applications for such warrants are required from shareholders entitled to the same, upon their issue and (ii) where applications by shareholders entitled to the same are required as aforesaid, immediately after the latest date for the submission of such applications or (if later) immediately after the Issuer fixes the said consideration, but in all cases retroactively to immediately after the record date mentioned above. (vi) Issues of rights or warrants for equity-related securities to shareholders If the Issuer shall grant, issue or offer to the holders of Shares rights or warrants entitling them to subscribe for or purchase any securities convertible into or exchangeable for Shares: 62

71 (a) (b) at a consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) which is fixed on or prior to the record date mentioned below and is less than the Current Market Price per Share at such record date; or at a consideration per Share receivable by the Issuer (determined as aforesaid) which is fixed after the record date mentioned below and is less than the Current Market Price per Share on the date the Issuer fixes the said consideration then the Conversion Price in effect (in a case within (a) above) on the record date for the determination of shareholders entitled to receive such rights or warrants or (in a case within (b) above) on the date the Issuer fixes the said consideration shall be adjusted in accordance with the following formula: = + + where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC (in a case within (a) above) on such record date or (in a case within (b) above) on the date the Issuer fixes the said consideration. n = the number of Shares initially to be issued upon exercise of such rights or warrants and conversion or exchange of such convertible or exchangeable securities at the said consideration. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share specified in (a) or, as the case may be, (b) above. Effective date of adjustment Subject as provided below, such adjustment shall become effective (a) where no applications for such rights or warrants are required from shareholders entitled to the same, upon their issue and (b) where applications by shareholders entitled to the rights or warrants are required as aforesaid and in the case of applications for convertible or exchangeable securities by shareholders entitled to the same pursuant to such rights, immediately after the latest date for the submission of such applications or (if later) immediately after the Issuer fixes the said consideration; but in all cases retroactively to immediately after the record date mentioned above. (vii) Distribution If the Issuer shall make any Distribution (as defined below) consisting in whole or in part of assets other than cash to its shareholders, then the Conversion Price shall be adjusted in accordance with the following formula: where: NCP = OCP x NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. CMP = the Current Market Price per Share on the last Trading Day preceding the date on which the Distribution is publicly announced. 63

72 fmv = the aggregate fair market value on the date of such announcement, as determined in good faith by a leading independent investment bank of international repute selected by the Issuer and notified in writing to the Trustee and acting as experts, of the portion of the Distribution attributable to one Share. If the Issuer shall pay or make any Distribution in cash only then, in such case, the Conversion Price shall be adjusted in accordance with the following formula: where: NCP = OCP x NCP and OCP shall have the meanings ascribed thereto in Condition 5(C)(iv). M = the Current Market Price per Share on the record date. C = the amount of Distribution in cash so distributed applicable to one Share, provided that with respect to any purchases of Shares by the Issuer, C shall be equal to the excess of the price per Share paid by the Issuer over the then current trading price per Share on the TPEx on the applicable Trading Day. For the purposes of this Condition 5(C)(vii): Capital Stock means, with respect to the Issuer, any and all shares, interests, participation or other equivalents (however designated) including all common stock and all preferred stock of the Issuer. Distribution means any dividend or distribution, whether of cash, assets in specie or other property (whenever paid or made and however described) or payment on redemption, or for the purchase of, Capital Stock of the Issuer, as applicable, provided that with respect to any purchases of Capital Stock by the Issuer, it shall not be a Distribution where the price per Share paid by the Issuer does not exceed the then current trading price per Share on the TPEx on the applicable Trading Day. Effective date of adjustment Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such Distribution, provided that (a) in the case of such a Distribution which must, under applicable law of the Cayman Islands and/or ROC, be submitted for approval to a general meeting of shareholders of the Issuer or be approved by a meeting of the board of directors of the Issuer before such Distribution may legally be made and is so approved after the record date fixed for the determination of shareholders entitled to receive such Distribution, such adjustment shall, immediately upon such approval being given by such meeting, become effective retroactively to immediately after such record date and (b) if the fair market value of such Distribution cannot be determined until after the record date fixed for the determination of shareholders entitled to receive such Distribution, such adjustment shall, immediately upon such fair market value being determined, become effective retroactively to immediately after such record date. (viii) Issue of convertible or exchangeable securities other than to shareholders or on exercise of warrants If the Issuer shall issue any securities convertible into or exchangeable for Shares (other than the Bonds or in any of the circumstances described in Condition 5(C)(vi) and Condition 5(C)(x)) and the consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) shall be less than the Current Market Price per Share on the date in the ROC on which the Issuer fixes the said consideration (or if the issue of such securities is subject to approval by a general meeting of shareholders, on the date on which the board of directors of the Issuer fixes the consideration to be 64

73 recommended at such meeting), then the Conversion Price in effect immediately prior to the date of issue of such convertible or exchangeable securities shall be adjusted in accordance with the following formula: = + + where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv). N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC on the day immediately prior to the date of such issue. n = the number of Shares to be issued upon conversion or exchange of such convertible or exchangeable securities at the initial conversion or exchange price or rate. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share. Effective date of adjustment Such adjustment shall become effective as of the calendar day in the ROC corresponding to the calendar day at the place of issue on which such convertible or exchangeable securities are issued. (ix) Other issues of Shares If the Issuer shall issue any Shares (other than Shares issued (a) upon conversion or exchange of any convertible or exchangeable securities issued by the Issuer, (b) upon exercise of any rights or warrants granted, offered or issued by the Issuer, (c) in any of the circumstances described in Conditions 5(C)(i) and 5(C)(ii), and (d) to the employees upon their exercise of employee stock options, but excluding Shares issued pursuant to any employee stock bonus or profit-sharing arrangements) for a consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) less than the Current Market Price per Share on the date in the ROC on which the Issuer fixes the said consideration (or, if the issue of such Shares is subject to approval by a general meeting of shareholders, on the date on which the board of directors of the Issuer fixes the consideration to be recommended at such meeting), then the Conversion Price in effect immediately prior to the issue of such additional Shares shall be adjusted in accordance with the following formula: = + + where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC on the day immediately prior to the date of issue of such additional Shares. n = the number of additional Shares issued as aforesaid. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share. 65

74 Effective date of adjustment Such adjustment shall become effective as of the calendar day in the ROC of the issue of such additional Shares or, in the case of an issue to employees under any employee stock bonus or profit sharing arrangements, where such an issue is announced at the same time as a stock dividend, such adjustment shall become effective as of the record date for determination of the identity of the shareholders entitled to receive any such dividend. (x) Issue of equity related securities If the Issuer shall grant, issue or offer options, warrants or rights (excluding those rights and warrants referred to in Conditions 5(C)(iv), 5(C)(v), 5(C)(vi) and 5(C)(viii)) to subscribe for or purchase Shares or securities convertible into or exchangeable for Shares and the consideration per Share receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) shall be less than the Current Market Price per Share on the date in the ROC on which the Issuer fixes the said consideration (or, if the offer, grant or issue of such rights, options or warrants is subject to approval by a general meeting of shareholders, on the date on which the board of directors of the Issuer fixes the consideration to be recommended at such meeting), then the Conversion Price in effect immediately prior to the date of the offer, grant or issue of such rights, options or warrants shall be adjusted in accordance with the following formula: = + + where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. N = the number of Shares outstanding (having regard to Condition 5(C)(xvii)) at the close of business in the ROC on the day immediately prior to the date of such issue. n = the number of Shares to be issued on exercise of such rights or warrants and (if applicable) conversion or exchange of such convertible or exchangeable securities at the said consideration. v = the number of Shares which the aggregate consideration receivable by the Issuer (determined as provided in Condition 5(C)(xvi)) would purchase at such Current Market Price per Share. Effective date of adjustment Such adjustment shall become effective as of the calendar day in the ROC corresponding to the calendar day at the place of issue on which such rights or warrants are issued. (xi) Capital Reduction Upon a capital reduction by the Issuer (other than by means of cancelling any Shares repurchased by the Issuer as treasury shares or by means of cancelling any Shares and returning capital in cash to shareholders) the Conversion Price shall be adjusted in accordance with the following formulas: where: = NCP and OCP have the meanings ascribed thereto in Condition 5(c)(iv) above. 66

75 N = the number of Shares outstanding immediately prior to the Trading Day on which the shares of the Issuer are relisted on the TPEx after the completion of such capital reduction. n = the number of Shares outstanding immediately after the Trading Day on which the shares of the Issuer are relisted on the TPEx after the completion of such capital reduction. For the avoidance of doubt, no adjustment to the Conversion Price under this Condition 5(C)(xi) will be required if the Issuer cancels any Shares repurchased by it as treasury shares or if the Issuer repurchases any Shares for the purposes of transferring to its employees or for conversion by holders of the convertible bonds issued by the Issuer. Effective date of adjustment Such adjustment shall become effective immediately on the Trading Day on which the shares of the Issuer are relisted on the TPEx after such capital reduction. (xii) Tender or exchange offers In case a tender or exchange offer made by the Issuer or any Subsidiary for all or any portion of the Shares shall expire and such tender or exchange offer shall involve the payment by the Issuer or such Subsidiary of a consideration per Share having a fair market value (as determined in good faith by two leading independent investment banks of international repute selected by the Issuer at the expense of the Issuer and promptly notified in writing to the Trustee and acting as experts) at the last time (the Expiration Date ) tenders or exchanges could have been made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Current Market Price per Share, as of the Expiration Date, the Conversion Price shall be adjusted in accordance with the following formula: = + [( ) ] where: NCP and OCP have the meanings ascribed thereto in Condition 5(C)(iv) above. N = the number of Shares outstanding (including any tendered or exchanged Shares) on the Expiration Date. CMP = the Current Market Price per Share as of the Expiration Date. fmv = the fair market value (as determined in good faith by two leading independent investment banks of international repute selected by the Issuer and notified in writing to the Trustee and acting as experts) of the aggregate consideration payable to the holders of Shares based on the acceptance (up to a maximum specified in the terms of the tender or exchange offer) of all Shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the Shares deemed so accepted up to any such maximum, being referred to as the Purchased Shares ). n = the number of Purchased Shares. Effective date of adjustment Such adjustment shall become retroactively effective immediately prior to the opening of business on the day following the Expiration Date. Tender or exchange offer not completed 67

76 If the Issuer is obliged to purchase Shares pursuant to any such tender or exchange offer, but the Issuer is permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender or exchange offer had not been made. (xiii) Analogous events and modifications If (a) the rights of conversion or exchange, purchase or subscription attaching to any options, rights or warrants to subscribe for or purchase Shares or any securities convertible into or exchangeable for, or which carry rights to subscribe for or purchase Shares are modified (other than pursuant to and as provided in the terms and conditions of such options, rights, warrants or securities) or (b) either (1) the Issuer determines or (2) written notice has been given by the Issuer to the Trustee that, in either case, any other event or circumstance has occurred which has or would have an effect on the position of the holders of the Bonds as a class compared with the position of the holders of all the securities (and options and rights relating thereto) of the Issuer, taken as a class, which is analogous to any of the events referred to in Conditions 5(C)(i) to 5(C)(xii) (both inclusive), then, in any such case as is referred to (a) or (b)(1) of this Condition 5(C)(xiii), the Issuer shall notify the Trustee in writing thereof or if the Trustee has been notified under (b)(2) of this Condition 5(C)(xiii), the Trustee shall notify the Issuer thereof, and in each such case the Issuer shall consult with a leading independent investment bank of international repute (who shall be selected by the Issuer at the expense of the Issuer and notified in writing to the Trustee) as to what adjustment, if any, should be made to the Conversion Price (and the timing of any such adjustment) to preserve the value of the Conversion Right holders of the Bonds and will make any such adjustment. Any such adjustment, where possible, shall be made using methodology similar in nature to one or more of the adjustments described above in this Condition 5(C), and may consist of a combination of such adjustments where appropriate. (xiv) Simultaneous issues of different classes of shares In the event of simultaneous issues of two or more classes of share capital comprising Shares or rights or warrants in respect of, or securities convertible into or exchangeable for, two or more classes of share capital comprising Shares, then, for the purposes of this Condition 5(C), the formula: = + + shall be restated as: = where v1 and n1 shall have the same meanings as v and n but by reference to one class of Shares, v2 and n2 shall have the same meanings as v and n but by reference to a second class of Shares, v3 and n3 shall have the same meanings as v and n but by reference to a third class of Shares and so on. (xv) Current Market Price per Share Closing Price means, in relation to the Shares for any Trading Day, the last reported transaction price or, if no transaction takes place on such day, the last available reported transaction price of the Shares on the TPEx in effect on the Trading Day immediately preceding such day or, if the Shares are not at that time listed or admitted to trading on the TPEx, the average of the closing bid and offered prices of Shares for such day as furnished by a leading independent securities firm licensed to trade on the TPEx selected by the Issuer for that purpose and notified in writing to the Trustee. With respect to 68

77 any security traded on another exchange or market, this definition shall apply with reference to that exchange or market. Current Market Price means, in relation to the Shares, for any day (i) the average of the Closing Prices for the 30 consecutive Trading Days before such day, (ii) if the Issuer has more than one class of share capital comprising Shares, then the relevant Current Market Price for Shares shall be the price for that class of Shares the issue of which (or of rights or warrants in respect of, or securities convertible into or exchangeable for, that class of Shares) gives rise to the adjustment in question, and (iii) in the case the market value cannot be determined pursuant to the procedures above, the market value determined by an opinion of an independent investment banking firm of international repute, selected by the Issuer at its own expense and notified in writing to the Trustee. If during the said 30 consecutive Trading Days or any period thereafter up to but excluding the date as of which the adjustment of the Conversion Price in question shall be effected, any event (other than the event which requires the adjustment in question) shall occur which gives rise to a separate adjustment to the Conversion Price under the provisions of these Conditions, then the Current Market Price as determined above shall be adjusted in such manner and to such extent as an independent investment bank of international repute, selected by the Issuer at its own expense and notified in writing to the Trustee, shall deem appropriate and fair to compensate for the effect thereof. (xvi) Consideration receivable by the Issuer For the purposes of any calculation of the consideration receivable by the Issuer pursuant to Conditions 5(C)(iv), 5(C)(v), 5(C)(vi), 5(C)(viii), 5(C)(ix) and 5(C)(x), the following provisions shall be applicable: (a) (b) (c) in the case of the issue of Shares for cash, the consideration shall be the amount of such cash, provided that in no such case shall any deduction be made for any commissions or any expenses paid or incurred by the Issuer for any underwriting of the issue or otherwise in connection therewith; in the case of the issue of Shares for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Issuer (and in making such determination the Issuer shall consult a leading independent investment bank of international repute selected by the Issuer at the Issuer s expense and notified to the Trustee in writing and shall take fully into account the advice received from such bank) or, if pursuant to applicable law of the ROC such determination is to be made by application to a court of competent jurisdiction, as determined by such court or an appraiser appointed by such court, irrespective of the accounting treatment thereof; in the case of issue of Shares for a merger or share exchange, the consideration shall be the net value per share of the target company calculated based on the latest reviewed or audited financial statements prior to the record date of the merger or share exchange, as the case may be, multiplied by the share exchange ratio; in the case of the issue (whether initially or upon the exercise of rights or warrants) of securities convertible into or exchangeable for Shares, the aggregate consideration receivable by the Issuer shall be deemed to be the consideration received by the Issuer for such securities and (if applicable) rights or warrants plus the additional consideration (if any) to be received by the Issuer upon (and assuming) the conversion or exchange of such securities at the initial conversion or exchange price or rate and (if applicable) the exercise of such rights or warrants at the initial subscription or purchase price (the consideration in each case to be determined in the same manner as provided in paragraphs (a) and (b) above of this Condition 5(C)(xvi)) and 69

78 the consideration per Share receivable by the Issuer shall be such aggregate consideration divided by the number of Shares to be issued upon (and assuming) such conversion or exchange at the initial conversion or exchange price or rate and (if applicable) the exercise of such rights or warrants at the initial subscription or purchase price; (d) (e) (f) in the case of the issue of rights or warrants to subscribe for or purchase Shares, the aggregate consideration receivable by the Issuer shall be deemed to be the consideration received by the Issuer for any such rights or warrants plus the additional consideration to be received by the Issuer upon (and assuming) the exercise of such rights or warrants at the initial subscription or purchase price (the consideration in each case to be determined in the same manner as provided in (a) and (b) above of this Condition 5(C)(xvi)) and the consideration per Share receivable by the Issuer shall be such aggregate consideration divided by the number of Shares to be issued upon (and assuming) the exercise of such rights or warrants at the initial subscription or purchase price; if any of the consideration referred to in any of the preceding paragraphs of this Condition 5(C)(xvi) is receivable in a currency other than NT dollars, such consideration shall, in any case where there is a fixed rate of exchange between the NT dollar and the relevant currency for the purposes of the issue of the Shares, the conversion or exchange of such securities or the exercise of such rights or warrants, be translated into NT dollars for the purposes of this Condition 5(C)(xvi) at such fixed rate of exchange and shall, in all other cases, be translated into NT dollars at the mean of the exchange rate quotations (being quotations for the cross rate through U.S. dollars if no direct rate is quoted) by a leading bank in the ROC for buying and selling spot units of the relevant currency by telegraphic transfer against NT dollars on the date as of which the said consideration is required to be calculated as aforesaid; and in the case of the issue of Shares excluding any issue of Shares to employees under any employee stock bonus or profit sharing arrangements credited as fully paid out of retained earnings or capitalisation or reserves at their par value, the aggregate consideration receivable by the Issuer shall be deemed to be zero (and accordingly the number of Shares which such aggregate consideration receivable by the Issuer could purchase at the relevant Current Market Price per Share shall also be deemed to be zero). (xvii) Cumulative adjustments If, at the time of computing an adjustment (the later adjustment ) of the Conversion Price pursuant to any of Conditions 5(C)(ii), 5(C)(iv), 5(C)(v), 5(C)(viii), 5(C)(ix) and 5(C)(x), the Conversion Price already incorporates an adjustment (the earlier adjustment ) made (or taken or to be taken into account pursuant to the proviso to Condition 5(C)(xviii) below) to reflect an issue of Shares or of securities convertible into or exchangeable for Shares or of rights or warrants to subscribe for or purchase Shares or securities, to the extent that the number of such Shares or securities taken into account for the purposes of calculating the earlier adjustment exceeds the number of such Shares in issue at the time relevant for ascertaining the number of outstanding Shares for the purposes of computing the later adjustment, such excess Shares shall be deemed to be outstanding for the purposes of making such computation. (xviii) Minor adjustments No adjustment will be made where such adjustment would be less than one per cent. of the Conversion Price then in effect; provided, however, that any adjustment that otherwise would be required to be made will be carried forward and taken into account (as if such adjustment had been made at the time 70

79 when it would have been made but for the provisions of this Condition 5(C)(xviii) in determining any subsequent adjustment. (xix) Reference to fixed Any reference herein to the date on which a consideration is fixed shall, where the consideration is originally expressed by reference to a formula which cannot be expressed as an actual cash amount until a later date, be construed as a reference to the first day on which such actual cash amount can be ascertained. (xx) Calculations All calculations relating to adjustment of the Conversion Price shall be performed by the Issuer, subject to approval by an independent, internationally recognised investment bank or accounting firm selected by the Issuer at the expense of the Issuer and notified in writing to the Trustee, before notice of any such adjustment is given to holders of the Bonds. All calculations under this Condition 5(C) shall be made to the nearest of a share of securities or other property or the nearest cent of a U.S. dollar or the nearest 10 cents of a NT dollar, as the case may be. If any doubt shall arise as to the appropriate adjustment to the Conversion Price, a certificate from such investment bank or accounting firm shall be conclusive and binding on all concerned save in the case of manifest error. (xxi) Minimum Conversion Price Notwithstanding the provisions of this Condition 5(C), the Conversion Price shall not be reduced below the par value of the Shares (NT$10 at the date hereof) as a result of any adjustment made hereunder unless under applicable law then in effect Bonds may be converted at such reduced Conversion Price into legally issued, fully-paid and non-assessable Shares. (xxii) Downward adjustment No adjustment involving an increase in the Conversion Price will be made, except in the case of a consolidation of the Shares, as referred to in Condition 5(C)(ii) above and in the case of a capital reduction, as referred to in Condition 5(C)(xi) above. (xxiii) Notification Any adjustment will be notified promptly by the Issuer to the holders of the Bonds in accordance with Condition 14 and to the Trustee and the Agents in writing. Any such notice relating to an adjustment of the Conversion Price should set forth the event giving rise to the adjustment, the Conversion Price prior to the adjustment, the effective date of such adjustment and the Conversion Price after the adjustment. (xxiv) No obligation to monitor Neither the Trustee nor any of the Agents shall be obliged to monitor whether any event has occurred that might fall within Condition 5(C)(i) to Condition 5(C)(xiv) (all inclusive) or to make any calculation (or verification thereof) in connection with the Conversion Price and neither the Trustee nor the Agents shall be responsible to the holders or any other person for any loss arising from any failure by it to do so or for any delay by the Issuer or any independent investment bank in making a determination or calculation or any erroneous determination or calculation in connection with the Conversion Price and each shall assume that no such event has occurred until it has actual knowledge by way of notice in writing from the Issuer to the contrary. 71

80 (xxv) Treasury Shares In determining the number of Shares outstanding under this Condition 5(C), any treasury share purchased by the Issuer, which has not been cancelled or transferred to any other person, shall be excluded in such determination. No adjustment shall be made to the Conversion Price under this Condition 5(C) upon the cancellation of any treasury shares held by it in accordance with ROC laws and regulations. (D) Conversion Undertakings The Issuer has undertaken in the Trust Deed that, so long as any Bond remains outstanding: (i) (ii) (iii) (iv) (v) (vi) it will use its best efforts to maintain the listing of all the Shares on the TPEx; to the extent permitted by applicable laws, it will use its best efforts to ensure that any Shares issuable on conversion of the Bonds may be transferred and sold to any person, corporation, partnership or association, regardless of nationality (except for PRC persons who are not QDIIs); it will ensure that any Closed Period is as short a period as is reasonably practicable having regard to applicable laws, regulations and practices; in the event of an adjustment to the Conversion Price in accordance with Condition 5(C), the holders of the Bonds will be notified by the Issuer in accordance with Condition 14; it will use its best endeavours to maintain the listing of the Bonds on the SGX-ST; and it will procure sufficient Shares for transfer and delivery to the person designated on the Conversion Notice upon conversion of the Bonds. The Issuer has also given certain other undertakings in the Trust Deed for the protection of the Conversion Rights. 6 Payments (A) Manner of payment Payment in respect of a Bond shall be made by transfer to the registered account of the holder of the Bond. The registered account and address of a holder of the Bonds mean its account and address appearing on the register of holders of the Bonds at the close of business on the second Business Day (as defined below in this Condition 6(A)) before the due date for payment. References in these Conditions, the Trust Deed and the Agency Agreement to payment in respect of a Bond shall, where the context so permits, be deemed to include not only a reference to the principal of, but also to any premium, interest and other amounts (including any Additional Amounts) payable on, such Bond. For the purposes of Condition 6, Condition 7 and Condition 9: Business Day means a day (other than a Saturday or Sunday) on which commercial banks are open for business in The City of New York, in Hong Kong, in London, in Taiwan and, in the case of the surrender of a Definitive Certificate, in the place where the Definitive Certificate is surrendered. 72

81 (B) (C) (D) Commissions and Expenses All payments are subject in all cases to any applicable fiscal or other laws and regulations, but without prejudice to the provisions of Condition 8. No commissions or expenses shall be charged to the holders of the Bonds in respect of such payments. Date of Payment Where payment is to be made by transfer to a registered account, payment instructions for value on the due date (or, if that date is not a Business Day, for value the next Business Day) shall be initiated. Notwithstanding the above, payment of principal of a Bond represented by a Definitive Certificate shall not be made earlier than the Business Day on which the relevant Definitive Certificate is surrendered at the specified office of a Paying Agent. Default interest and Payment Delay If the Issuer fails to pay any sum in respect of the Bonds when the same becomes due and payable under these Conditions, interest shall accrue on the overdue sum at the rate of five per cent. per annum from the due date and ending on the date on which payment is made to the holders of the Bonds in respect thereof (both dates inclusive) as stated in a notice given to the holders of the Bonds in accordance with Condition 14. Such default interest shall accrue on the basis of the actual number of days elapsed and a 360- day year consisting of 12 months of 30 days each. A holder of the Bonds shall not be entitled to any interest or other payment for any delay in receiving the amount due if (i) the due date is not a Business Day, (ii) the Bond is represented by a Definitive Certificate and the holder is late in surrendering its Definitive Certificate (if required to do so), or (iii) a cheque mailed in accordance with this Condition 6 arrives after the due date for payment. (E) Partial Payments If the amount of principal and premium (if any) which is due on the Bonds is not paid in full, the Registrar will annotate the register of Bondholders with a record of the amount of principal and/or premium, in fact paid. 7 Redemption, Repurchase and Cancellation (A) Redemption at maturity Unless the Bonds have been previously converted, redeemed, repurchased and cancelled as herein provided, the Issuer shall redeem the Bonds at a redemption price equal to per cent. of the outstanding principal amount thereof on 25 January 2022 (the Maturity Date ). The Bonds may be redeemed prior to that date only as provided in Conditions 7(B), 7(C), 7(D), 7(E) and 7(F) below, but without prejudice to Condition 9. (B) Redemption at the Option of the Issuer At any time on or after the day falling 12 months after the Issue Date and at least 40 days prior to the Maturity Date, the Issuer may, having given not less than 30 nor more than 60 days notice to the holders of the Bonds and the Trustee (which notice shall be irrevocable and delivered in accordance with Condition 7(H) and Condition 14), redeem the Bonds in whole or in part (being US$200,000 in principal amount or an integral multiple thereof) at their Early Redemption Amount if the Closing Price of the Shares (translated into U.S. dollars at the Prevailing Rate) for 20 out of 30 consecutive Trading Days, the last of which occurs not more than five Trading Days prior to the date on which notice of such redemption is given, is at least 130 per cent. of the Conversion Price (translated into U.S. dollars at the Fixed Exchange Rate). 73

82 Notwithstanding the foregoing, the Issuer may, at any time, having given not less than 30 nor more than 60 days notice to the holders of the Bonds and the Trustee (which notice shall be irrevocable and delivered in accordance with Condition 7(H) and, in the case of the Bondholders, Condition 14), redeem the Bonds in whole but not in part, at the Early Redemption Amount if (a) more than 90 per cent. of the principal amount of the Bonds have already been converted or redeemed, repurchased and cancelled and (b) the applicable redemption date does not fall within a Closed Period. For the purposes of this Condition 7(B), the Prevailing Rate means, for each relevant Trading Day, the fixing rate at 11:00 a.m. (Taipei time) expressed as the number of NT dollars per one U.S. dollar, as quoted by Taipei Forex Inc. (C) Redemption for Taxation Reasons At any time, the Issuer may having given not less than 30 nor more than 60 days notice to the holders of the Bonds and the Trustee (which notice will be irrevocable and delivered in accordance with Condition 7(H) and, in the case of the Bondholders, Condition 14), redeem the Bonds in whole but not in part (subject to the Non-Redemption Right (as defined below in this Condition 7(C)) of the holders of the Bonds) at their Early Redemption Amount, provided that the Issuer satisfies the Trustee that, immediately prior to the giving of such notice: (i) (ii) the Issuer has become obliged to pay Additional Amounts (as defined in Condition 8) as a result of any change in, or amendment to, the laws or regulations of the Cayman Islands, the ROC (or any other jurisdiction in which the Issuer is then organised or resident for tax purposes) or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective after the Issue Date and would require the Issuer to gross up in respect of ROC tax for payment of interest or premium, if any, at a rate greater than 15 per cent., or to gross up for the payment of principal or to gross up for payment of interest or premium if any, for Cayman Islands tax; and such obligation cannot be avoided by the Issuer taking reasonable measures available to it. Notwithstanding the foregoing, no such notice of redemption shall be given earlier than 30 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Amounts. Prior to the delivery of any notice of redemption pursuant to this Condition 7(C), the Issuer shall deliver to the Trustee (1) a certificate in English signed by two Authorised Officers of the Issuer stating that the obligations referred to in (i) above cannot be avoided by taking reasonable measures available to it, and (2) an opinion addressed to the Trustee, in form and substance satisfactory to the Trustee, from an independent law firm of recognised standing admitted to practice in the Cayman Islands, the ROC (or any other jurisdiction in which the Issuer is then organised or resident for tax purpose) or a written advice, in form and substance satisfactory to the Trustee, of a qualified tax advisor of recognised standing in the Cayman Islands and/or the ROC (or any other jurisdiction in which the Issuer is then organised or resident for tax purpose) addressed to the Trustee, in each case to the effect that the Issuer has or will become obliged to pay such Additional Amounts as a result of such change or amendment, and the Trustee shall be entitled to accept such certificate and opinion or advice as sufficient and conclusive evidence of the satisfaction of the conditions precedent referred to in this Condition 7(C), in which event the same shall be conclusive and binding on the holders of the Bonds. Upon the expiry of any such notice, the Issuer shall be bound to redeem the Bonds at their Early Redemption Amount. The Bonds in respect of which a notice of redemption has been given under Conditions 7(B), 7(D), 7(E) or 7(F) shall not be affected by any notice given subsequently under this Condition 7(C). 74

83 If the Issuer gives a notice of redemption of the Bonds under this Condition 7(C), each Bondholder shall have the right (the Non-Redemption Right ) to elect that all and not part only of its Bonds shall not be redeemed. Upon the exercise of the Non-Redemption Right with respect to such Bonds, no Additional Amounts referred to in Condition 8 shall be payable on the payments due after the Relevant Date (as defined in Condition 8) in respect of such Bonds and, subject to Condition 8, such payments shall be made subject to the deduction or withholding required under the laws or regulations of the Cayman Islands, the ROC (or such other jurisdiction in which the Issuer is then organised or resident for tax purpose). For the avoidance of doubt, any increased amounts that had been payable in respect of the Bonds under Condition 8 as a result of the laws or regulations (or the interpretation or administration thereof) of a relevant taxing jurisdiction in effect on the original date of their issuance shall continue to be payable to such holders of the Bonds. (D) Redemption of the Bonds in the Event of Delisting In the event that the Shares cease to be listed or admitted for trading on the TPEx (a Delisting ), the Issuer shall notify the holders of the Bonds and the Trustee promptly (which notice shall be delivered in accordance with Conditions 7(H) and, in the case of the Bondholders, Condition 14), each Bondholder shall have the right (the Delisting Put Right ) to require the Issuer to redeem such Bondholder s Bonds in whole, or in part (being U.S.$200,000 in principal amount or an integral multiple thereof), at their Early Redemption Amount on the 20th Business Day (as defined in Condition 6) after the date of such notice. (E) Redemption of the Bonds in the Event of a Change of Control If a Change of Control occurs, each Bondholder shall have the right (the Change of Control Put Right ) at such Bondholder s option to require the Issuer to redeem such Bondholder s Bonds in whole or in part (being U.S.$200,000 in principal amount or an integral multiple thereof) on the date set by the Issuer for such redemption (the Change of Control Put Date ), which shall not be less than 30 nor more than 60 days following the date on which the Issuer notifies the Trustee in writing of the Change of Control, at the Early Redemption Amount. For the purposes of this Condition 7: a Change of Control occurs when: (1) any Person or Persons (other than the Major Shareholders) acting together acquires Control of the Issuer if such Person or Persons does not or do not have, and would not be deemed to have, Control of the Issuer on the Issue Date; or (2) the Issuer consolidates with or merges into or sells or transfers all or substantially all of its assets to any other Person, unless the consolidation, merger, sale or transfer will not result in such other Person or Persons acquiring Control over the Issuer or the successor entity. Control means (i) the right to appoint and/or remove all or the majority of the members of the Issuer s board of directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise; or (ii) the acquisition or control of more than 50 per cent. of the voting rights of the issued share capital of the Issuer. Early Redemption Amount of a Bond, for each U.S.$200,000 principal amount of Bonds, is determined so that it represents for the holders of the Bonds a gross yield of 0.2 per cent. per annum, calculated on a semi-annual basis. The applicable Early Redemption Amount for each US$200,000 principal amount of Bonds is calculated in accordance with the following formula, rounded (if 75

84 necessary) to two decimal places with being rounded upwards (provided that if the date fixed for redemption is the Annual Date (as set out below), such Early Redemption Amount shall be as set out in the table below in respect of such Annual Date). Early Redemption Amount = Previous Redemption Amount x (1 + r) d/p Previous Redemption Amount = the Early Redemption Amount for each U.S.$200,000 principal amount of the Bonds on the Annual Date immediately preceding the date fixed for redemption as set out below (or if the Bonds are to be redeemed prior to 25 January 2018, U.S.$200,000): Annual Date Early Redemption Amount ( U.S.$) 25 January , January , January , January ,604,81 25 January , r = 0.2 per cent. expressed as a fraction d = number of days from and including the immediately preceding Annual Date (or if the Bonds are to be redeemed on or before 25 January 2018, from and including the Issue Date) to, but excluding, the date fixed for redemption, calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed. p = 360 Major Shareholders means Green Source Investments Ltd and any other person (i) directly or indirectly Controlling, Controlled by, or under direct or indirect common Control with, Green Source Investments Ltd or (ii) who is a spouse or child of any person described in (i) above; or (iii) any trust established for the benefit of any person described in (i) and (ii) above. Person means any individual, limited liability company, corporation, company, firm, partnership, joint venture, tribunal, undertaking, association, organisation, trust, government or political subdivision or agency or instrumentality thereof or any other entity or organisation, in each case whether or not being a separate legal entity; provided, however, that Person does not include (a) the Issuer s board of directors, supervisors or any other governing board of the Issuer or (b) the Issuer s wholly-owned direct or indirect Subsidiaries. (F) Repurchase The Issuer or any Subsidiary (as defined in Condition 3(B)) may at any time and from time to time repurchase the Bonds in the open market or otherwise at any price. (G) Cancellation All Bonds that are redeemed, repurchased or converted and surrendered to any Agent shall forthwith be cancelled. In the case of Bonds represented by Definitive Certificates, certificates in respect of all 76

85 Bonds cancelled shall be forwarded to or to the order of the Registrar or the Principal Agent. Bonds cancelled may not be reissued or resold. (H) Redemption Procedures In the event that the Issuer is required to deliver a notice to the holders of the Bonds and the Trustee under this Condition 7, the Issuer shall provide notice to each holder of the Bonds in accordance with Condition 14, which notice shall state, to the extent applicable: (i) (ii) (iii) (iv) (v) (vi) (vii) the date fixed for redemption; in the case of a Delisting, the date of such Delisting and, briefly, the events resulting in such Delisting; in the case of a Change of Control, the date of such Change of Control and, briefly, the events causing such Change of Control; the date by which the Exercise Notice (as defined below) must be given by the holder; the applicable redemption price of a Bond on the redemption date and the method by which such redemption price will be paid; the names and specified addresses of all Paying Agents; the Conversion Price then in effect and the date on which the right to convert the Bonds or the portions thereof to be redeemed will expire; (viii) the procedures that holders of the Bonds must follow and the requirements they must satisfy in order to exercise their Delisting Put Right, Non-Redemption Right, Change of Control Put Right and/or Conversion Right, as the case may be; (ix) (x) (xi) that an Exercise Notice, once validly given, may not be withdrawn; the place or places of payment; and that payment will be made upon presentation and surrender of the Bonds to be redeemed. To exercise its Delisting Put Right, Non-Redemption Right or Change of Control Put Right, as the case may be, a holder must deliver at its own expense a written irrevocable notice of the exercise of such right (an Exercise Notice ) in substantially the form set forth in the Agency Agreement or such other form obtainable from any of the Paying Agents, to any Paying Agent during normal business hours (being between 9.00 a.m. and 3.00 p.m.) on any Business Day that is not fewer than 10 Business Days prior to the date fixed for redemption. The exercise of the Delisting Put Right, the Change of Control Put Right in respect of any Bonds outstanding shall override any exercise of the redemption right at the option of the Issuer with respect to the Bonds, irrespective of the dates fixed for redemption or the timing of the notices given by the holders of the Bonds or the Issuer thereunder. Payment of the redemption price upon exercise of the Delisting Put Right or the Change of Control attaching to any Bond represented by a Definitive Certificate for which an Exercise Notice has been delivered is conditional upon the delivery of such Definitive Certificate (together with any necessary endorsements) to any Paying Agent during normal business hours on any Business Day, together with the delivery of such Exercise Notice, and shall be made promptly following the later of the relevant redemption date and the time of delivery of such Definitive Certificate. If such Paying Agent holds on a redemption date money sufficient to pay the redemption price for a Bond for which an Exercise 77

86 Notice has been delivered, then, whether or not the Definitive Certificate representing such Bond is delivered to such Paying Agent, on and after such redemption date (i) such Bond shall cease to be outstanding and interest, if any, on such Definitive Certificate shall cease to accrue; (ii) such Bond shall be deemed paid; and (iii) all other rights of the holder shall terminate, other than the right to receive the redemption price. 8 Taxation All payments in respect of the Bonds by the Issuer shall be made free and clear of and without any deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature ( Taxes ) imposed, levied, collected, withheld or assessed by or on behalf of the government of the Cayman Islands and/or the ROC or any authority thereof or therein having power to tax unless otherwise required by law or regulation; provided that, in respect of any such deduction or withholding so required from any such payment, the Issuer shall pay such additional amounts ( Additional Amounts ) as will result in the receipt by the holders of the Bonds of the amounts which would have been receivable in the absence of any such deduction or withholding, except that no Additional Amounts shall be payable in respect of any Bond: (i) (ii) to or to a third party on behalf of a Bondholder who is subject to such Taxes in respect of such Bond by reason of its being connected with the Cayman Islands and/or the ROC otherwise than merely by holding such Bond or by the receipt of payments in respect of such Bond; or if the Definitive Certificate, if issued, in respect of a Bond is presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the Bondholder would have been entitled to such Additional Amounts on surrendering the relevant certificate for payment on the last day of such 30-day period. References in these Conditions to payments in respect of the Bonds shall be deemed also to refer to any Additional Amounts that may be payable in respect thereof under this Condition 8. For the purposes of these Conditions: Relevant Date in relation to any Bond means (a) the due date for payment in respect thereof, or (b) if the full amount of the monies payable on such due date has not been received by the Trustee or the Principal Agent on or prior to such due date, the date on which notice is duly given to the holders of the Bonds that such monies have been so received. 9 Events of Default The Trustee at its discretion may, and if so requested in writing by the holders of the Bonds of not less than 25 per cent. in aggregate principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution shall (in each case subject to being indemnified and/or secured and/or pre-funded to its satisfaction), give notice in writing to the Issuer that the Bonds are immediately due and payable if an Event of Default (as defined below) shall have occurred. Upon such notice being given to the Issuer, the Bonds shall immediately become due and payable at their Early Redemption Amount plus any overdue interest payable in accordance with Condition 6(D). An Event of Default occurs when: (i) Payment Default: the Issuer fails to make any payment in respect of the Bonds within five Business Days after the same shall become due and payable; 78

87 (ii) (iii) (iv) (v) (vi) (vii) Default on Conversion: the Issuer fails to deliver Shares as and when such Shares are required to be delivered upon the conversion of a Bond and such failure continues for more than five Business Days; Other Default: the Issuer defaults in the performance or observance of or compliance with any of its other obligations set out in these Conditions or in the Trust Deed, which default is in the opinion of the Trustee incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not remedied within 30 days after written notice of such default has been given to the Issuer by the Trustee; Legal Proceedings: there shall have been entered against the Issuer or any Principal Subsidiary (as defined in Condition 3) a final judgment, decree or order by a court of competent jurisdiction for the payment of money in excess of U.S.$5 million with respect to the Issuer or any Principal Subsidiary (or its equivalent in any other currency or currencies (determined as provided below)) and 30 days shall have passed since the entry of such judgment, decree or order without it being bonded, satisfied, discharged or stayed; Cross Default: (a) any other present or future indebtedness of the Issuer or any Principal Subsidiary for or in respect of monies borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of an actual or potential default or event of default, howsoever described, or any such indebtedness is not paid when due or, as the case may be, within any applicable grace period originally provided for or (b) the Issuer or any Principal Subsidiary fails to pay when due any amount payable by the Issuer or such Principal Subsidiary, as the case may be, under any present or future guarantee, indemnity or arrangement or obligation having a like or similar effect, howsoever described, for any monies borrowed or raised, provided that the aggregate amount of the relevant indebtedness or amount payable in respect of which one or more events mentioned above in this Condition 9(v) have occurred equals or exceeds U.S.$5 million or its equivalent in any other currency (determined as provided below); Security Enforced: an encumbrancer takes possession or a receiver, manager or other similar officer is appointed, or a distress, execution or seizure before judgment is levied, enforced or sued out upon, against or in respect of the whole or any material part of the property, assets or revenues of the Issuer or any Principal Subsidiary and the same is not stayed, discharged, released or satisfied (as the case may be) within 60 days of such taking of possession, appointment, levying, enforcement or suing out (as the case may be); Bankruptcy: a decree or order by a court having jurisdiction shall have been entered adjudging the Issuer or any Principal Subsidiary bankrupt or insolvent, or approving a petition seeking the Issuer s reorganisation or that of any Subsidiary under any applicable bankruptcy, insolvency or reorganisation law, or for the appointment of an administrator or a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of, or all or a material part of the business or assets of, or for the winding-up or liquidation of the affairs of, the Issuer or any Principal Subsidiary; or the Issuer or any Principal Subsidiary shall institute proceedings to be adjudicated as a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganisation or arrangement under any applicable bankruptcy, insolvency or reorganisation law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of all or a material part of its business or assets, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or the Issuer or any Principal Subsidiary becomes bankrupt, insolvent or is unable to pay its debts as they mature, or the Issuer or any Principal Subsidiary stops or threatens to cease to carry on its business or a material part of its business, or corporate action shall be taken by the Issuer or any Principal Subsidiary in furtherance of any of the aforesaid purposes; 79

88 (viii) Dissolution: an order is made or an effective resolution shall be passed for the winding-up, dissolution or liquidation of the Issuer or that of any Principal Subsidiary, or the Issuer or any Principal Subsidiary becomes capable of being dissolved under the laws of its place of incorporation; (ix) (x) (xi) (xii) Proceedings: proceedings shall have been initiated against the Issuer or any Principal Subsidiary under any applicable bankruptcy, insolvency, or reorganisation law and such proceedings shall not have been discharged or stayed within a period of 60 days; Material loss of assets: any step is taken by any authorised person with a view to the seizure, condemnation, compulsory acquisition, expropriation or nationalisation of all or a material part of the assets of the Issuer or any Principal Subsidiary; Authorisation for performance: any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, license, order, recording or registration) at any time required to be taken, fulfilled or done in order (a) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under the Bonds and the Trust Deed, (b) to ensure that those obligations are legally binding and enforceable, and (c) to make the Bonds and the Trust Deed admissible in evidence in the courts of the ROC is not taken, fulfilled or done; or Unlawfulness: It is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Bonds or the Trust Deed. For the purposes of Conditions 9(iv) and 9(v) above, any indebtedness which is in a currency other than U.S. dollars shall be translated into U.S. dollars at the spot rate for the sale of U.S. dollars against the purchase of the relevant currency as quoted by an leading bank. If no direct spot rate is available, a rate shall be calculated by reference to the cross-rates through U.S. dollars of the relevant currency as quoted by any leading bank. 10 Prescription Claims against the Issuer for payment in respect of the Bonds shall be prescribed and become void unless made within 10 years from the appropriate Relevant Date in respect of such payment. 11 Enforcement At any time after the Bonds have become due and payable, the Trustee may, at its discretion and without further notice, take such proceedings against the Issuer as it may think fit to enforce payment in respect of the Bonds, including any premium and interest, and to enforce the provisions of the Trust Deed; provided, however, that the Trustee shall not be bound to take any such actions unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by Bondholders holding at least 25 per cent. in principal amount of the Bonds then outstanding, and (b) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction. No Bondholder will be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable period and such failure is continuing. 12 Meetings of Holders of the Bonds; Modification and Waiver (A) Meetings The Trust Deed contains provisions for convening meetings of holders of the Bonds to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or any provisions of the Trust Deed. Such a meeting may be 80

89 convened by the Issuer or the Trustee and shall be convened by the Trustee if requested in writing to do so by holders of the Bonds holding not less than 10 per cent. in principal amount of the Bonds for the time being outstanding and subject to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction against all costs and expenses. The quorum for any meeting convened to consider an Extraordinary Resolution will be two or more persons holding or representing at least 50 per cent. in principal amount of the Bonds for the time being outstanding or, at any adjourned such meeting, two or more persons being or representing holders of the Bonds whatever the principal amount of the Bonds held or represented, unless the business of such meeting includes consideration of proposals, inter alia, (a) to modify the maturity of the Bonds, (b) to modify the circumstances in which the Issuer or holders of the Bonds are entitled to redeem the Bonds pursuant to any of Conditions 7(B), 7(C), 7(D) or 7(E), (c) to reduce or cancel the principal amount of, any premium payable in respect of the Bonds or interest payable in respect of the Bonds or to change the method of calculation of interest, (d) to change the currency of denomination or payment of the Bonds, (e) to modify (except by a unilateral and unconditional reduction in the Conversion Price) or cancel the Conversion Rights, (f) to modify the provisions concerning the quorum required at any meeting of the holders of the Bonds or the majority required to pass an Extraordinary Resolution or (g) to change the governing law of the Bonds, in which case the necessary quorum will be two or more persons holding or representing not less than 75 per cent., or at any adjourned meeting not less than 50 per cent., in principal amount of the Bonds for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on all holders of the Bonds, whether or not they were present at the meeting at which such resolution was passed. The Trust Deed provides that a written resolution signed by or on behalf of the holders of the Bonds of not less than 90 per cent. of the aggregate principal amount of Bonds for the time being outstanding shall be as valid and effective as a duly passed Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more holders of the Bonds. (B) Other Modifications and Waivers The Trustee may, in its sole discretion, also agree (but shall not be obliged to do so), without the consent of the holders of the Bonds, to (i) any modification of, or the waiver or authorisation of any breach or proposed breach of, the Bonds, the Trust Deed or the Agency Agreement that is not, in the Trustee s opinion, materially prejudicial to the interests of the holders of the Bonds or (ii) any modification of the Bonds, the Trust Deed or the Agency Agreement that, in the Trustee s opinion, is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of law. In connection with such modification, waiver or authorisation, the Trustee may require a certificate from the Issuer certifying, and a legal opinion advising the Trustee, that the modification, waiver or authorisation is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of law. Any such modification, waiver or authorisation shall be binding on the holders of the Bonds. Unless the Trustee otherwise agrees, any such modification, waiver or authorisation shall be notified by the Issuer to the holders of the Bonds as soon as practicable thereafter in accordance with Condition 14. (C) Waiver of Event of Default The holders of the Bonds, through the written consent of not less than 50 per cent. in principal amount of the Bonds then outstanding, may, on behalf of the holders of all the Bonds, waive any existing Event of Default and its consequences, except for (i) any Event of Default in relation to any payment on the Bonds, (ii) any Event of Default with respect to the Conversion Rights or (iii) any Event of Default with respect to certain covenants or provisions in the relevant Trust Deed which may not be 81

90 modified without the written consent of the holders of 75 per cent. in principal amount of the outstanding Bonds as described in Condition 12(A) above. When an Event of Default is waived, it is deemed cured and shall cease to exist, but no such rescission or waiver shall extend to any subsequent or other Event of Default or impair any consequent right. The right of a Bondholder (i) to receive payment in respect of its Bonds, (ii) to receive Shares on or after any Conversion Date, (iii) to exercise its Conversion Right or (iv) to bring suit for the enforcement of any such right, shall not be impaired or adversely affected without such holder's prior written consent. (D) Exercise of Trustee's Functions Where the Trustee is required in connection with the exercise of its powers, trusts, authorities, duties and discretions to have regard to the interests of the holders of the Bonds, it shall have regard to the interests of the holders of the Bonds as a class and, in particular but without prejudice to the generality of the foregoing, the Trustee shall not have regard to, or be in any way liable for, the consequences of such exercise for any individual holder resulting from it being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory. In connection with any such exercise, the Trustee shall not be entitled to require and no Bondholder shall be entitled to claim from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon such individual holder of the Bonds. 13 Replacement of Certificates Any replacement of mutilated, defaced, destroyed, stolen or lost Definitive Certificates shall take place at the specified office of the Registrar or any Transfer Agent in accordance with the provisions of the Agency Agreement, which provisions include the following: (i) (ii) (iii) replacement certificates shall only be issued upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity and/or security as the Issuer and the relevant Agent may require; mutilated or defaced certificates must be surrendered before replacements will be issued; and in the event any Bonds represented by a mutilated, destroyed, lost or stolen Definitive Certificate have become or are about to become due and payable, the Issuer in its discretion may, instead of issuing a new Definitive Certificate representing such Bonds, make payment as consideration for the cancellation of the Bonds represented thereby in accordance with the Agency Agreement. 14 Notices All notices to holders of the Bonds shall be validly given if (i) made in writing in English and mailed to them at their respective addresses in the register of holders of the Bonds maintained by the Registrar; and (ii) so long as the Bonds are listed on SGX-ST and only if the rules of SGX-ST so require, published in a leading newspaper having general circulation in Singapore (which is expected to be The Business Times). So long as the Bonds are represented by the Global Certificate and held on behalf of Euroclear and/or Clearstream or any Alternative Clearing System (as defined in the form of the Global Certificate), notice to holders of the Bonds shall be given by delivery of the relevant notice to Euroclear and/or Clearstream or the alternative clearing system, for communication to entitled account holders. Any such notice shall be deemed to have been given on the later of the date of such publication and the seventh day after being so mailed. 82

91 15 Indemnification The Trust Deed contains provisions for the indemnification of the Trustee and its directors, officers, employees or agents and for its and their relief from responsibility, including provisions relieving it and/or them from taking proceedings to enforce payment unless indemnified and/or secured and/or pre-funded to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit. The Trustee may rely without liability to Bondholders on any report, confirmation or certificate from or any opinion or advice of any legal advisers, accountants, financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or any other person or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation, certificate, opinion or advice and, in such event, such report, confirmation, certificate, opinion or advice shall be binding on the Issuer and the Bondholders. Whenever the Trustee is required or entitled by the terms of the Trust Deed, the Agency Agreement or these Conditions to exercise any discretion or power, take any action, make any decision or give any direction, the Trustee is entitled, prior to exercising any such discretion or power, taking any such action, making any such decision or giving any such direction, to seek directions from the Bondholders by way of Extraordinary Resolution, and the Trustee shall not be responsible for any loss or liability incurred by the Issuer, the Bondholders or any other person as a result of any delay in it exercising such discretion or power, taking such action, making such decision or giving such direction as a result of seeking such direction from the Bondholders or in the event that no direction is given to the Trustee by the Bondholders. None of the Trustee or any Agent shall be liable to any Bondholder, the Issuer or any other person for any action taken by the Trustee or such Agent in accordance with the instructions, direction or request of the Bondholders. The Trustee shall be entitled to rely on any direction, request or resolution of Bondholders given by Bondholders holding the requisite principal amount of Bonds outstanding or passed at a meeting of Bondholders convened and held in accordance with the Trust Deed. Neither the Trustee nor any Agent shall be responsible for the performance by the Issuer and any other person appointed by the Issuer in relation to the Bonds of the duties and obligations on their part expressed in respect of the same and, unless it has written notice from the Issuer to the contrary, the Trustee and each Agent shall be entitled to assume that the same are being duly performed. The Trustee shall have no obligation to monitor compliance with the provisions of the Trust Deed, the Agency Agreement or these Conditions or whether an Event of Default, a Potential Event of Default, a Change of Control or any other event under these Conditions has occurred, and shall not be liable to the Holders or any other person for not doing so. Each Bondholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer, and the Trustee shall not at any time have any responsibility for the same and each Bondholder shall not rely on the Trustee in respect thereof. 16 Agents The Issuer reserves the right, subject to the provisions of the Trust Deed and the Agency Agreement, at any time to vary or terminate the appointment of the Agents; provided that it shall at all times maintain (i) a Principal Agent, (ii) an Agent having a specified office in Singapore where the Bonds may be presented or 83

92 surrendered for payment or redemption, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require (and such agent in Singapore shall be a paying agent, transfer agent and conversion agent and (iii) a Registrar with a specified office outside the United Kingdom. Notice of any such termination or appointment, of any changes in the specified offices of the Agents, and of any change in the identity or specified office of any Agent shall be given promptly by the Issuer to the Trustee in writing and to the holders of the Bonds in accordance with Condition Further Issues The Issuer shall be at liberty from time to time (subject to any regulatory approval) without the consent of the holders of the Bonds, to create and issue further bonds with the same terms and conditions apart from the Issue Date and ranking equally in all respects so that the same shall be consolidated and form a single series with the Bonds. 18 Contracts (Rights of Third Parties) Act 1999 No person shall have any right to enforce any term or condition of the Bonds under the Contracts (Rights of Third Parties) Act 1999 except to the extent provided for in these Conditions and the Trust Deed. 19 Governing Law and Jurisdiction (A) Governing Law The Trust Deed, the Agency Agreement and the Bonds and any non-contractual obligations arising out of or in connection with them are governed by and shall be construed in accordance with English law. (B) Jurisdiction The courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed or the Bonds and accordingly any legal action or proceedings arising out of or in connection with the Trust Deed or the Bonds ( Proceedings ) may be brought in such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts and has waived any objection to Proceedings in such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of the Trustee and each of the holders of the Bonds and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not). (C) Agent for Service of Process Pursuant to the Trust Deed, the Issuer has irrevocably appointed Hackwood Secretaries Limited of One Silk Street, London, EC2Y 8HQ to receive service of process in any Proceedings in England based on any of the Bonds. 84

93 THE GLOBAL CERTIFICATE Except in certain limited circumstances, interests in the Bonds may only be held through interests in the Global Certificate. Such interests in the Global Certificate will be shown on, and transfer thereof will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants. The Global Certificate contains provisions which apply to the Bonds in respect of which the Global Certificate is issued, some of which modify the effect of the Terms and Conditions of the Bonds set out in this Offering Circular. Terms defined in the Terms and Conditions of the Bonds have the same meanings in the paragraphs below. The following is a summary of those provisions. General The Bonds will be represented by interests in the Global Certificate which will be registered in the name of a nominee of, and deposited with, a common depositary for Euroclear and Clearstream, Luxembourg and interests therein will be credited to the securities clearance accounts of the relevant Bondholders with Euroclear and/or Clearstream, Luxembourg. A beneficial interest in the Global Certificate may at all times be held only through Euroclear and Clearstream, Luxembourg. Individual Definitive Certificates for Bonds Registration of title to Bonds initially represented by the Global Certificate in a name other than the nominee for Euroclear and Clearstream, Luxembourg will not be permitted unless Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory of otherwise) or announces an intention permanently to cease business or does in fact do so. In such circumstances, the Issuer will, at its own expense, cause sufficient definitive certificates (the Definitive Certificates ) to be executed and delivered to the Registrar for completion and dispatch to all Bondholders. A person having an interest in the Global Certificate must provide the Registrar with a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Definitive Certificates. The Registrar will not register the exchange of interests in the Global Certificate for Definitive Certificates for a period of 15 calendar days preceding the due date for any payment of principal in respect of the Bonds. Payments Distributions of principal and interest with respect to book-entry interests in the Bonds held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the Principal Agent, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system s rules and procedures. A record of each payment made will be endorsed on the appropriate schedule to the Global Certificate by or on behalf of the Registrar and shall be prima facie evidence that payment has been made. Meetings The registered holder (as defined in the Terms and Conditions of the Bonds) of the Global Certificate will be treated as being two persons for the purposes of any quorum requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each U.S.$200,000 in principal amount of Bonds for which the Global Certificate is issued. The Trustee may allow a person with an interest in Bonds in respect of which the Global Certificate has been issued to attend and speak at a meeting of Bondholders on appropriate proof of his identity and interest. 85

94 Cancellation Cancellation of any Bond following its redemption, conversion or repurchase by the Issuer will be effected by reduction in the principal amount of the Bonds in the register of Bondholders. Trustee s Powers In considering the interests of Bondholders while the Global Certificate is registered in the name of a nominee for a clearing system, the Trustee may, without being obliged to do so, to the extent it considers it appropriate in the circumstances to do so, have regard to any information provided to it by or on behalf of such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to Bonds and may consider such interest as if such accountholders were the holders of the Bonds in respect of which the Global Certificate is issued. Conversion Subject to the requirements of Euroclear and Clearstream, Luxembourg, the Conversion Right attaching to a Bond in respect of which the Global Certificate is issued may be exercised by the presentation to or to the order of the Principal Agent of one or more Conversion Notices duly completed by or on behalf of a holder of a book-entry interest in such Bond. Deposit of the Global Certificate with the Principal Agent together with the relevant Conversion Notice shall not be required. The exercise of the Conversion Right shall be notified by the Principal Agent to the Registrar and the holders of the Global Certificate. Notices So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear or Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear or Clearstream, Luxembourg for communication by it to entitled accountholders in substitution for notification as required by the Terms and Conditions of the Bonds. Put Option The Bondholders put options in Condition 7(D) and Condition 7(E) of the Terms and Conditions of the Bonds may be exercised by the holder of the Global Certificate giving notice to the Principal Agent of the principal amount of Bonds in respect of which the option is exercised and presenting the Global Certificate for endorsement or exercise within the time limits specified in Condition 7(D) or Condition 7(E) of the Terms and Conditions of the Bonds, as the case may be. Call Option The Issuer s call options in Condition 7(B) and Condition 7(C) of the Terms and Conditions of the Bonds may be exercised by it giving notice to the Bondholders within the time limits set out in and containing the information required by (a) Condition 7(B) or Condition 7(C) of the Terms and Conditions of the Bonds, as the case may be, and (b) Condition 7(H) of the Terms and Conditions of the Bonds. Transfers Transfers of interests in the Bonds will be effected through the records of Euroclear and Clearstream, Luxembourg and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants. 86

95 DESCRIPTION OF SHARE CAPITAL The following is a description of the Shares, including summaries of material relevant provisions of the Issuer s memorandum and the articles of association and the Cayman Companies Law. These summaries do not purport to be complete and are qualified in their entirety by reference to the full memorandum and the articles of association. The Issuer was incorporated in the Cayman Islands as an exempted company with limited liability on 14 January 2011 under the Cayman Companies Law. The Issuer's constitutional documents consist of its Third Amended and Restated Memorandum and Articles of Association (the Amended and Restated Memorandum and Articles of Association ). As of 30 September 2016, the share capital of the Issuer was NT$1,500,000,000 divided into 150,000,000 ordinary shares of a par value of NT$10 each. Shares General Subject to the Cayman Companies Law, the Amended and Restated Memorandum and Articles of Association, the applicable laws and to any resolution of the shareholders to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing Shares or class of Shares, the board of directors of the Issuer shall have the power to issue any of the authorised but unissued Shares on such terms and conditions as it may determine, and any Shares or class of Shares (including the issue or grant of options, warrants and other rights, renounceable or otherwise in respect of the Shares) may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital, or otherwise as the Issuer may by resolution of the shareholders prescribe provided that no Share shall be issued at a discount except in accordance with the Companies Law. Dividends and Distributions The holders of the Shares are entitled to such dividends as may be declared by the board of directors of the Issuer and approved by the shareholders of the Issuer subject to the Cayman Companies Law and to the Amended and Restated Memorandum and Articles of Association. Pursuant to the Amended and Restated Memorandum and Articles of Association, the board of directors may, subject to approval by the Members by way of ordinary resolution or, in the case of effecting any capitalization of distributable dividends and/or bonuses and/or any other amount standing to the credit of the capital reserve or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such sum in paying up unissued Shares to be allotted as fully paid bonus shares pro rata to the shareholders, by a supermajority resolution adopted at a shareholders' meeting and subject to the Amended and Restated Memorandum and Articles of Association and any direction of the Issuer in general meeting, declare a dividend to be paid to the shareholders in proportion to the number of Shares held by them. The dividend may be paid in cash or shares. Subject to the applicable laws, no dividends or other distribution shall be paid except out of profits of the Issuer, realised or unrealised, out of share premium account or any reserve, fund or account as otherwise permitted by the Cayman Companies Law. Except as otherwise provided by the rights attached to any Shares, all dividends and other distributions shall be paid according to the number of the Shares that a shareholder holds. If any Share is issued on terms providing that it shall rank for dividend as from a particular date, that Share shall rank for dividends accordingly. Subject to the Cayman Companies Law and the Amended and Restated Memorandum and Articles of Association and except as otherwise provided by the rights attached to any Shares, the Issuer may distribute profits in accordance with a proposal for profit distribution approved by the board of directors and sanctioned by the shareholders by an ordinary resolution, in annual general meetings. 87

96 If there is surplus profit for the year, the Issuer shall set aside no less than zero point one per cent (0.1%) of the pretax profit as employee compensation and no more than three per cent (3%) of the pre-tax profit as compensation for the directors. However, if the Issuer has accumulated losses in previous years, it shall reserve an amount of the pretax profit for offsetting the accumulated losses. The employee compensation shall be distributed in the form of stock or cash and may be distributed to employees of the Issuer's subsidiaries, if such employees satisfy certain qualifications as may be resolved by the board of directors from time to time. For so long as the Shares are listed on the TWSE or TPEx, if there are profits, in making the profit distribution recommendation, the board of directors shall set aside out of the profits of the Issuer for each financial year: (i) a reserve for payment of tax for the relevant financial year; (ii) an amount to offset losses incurred in previous years; (iii) a special surplus reserve as required by the applicable securities authority under the applicable public company rules of the ROC; and (iv) other reserves as determined by the board of directors for specific purposes. Thereafter, having considered the financial, business and operational factors, including the Issuer being in the growth stage while competing in a mature industry, its capital expenditure, future expansion projects and financial plans for long term development, the amount to be distributed as dividends shall not be less than ten per cent (10%) of remaining profits. After combining all or part of the accumulated undistributed profits in the previous years and the reversed special surplus reserve, the combined amount shall be allocated as dividends to the shareholders subject to the discretion of the directors and upon approval by the shareholders. Dividends shall be made by way of cash dividend but may also be made by stock dividends or a combination thereof, provided further that, the cash dividends shall not be less than ten per cent (10%) of the total amount of dividends payable. The board of directors shall fix any date as the record date for determining the shareholders entitled to receive any dividend or other distribution. Voting Rights Every shareholder who is present in person or by proxy shall have one vote for each Share of which it is a holder. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of votes attached to the Shares cast by such shareholders who, being entitled to do so, vote in person or by their proxies in a general meeting, while a special resolution requires the affirmative vote of at least two-thirds of votes cast in a general meeting. A supermajority resolution requires the majority vote of the shareholders present who represent two-thirds or more of the total issued Shares of the Issuer or, if the total number of shares represented by the shareholders present at the general meeting is less than two-thirds of the total issued shares, but more than one-half of the total issued shares, by at least two-thirds of the votes cast by shareholders present at such meeting. A special resolution will be required for matters such as a change of name or making amendments to the Amended and Restated Memorandum and Articles of Association and a supermajority resolution will be required for matters such as the removal of any director of the Issuer. Pursuant to the Amended and Restated Memorandum and Articles of Association, shares held by the Issuer, its subsidiaries or entities in which the Issuer (together with the Issuer's affiliates) own more than 50% of the issued shares shall not carry any voting rights nor be counted in the total number of issued shares at any given time. Also, a shareholder, who has a personal interest in any motion discussed at a general meeting and such interest may be in conflict with and impair those of the Issuer, shall abstain from voting such shareholder s shares in regard to such motion and such shares shall not be counted in determining the number of votes of the shareholders present at the said meeting. However, such shares may be counted in determining the number of shares of the shareholders present at such general meeting for the purposes of determining the quorum. Such shareholder shall also not vote on behalf of any other shareholder. The board of directors may determine that the voting power of a shareholder at a general meeting may be exercised by way of a written ballot or by way of electronic transmission; provided, however, that if a general meeting is to be held outside of Taiwan or pursuant to the applicable public company rules of the ROC, the Issuer shall provide 88

97 the shareholders with a method for exercising their voting power by means of a written ballot or electronic transmission. Preemptive Rights Pursuant to the Amended and Restated Memorandum and Articles of Association, when the Issuer issues new Shares for cash, 10% to 15% of the issue may be offered in the ROC to the Issuer's employees and employees of the Issuer's subsidiaries. In addition, when the Issuer intend to offer new Shares for cash, at least 10% of the issue must be offered to the public, except under certain circumstances or when exempted by the FSC or the TWSE or the TPEx. This percentage to be allocated to the public can be increased by a resolution passed at a shareholders meeting, thereby reducing the number of new Shares subject to the preemptive rights of existing shareholders. The Shares not subscribed for by the employees and shareholders at the expiration of the period for the exercise of their rights may be sold to the public or specified persons in such manner as is consistent with applicable public company rules of the ROC. The preemptive rights provisions will not apply to offering of new Shares through a private placement or in connection with meeting the Issuer's obligations under the convertible bonds. These preemptive rights do not apply to this offering. Transfer of Shares Subject to the requirements of applicable laws of the Cayman Islands, transfers of uncertificated shares which are traded on the TWSE or the TPEx may be effected by any method of transferring or dealing in securities introduced by the TWSE or operated in accordance with the applicable public company rules of the ROC as appropriate. In accordance with the applicable public company rules of the ROC, the Issuer shall issue the Shares in scripless form and the Shares shall be traded on the TPEx during the period of listing. Liquidation On the winding up of the Issuer, assets available for distribution among the holders of Shares will be distributed among the holders of the Shares on a pro rata basis. If the Issuer's assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by the shareholders proportionately. Purchase of Shares Subject to the provisions of the Companies Law, the Amended and Restated Memorandum and Articles of Association and the laws of the ROC, the Issuer may purchase its own Shares on such terms and by such method as the board of directors may from time to time decide. Pursuant to the Amended and Restated Memorandum and Articles of Association, Shares that the Issuer purchase shall be cancelled immediately or held as treasury Shares at the discretion of the board of directors. No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Issuer's assets (including any distribution of assets to shareholders on a winding up of the Issuer) may be made to the Issuer in respect of a treasury share. The Issuer shall be entered in the register of members as the holder of the treasury Shares provided that: (a) (b) the Issuer shall not be treated as a shareholder for any purpose and shall not exercise any right in respect of the treasury Shares, and any purported exercise of such a right shall be void; and a treasury share shall not be voted, directly or indirectly, at any meeting of the Issuer and shall not be counted in determining the total number of issued Shares at any given time. Variations of Rights of Shares If at any time, the Issuer's share capital is divided into different classes of Shares, the rights attaching to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Issuer is being wound up, be varied with the sanction of a special resolution passed at a general meeting of the holders of the 89

98 Shares of that class. Notwithstanding the foregoing, if any modification or alteration to the Amended and Restated Memorandum and Articles of Association is prejudicial to the preferential rights of any class of Shares, such modification or alteration shall be adopted by a special resolution and shall also be adopted by a Special Resolution passed at a separate meeting of shareholders of that class of Shares. The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith. General Meetings of Shareholders The board of directors may convene the general meetings whenever they think fit. For so long as the Shares are listed on the TWSE or the TPEx, general meetings shall also be convened on the written requisition of any shareholder or shareholders entitled to attend and vote at general meetings holding at least 3% of the total number of issued Shares of the Issuer for a period of one year or a longer time as of the date of making such requisition by depositing at the registered office of the Issuer or the office of the institution handling the Shares specifying the matters to be discussed at the meeting and the reason therefore signed by such shareholder(s); if the board of directors does not within 15 days from the date of the deposit of the requisition dispatch the notice of such general meeting, and for so long as the Shares are listed on the TWSE or the TPEx, such shareholder(s) may convene the general meeting, provided that if the extraordinary general meeting will be held outside Taiwan, an application shall be submitted by such shareholders to the TWSE or the TPEx for its prior approval. In addition, shareholder(s) holding 1% or more of the total issued Shares immediately prior to the relevant book close period may propose to the Issuer in writing one matter for discussion at an annual general meeting. The Issuer shall give a public notice in such manner as permitted by ROC laws and regulations at such time deemed appropriate by the board of directors specifying the place and a period of not less than 10 days for shareholders to submit proposals. Proposals submitted for discussion at an annual general meeting shall not be included in the agenda of the annual general meeting where (a) the proposing shareholder(s) holds less than 1% of the total issued Shares, (b) the matter of such proposal may not be resolved by a general meeting; or (c) the proposing shareholder(s) has proposed more than one proposal. The following matters shall be stated in the notice of a general meeting, with a summary of the major content to be discussed, and shall not be proposed as an ad-hoc motion: (a) (b) (c) (d) (e) (f) (g) election or discharge of directors; alteration of the Amended and Restated Memorandum or Articles of Association; (i) dissolution, merger or spin-off, (ii) entering into, amending, or terminating any contracts regarding leasing of the Issuer's business, or mandate of operations or joint operations, (iii) transfer of the whole or any essential part of the Issuer's business or assets, and (iv) acquisition or assumption of the whole of the business or assets of another person, which has a material effect on the Issuer's operations; ratification of an action by director who engages in business for himself or on behalf of another person that is within the scope of the Issuer's business; distribution of the whole or part of the Issuer's surplus profit in the form of new Shares, capitalization of capital reserve and any other amount in accordance with the Amended and Restated Memorandum and Articles of Association; distribution of new Shares or cash to the shareholders in accordance with the Amended and Restated Memorandum and Articles of Association; and private placement of any equity-related securities to be issued by the Issuer. 90

99 The following matters shall require the approval of the shareholders meeting by a special resolution: (a) (b) (c) (d) (e) (f) change name; alter or add to the Amended and Restated Articles of Association; alter or add to the Amended and Restated Memorandum of Association with respect to any objects, powers or other matters specified therein; effect any merger of the Issuer under the Companies Law; reduce share capital and any capital redemption reserve fund; or private placement of the securities (excluding corporate bonds which do not involve the grant of a warrant, option or right of conversion or otherwise, grant the holders of the bonds the rights to acquire equity or similar rights by way of placement) within the territory of the R.O.C. The following actions shall require the approval of the shareholders meeting by a supermajority resolution: (a) (b) (c) (d) (e) effecting any capitalization of distributable dividends and/or bonuses and/or any other amount standing to the credit of the capital reserve or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such sum in paying up unissued Shares to be allotted as fully paid bonus shares pro rata to the shareholders; effecting any merger (except for any merger which falls within the definition of merger and/or consolidation under the Companies Law, which requires the approval of the shareholders meeting by special resolution only) or spin-off; entering into, amend, or terminate any contracts regarding leasing of the Issuer's business, or mandate of operations or joint operation; the transferring of the whole or any essential part of the Issuer's business or assets; or acquiring or assuming the whole business or assets of another person, which has a material effect on the Issuer's operation. At least 30 days notice of an annual general meeting, and at least 15 days notice of an extraordinary general meeting shall be given to each shareholder entitled to attend and vote at such meeting. Save as otherwise provided by the Amended and Restated Memorandum and Articles of Association, the holders of the Shares being more than an aggregate of one-half of all Shares in issue present in person or by proxy and entitled to vote shall constitute a quorum for any general meeting. Appraisal Rights According to the Amended and Restated Memorandum and Articles of Association, subject to the Companies Law, in the event any of the following resolutions is passed at general meetings, any shareholder who has notified the Issuer in writing of his objection to such matter prior to the meeting and has raised again his objection at the meeting, may request the Issuer to purchase all of his Shares at the then prevailing fair price: (a) (b) (c) the Issuer propose to enter into, amend, or terminate any contracts regarding leasing of the Issuer's business, or mandate of operations or joint operations; the Issuer transfer the whole or an essential part of the Issuer's business or assets, provided that, the foregoing does not apply where such transfer is pursuant to the Issuer's dissolution; or acquires or assumes the whole business or assets of another person, which has a material effect on the Issuer's operation. 91

100 In the event any part of our business is spun off or involved in any merger, any shareholder, who has abstained from voting in respect of such matter and expressed his dissent therefor, in writing or verbally (with a record) before or during the general meeting approving such spin off or merger, may request the Issuer to purchase all of his Shares at the then prevailing fair price. Election and Removal of Directors The board of directors consists of seven persons, including independent directors, each of whom shall be appointed to a term of office of not more than three years. The Issuer may from time to time increase or reduce the number of directors by special resolution subject to the above number limitation provided that the requirements by relevant laws and regulations (including but not limited to any listing requirements) are met. Unless otherwise permitted under the laws of the ROC, there shall be at least 3 independent directors and, to the extent required by the laws of the ROC, at least one of them shall be domiciled in the ROC and at least one of them shall have accounting or financial expertise. If the number of independent directors is less than 3 persons, or, the number of directors is less than 5 persons, the Issuer shall hold an election of independent directors or directors (as the case may be) at the next following general meeting. If all of the independent directors have resigned or are removed or vacated, or the number of vacancies on the board of directors equals to one third of the total number of directors elected, the board of directors shall hold, within 60 days from the date of the occurrence of vacancies, a general meeting of shareholders to elect succeeding independent directors or directors (as the case may be) to fill the vacancies. The Issuer may at a general meeting elect any person to be a director (including independent directors) pursuant to a cumulative voting mechanism. The shareholders of the Issuer may from time to time by supermajority resolution remove any director from office. In case a director has, in the course of performing his duties, committed any act resulting in material damages to the Issuer or is in serious violation of applicable laws, regulations and/or the Amended and Restated Articles of Association, but has not been removed by shareholders meeting by a supermajority resolution, the shareholder(s) holding 3% or more of the total number of issued Shares of the Issuer may, within 30 days after such general meeting, to the extent permissible under ROC laws and regulations and the Companies Law, institute a lawsuit to remove such director. Where an election of all directors is effected by a resolution adopted at a general meeting prior to the expiration of the term of office of existing directors, the term of office of all current directors is deemed to have expired on the date of the election unless otherwise resolved by the shareholders that all current directors will not be removed until the expiration of their present term of office. The shareholders of the Issuer present in person or by proxy, representing more than one-half of the total issued shares shall constitute a quorum for any general meeting to such election of all directors. Proceedings of Board of Directors The Amended and Restated Memorandum and Articles of Association provide that, subject to the provisions of the Companies Law, the Amended and Restated Memorandum and Articles of Association, applicable public company rules and any resolutions made in a general meeting, the Issuer's business is to be managed and conducted by the board of directors. The quorum necessary for a meeting of the board of the directors shall be more than one-half of the total number of the directors. The Amended and Restated Memorandum and Articles of Association provide that the directors may amongst others exercise all powers of the Issuer to raise or borrow money, to mortgage or charge or otherwise grant a security interests in its undertaking property and uncalled capital or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Issuer or of any third party. 92

101 Inspection of Books and Records The board of directors shall keep at the office of the Issuer's registered office copies of the Amended and Restated Memorandum and Articles of Association, minutes of every meeting of the shareholders, financial statements, register of members and the counterfoil of corporate bonds issued by the Issuer. Any shareholders may request, by submitting document(s) evidencing his/her interests involved and indicating the scope of the inspection, access to inspect, review or make copies of the foregoing documents. Changes in Capital The Issuer may from time to time by ordinary resolution increase the authorised share capital of the Issuer by such amount as the Issuer think expedient. Subject to the Companies Law and the Amended and Restated Memorandum and Articles of Association, the Issuer may by a shareholders special resolution reduce the Issuer's share capital and any capital redemption reserve fund. 93

102 TAIPEI EXCHANGE INDEX The Taipei Exchange Index ( TPEx Index ) is calculated on the basis of a wide selection of listed shares weighted according to the number of shares outstanding. The TPEx Index is compiled by dividing the market value by the base day s total market value for the index shares. The weighting of stocks in the index is fixed as long as the number of shares outstanding remains constant. When the total number of shares outstanding changes, the weight of each stock is adjusted. Stock splits and stock dividends are adjusted automatically. Cash dividends are not included in the calculation. The following table shows for the periods indicated information relating to the TPEx Index. Period ended Number of Listed Companies at the Period End Market Capitalisation Index High Index Low (NT$ in billions) Index at Period End 31 December , December , December December , December , December , December , December , December , December , November December , As indicated above, the performance of the TPEx has in recent years been characterised by extreme price volatility. Price Limits, Commissions, Transaction Tax and other Matters The TPEx has placed limits on block trading and on the range of daily price movements. According to the Taipei Exchange Regulations Governing Block Trading of TPEx Listed Securities (The TPEx Regulations ), a block trade may only be conducted as either a non-paired trade or a paired trade prescribed in the TPEx Regulations, and a block trade may not involve margin purchase or short sale. The payment settlement of a block trade shall be processed together with other trades made through the automated trade matching system. Besides, the securities firm shall register the volume, type, and dollar amount of a bid to the TPEx under a block trade of a single security for 500 or more trading units, or a block trade of a basket of stocks for five or more different stocks, and the total dollar amount exceeding NT$15 million or more. If a block trade of a single security for less than 500 trading units but the total dollar amount exceeding NT$15 million or more, it may still be carried out if registered to the TPEx. In accordance with Article 55 of the Taipei Exchange Rules Governing Securities Trading on the TPEx, fluctuations in the price of securities traded on the TPEx is restricted to 10 per cent. above and below the reference 94

103 price of that day. However, the ROC FSC has modified these restrictions from time to time based on market conditions. Brokerage commission can be set at any rate of the transaction price, provided that any rate exceeding per cent. shall be reported to the TPEx and notified to the client in advance. A securities transaction tax, currently levied at 0.3 per cent. of the transaction price, is payable by the seller of equity securities. Such securities transaction taxes are withheld at the time of the transaction giving rise to such tax. Sales of shares of listed companies on the TPEx are generally sold in round lots of 1,000 shares. Investors who desire to sell less than 1,000 shares of a listed company occasionally experience delays in making these sales. Regulation and Supervision The FSC has extensive regulatory authority over companies listed on the Taiwan Stock Exchange ( TWSE ), companies listed on the TPEx and unlisted public issuing companies generally. Such companies are generally required to obtain approval from, or register with, the FSC for all securities offerings. The FSC has promulgated regulations requiring, unless otherwise exempted, periodic reporting of financial and operating information by all public companies. In addition, the FSC is responsible for the establishment of standards for financial reporting and carries out licensing and supervision with respect to the other participants in the ROC securities market. The FSC has responsibility for implementation of the ROC Securities and Exchange Law and for overall administration of governmental policies in the ROC securities market. It has extensive regulatory authority over the offering, issue and trading of securities. In addition, the ROC Securities and Exchange Law specifically empowers the FSC to promulgate rules under certain circumstances. The ROC Securities and Exchange Law prohibits market manipulation. It permits an issuer to recover certain shortterm trading profits made through purchases and sales within six months by directors, supervisors, managerial officers as well as the spouses, minor children and nominees of these parties, and shareholders (together with their spouses, minor children and nominees) holding more than 10.0 per cent. of the issued shares of the issuer. The ROC Securities and Exchange Law prohibits trading of equity or debt securities by insiders based on non-public information that materially affects the price movements of equity securities or the issuer s ability to repay the principal amount or interest of the debt securities prior to publication of such information and within 18 hours after publication of such information. Pursuant to the ROC Securities and Exchange Law, the term insiders includes: directors, supervisors, managers, as well as the spouses, minor children and nominees of these parties, and shareholders (together with their spouses, minor children and nominees) who hold more than 10 per cent. of the outstanding shares of the issuer and any individual designated by a governmental or corporate director or supervisor to act on its behalf; any person who has learned material, non-public information due to occupational or controlling relationship with the issuer; any person who has discharged from the status or position in the first and second bullet points for less than six months; and any person who has learned material, non-public information from any of the above. Sanctions include imprisonment. In addition, damages may be awarded to persons injured by the transaction. Notwithstanding these regulatory requirements, there have been recurring press reports on insider trading and manipulation of stock prices in the ROC. 95

104 The ROC Securities and Exchange Law also imposes criminal liability on certified public accountants and lawyers who make false certifications in their examination and audit of an issuer s contracts, reports and other evidentiary documents that are related to securities transactions. The FSC Bureau regulations require that financial reports of listed companies be audited by accounting firms consisting of at least three certified public accountants and be signed by at least two certified public accountants. In addition, the ROC Securities and Exchange Law provides for civil liability for material misstatements or omissions made by issuers and regulation of tender offers. The FSC does not have criminal or civil enforcement powers under the ROC Securities and Exchange Law. Criminal actions may be pursued only by the district prosecutors located in the district where the defendant is domiciled or where the violation occurred. Under ROC law, civil actions may only be brought by plaintiffs who assert that they have suffered damage. The FSC is directly empowered to curb abuses and violations of applicable laws and regulations only through administrative measures such as the issuance of warnings, temporary suspension of operation, imposition of administrative fines and revocation of licences. In addition to providing a market for securities trading, the TPEx has primary responsibility for reviewing applications by issuers to list securities on the TPEx. In addition, the FSC reviews all securities offerings by listed companies. If issuers of listed securities violate relevant laws and regulations or encounter significant difficulties, the TPEx may suspend trading of its securities on the TPEx and report to the FSC. For foreign issuer who lists its shares for trading on the TPEx, in addition to the abovementioned regulations and supervision, certain restrictions and provisions of the ROC Securities and Exchange Law shall also be applicable to such foreign companies, including but not limited to the following: responsibility for preparation and announcement of financial statements; responsibility for preparation and distribution of prospectus; reporting obligations of change of shareholding of directors, managers and shareholders who hold more than 10% of the shares of the issuer; tender offer; private placement of securities; and margin trading. Under the ROC Securities and Exchange Law, any directors, managers or shareholders holding more than 10% of the shares of a public company, such as us, are required to report to such company, on a monthly basis, any changes in their shareholding in the Issuer. Except in certain limited circumstances, the number of Shares that they may sell or transfer on the TPEx on any given day is limited by ROC laws. In addition, they may only sell or transfer such shares on the TPEx at least three days after they have filed a notification with the FSC in connection with such sale or transfer, provided that such notification is not required if the number of shares to be sold or transferred does not exceed 10,

105 The Cayman Islands TAXATION The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Bonds. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law. Under the laws of the Cayman Islands, payments of interest and principal on the Bonds and dividends and capital in respect of the Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of interest and principal or a dividend or capital to any holder of the Bonds or Shares, as the case may be, nor will gains derived from the disposal of the Bonds or Shares be subject to Cayman Islands income or corporation tax. The Cayman Islands currently have no income, corporate or capital gains tax nor do they have estate duty, inheritance tax or gift tax. No stamp duty is payable in respect of the issue of the Bonds and the Global Certificate. An instrument of transfer in respect of a Note or a Global Certificate is stampable if executed in or brought into the Cayman Islands. The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Issuer levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any double tax treaties that are applicable to any payments made to or by the Issuer. ROC Taxation Prospective investors should consult their own advisers concerning the tax consequences of an investment in the Bonds or Shares. The following summary addresses the principal ROC tax consequences of the ownership and disposition of the Bonds or the Shares to a non-resident individual or non-resident entity that holds such Bonds or Shares (a Non-ROC Holder ). A non-resident individual (a Non-ROC Individual Holder ) is a non-roc national individual who is not physically present in the ROC for 183 days or more during any calendar year in which he or she owns the Bonds or the Shares. A non-resident entity (a Non-ROC Entity Holder ) is a corporation or a non-corporate body that is organised under the laws of a jurisdiction other than the ROC and does not have a fixed place of business or business agent in the ROC. Bonds Interest Payments of stated interest or premium (if any) on the Bonds to a Non-ROC Holder will not be subject to ROC withholding tax. Capital gains from the sale or disposal of the Bonds Sales or disposal of the Bonds are not regarded as sales of ROC securities, and thus are not subject to the ROC securities transaction tax, and any gains generated therefrom by Non-ROC Holders are not subject to ROC income tax. Conversion into Shares The conversion of Bonds into Shares will not be taxable to Non-ROC Holders under ROC income tax law. 97

106 Stamp Duty There is no ROC stamp tax, issue or registration fee imposed on the delivery of Shares upon conversion of the Bonds. Shares Dividends Dividends distributed for the Shares to a Non-ROC Holder will not be subject to ROC withholding tax. Securities transaction tax Securities transaction tax will be withheld by a securities broker at the rate of 0.3% of the transaction price upon a sale of the Shares. Capital gains from the sale or disposal of the Shares Non-ROC Holders are exempt from income tax on capital gains from the sale or disposal of the Shares. Estate Tax and Gift Tax ROC estate tax is payable on any property within the ROC left by a deceased non-roc national individual, and ROC gift tax is payable on any property within the ROC donated by a non-roc national individual. Under the ROC estate and gift tax laws, the Shares and the Bonds are deemed properties located outside of the territory of the ROC. Therefore, a Non-ROC Individual Holder who holds the Shares or the Bonds will not be subject to the ROC estate or gift tax. 98

107 Tax Guarantor for Repatriation of Profits CERTAIN ROC LEGAL REQUIREMENTS When a non-roc person exercises its conversion right and registers as a shareholder of a ROC entity, such holders will be required to appoint an agent, referred to as a tax guarantor, in the ROC for filing tax returns and making tax payments on their behalf. A tax guarantor will be required to meet the qualifications set by the Ministry of Finance of the ROC government and will act as the guarantor of the holder s tax payment obligations. Evidence of the appointment of a tax guarantor and the approval of such appointment are required as conditions to repatriating the holder s profits derived from the sale of the applicable shares. There can be no assurance that a converting holder of the Bonds will be able to appoint and obtain approval for a tax guarantor in a timely manner. Appointment of Local Agent Under current ROC law, a converting holder of the Bonds wishing to convert Bonds or its designee is required to register with the TWSE and appoint a local agent in the ROC. Such a local agent will be required to meet the qualifications set by the ROC FSC and will act as the converting holder s agent to (i) open a securities trading account with a local securities brokerage firm and an NT dollar bank account, (ii) handle the safekeeping, confirmation and settlement of trades, (iii) remit funds, (iv) pay taxes and (v) exercise shareholder s rights. Unless these requirements are satisfied, converting holders of the Bonds that receive Shares on conversion will not be able to receive and hold or otherwise transfer such Shares on the TPEx. Securities Transaction Tax Transfers of the Bonds are not subject to the ROC securities transaction tax. The ROC securities transaction tax will be imposed on the seller of the Shares at the rate of 0.3% of the transaction price upon a sale of the Shares. See Taxation ROC Taxation Bonds. Disclosure Obligations A holder of the Bonds requesting the conversion of its Bonds or its designee may be required to provide certain information to the Issuer or the Issuer s conversion agents, including the name and nationality of the person to be registered as the shareholder, the number of shares such person has acquired in the past through conversion of bonds held by it, and supporting documents, before such conversion will be effected. The Issuer is required to report the status of the Bonds twice a month to the Central Bank of the Republic of China (Taiwan), Taiwan s central bank, and post the above information on the website designated by the ROC FSC as well as the information that the person to be registered as a shareholder (i) is a related party to the Issuer as defined in the Regulation Governing the Preparation of Financial Reports by Securities Issuers or (ii) will hold immediately following such conversion more than 10% of the total number of shares to be issued upon the conversion of the aggregate principal amount of all Bonds at the time of issue. 99

108 SUBSCRIPTION AND SALE The Sole Lead Manager and Bookrunner has, pursuant to a subscription agreement dated 18 January 2017 (the Subscription Agreement ), agreed with the Issuer to subscribe and pay for, and the Issuer has agreed to sell to the Sole Lead Manager and Bookrunner, the principal amount of the Bonds less a combined underwriting commission and concession as set out in the Subscription Agreement. The Subscription Agreement provides that the Issuer will indemnify the Sole Lead Manager and Bookrunner against certain liabilities including liabilities in connection with its offering and sale of the Bonds under the Securities Act of 1933 or to contribute to payments the Sole Lead Manager and Bookrunner may be required to make because of those liabilities. The Subscription Agreement provides that the obligations of the Sole Lead Manager and Bookrunner are subject to approval of legal matters by counsel and certain conditions precedent, and entitles the Sole Lead Manager and Bookrunner to terminate the Subscription Agreement in certain circumstances prior to payment being made to the Issuer. In connection with this offering, the Sole Lead Manager and Bookrunner (or its affiliates) may, for its own account purchase the Bonds and/or the Shares or, enter into secondary market transactions or derivative transactions relating to the Bonds and/or the Shares, including but not limited to purchase, sale (or facilitation thereof), stock borrowing, repackagings, asset swaps, credit derivatives or other derivative transactions relating to the Bonds and/or the Shares at the same time as the offer and sale of the Bonds or in secondary market transactions. Such transactions may be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of the Bonds and/or the Shares to which this Offering Circular relates (notwithstanding that such selected counterparties may also be a purchaser of the Bonds). As a result of such transactions, the Sole Lead Manager and Bookrunner (or its affiliates) may hold long or short positions in such Bonds or derivatives or in the Shares. These transactions may comprise a substantial portion of the offering and no disclosure will be made of such positions. The Sole Lead Manager and Bookrunner (or its affiliates) may also engage in investment or commercial banking and other dealings in the ordinary course of business with the Issuer or its affiliates from time to time and may receive fees and commissions for these transactions. In addition to the transactions noted above, the Sole Lead Manager and Bookrunner (or its affiliates) may, from time to time after completion of the offering of the Bonds, engage in other transactions with, and perform services for, the Issuer or its affiliates in the ordinary course of its business. The Sole Lead Manager and Bookrunner (or its affiliates) may also have placed orders, purchased Bonds and been allocated Bonds for asset management and/or proprietary purposes and not with a view to distribution or may hold the Bonds and/or the Shares on behalf of clients or in the capacity of investment advisors. Accordingly, references herein to the Bonds being offered should be read as including any offering of the Bonds to the Sole Lead Manager and Bookrunner and/or its affiliates for its own account. Such entities are not expected to disclose such transactions or the extent of any such investment, otherwise than in accordance with any legal or regulatory obligation to do so. Furthermore, it is possible that only a limited number of investors may subscribe for a significant proportion of the Bonds. If this is the case, liquidity of trading in the Bonds may be constrained (see Risk Factors Risks Relating to this Offering An active trading market for the Bonds may not develop. ). The Issuer and the Sole Lead Manager and Bookrunner are under no obligation to disclose the extent of the distribution of the Bonds amongst individual investors. While the Sole Lead Manager and Bookrunner and its affiliates have policies and procedures to deal with conflicts of interests, any such transactions may cause the Sole Lead Manager and Bookrunner or its affiliates or its clients or counterparties to have economic interests and incentives which may conflict with those of an investor in the Bonds. The Sole Lead Manager and Bookrunner may receive returns on such transactions and has no obligation to take, refrain from taking or cease taking any action with respect to any such transactions based on the potential effect on a prospective investor in the Bonds. 100

109 The Issuer has undertaken that neither the Issuer nor any party acting on its behalf will, without the prior written consent of the Sole Lead Manager and Bookrunner, (a) issue, offer, sell, pledge, contract to sell, or otherwise dispose of or grant options, issue warrants or offer rights entitling persons to subscribe or purchase any interest in any Shares or securities of the same class as the Bonds or the Shares or any securities convertible into, exchangeable for or which carry rights to subscribe or purchase the Bonds, the Shares or securities of the same class as the Bonds, the Shares or other instruments representing interests in the Bonds, the Shares or other securities of the same class as them, (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of the ownership of the Shares, (c) enter into any transaction with the same economic effect as, or which is designed to, or which may reasonably be expected to result in, or agree to do, any of the foregoing, whether any such transaction of the kind described in (a), (b) or (c) is to be settled by delivery of Shares or other securities, in cash or otherwise or (d) announce or otherwise make public an intention to do any of the foregoing, between the date of the Subscription Agreement and the date which is 90 days after the Closing Date except for the Bonds and the New Shares issued on conversion of the Bonds and other exemptions under the Subscription Agreement. The Bonds are a new issue of securities with no established trading market. The Sole Lead Manager and Bookrunner has performed investment banking and advisory services for the Issuer from time to time, for which they have received customary fees and expenses. The Sole Lead Manager and Bookrunner may, from time to time, engage in transactions with and perform services for the Issuer in the ordinary course of its business. General No action has been or shall be taken in any jurisdiction that would permit a public offering of the Bonds, or possession or distribution of this Offering Circular or any other offering or publicity material relating to the Bonds, where action for that purpose is required. No offer, sales or deliveries of any Bonds, or distribution of any offering material relating to the Bonds (including this Offering Circular) may be made in or from any jurisdictions except in circumstances which will result in compliance with any applicable laws or regulations and will not impose any obligations on the Issuer or the Sole Lead Manager and Bookrunner. No one has been or will be authorised to make any representation or use any information in connection with the offer, sale or distribution of the Bonds other than as contained in this Offering Circular. United States The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be registered under the Securities Act and, subject to certain exceptions, may not be offered or sold within the United States. The Bonds and the Shares to be issued upon conversion of the Bonds are being offered and sold outside of the United States in reliance on Regulation S. In addition, until 40 days after the commencement of the offering of the Bonds and the Shares to be issued upon conversion of the Bonds, an offer or sale of Bonds or Shares to be issued upon conversion of the Bonds within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act. United Kingdom (i) Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom (the FSMA )) received in connection with the issue or sale of the Bonds shall only be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and 101

110 (ii) all applicable provisions of the FSMA in relation to the Bonds in, from or otherwise involving the United Kingdom shall be complied with. Hong Kong (i) The Bonds shall not be offered or sold in Hong Kong, by means of any document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (ii) no advertisement, invitation or document relating to the Bonds, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance and any rules made under that Ordinance shall be issued, whether in Hong Kong or elsewhere. Japan The Bonds have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the Financial Instruments and Exchange Act ). Accordingly, the Bonds shall not directly or indirectly be offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan. Singapore This Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds may not be circulated or distributed, nor may the Bonds be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (i) (ii) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Bonds pursuant to an offer made under Section 275 of the SFA except: 102

111 (i) (ii) (iii) (iv) (v) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; where no consideration is or will be given for the transfer; where the transfer is by operation of law; as specified in Section 276(7) of the SFA; or as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. Republic of China This Offering Circular is not an offer or sale, directly or indirectly, of any Bonds in the ROC or to, or for the account or benefit of, any resident of the ROC. The Bonds may not be offered or sold directly or indirectly in the ROC. Cayman Islands No offer or invitation whether directly or indirectly may be made to the public in the Cayman Islands to subscribe for the Bonds. Each of the Sole Lead Manager and Bookrunner, the Trustee and any Agent has represented, warranted and agreed that it has not made and will not make any invitation, whether directly or indirectly, to the public in the Cayman Islands to offer or sell the Bonds. 103

112 GENERAL INFORMATION 1. The offering and issue of the Bonds have been authorised by the Issuer s board of directors on 28 October 2016 and approved by the CBC on 3 November 2016 and the ROC FSC on 21 December There are no legal, regulatory or arbitration proceedings against or affecting the Issuer, the Group or any of their assets, nor is the Issuer aware of any pending or threatened proceedings, which are or might be material in the context of the issue and offering of the Bonds. 3. There has been no adverse change, or any development reasonably likely to involve an adverse change, in the Group s condition (financial or otherwise), business, prospects, operations or general affairs since 30 September 2016 that is material in the context of the issue and offering of the Bonds. 4. For so long as any of the Bonds are outstanding, copies of the following documents may be inspected at all reasonable times during normal business hours (being between 9:00 a.m. and 3:00 p.m.) on any business day in the location of the specified office for the time being of the Principal Agent following prior written request and satisfactory proof of holding: (a) (b) the Trust Deed; and the Agency Agreement. 5. The consolidated financial statements of the Issuer as of and for the years ended 31 December 2013, 2014 and 2015 included in this Offering Circular have been audited by KPMG, independent auditors, as stated in their report appearing elsewhere herein (which report expresses an unqualified opinion on the financial statements and includes an explanatory paragraph referring to the adoption of new accounting pronouncements). The consolidated financial statements of the Issuer as of and for the three-month and the nine month periods ended 30 September 2015 and 2016 have not been audited but were reviewed by KPMG in accordance with Statement of Auditing Standards No. 36 Review of Financial Statements in the ROC. 6. For so long as any of the Bonds are outstanding, copies of the Issuer s audited consolidated financial statements as of and for the years ended 31 December 2013, 2014 and 2015 (together with English translations thereof, if applicable) may be obtained at all reasonable times during normal business hours being (between 9:00 a.m. and 3:00 p.m.) on any business day in the location of the specified office of the Principal Agent following prior written request and satisfactory proof of holding. 7. Approval in-principle has been received for the listing and quotation of the Bonds on the SGX-ST. The Bonds will be traded on the SGX-ST in a minimum board lot size of U.S.$200,000 on the SGX-ST for so long as any of the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require. So long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a Paying Agent in Singapore, where the Bonds may be presented or surrendered for payment or redemption, in the event that the Global Certificate is exchanged for Definitive Certificates. In addition, in the event that the Global Certificate is exchanged for Definitive Certificates, an announcement of such exchange shall be made by or on behalf of the Issuer through the SGX-ST and such announcement will include all material information with respect to the delivery of the Definitive Certificates, including details of the Paying Agent in Singapore. 8. The Bonds have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The ISIN for the Bonds is XS and the common code for the Bonds is

113 INDEX TO FINANCIAL STATEMENTS Annual Consolidated Financial Statements of the Issuer as of and for the years ended 31 December 2013 and 2014 Independent Auditors Report... F-3 Consolidated Statements of Financial Position... F-4 Consolidated Statements of Comprehensive Income... F-5 Consolidated Statements of Changes in Equity... F-6 Consolidated Statements of Cash Flows... F-7 Notes to the Consolidated Financial Statements... F-8 Annual Consolidated Financial Statements of the Issuer as of and for the years ended 31 December 2014 and 2015 Independent Auditors Report... F-48 Consolidated Statements of Financial Position... F-49 Consolidated Statements of Comprehensive Income... F-50 Consolidated Statements of Changes in Equity... F-51 Consolidated Statements of Cash Flows... F-52 Notes to the Consolidated Financial Statements... F-53 Unaudited Condensed Consolidated Interim Financial Statements of the Issuer as of and for the three-month and the nine-month periods ended 31 September 2015 and 2016 Independent Accountants Review Report... F-96 Unaudited Condensed Consolidated Interim Statements of Financial Position... F-97 Unaudited Condensed Consolidated Interim Statements of Comprehensive Income... F-98 Unaudited Condensed Consolidated Statements of Changes in Equity... F-99 Unaudited Condensed Consolidated Statements of Cash Flows... F-100 Notes to the Unaudited Condensed Interim Consolidated Financial Statements... F-101 Page F-1

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