Exhibit 10.1
CONFORMED COPY
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CREDIT AGREEMENT
DATED AS OF AUGUST 5, 1999
AMONG
CHIPPAC INTERNATIONAL COMPANY LIMITED,
CHIPPAC, INC.,
THE LENDERS LISTED HEREIN,
as Lenders,
AND
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent, Sole Lead Arranger and Collateral Agent
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TABLE OF CONTENTS
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SECTION 1.
DEFINITIONS...................................................................................... 1
1.1 Certain Defined Terms.............................................................. 1
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement....................................................... 38
1.3 Other Definitional Provisions...................................................... 38
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS....................................................... 39
2.1 Commitments; Loans................................................................. 39
2.2 Interest on the Loans.............................................................. 46
2.3 Fees............................................................................... 50
2.4 Repayments, Prepayments and Reductions in
Commitments; General Provisions Regarding Payments................................. 50
2.5 Use of Proceeds.................................................................... 60
2.6 Special Provisions Governing Eurodollar Rate Loans................................. 60
2.7 Increased Costs; Taxes; Capital Adequacy........................................... 63
2.8 Obligation of Lenders and Issuing Bank to Mitigate................................. 66
SECTION 3.
LETTERS OF CREDIT................................................................................ 67
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein............................................................. 67
3.2 Letter of Credit Fees.............................................................. 69
3.3 Drawings and Payments and Reimbursement of Amounts
Drawn or Paid Under Letters of Credit.............................................. 70
3.4 Obligations Absolute............................................................... 72
3.5 Indemnification; Nature of Issuing Bank's Duties................................... 72
3.6 Increased Costs and Taxes Relating to Letters of Credit............................ 74
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT........................................................ 75
4.1 Conditions to Loans................................................................ 75
4.2 Conditions to All Loans............................................................ 80
4.3 Conditions to Letters of Credit.................................................... 80
SECTION 5.
REPRESENTATIONS AND WARRANTIES................................................................... 81
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.......................................................... 81
5.2 Authorization of Borrowing, etc.................................................... 82
5.3 Financial Condition; Projections................................................... 83
5.4 No Material Adverse Change......................................................... 84
5.5 Title to Properties; Liens; Real Property; Intellectual
Property........................................................................... 84
5.6 Litigation; Adverse Facts.......................................................... 85
5.7 Payment of Taxes................................................................... 85
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5.8 Performance of Agreements.......................................................... 85
5.9 Governmental Regulation............................................................ 85
5.10 Securities Activities.............................................................. 86
5.11 Employee Benefit Plans............................................................. 86
5.12 Certain Fees....................................................................... 86
5.14 Employee Matters................................................................... 87
5.15 Solvency........................................................................... 87
5.16 Disclosure......................................................................... 87
5.17 Year 2000 Matters.................................................................. 88
SECTION 6.
AFFIRMATIVE COVENANTS............................................................................ 88
6.1 Financial Statements and Other Reports............................................. 88
6.2 Corporate Existence................................................................ 92
6.3 Payment of Taxes and Claims; Tax Consolidation..................................... 93
6.4 Maintenance of Properties; Insurance............................................... 93
6.5 Inspection; Lender Meeting......................................................... 93
6.6 Compliance with Laws, etc.......................................................... 94
6.7 Environmental Disclosure and Inspection............................................ 94
6.8 ChipPAC's Remedial Action Regarding Hazardous
Materials.......................................................................... 95
6.9 Execution of Guaranty and Collateral Documents by Future
Subsidiaries....................................................................... 95
6.10 Interest Rate Protection........................................................... 96
6.11 Further Assurances................................................................. 96
6.12 Year 2000 Matters.................................................................. 97
SECTION 7.
NEGATIVE COVENANTS............................................................................... 97
7.1 Indebtedness....................................................................... 97
7.2 Liens and Related Matters.......................................................... 99
7.3 Investments; Joint Ventures........................................................ 101
7.4 Contingent Obligations............................................................. 102
7.5 Restricted Payments................................................................ 103
7.6 Financial Covenants................................................................ 105
7.7 Restriction on Fundamental Changes; Asset Sales.................................... 108
7.8 Sales and Lease-Backs.............................................................. 109
7.9 Transactions with Shareholders and Affiliates...................................... 109
7.10 Ownership of Subsidiary Stock...................................................... 110
7.11 Amendments or Waivers of Certain Agreements........................................ 110
7.12 Fiscal Year........................................................................ 111
7.13 Conduct of Business................................................................ 111
SECTION 8.
EVENTS OF DEFAULT................................................................................ 111
8.1 Failure to Make Payments When Due.................................................. 111
8.2 Default in Other Agreements........................................................ 112
8.3 Breach of Certain Covenants........................................................ 112
8.4 Breach of Warranty................................................................. 112
8.5 Other Defaults Under Loan Documents................................................ 112
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc............................... 113
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8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................................. 113
8.8 Judgments and Attachments.......................................................... 113
8.9 Dissolution........................................................................ 114
8.10 Employee Benefit Plans............................................................. 114
8.11 Change in Control.................................................................. 114
8.12 Invalidity of Guaranties........................................................... 114
8.13 Failure of Security................................................................ 114
SECTION 9.
AGENTS........................................................................................... 115
9.1 Appointment........................................................................ 115
9.2 Powers; General Immunity........................................................... 117
9.3 Representations and Warranties; No Responsibility for Appraisal of
Creditworthiness................................................................... 118
9.4 Right to Indemnity................................................................. 118
9.5 Successor Administrative Agent and Swing Line Lender............................... 119
9.6 Collateral Documents; Successor Collateral Agent................................... 119
SECTION 10.
MISCELLANEOUS.................................................................................... 120
10.1 Assignments and Participations in Loans and Letters of
Credit............................................................................. 120
10.2 Expenses........................................................................... 123
10.3 Indemnity.......................................................................... 123
10.4 Set-Off; Security Interest in Deposit Accounts..................................... 124
10.5 Ratable Sharing.................................................................... 124
10.6 Amendments and Waivers............................................................. 125
10.7 Independence of Covenants.......................................................... 126
10.8 Notices............................................................................ 127
10.9 Survival of Representations, Warranties and Agreements............................. 127
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.............................. 127
10.11 Marshalling; Payments Set Aside.................................................... 127
10.12 Severability....................................................................... 128
10.13 Obligations Several; Independent Nature of the Lenders' Rights..................... 128
10.14 Maximum Amount..................................................................... 128
10.15 Headings........................................................................... 129
10.16 Applicable Law..................................................................... 129
10.17 Successors and Assigns............................................................. 129
10.18 Consent to Jurisdiction and Service of Process..................................... 129
10.19 Waiver of Jury Trial............................................................... 130
10.20 Judgment Currency.................................................................. 130
10.21 Confidentiality.................................................................... 131
10.22 Counterparts; Effectiveness........................................................ 132
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF GUARANTY
V FORM OF PRINCIPAL PLEDGE AGREEMENT
VI FORM OF PRINCIPAL SECURITY AGREEMENT
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORMS OF OPINIONS OF COUNSEL TO LOAN PARTIES
IX FORM OF ASSIGNMENT AGREEMENT
X FORM OF COLLATERAL ACCOUNT AGREEMENT
XI FORM OF PERMITTED SELLER PAPER SUBORDINATION
PROVISIONS
XII-A CHINESE PLEDGE AGREEMENT (SHANGHAI I)
XII-B CHINESE PLEDGE AGREEMENT (SHANGHAI II)
XIII-A CHINESE SECURITY AGREEMENT (RECEIVABLES)
XIII-B CHINESE SECURITY AGREEMENT (LAND USE AND BUILDING)
XIV HEI PREFERRED STOCK
XV HUNGARIAN PLEDGE AGREEMENT
XVI KOREAN PLEDGE AGREEMENT
XVII KOREAN SECURITY AGREEMENT
XVIII INTEL PREFERRED STOCK
XIX OTHER RECAPITALIZATION SECURITY AGREEMENTS
SCHEDULES
1.1(i) CERTAIN ADJUSTMENTS TO EBITDA/CONSOLIDATED
INTEREST EXPENSE
1.1(ii) INTERCOMPANY NOTES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1G PERFECTION OF SECURITY INTERESTS
4.1P CORPORATE STRUCTURE; CAPITAL STRUCTURE; OWNERSHIP
5.1 SUBSIDIARIES OF CHIPPAC
5.5B CERTAIN REAL PROPERTY MATTERS
5.5C CERTAIN INTELLECTUAL PROPERTY MATTERS
5.12 CERTAIN FEES
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2A CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.8 CERTAIN SALES AND LEASE-BACKS
CONFORMED COPY
CHIPPAC INTERNATIONAL COMPANY LIMITED
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of August 5, 1999 and entered into
by and among CHIPPAC INTERNATIONAL COMPANY LIMITED, a British Virgin Islands
company ("Company"), CHIPPAC, INC., a California corporation ("ChipPAC"), THE
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BANKS, FINANCIAL INSTITUTIONS AND OTHER ENTITIES LISTED ON THE SIGNATURE PAGES
HEREOF (each individually referred to herein as a "Lender" and collectively as
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"Lenders"), CREDIT SUISSE FIRST BOSTON ("CSFB"), as administrative agent for the
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Lenders (in such capacity, the "Administrative Agent"), as sole lead arranger
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(in such capacity, the "Sole Lead Arranger"), and as collateral agent for the
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Administrative Agent and the Lenders (in such capacity, the "Collateral Agent").
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R E C I T A L S
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WHEREAS, Xxxx (capitalized terms used herein having the meanings
assigned to those terms in subsection 1.1), the SXI Holders and the Existing
Investors propose to engage in a series of Recapitalization Transactions,
whereby ChipPAC will be recapitalized on the Closing Date;
WHEREAS, ChipPAC and Company have requested Lenders to extend, and
Lenders have agreed to extend, certain credit facilities in an aggregate
principal amount of up to $220,000,000 to Company, the proceeds of which will be
used, together with proceeds from the Equity Contribution and not less than
$150,000,000 in gross cash proceeds from the issuance and sale of Subordinated
Debt, to permit the consummation of the Recapitalization Transactions, to pay
related fees and expenses, and to provide financing for working capital and
other general corporate purposes of the Operating Subsidiaries; and
WHEREAS, the Lenders are willing to make such credit facilities
available upon and subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
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The following terms used in this Agreement shall have the following
meanings:
"Acquired Business" has the meaning assigned to such term in the
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definition of the term "Acquired Capital Expenditures".
"Acquired Capital Expenditures" means, on the date of any Permitted
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Acquisition and with respect to the Person or business (the "Acquired
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Business") acquired in such Permitted Acquisition, an amount equal to the
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greater of (i) 8% of the net sales of such Acquired Business for the
twelve-month period most recently ended and (ii) the average historical
capital expenditures made with respect to such Acquired Business for the
last two fiscal years applicable to such Acquired Business ending prior to
the consummation of such Permitted Acquisition.
"Acquired Capital Expenditures Percentage" means, with respect to any
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Acquired Business on the date of the related Permitted Acquisition, the
quotient (expressed as a percentage) obtained by dividing the Acquired
Capital Expenditures of such Acquired Business by the Maximum Consolidated
Capital Expenditures Amount (without giving effect to any previous increase
to such amount as a result of previous Permitted Acquisitions or by
application of the Carryforward) for the Fiscal Year in which such
Permitted Acquisition occurs.
"Additional Subordinated Debt" means subordinated, unsecured
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Indebtedness of Company the proceeds of which are used solely to finance
one or more Permitted Acquisitions and to pay related expenses; provided
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that (i) such Indebtedness does not require any scheduled payment of
principal prior to the maturity date of the Subordinated Debt issued on or
prior to the Closing Date and (ii) the subordination provisions and other
non-pricing terms and conditions thereof are no less favorable to ChipPAC
and its Subsidiaries and the Lenders than the analogous provisions of the
Subordinated Debt Documents executed on or prior to the Closing Date.
"Administrative Agent" has the meaning assigned to that term in the
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Preamble to this Agreement and shall include any successor Administrative
Agent appointed pursuant to subsection 9.5.
"Affected Class" has the meaning assigned to that term in subsection
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10.6A.
"Affected Lender" has the meaning assigned to that term in subsection
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2.6C.
"Affected Loans" has the meaning assigned to that term in subsection
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2.6C.
"Affiliate" means, as applied to any Person, any other Person directly
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or indirectly controlling, controlled by, or under common control with that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of that Person, whether through the ownership
of voting securities or by contract or otherwise.
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"Agents" means, collectively, the Administrative Agent, the Collateral
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Agent and the Sole Lead Arranger.
"Agreement" means this Credit Agreement dated as of August 5, 1999, as
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it may be amended, restated, supplemented or otherwise modified from time
to time.
"Anniversary" means a date that is an anniversary of the Closing Date.
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"Applicable Base Rate Margin" means (i) with respect to Term B Loans,
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3.00% per annum, and (ii) with respect to Term A Loans, Term Delayed Draw
Loans and Revolving Loans, a percentage per annum determined by reference
to the Applicable Leverage Ratio as set forth below:
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Applicable Base Rate
Margin for Term A
Applicable Loans, Term Delayed
Leverage Draw Loans and
Ratio Revolving Loans
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Greater than 3.5:1.0 2.25%
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Less than or equal to 3.5:1.0 2.00%
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Less than or equal to 3.0:1.0 1.75%
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Less than 2.5:1.0 1.50%
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; provided, however, that the Applicable Base Rate Margin shall be 2.25% in
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the case of Term A Loans, Term Delayed Draw Loans and Revolving Loans, in
each case for so long (but only for so long) as an Event of Default has
occurred and is continuing or Company has not submitted to the
Administrative Agent the information as and when required under subsection
6.1(ii) or (iii), as applicable.
"Applicable Eurodollar Rate Margin" means (i) with respect to Term B
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Loans, 4.00% per annum, and (ii) with respect to Term A Loans, Term Delayed
Draw Loans and Revolving Loans, a percentage per annum determined by
reference to the Applicable Leverage Ratio as set forth below:
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Applicable
Eurodollar
Rate Margin for Term A
Applicable Loans, Term Delayed
Leverage Draw Loans and
Ratio Revolving Loans
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Greater than 3.5:1.0 3.25%
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Less than or equal to 3.5:1.0 3.00%
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Less than or equal to 3.0:1.0 2.75%
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Less than 2.5:1.0 2.50%
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; provided, however, that the Applicable Eurodollar Rate Margin shall be
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3.25% in the case of Term A Loans, Term Delayed Draw Loans and Revolving
Loans, in each case for so long (but only for so long) as an Event of
Default has occurred and is continuing or Company has not submitted to the
Administrative Agent the information as and when required under subsection
6.1(ii) or (iii), as applicable.
"Applicable Laws" means, collectively, all statutes, laws, rules,
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regulations, ordinances, decisions, writs, judgments, decrees, and
injunctions of any Governmental Authority affecting ChipPAC or any of its
Subsidiaries or any Collateral or any of their other assets, whether now or
hereafter enacted and in force, and all Governmental Authorizations
relating thereto.
"Applicable Leverage Ratio" means, with respect to any date of
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determination, the Leverage Ratio set forth in the Pricing Certificate (as
defined below) in effect for the Pricing Period (as defined below) in which
such date of determination occurs. For purposes of this definition, (i)
"Pricing Certificate" means an Officer's Certificate of ChipPAC certifying
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as to the Leverage Ratio as of the last day of any Fiscal Quarter and
setting forth the calculation of such Leverage Ratio in reasonable detail,
which Officer's Certificate may be delivered to Administrative Agent at any
time on or after the date of delivery by ChipPAC of the Compliance
Certificate (the "Related Compliance Certificate") with respect to the
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period ending on the last day of such Fiscal Quarter pursuant to subsection
6.1(iv), and (ii) "Pricing Period" means each period commencing on the
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first Business Day after the delivery to Administrative Agent of a Pricing
Certificate and ending on the first Business Day after the next Pricing
Certificate is delivered to Administrative Agent; provided that, anything
contained in this definition to the contrary notwithstanding, (a) the
Applicable Leverage Ratio for the period from the Closing Date to but
excluding the First Adjustment Date shall be deemed to be greater than
3.50:1.00 for purposes of making the relevant calculation referred to
above, and (b) in the event that, after the First Adjustment Date, (X)
ChipPAC fails to deliver a Pricing Certificate to Administrative Agent
setting forth the Leverage Ratio as of the last day of any Fiscal Quarter
on or before the last day on which ChipPAC is required to deliver the
Related Compliance Certificate (such last day being the "Cutoff Date") and
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(Y) Administrative Agent determines (each such determination being an
"Agent Determination") on or after the Cutoff Date (on the basis of the
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Related Compliance Certificate or a Pricing Certificate delivered after the
Cutoff Date) that the Applicable Leverage Ratio that would have been in
effect if ChipPAC had delivered a Pricing Certificate on the Cutoff Date is
greater than the Leverage Ratio set forth in the most recent Pricing
Certificate actually delivered by ChipPAC, then (1) the Applicable Leverage
Ratio in effect for purposes of making the relevant calculation referred to
above for the period from the Cutoff Date to the date of delivery by
ChipPAC of the next Pricing Certificate (or, if earlier, the next date on
which an Agent Determination is made) shall be the Leverage Ratio
determined pursuant to the Agent Determination and (2) on the first
Business Day after Administrative Agent delivers written notice to ChipPAC
and Company of any Agent Determination, Company shall pay to Administrative
Agent, for distribution (as appropriate) to Lenders, an aggregate amount
equal to the additional interest and letter of credit fees Company would
have been required to pay in respect of all applicable Loans and Letters of
Credit in respect of which any interest or fees have been paid by Company
during the period from the Cutoff
4
Date to the date such notice is given by Administrative Agent to ChipPAC
and Company if the amount of such interest and fees had been calculated
using the Applicable Leverage Ratio based on such Agent Determination.
"Approved Fund" with respect to any Lender that is a fund that invests
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in bank loans, any other fund or trust or entity that invests in bank loans
and is advised or managed by the same investment advisor as such Lender or
by an Affiliate of such investment advisor property.
"Asian Letters of Credit" means Commercial Letters of Credit, in an
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aggregate face amount outstanding at any time not to exceed $50,000,000,
issued by one or more local banks for the account of the Operating
Subsidiaries.
"Asset Sale" means the sale, lease, sale and leaseback, assignment,
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conveyance, transfer or other disposition by ChipPAC or any of its
Subsidiaries to any Person (other than ChipPAC or any of its wholly owned
Subsidiaries) of any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock (including,
without limitation, of any of ChipPAC's Subsidiaries), but excluding (a)
sales of assets in a single transaction or a series of related transactions
equal to $2,000,000 or less, (b) sales or other disposals of obsolete,
uneconomical, negligible, worn out or surplus equipment or other assets,
and (c) sales and other disposals of assets in the ordinary course of
business, including sales or discounts of accounts receivable in connection
with the collection or compromise thereof, the sale or exchange of
equipment or other personal property, including intellectual property, for
the functional equivalent thereof, and leasing or licensing of real or
personal property (including intellectual property).
"Assignment Agreement" means an assignment agreement in substantially
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the form of Exhibit IX annexed hereto or in such other form as may be
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approved by the Administrative Agent.
"Bain" means Xxxx Capital, Inc. and/or one or more of its Affiliates.
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"Bankruptcy Law" means Title 11 of the United States Code entitled
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"Bankruptcy", as now and hereafter in effect, or any successor statute, or
any similar state or foreign law for the relief of debtors.
"Base Rate" means, at any time, the higher of (x) the Prime Rate and
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(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
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reference to the Base Rate as provided in subsection 2.2A.
"Business Day" means a day other than a Saturday, Sunday or other day
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on which commercial banks in New York City are authorized or required by
law to close; provided that, with respect to matters relating to Eurodollar
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Rate Loans, the term "Business Day" shall mean a day other than a Saturday,
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Sunday or other day on which commercial banks in New York City or London,
England, are authorized or required by law to close.
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"Calculation Date" has the meaning assigned to that term in subsection
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7.6B.
"Calculation Period" has the meaning assigned to that term in
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subsection 7.6A.
"Capital Lease" means, as applied to any Person, any lease of any
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property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation), including, without limitation, partnership interests and
membership interests, and any and all warrants, rights or options to
purchase or other arrangements or rights to acquire any of the foregoing.
"Carryforward" has the meaning assigned to that term in subsection
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7.6C.
"Cash" means money, currency or a credit balance in a Deposit Account.
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"Cash Equivalents" means (i) marketable securities issued or directly
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and unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Xxxxx'x; (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Xxxxx'x; (iv) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
and, at the time of acquisition, having a rating of at least A-1 from S&P
or at least P-1 from Xxxxx'x, issued by any Lender or any commercial bank
organized under the laws of the United States of America or any state
thereof or the District of Columbia, any member of the European Economic
Community, Korea, the People's Republic of China and Hong Kong or any U.S.
branch of a foreign bank having combined capital and surplus of not less
than $250,000,000 (each Lender and each such commercial bank being herein
called a "Cash Equivalent Bank"); (v) Eurodollar time deposits having a
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maturity of less than one year purchased directly from any Cash Equivalent
Bank (provided such deposit is with such Cash Equivalent Bank or any other
Cash Equivalent Bank); (vi) repurchase obligations for underlying
securities of the types described in clauses (i) through (v); (vii)
investments in money market funds which invest their assets in the types of
Cash Equivalents described in clauses (i) through (v) above; and (viii)
other short-term investments utilized by foreign Subsidiaries in accordance
with normal investment practices for cash management in investments of a
type and with financial institutions analogous to the foregoing.
6
"Cash Proceeds" means, with respect to any Asset Sale, Cash payments
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(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise (other than the portion of
such deferred payment constituting interest), but only as and when so
received) received from such Asset Sale.
"Chinese Agreements" means, the agreements related to the ChipPAC
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Shanghai I Loan, the Chinese Security Agreements and the Chinese Pledge
Agreements.
"Chinese Pledge Agreements" means, collectively, the ChipPAC Shanghai
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I pledge agreement and the ChipPAC Shanghai II pledge agreement,
substantially in the form of Exhibits XII-A and XII-B annexed hereto, as
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such Chinese Pledge Agreements may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Chinese Security Agreements" means, collectively, the receivables
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security agreement and the land use right and building mortgage agreement,
substantially in the form of Exhibits XIII-A and XIII-B annexed hereto, as
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such Chinese Security Agreements may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Chinese Security Effective Date" has the meaning assigned to that
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term in subsection 6.11.
"ChipPAC" has the meaning assigned to that term in the Preamble to
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this Agreement.
"ChipPAC Barbados" means ChipPAC (Barbados) Ltd., a corporation
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organized under the laws of Barbados.
"ChipPAC Hungary" means ChipPAC Liquidity Management Hungary Limited
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Liability Company, a limited liability company organized under the laws of
Hungary.
"ChipPAC Hungary Capital Contribution" means the $29,000,000 capital
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contribution to be made by Company to ChipPAC Hungary on or prior to the
Closing Date.
"ChipPAC Hungary Loan" means the $116,000,000 loan to be made by
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ChipPAC Luxembourg to ChipPAC Hungary on the Closing Date.
"ChipPAC Korea" means ChipPAC Korea Company Ltd., a corporation
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organized under the laws of the Republic of Korea.
"ChipPAC Korea Loan" means the $145,000,000 loan to be made by ChipPAC
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Hungary to ChipPAC Korea on the Closing Date.
"ChipPAC Limited" means ChipPAC Limited, a corporation organized
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under the laws of the British Virgin Islands.
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"ChipPAC Limited Loan" means the $121,000,000 loan to be made by
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Company to ChipPAC Limited on the Closing Date.
"ChipPAC Luxembourg" means ChipPAC Luxembourg S.a.r.l., a corporation
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organized under the laws of Luxembourg.
"ChipPAC Luxembourg Loan" means the $116,000,000 loan to be made by
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Company to ChipPAC Luxembourg on the Closing Date.
"ChipPAC Shanghai I" means ChipPAC (Shanghai) Company Limited, a
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limited liability company established and organized under the laws of the
People's Republic of China.
"ChipPAC Shanghai I Loan" means the $34,000,000 loan to be made by
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Company to ChipPAC Shanghai I on the Closing Date.
"ChipPAC Shanghai II" means ChipPAC Assembly & Test (Shanghai) Co.,
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Ltd., a limited liability company established and organized under the laws
of the People's Republic of China.
"Class" means each of the following classes of the Lenders: (i) the
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Lenders having Term A Loan Exposure, (ii) the Lenders having Term B Loan
Exposure, (iii) the Lenders having Term Delayed Draw Loan Exposure and (iv)
the Lenders having Revolving Loan Exposure.
"Cleanup" means all actions required to: (1) clean up, remove, treat
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or remediate Hazardous Materials in the indoor or outdoor environment; (2)
prevent the Release of Hazardous Materials so that they do not migrate,
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; or (3) perform pre-remedial studies and investigations
and post-remedial monitoring and care.
"Closing Date" means the date on which the Term Loans (other than the
------------
Term Delayed Draw Loans) are made, but in any event not later than August
15, 1999.
"Collateral" means all of the properties and assets (including Capital
----------
Stock) in which Liens are purported to be granted by the Collateral
Documents as security for the Obligations.
"Collateral Account" has the meaning assigned to that term in the
------------------
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
----------------------------
executed and delivered by Company, ChipPAC and the Collateral Agent as of
the Closing Date, substantially in the form of Exhibit X annexed hereto, as
---------
such Collateral Account Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
8
"Collateral Agent" means CSFB, in its capacity as collateral agent
----------------
hereunder and under the Collateral Documents, and any successor in such
capacity.
"Collateral Documents" means (i) the Intercompany Security Documents
--------------------
and (ii) the Pledge Agreements, the Security Agreements, the Collateral
Account Agreement, and any other documents, instruments or agreements
delivered by any Loan Party pursuant to this Agreement or any of the other
Loan Documents in order to grant to Collateral Agent, on behalf of the
Lenders, Liens and to perfect such Liens on any assets of such Loan Party
as security for all or any of the Obligations.
"Commercial Letter of Credit" means any letter of credit or similar
---------------------------
instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or
services by ChipPAC or any Operating Subsidiary in the ordinary course of
its business.
"Commitments" means the commitments of the Lenders to make Loans as
-----------
set forth in subsection 2.1A of this Agreement.
"Company" has the meaning assigned to that term in the Preamble to
-------
this Agreement.
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit VII annexed hereto delivered to the Administrative Agent by
-----------
ChipPAC pursuant to subsection 6.1(iv).
"Condemnation Proceeds" has the meaning assigned to that term in
---------------------
subsection 2.4B(iii)(d).
"Consolidated Adjusted EBITDA" means, for any period, without
----------------------------
duplication, the sum of the amounts for such period (as determined for
ChipPAC and its Subsidiaries on a consolidated basis) of (i) Consolidated
Net Income, (ii) Consolidated Interest Expense (excluding the cash portion
of any payments made pursuant to subsection 2.3 to the Agent or Lenders on
or before the Closing Date, but including the non-cash amortization of such
amounts after the Closing Date), (iii) provisions for taxes based on income
(including, without duplication, foreign withholding taxes and any state
single business, unitary or similar taxes), (iv) total depreciation
expense, (v) total amortization expense, (vi) to the extent deducted in
determining Consolidated Net Income, those items described in subdivision A
of Schedule 1.1(i) annexed hereto, and (vii) other non-cash items reducing
---------------
Consolidated Net Income (excluding accruals of expenses and establishment
of reserves in the ordinary course of business) to the extent reflected as
a charge or otherwise deducted from the determination of Consolidated Net
Income, less non-cash items increasing Consolidated Net Income (other than
----
accruals of revenue or reversals of reserves), all of the foregoing (except
as otherwise provided in the definition of any term used herein) as
determined on a consolidated basis in conformity with GAAP; provided that,
for purposes of determining Consolidated Adjusted EBITDA for any period (or
portion thereof) that includes the Fiscal Quarters ended December 31, 1999,
March 31, 2000 and/or June 30, 2000,
9
Consolidated Adjusted EBITDA shall be determined pursuant to the
methodology set forth in subdivision B of Schedule 1.1(i).
"Consolidated Capital Expenditures" means, for any period, the
---------------------------------
aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability (including that portion of Capital Leases which
is capitalized on a consolidated balance sheet in accordance with GAAP), by
ChipPAC and its Subsidiaries during that period that, in conformity with
GAAP, are or should be included in "purchases of property, plant or
equipment" or comparable items reflected in the consolidated statement of
cash flows of ChipPAC and its Subsidiaries; provided, however, that the
-------- -------
following shall in any event be excluded from the definition of
Consolidated Capital Expenditures: (a) any such expenditures made with, or
subsequently reimbursed out of, the proceeds of insurance, condemnation
awards (or payments in lieu thereof), indemnity payments or payments in
respect of judgments or settlements received from third parties for
purposes of replacing or repairing the assets in respect of which such
proceeds, awards or payments were received, so long as such expenditures
are commenced (or are contractually committed to commence) within 365 days
of the later of the occurrence of the damage to or loss of the assets being
replaced or repaired and the receipt of such proceeds, awards or payments
in respect thereof, (b) any such expenditures constituting the reinvestment
of proceeds from the sales of assets in equipment or other productive
assets of ChipPAC and its Subsidiaries, so long as such expenditures are
commenced (or are contractually committed to commence) within 365 days of
the receipt of such proceeds, (c) if made on or prior to December 31, 2001,
Micro BGA Capital Expenditures and (d) any such expenditures made with the
proceeds of the HEI Unspent Amount and/or the Intel Preferred Stock and
identified as such on an Officer's Certificate pursuant to Section 6.1(iv);
and provided further, however, that Consolidated Capital Expenditures shall
-------- ------- -------
not include any expenditures made by ChipPAC or any of its Subsidiaries to
acquire in a Permitted Acquisition the business, property or assets of any
Person, or the stock or other evidence of beneficial ownership of any
Person that, as a result of such acquisition, becomes a Subsidiary of
ChipPAC.
"Consolidated Current Assets" means, as at any date of determination,
---------------------------
the total assets of ChipPAC and its Subsidiaries on a consolidated basis
which may properly be classified as current assets in conformity with GAAP,
excluding Cash, Cash Equivalents and deferred income taxes to the extent
otherwise included in current assets.
"Consolidated Current Liabilities" means, as at any date of
--------------------------------
determination, the total liabilities of ChipPAC and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP, other than (i) any liabilities that are the
current portion of Indebtedness (including Capital Lease obligations)
classified as long term liabilities in conformity with GAAP (including
accrued but unpaid interest) and (ii) deferred income taxes to the extent
otherwise included in current liabilities.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
-----------------------------
positive) equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated Adjusted EBITDA, and (b) the Consolidated
Working Capital Adjustment (which may be a negative number) minus (ii) the
-----
sum, without
10
duplication, of the amounts for such period of (a) voluntary and scheduled
cash principal repayments made in respect of Consolidated Total Debt
(excluding repayments of Revolving Loans or loans under similar revolving
lines of credit except to the extent the Revolving Loan Commitments or
similar commitments to lend, respectively, are permanently reduced in
connection with such repayments), (b) Consolidated Capital Expenditures
plus, to the extent not included therein, the Micro BGA Capital
----
Expenditures (net of any proceeds of any related financings with respect to
such Capital Expenditures and net of any portion of the HEI Unspent Amount
used to finance such Capital Expenditures) plus (or minus, if negative) the
---- ------
Carryforward for such period to be carried forward to the next period less
----
the Carryforward (if any) for the preceding period carried forward to the
current period, (c) Consolidated Interest Expense paid in cash during such
period, (d) the provision for taxes (including, without duplication,
foreign withholding taxes and any single business, unitary or similar
taxes) based on income of ChipPAC and its Subsidiaries and paid in cash
with respect to such period (including taxes payable in cash within 90 days
following such period), (e) any cash payments made during such period with
respect to items set forth in subdivision A of Schedule 1.1(i) annexed
---------------
hereto, (f) non-cash charges added in calculating Consolidated Adjusted
EBITDA in a prior period to the extent such non-cash charges are or will be
paid in cash in the current period, (g) to the extent not otherwise
deducted in determining Consolidated Net Income, fees and expenses
associated with any exchange of Subordinated Debt contemplated under the
terms of the Subordinated Debt Documents, (h) to the extent not otherwise
deducted in determining Consolidated Excess Cash Flow, cash payments made
during such period with respect to non-current liabilities and cash
payments made during such period with respect to restructuring reserves and
expenditures with respect to Permitted Acquisitions, and (i) to the extent
not otherwise deducted in determining Consolidated Net Income, Restricted
Payments and Investments made pursuant to subsection 7.3 or 7.5 made during
such period (including any payments made related to the Earnout and the
Intel Preferred Stock).
"Consolidated Interest Expense" means, for any period (as determined
-----------------------------
for ChipPAC and its Subsidiaries on a consolidated basis), total cash or
non-cash interest expense (including that portion attributable to capital
leases in accordance with GAAP), including, without limitation, all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
Interest Rate Agreements and other Hedge Agreements, commitment fees
accrued under subsection 2.3A and any Administrative Agent's fees payable
to Administrative Agent, provided that Consolidated Interest Expense for
any period (or portion thereof) that includes the Fiscal Quarters ended
December 31, 1999, March 31, 2000 and June 30, 2000 shall be determined in
accordance with subdivision B of Schedule 1.1(i).
---------------
"Consolidated Net Income" means, for any period, the net income (or
-----------------------
loss) of ChipPAC and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded therefrom (i) the income (or
--------
loss) of any Person other than a Subsidiary of ChipPAC in which any other
person (other than ChipPAC or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other
distributions actually paid to ChipPAC or any Subsidiary of ChipPAC by such
Person during such period, (ii) the income (or
11
loss) of any Person accrued prior to the date it becomes a Subsidiary of
ChipPAC or is merged into or consolidated with ChipPAC or any Subsidiary of
ChipPAC or that Person's assets are acquired by ChipPAC or any Subsidiary
of ChipPAC, (iii) the amount of income of any Subsidiary of ChipPAC only to
the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of such amount of income is not at the
time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or
losses attributable to Asset Sales, (v) Transaction Costs, and (vi) to the
extent not included in clauses (i) through (v) above, any net extraordinary
unusual or nonrecurring gains or net unusual or nonrecurring extraordinary
losses and any write-offs of deferred financing costs associated with
Indebtedness of ChipPAC or any Subsidiary of ChipPAC repaid on the Closing
Date.
"Consolidated Total Debt" means, as at any date of determination, the
-----------------------
aggregate amount, without duplication, of all outstanding Indebtedness of,
and Contingent Obligations consisting of the guarantee of Indebtedness by
ChipPAC and its Subsidiaries on a consolidated basis; provided that the
--------
term "Consolidated Total Debt" shall exclude any Indebtedness with respect
to outstanding Permitted Seller Paper so long as the terms and conditions
of such Permitted Seller Paper do not require any cash payments to be made
to the holder of such Permitted Seller Paper prior to the payment in full
of all Obligations.
"Consolidated Working Capital" means, as at any date of determination,
----------------------------
the excess of Consolidated Current Assets over Consolidated Current
Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
---------------------------------------
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or
is less than) Consolidated Working Capital as of the end of such period.
"Contingent Obligation" means, as applied to any Person, any direct or
---------------------
indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another
if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under Interest
Rate Agreements or other Hedge Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to
make take-or-pay or similar payments if required regardless of non-
performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any
agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such
12
obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise) or (Y) to maintain the solvency or any
balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclause (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal
to (A) the amount of the obligation so guaranteed or otherwise supported
or, if less, the amount to which such Contingent Obligation is specifically
limited (including netting of Interest Rate Agreements of Hedge Agreements)
or (B) if neither amount in clause (A) is stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform) as determined by such Person in good faith.
Contingent Obligations shall not include standard contractual indemnities
entered into in the ordinary course of business, endorsements of
instruments for deposit or collection in the ordinary course of business or
any product warranties in the ordinary course of business.
"Continuing Director" shall mean, as of any date of determination, any
-------------------
member of the Board of Directors of ChipPAC who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated for election
or elected to such Board of Directors with the affirmative vote (directly
or indirectly) of Bain and the SXI Holders.
"Contractual Obligation" means, as applied to any Person, any
----------------------
provision of any material indenture, mortgage, deed of trust, contract,
undertaking or other material agreement or instrument to which such Person
is a party or to which such Person or any of its assets is subject.
"CSFB" means Credit Suisse First Boston.
----
"Default" means a condition or event that, after notice or after any
-------
applicable grace period has lapsed, or both, would constitute an Event of
Default.
"Defaulting Lender" means any Lender with respect to which a Lender
-----------------
Default is in effect.
"Deposit Account" means a demand, time, savings, passbook or like
---------------
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"Dollars" and the sign "$" mean the lawful money of the United States
------- -
of America.
"Earnout" means amounts payable to HEI, either through a redemption of
-------
a portion of the HEI Preferred Stock, direct cash payments or a combination
thereof, during the four-and-one-half year period following the closing of
the Recapitalization Transactions if ChipPAC and its Subsidiaries attain
certain financial performance objectives as set forth in the
Recapitalization Agreement.
"Eligible Assignee" means (A) (i) a commercial bank organized under
-----------------
the laws of the United States or any state thereof; (ii) a commercial bank
13
organized under the laws of any other country or a political subdivision
thereof; provided that (x) such bank is acting through a branch or agency
--------
located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country; and (iii) any
other financial institution or entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses including, but not limited to,
insurance companies, mutual funds, investment funds and lease financing
companies; (B) any Lender and any Affiliate of any Lender; provided that
--------
neither Company nor any Affiliate of Company shall be an Eligible Assignee
(other than by assignment within 30 days of the Closing Date to an
investment fund controlled by or under common control with Xxxx) and (C) an
Approved Fund.
"Employee Benefit Plan" means "employee benefit plan" as defined in
---------------------
Section 3(3) of ERISA which is subject to ERISA and which is maintained or
contributed to by Company or any of its ERISA Affiliates.
"Environmental Claim" means any written claim, action, or notice by
-------------------
any Person alleging potential liability (including, without limitation,
potential liability for investigatory costs, Cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (a) the
presence or Release of any Hazardous Materials at any location, whether or
not owned, leased or operated by Company or any of its Subsidiaries, or (b)
any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all present and future treaties,
------------------
international conventions and federal, state, local, and foreign laws,
regulations, Governmental Authorizations, codes, ordinances, orders,
decrees, judgments and binding agreements issued, promulgated or entered
into by or with any Governmental Authority relating to pollution or
protection of the environment, including, without limitation, laws relating
to Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, Release, disposal, transport or handling of Hazardous Materials,
laws and regulations with regard to recordkeeping, notification, disclosure
and reporting requirements respecting Hazardous Materials and laws relating
to the management or use of natural resources.
"Environmental Liabilities" means all liabilities, obligations to
-------------------------
conduct Cleanup, and all Environmental Claims against any Loan Party or its
Subsidiaries or against any Person whose liability for any Environmental
Claim any Loan Party or its Subsidiaries may have retained or assumed
contractually or by operation of law arising from (a) the presence, Release
or threatened Release of Hazardous Materials at any location, owned,
leased, occupied or operated by Company or its Subsidiaries, or (b) any
violation, or alleged violation, of any Environmental Law.
"Equity Contribution" means, collectively, (i) the contribution by the
-------------------
Sponsors to ChipPAC Merger Corp. of approximately $87,000,000 in cash in
exchange for all of the outstanding common stock of ChipPAC Merger Corp.
and
14
(ii) approximately $10,000,000 of rollover equity contribution by the
Existing Investors, all as contemplated by the Recapitalization
Transactions.
"Equity Proceeds" means the cash proceeds (net of underwriting
---------------
discounts and commissions and other costs and expenses (including legal
costs) associated therewith) from the issuance of any Capital Stock or
other equity Securities of, or the making of any capital contribution to,
ChipPAC or any of its Subsidiaries after the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
---------------
which is a member of a controlled group of corporations within the meaning
of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) solely for purposes of obligations under Section 412
of the Internal Revenue Code or under the applicable sections set forth in
Section 414(t)(2) of the Internal Revenue Code, any member of an affiliated
service group within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that Person, any corporation described in clause (i)
above or any trade or business described in clause (ii) above is a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
-----------
Section 4043(c) of ERISA and the regulations issued thereunder with respect
to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation or with respect to which
no penalty will be assessed by the PBGC for failure to satisfy such notice
requirements); (ii) the failure to meet the minimum funding standard of
Section 412 of the Internal Revenue Code with respect to any Pension Plan
(whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any
Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the withdrawal by Company or any of its ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting, in either case, in
liability pursuant to Section 4063 or 4064 of ERISA, respectively; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan
pursuant to Section 4042 of ERISA; (vi) the imposition of liability on
Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069
of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii)
the withdrawal by Company or any of its ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA)
from any Multiemployer Plan resulting in withdrawal liability pursuant to
Section 4201 of ERISA, or the receipt by Company or any of its ERISA
Affiliates of written notice from any Multiemployer Plan that it is in
15
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4042 of ERISA
or under Section 4041A of ERISA if such termination would result in
liability to Company or any of its ERISA Affiliates; (viii) the imposition
on Company or any of its ERISA Affiliates of fines, penalties or taxes
under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the disqualification by the Internal Revenue Service of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) under Section 401(a) of
the Internal Revenue Code, or the determination by the Internal Revenue
Service that any trust forming part of any Pension Plan fails to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue
Code; or (x) the imposition of a Lien pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or pursuant to ERISA with respect to
any Pension Plan.
"Eurocurrency Reserve Requirements" means, for each Interest Period
---------------------------------
for each Eurodollar Rate Loan, the highest reserve percentage applicable to
any Lender during such Interest Period under regulations issued from time
to time by the Board of Governors of the Federal Reserve System or any
successor for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement), with respect to liabilities or assets consisting of or
including Eurocurrency liabilities having a term equal to such Interest
Period.
"Eurodollar Base Rate" means the rate per annum determined by the
--------------------
Administrative Agent at approximately 11:00 A.M. (London time) on the date
which is two Business Days prior to the beginning of the relevant Interest
Period (as specified in the applicable Notice of Borrowing) by reference to
the British Bankers' Association Interest Settlement Rates for deposits in
Dollars (as set forth by any service selected by the Administrative Agent
which has been nominated by the British Bankers' Association as an
authorized information vendor for the purpose of displaying such rates) for
a period equal to such Interest Period; provided that, to the extent that
--------
an interest rate is not ascertainable pursuant to the foregoing provisions
of this definition, the "Eurodollar Base Rate" shall be the interest rate
per annum determined by the Administrative Agent to be the average of the
rates per annum at which deposits in Dollars are offered for such relevant
Interest Period to major banks in the London interbank market in London,
England by the Reference Lenders at approximately 11:00 A.M. (London time)
on the date which is two Business Days prior to the beginning of such
Interest Period. If any of the Reference Lenders shall be unable or shall
otherwise fail to supply such rates to the Administrative Agent upon its
request, the rate of interest shall be determined on the basis of the
quotations of the remaining Reference Lender.
"Eurodollar Rate Loans" means Loans bearing interest at rates
---------------------
determined by reference to the Reserve Adjusted Eurodollar Rate as provided
in subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
----------------
"Excess Proceeds Amount" means, initially, $0, which amount shall be
----------------------
(i) increased (a) on the date of delivery in any Fiscal Year of an
---------
Officer's
16
Certificate setting forth the calculation of Consolidated Excess Cash Flow
for the preceding Fiscal Year pursuant to subsection 2.4B(iii)(e) (each
such date being an "Excess Cash Payment Date"), so long as any prepayment
------------------------
required pursuant to subsection 2.4B(iii)(e) has been made, by an amount
equal to the amount of such Consolidated Excess Cash Flow which is not so
prepaid, and (b) on the date of the receipt by ChipPAC or any Subsidiary of
ChipPAC of any Equity Proceeds, so long as any prepayment required pursuant
to subsection 2.4B(iii)(c) has been made, by an amount equal to such Equity
Proceeds and such other proceeds which are not so prepaid, and (ii) reduced
-------
(a) on each Excess Cash Payment Date where Consolidated Excess Cash Flow
for the immediately preceding Fiscal Year is a negative number, by such
amount, (b) at the time any Consolidated Capital Expenditures are made
pursuant to subsection 7.6D(iii), by the amount of such Consolidated
Capital Expenditures, (c) at the time any time a Permitted Acquisition is
funded pursuant to subsection 7.7(v)(z) with an amount attributable to the
Excess Proceeds Amount, by the portion of the purchase price paid with the
Excess Proceeds Amount and (d) at the time Investments are made pursuant to
subsection 7.3(xii), by the amount of such Investments in excess of
$20,000,000 it being understood that the Excess Proceeds Amount may be
reduced to an amount below $0 after giving effect to the reductions
enumerated in clause (ii)(a) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, and any successor statute.
"Existing Investors" means HEA and HEI.
------------------
"Facilities" means any and all real property (including, without
----------
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or (for purposes of Sections 5.13 and 10.3 only) heretofore
owned, leased, operated or used by ChipPAC or any of its Subsidiaries (but
only as to portions thereof actually owned, leased, operated or used) or
any of their respective predecessors or any of their respective Affiliates
that are directly or indirectly controlled by ChipPAC.
"Federal Funds Effective Rate" means, for any period, a fluctuating
----------------------------
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by
the Administrative Agent.
"First Adjustment Date" means the later of (a) six months from the
---------------------
Closing Date and (b) the date of the delivery of the first set of quarterly
financial statements pursuant to subsection 6.1(ii) following the Closing
Date.
"First Priority" means, with respect to any Lien purported to be
--------------
created in any Collateral pursuant to any Collateral Document, that such
Lien is the most senior Lien (other than Permitted Encumbrances and other
Liens permitted
17
pursuant to subsection 7.2A to the extent not perfected by filing of any
UCC financing statements) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
--------------
"Fiscal Year" means the fiscal year of ChipPAC and its Subsidiaries
-----------
ending on December 31 of each calendar year. For purposes of this
Agreement, any particular Fiscal Year shall be designated by reference to
the calendar year in which such Fiscal Year ends.
"Fixed Charge Coverage Ratio" has the meaning assigned to that term in
---------------------------
subsection 7.6E.
"Foreign Benefit Event" means with respect to any Foreign Pension
---------------------
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would
be permitted absent a waiver from a Governmental Authority, (b) the failure
to make the required contributions or payments, under any applicable law,
on or before the due date for such contributions or payments, (c) the
receipt of a notice by a Governmental Authority relating to the intention
to terminate any such Foreign Pension Plan or to appoint a trustee or
similar official to administer any such Foreign Pension Plan, or alleging
the insolvency of any such Foreign Pension Plan and (d) the incurrence of
any liability in excess of $5,000,000 which is unfunded or for which a
reserve has not been established in the financial statements of ChipPAC and
its subsidiaries (or the Dollar equivalent thereof in another currency) by
Company or any of its Subsidiaries under applicable law on account of the
complete or partial termination of such Foreign Pension Plan or the
complete or partial withdrawal of any participating employer therein, or
(e) the occurrence of any transaction that is prohibited under any
applicable law and could reasonably be expected to result in the incurrence
of any liability by Company or any of its Subsidiaries, or the imposition
on Company or any of its Subsidiaries of any fine, excise tax or penalty
resulting from any noncompliance with any applicable law, in each case in
excess of $5,000,000 (or the Dollar equivalent thereof in another
currency).
"Foreign Pension Plan" shall mean any plan, fund (including any
--------------------
superannuation fund) or other similar program established or maintained
outside the United States by ChipPAC or any one or more of its Subsidiaries
primarily for the benefit of employees of ChipPAC or such Subsidiaries
residing outside the United States, which plan, fund or other similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Funding and Payment Office" means the office of the Administrative
--------------------------
Agent located at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (or such office of
the Administrative Agent or any successor Administrative Agent specified by
the Administrative Agent or such successor Administrative Agent in a
written notice to the Loan Parties and the Lenders).
18
"Funding Date" means the date of the funding of a Loan, which, in the
------------
case of the Term A Loans and Term B Loans, shall be the Closing Date.
"GAAP" means, subject to the limitations on the application thereof
----
set forth in subsection 1.2, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, in each case as the same are applicable to
the circumstances as of the date of determination and specifically, terms
used herein applicable to Company and its Subsidiaries defined by reference
to GAAP shall give effect to the subtraction of minority interests.
"Governmental Acts" has the meaning assigned to that term in
-----------------
subsection 3.5A.
"Governmental Authority" means any nation or government, any state or
----------------------
any political subdivision of any of the foregoing and any entity exercising
executive, legislative, judicial or regulatory functions of or pertaining
to government.
"Governmental Authorization" means any permit, license, authorization,
--------------------------
plan, directive, consent order or consent decree of or from any
Governmental Authority.
"Granting Bank" has the meaning assigned to that term in subsection
-------------
10.1F.
"Guaranty" means, individually, the Guaranty, substantially in the
--------
form of Exhibit IV annexed hereto, executed and delivered by ChipPAC and
----------
the Subsidiary Guarantors as of the Closing Date or by any additional
Subsidiary Guarantor from time to time thereafter pursuant to subsection
6.9, as such Guaranty may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time, or any
other guaranty of the Obligations, and "Guaranties" means, collectively,
----------
the Guaranty and each other guaranty of the Obligations.
"Guarantor" means, individually, ChipPAC, the Subsidiary Guarantors or
---------
any other guarantor of the Obligations, and "Guarantors" means,
----------
collectively, ChipPAC, the Subsidiary Guarantors and each other guarantor
of the Obligations.
"Hazardous Materials" means all substances defined as Hazardous
-------------------
Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
"HEA" means Hyundai Electronics America, a California corporation.
---
19
"Hedge Agreements" means all swaps, caps or collar agreements or
----------------
similar arrangements entered into by ChipPAC or any of its Subsidiaries
providing for protection against fluctuations in currency exchange rates or
the exchange of nominal interest obligations, either generally or under
specific contingencies.
"HEI" means Hyundai Electronics Industries Co., Ltd., a corporation
---
incorporated under the laws of the Republic of Korea.
"HEI Preferred Stock" means a series of senior pay-in-kind preferred
-------------------
stock of ChipPAC issued to HEI in connection with the Recapitalization
Transactions having an initial liquidation preference of $70,000,000 and
the other terms and conditions set forth in Exhibit XIV annexed hereto.
-----------
"HEI Unspent Amount" means $12,295,000, which is the amount by which
------------------
the cash consideration payable to HEI pursuant to the Recapitalization
Agreement is reduced as a result of ChipPAC's actual capital expenditures
for the period from January 1, 1999, through the Closing Date being less
than budgeted capital expenditures for such period.
"Hungarian Pledge Agreement" means the Quota Lien Agreement by and
--------------------------
between the Company and the Collateral Agent, substantially in the form of
Exhibit XV annexed hereto, as such Hungarian Pledge Agreement may hereafter
----------
be amended, restated, supplemented or otherwise modified from time to time.
"Immaterial Subsidiaries" means one or more Subsidiaries of ChipPAC,
-----------------------
designated in writing to the Administrative Agent from time to time;
provided that (x) the assets of all such designated Subsidiaries
--------
constitute, in the aggregate, less than or equal to 5% of the total assets
of ChipPAC and its Subsidiaries on a consolidated basis and (y) all such
designated Subsidiaries contribute, individually or in the aggregate, less
than or equal to 5% of Consolidated Adjusted EBITDA.
"Indebtedness" means, as applied to any Person, (i) all indebtedness
------------
for borrowed money, (ii) that portion of obligations with respect to
Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations
for borrowed money (other than current accounts payable incurred in the
ordinary course of business and accrued expenses incurred in the ordinary
course of business), (iv) any obligation owed for all or any part of the
deferred purchase price of property or services (excluding the Earnout, any
such obligations incurred under ERISA or any Foreign Pension Plan, any
obligation under employment or consulting agreements of ChipPAC or its
Subsidiaries and current trade payables incurred in the ordinary course of
business) which obligation in accordance with GAAP would be shown as a
liability on the balance sheet of such Person, (v) all indebtedness created
or arising under any conditional sale or other title retention agreement
with respect to any property or assets acquired by such Person (unless the
rights and remedies of the seller or the lender under such agreement in the
event of default are limited to repossession or sale of such property or
assets), (vi) all obligations, contingent or otherwise, as an account party
under any Letter of Credit or under acceptance, letter of credit or similar
facilities to the extent not reflected as trade liabilities on
20
the balance sheet of such Person in accordance with GAAP, and (vii) all
indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that
Person. The amount of Indebtedness which is non-recourse to the obligor
thereunder or to any other obligor and for which recourse is limited to an
identified asset or assets shall be equal to the lesser of (1) the stated
amount of such obligation and (2) the fair market value of such asset or
assets. Obligations under Interest Rate Agreements and Hedge Agreements
constitute (X) in the case of Hedge Agreements, Contingent Obligations, and
(Y) in all other cases, Investments, and in neither case constitute
Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
----------
"Information Memorandum" means the Confidential Information Memorandum
----------------------
dated July 1999, that was used in connection with the syndication of the
credit facilities set forth herein.
"Initial Period" means the period commencing on and including the
--------------
Closing Date and ending on the earlier of (i) the date on which the Sole
Lead Arranger notifies Company that it has concluded its primary
syndication of the Loans and the Commitments, and (ii) thirty (30) days
after the Closing Date.
"Insurance Proceeds" has the meaning assigned to that term in
------------------
subsection 2.4B(iii)(d).
"Intel" means Intel Corporation, a Delaware corporation.
-----
"Intel Preferred Stock" means the 10% convertible preferred stock of
---------------------
ChipPAC issued to Intel in connection with the Recapitalization
Transactions having an initial liquidation preference of $10,000,000 and on
the other terms and conditions set forth in Exhibit XVIII annexed hereto.
-------------
"Intellectual Property" has the meaning assigned to that term in
---------------------
subsection 5.5C.
"Intercompany Note" means any note evidencing Indebtedness of ChipPAC
-----------------
or any Subsidiary of ChipPAC to ChipPAC or any other Subsidiary of ChipPAC
(including the Recapitalization Notes) set forth on Schedule 1.1(ii)
----------------
annexed hereto, and "Intercompany Notes" means, collectively, all such
------------------
notes.
"Intercompany Security Documents" means the Recapitalization Security
------------------------------
Agreements and the Recapitalization Notes.
"Interest Coverage Ratio" has the meaning assigned to that term in
-----------------------
subsection 7.6A.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
---------------------
the last Business Day in each of March, June, September and December of
each year, commencing September 1999, and (ii) with respect to any
Eurodollar Rate
21
Loan, the last day of each Interest Period applicable to such Loan;
provided that in the case of each Interest Period of longer than three
--------
months, "Interest Payment Date" shall also include the date that is three
months or integral multiple thereof after the commencement of such Interest
Period.
"Interest Period" has the meaning assigned to that term in subsection
---------------
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
-----------------------
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to hedge ChipPAC or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating the
--------------------------------
Reserve Adjusted Eurodollar Rate, for purposes of determining the interest
rate in respect of an Interest Period. The Interest Rate Determination
Date for purposes of calculating the Reserve Adjusted Eurodollar Rate shall
be the second Business Day prior to the first day of the related Interest
Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter and any
successor statute and the regulations promulgated by the Internal Revenue
Service thereunder.
"Investment" means (i) any direct or indirect purchase or other
----------
acquisition by ChipPAC or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person, (ii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
ChipPAC or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable acquired from that other Person that
are not current assets or did not arise from sales to that other Person in
the ordinary course of business or (iii) Interest Rate Agreements;
provided, however, that the term "Investment" shall not include (a) current
-------- -------
trade and customer accounts receivable for goods furnished or services
rendered in the ordinary course of business and payable in accordance with
customary trade terms, (b) advances and prepayments to suppliers for goods
and services in the ordinary course of business, (c) stock or other
securities acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due or owing to ChipPAC or any of its Subsidiaries
(whether in bankruptcy of customers or suppliers or otherwise) or as
security for any such Indebtedness or claims, (d) Cash, and (e) deposits to
secure the performance of leases. The amount of any Investment shall be
the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment
"Investors" means Xxxx, the SXI Holders and the Existing Investors.
---------
"Issuing Bank" means, with respect to any Letter of Credit, CSFB, in
------------
its capacity as issuer of Letters of Credit, and, any other Lender,
reasonably
22
acceptable to Company and the Administrative Agent, having a Letter of
Credit Subfacility Commitment.
"Judgment Currency" has the meaning assigned to that term in
-----------------
subsection 10.20.
"Judgment Currency Conversion Date" has the meaning assigned to that
---------------------------------
term in subsection 10.20.
"Korean Pledge Agreement" means that certain Pledge (Jil-Kwon)
-----------------------
Agreement entered into by and between ChipPAC Korea and ChipPAC Hungary on
or prior to the Closing Date, substantially in the form of Exhibit XVI
-----------
annexed hereto, as such Korean Pledge Agreement may hereafter be amended,
restated, supplemented or otherwise modified from time to time with the
consent of the Requisite Lenders.
"Korean Security Agreement" means that certain Yangdo Dambo Agreement
-------------------------
entered into by and between ChipPAC Korea and the Collateral Agent on or
prior to the Closing Date, substantially in the form of Exhibit XVII
------------
annexed hereto, as such Korean Security Agreement may hereafter be amended,
restated, supplemented or otherwise modified from time to time.
"Lender" and "Lenders" means the Persons identified as "Lenders" and
------ -------
listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 10.1, and the term
"Lenders" shall include the Swing Line Lender unless the context otherwise
requires; provided that the term "Lenders", when used in the context of a
--------
particular Commitment, shall mean the Lenders having that Commitment.
"Lender Default" means (i) the refusal (which has not been retracted)
--------------
of a Lender to make available its portion of any Loans (including any
Revolving Loans made to pay Refunded Swing Line Loans or to reimburse
drawings under Letters of Credit) in accordance with subsection 2.1A or its
portion of any unreimbursed drawing or payment under a Letter of Credit in
accordance with subsection 3.3C or (ii) a Lender having notified Company
and/or the Administrative Agent in writing that it does not intend to
comply with its obligations under subsection 2.1 or subsection 3.1C, 3.3B
or 3.3C.
"Lending Office" means, as to any Lender, the office or offices of
--------------
such Lender specified as the "Lending Office" in Schedule 2.1, or such
------------
other office or offices as such Lender may from time to time notify Company
and the Administrative Agent.
"Letter of Credit" or "Letters of Credit" means Commercial Letters of
---------------- -----------------
Credit and Standby Letters of Credit issued or to be issued by the Issuing
Bank pursuant to subsection 3.1.
"Letter of Credit Issuing Office" means, as to any Issuing Bank, the
-------------------------------
address from time to time specified by such Issuing Bank to Company and the
Administrative Agent as its letter of credit issuing office. The initial
"Letter of
23
Credit Issuing Office" for CSFB shall be 5 World Xxxxx Xxxxxx, 0/xx/ Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000.
"Letter of Credit Subfacility Commitment" means, with respect to any
---------------------------------------
Issuing Bank at any time, the commitment of such Issuing Bank to issue
Letters of Credit pursuant to subsection 3.1A; provided that the aggregate
--------
amount of the Letter Credit Subfacility Commitments shall in no event
exceed $10,000,000; provided, further, that any reduction in the Revolving
-------- -------
Loan Commitments to a level that is below the then aggregate amount of the
Letter of Credit Subfacility Commitments shall result in the pro rata
reduction of the aggregate Letter of Credit Subfacility Commitments pro
rata to each Issuing Bank.
"Letter of Credit Usage" means, as at any date of determination, the
----------------------
sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
----
Credit honored by the Issuing Bank and not theretofore reimbursed by
Company (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B).
"Leverage Ratio" has the meaning assigned to that term in subsection
--------------
7.6.
"Lien" means any lien, mortgage, pledge, assignment, security
----
interest, fixed or floating charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest) and any
option, trust or deposit or other preferential arrangement having the
practical effect of any of the foregoing.
"Loan" or "Loans" means, as the context requires, one or more of the
---- -----
Term Loans, Revolving Loans, Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, any notes issued pursuant to
--------------
subsection 2.1E(ii), the Letters of Credit (and any applications for, or
reimbursement agreements or other documents or certificates executed by
ChipPAC or Company in favor of the Issuing Bank relating to, the Letters of
Credit), the Guaranties and the Collateral Documents.
"Loan Parties" means Company, ChipPAC Shanghai I, ChipPAC Shanghai II
------------
and each Guarantor.
"Local Lines of Credit" means (a) the lines of credit in an aggregate
---------------------
principal amount outstanding at any time not to exceed $25,000,000 (or the
equivalent), to provide working capital financing for the Operating
Subsidiaries and (b) additional lines of credit in an aggregate principal
amount outstanding at any time not to exceed $5,000,000 (or the
equivalent), to provide working capital financing for the Operating
Subsidiaries in connection with a Permitted Acquisition.
24
"Margin Stock" has the meaning assigned to that term in Regulation U
------------
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Adverse Effect" means a material adverse effect upon (i) the
-----------------------
business, results of operations, financial condition or prospects of
ChipPAC and its Subsidiaries, taken as a whole, or (ii) the validity or
enforceability of any of the Transaction Documents (to the extent adverse
to ChipPAC or its Subsidiaries) or the Loan Documents against the Loan
Parties (other than Immaterial Subsidiaries, except to the extent any such
invalidity or unenforceability would adversely affect the Collateral
Agent's ability to realize upon any Collateral) or the rights, remedies and
benefits available to the parties thereunder.
"Material Contracts" means any indenture, mortgage, deed of trust,
------------------
contract, undertaking, agreement or other instrument to which ChipPAC or
any of its Subsidiaries is a party for which breach, nonperformance,
cancellation or failure to renew would constitute an Event of Default or
could reasonably be expected to have a Material Adverse Effect.
"Maximum Consolidated Capital Expenditures Amount" has the meaning
------------------------------------------------
assigned to that term in subsection 7.6C(i).
"Merger Corp" means ChipPAC Merger Corp., a Delaware corporation.
-----------
"Micro BGA Capital Expenditures" means expenditures that would
------------------------------
constitute Consolidated Capital Expenditures (but for clause (c) in the
proviso to the definition of such term) made with respect to the provision
of Micro BGA packaging services pursuant to the Services Agreement dated as
of the Closing Date by and between HEI and ChipPAC Limited.
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan", as defined in
------------------
Section 4001(a)(3) of ERISA which is subject to Title IV of ERISA, to which
Company or any of its ERISA Affiliates is contributing or to which Company
or any of its ERISA Affiliates has an obligation to contribute.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
-----------------
Proceeds of such Asset Sale net of costs of sale including, without
limitation, (i) income taxes estimated to be payable as a result of such
Asset Sale within two years of the date of receipt of such Cash Proceeds,
(ii) transfer, sales, use and other taxes payable in connection with such
Asset Sale, (iii) payment of the outstanding principal amount of, premium
or penalty, if any, and interest on any Indebtedness (other than the Loans)
that is secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such Asset
Sale, and (iv) financial advisor's commissions and fees and expenses of
counsel and other advisors in connection with such Asset Sale.
"Non-Defaulting Lender" means and includes each Lender other than a
---------------------
Defaulting Lender.
25
"Notice of Borrowing" means a notice in the form of Exhibit I annexed
------------------- ---------
hereto delivered by Company to the Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
---------------------------------
the form of Exhibit II annexed hereto delivered by Company to the
----------
Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the
interest rate with respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice in the form of
--------------------------------------
Exhibit III annexed hereto delivered by Company to the Administrative Agent
-----------
pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations of every nature of each Loan Party
-----------
from time to time owed to the Agents, the Lenders or any of them or their
respective Affiliates under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of Credit or
payments for early termination of Interest Rate Agreements, fees, expenses,
indemnification or otherwise.
"Obligation Currency" has the meaning assigned to that term in
-------------------
subsection 10.20.
"Officer's Certificate" means, with respect to any Person, a
---------------------
certificate executed on behalf of such Person (x) if such Person is a
partnership or limited liability company, by its chairman of the Board (if
an officer) or chief executive officer or by the chief financial officer,
vice president, treasurer or a principal financial officer of its general
partner or managing member or other Person authorized to do so by its
Organizational Documents, (y) if such Person is a corporation, on behalf of
such corporation by its chairman of the board (if an officer) or chief
executive officer or its chief financial officer, vice president, treasurer
or a principal financial officer and (z) if such person is ChipPAC or a
Subsidiary of ChipPAC, a Responsible Officer; provided that every Officer's
--------
Certificate with respect to the compliance with a condition precedent to
the making of any Loans hereunder shall include (i) a statement that the
officer or officers making or giving such Officer's Certificate have read
such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signer or signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied
with, and (iii) a statement as to whether, in the opinion of the signer or
signers, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including, without limitation, leases that may be terminated by the lessee
at any time) of any property (whether real, personal or mixed) that is not
a Capital Lease other than any such lease under which that Person is the
lessor.
26
"Operating Subsidiaries" means ChipPAC Limited, ChipPAC Korea, ChipPAC
----------------------
Shanghai I, ChipPAC Shanghai II and each other Subsidiary of ChipPAC (other
than Company, ChipPAC Barbados, ChipPAC Luxembourg and ChipPAC Hungary)
that conducts packaging and testing services, sales or distribution
functions.
"Organizational Authorizations" means, with respect to any Person,
-----------------------------
resolutions of its Board of Directors, general partners or members of such
Person, and such other Persons, groups or committees (including, without
limitation, managers and managing committees), if any, required by the
Organizational Certificate or Organization Documents of such Person to
authorize or approve the taking of any action or the entering into of any
transaction.
"Organizational Certificate" means, with respect to any Person, the
--------------------------
certificate or articles of incorporation, partnership or limited liability
company or any other similar or equivalent organizational, charter or
constitutional certificate or document filed with the applicable
Governmental Authority in the jurisdiction of its incorporation,
organization or formation.
"Organizational Documents" means, with respect to any Person, the by-
------------------------
laws, partnership agreement, limited liability company agreement, operating
agreement, management agreement or other similar or equivalent
organizational, charter or constitutional agreement or arrangement.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Section 4002 of ERISA (or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
------------
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"Permitted Acquisitions" means an acquisition made pursuant to
----------------------
subsection 7.7(v).
"Permitted Encumbrances" means the following types of Liens:
----------------------
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory or contractual Liens of landlords, statutory
Liens of banks and rights of setoff, statutory Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law
(other than any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA) incurred in the
ordinary course of business for sums not yet delinquent or being
contested in good faith pursuant to appropriate proceedings, if such
reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
27
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive, in each case, of obligations for the payment of borrowed
money or other Indebtedness);
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to others (in the ordinary
course of business consistent with past practices) not interfering in
any material respect with the ordinary conduct of the business or
operations of ChipPAC or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries and
encumbrances set forth on the title reports delivered to the
Administrative Agent;
(vii) any (a) interest or title of a lessor or sublessor under
any Capital Lease permitted by subsection 7.1(v) or any operating
lease not prohibited by this Agreement, (b) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject
to, or (c) subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred to in the
preceding clause (b);
(viii) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(ix) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(x) deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessors, utilities and other
service providers;
(xi) bankers' liens and rights of setoff with respect to
customary depository arrangements entered into in the ordinary course
of business;
(xii) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate the use of
any real property; and
(xiii) licenses of patents, trademarks and other intellectual
property rights granted by ChipPAC or any of its Subsidiaries in the
ordinary course of business and not interfering in any material
respect with the ordinary conduct of the business of ChipPAC or such
Subsidiary.
28
"Permitted Seller Paper" means any unsecured Indebtedness of ChipPAC
----------------------
or its Subsidiaries that is not guaranteed by any Subsidiary of ChipPAC and
that is incurred in connection with any acquisition consummated in
accordance with the provisions of subsection 7.7(v) and payable to the
seller in connection therewith and containing the subordination provisions
set forth on Exhibit XI hereto.
-----------------
"Person" means and includes natural persons, corporations, limited
------
partnerships, limited liability companies, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof and any other entities of whatever nature.
"Pledge Agreements" means, collectively, the Principal Pledge
-----------------
Agreement, the Korean Pledge Agreement, the Hungarian Pledge Agreement and
the Chinese Pledge Agreements.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by CSFB as its prime commercial lending rate in effect at
its principal office in New York City. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged
to any customer. CSFB or any other Lender may make commercial loans or
other loans at rates of interest at, above or below the Prime Rate.
"Principal Pledge Agreement" means that certain Pledge Agreement
--------------------------
entered into by and among ChipPAC, certain of the Guarantors and the
Collateral Agent as of the Closing Date, or pursuant to subsection 6.9,
substantially in the form of Exhibit V annexed hereto, as such Principal
---------
Pledge Agreement may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Principal Security Agreement" means the Security Agreement entered
----------------------------
into by and among ChipPAC, certain of the Guarantors and the Collateral
Agent on and as of the Closing Date, or pursuant to subsection 6.9,
substantially in the form of Exhibit VI annexed hereto, as such Security
----------
Agreement may hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Pro Forma Basis" means, with respect to compliance with any test or
---------------
covenant hereunder, compliance with such covenant or test after giving
effect to any proposed acquisition or other action (including cost
reduction actions taken as a result thereof) which requires compliance on a
pro forma basis (including pro forma adjustments arising out of events
which are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing impact, in each case
determined on a basis consistent with Article 11 of Regulation S-X of the
Securities Act and as interpreted by the Staff of the Securities and
Exchange Commission which (to the extent consistent therewith) may include
cost savings resulting from head count reductions, closure of facilities
and similar restructuring charges or integration activities or other
adjustments certified by a financial officer of ChipPAC, together with such
other pro forma adjustments certified by a financial officer of ChipPAC as
being
29
reasonable and having been made in good faith as may be reasonably
acceptable to the Administrative Agent) using, for purposes of determining
such compliance, the historical financial statements of all entities or
assets so acquired or to be acquired and the consolidated financial
statements of ChipPAC and its Subsidiaries which shall be reformulated as
if such acquisition or other action, and any other acquisitions which have
been consummated during the period, and any Indebtedness or other
liabilities incurred in connection with any such acquisition had been
consummated at the beginning of such period and assuming that such
Indebtedness bears interest during any portion of the applicable
measurement period prior to the relevant acquisition at the weighted
average of the interest rates applicable to outstanding Loans during such
period.
"Pro Forma Compliance" means, at any date of determination, ChipPAC
--------------------
shall be in pro forma compliance with the covenants set forth in
--- -----
subsections 7.6A, B, C and D as of the last day of the most recent Fiscal
Quarter end (computed on the basis of (i) balance sheet amounts as of the
most recently completed Fiscal Quarter, and (ii) income statement amounts
for the most recently completed period of four consecutive Fiscal Quarters,
in each case, for which financial statements shall have been delivered to
the Administrative Agent and calculated on a Pro Forma Basis in respect of
the event giving rise to such determination).
"Pro Rata Share" means (i) with respect to all payments, computations
--------------
and other matters relating to the Term A Loan Commitment or the Term A
Loans of any Lender, the percentage obtained by dividing (x) the Term A
--------
Loan Exposure of that Lender by (y) the aggregate Term A Loan Exposure of
--
all the Lenders; (ii) with respect to all payments, computations and other
matters relating to the Term B Loan Commitment or the Term B Loans of any
Lender, the percentage obtained by dividing (x) the Term B Loan Exposure of
--------
that Lender by (y) the aggregate Term B Loan Exposure of all the Lenders;
--
(iii) with respect to all payments, computations and other matters relating
to the Term Delayed Draw Loan Commitment or the Term Delayed Draw Loans of
any Lender, the percentage obtained by dividing (x) the Term Delayed Draw
--------
Loan Exposure of that Lender by (y) the aggregate Term Delayed Draw Loan
--
Exposure of all the Lenders; (iv) with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or
the Revolving Loans of any Lender or any Letters of Credit issued by any
Lender or any participations purchased by any Lender therein or in any
Swing Line Loans, the percentage obtained by dividing (x) the Revolving
--------
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure
--
of all the Lenders; and (v) for all other purposes with respect to each
Lender, the percentage obtained by dividing (x) the sum of the Term Loan
--------
Exposure of that Lender and the Revolving Loan Exposure of that Lender by
--
(y) the sum of the aggregate Term Loan Exposure of all the Lenders and the
aggregate Revolving Loan Exposure of all the Lenders; in any such case as
the applicable percentage may be adjusted by assignments permitted pursuant
to subsection 10.1. The initial Pro Rata Share of each Lender for purposes
of each of clauses (i), (ii), (iii) and (iv) of the preceding sentence is
set forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
------------
"Projections" has the meaning assigned to that term in subsection
-----------
5.3B.
30
"Qualified Public Equity Offering" means an underwritten public
--------------------------------
offering of common stock of, and by, ChipPAC pursuant to a registration
statement filed with the Securities and Exchange Commission in accordance
with the Securities Act.
"Recapitalization Agreement" means the Agreement and Plan of
--------------------------
Recapitalization and Merger dated as of March 13, 1999, as amended to date,
entered into by HEI, HEA, ChipPAC and Merger Corp, as the same may
thereafter be amended, restated, supplemented or otherwise modified from
time to time to the extent permitted under subsection 7.11A.
"Recapitalization Loans" means, collectively, the ChipPAC Luxembourg
----------------------
Loan, the ChipPAC Limited Loan, the ChipPAC Hungary Loan, the ChipPAC Korea
Loan and the ChipPAC Shanghai I Loan.
"Recapitalization Note" means a note evidencing a Recapitalization
---------------------
Loan, and "Recapitalization Notes" means, collectively, all such notes.
----------------------
"Recapitalization Security Agreement" means the Chinese Security
-----------------------------------
Agreements, the Korean Pledge Agreement and each other pledge or security
agreement entered into by a Subsidiary to secure a Recapitalization Loan,
and "Recapitalization Security Agreements" means, collectively, all such
------------------------------------
agreements. The Recapitalization Security Agreements, other than the
Chinese Pledge and Security and the Korean Pledge and Security Agreements,
are substantially in the form of Exhibit XIX annexed hereto.
-----------
"Recapitalization Transactions" means the transactions contemplated by
-----------------------------
the Recapitalization Agreement (including the Recapitalization Loans) and
the payment of Transaction Costs, in each case occurring on or about the
Closing Date.
"Recovery Event" has the meaning assigned to that term in subsection
--------------
2.4B(iii)(d).
"Reference Lenders" means (i) CSFB and (ii) another Lender determined
-----------------
by the Administrative Agent with the consent of Company.
"Refunded Swing Line Loans" has the meaning assigned to that term in
-------------------------
subsection 2.1A(v).
"Register" has the meaning assigned to that term in subsection 2.1D.
--------
"Regulation D" means Regulation D of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in
------------------
subsection 3.3B.
"Reinvestment Assets" means, in the case of any Reinvestment Event,
-------------------
any assets which are either (i) in replacement of the assets subject to the
31
Reinvestment Event, or (ii) long term assets (including Capital Stock)
useful in the business of ChipPAC or its Subsidiary whose assets were
subject to the Reinvestment Event.
"Reinvestment Deferred Amount" means, with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds, Insurance Proceeds or Condemnation
Proceeds, as the case may be, received by ChipPAC or any of its
Subsidiaries in connection therewith which are not applied to prepay the
Loans (and/or reduce the Revolving Loan Commitments) in accordance with
subsection 2.4B(iii)(a) or (d) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event" means any Asset Sale or Recovery Event in respect
------------------
of which ChipPAC has delivered a Reinvestment Notice.
"Reinvestment Notice" means a written notice executed by a Responsible
-------------------
Officer stating that no Default or Event of Default has occurred and is
continuing and that ChipPAC (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash
Proceeds, Insurance Proceeds or Condemnation Proceeds, as the case may be,
of an Asset Sale or Recovery Event to acquire Reinvestment Assets within
365 days of the receipt of such Net Cash Proceeds, Insurance Proceeds or
Condemnation Proceeds, as the case may be.
"Reinvestment Prepayment Amount" means, with respect to any
------------------------------
Reinvestment Event, the Reinvestment Deferred Amount, if any, relating
thereto less any amount expended prior to the relevant Reinvestment
Prepayment Date to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" means, with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring 365 days after such
Reinvestment Event and (b) the date on which ChipPAC shall have determined
not to, or shall have otherwise ceased to, acquire Reinvestment Assets with
all or any portion of the relevant Reinvestment Deferred Amount.
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the environment.
"Requisite Class Lenders" means, at any time of determination (i) for
-----------------------
the Class of the Lenders having Term A Loan Exposure, Non-Defaulting
Lenders having or holding more than 50% of the aggregate Term A Loan
Exposure of all Non-Defaulting Lenders, (ii) for the Class of Lenders
having Term B Loan Exposure, Non-Defaulting Lenders having or holding more
than 50% of the aggregate Term B Loan Exposure of all Non-Defaulting
Lenders, (iii) for the Class of Lenders having Term Delayed Draw Loan
Exposure, Non-Defaulting Lenders having or holding more than 50% of the
aggregate Term Delayed Draw Loan Exposure of all Non-Defaulting Lenders,
and (iv) for the Class of Lenders having Revolving Loan Exposure, Non-
Defaulting Lenders having or holding more than 50% of the aggregate
Revolving Loan Exposure of all Non-Defaulting Lenders.
32
"Requisite Lenders" means Non-Defaulting Lenders having or holding
-----------------
more than 50% of the sum of the aggregate Term Loan Exposure of all Non-
Defaulting Lenders and the aggregate Revolving Loan Exposure of all Non-
Defaulting Lenders.
"Reserve Adjusted Eurodollar Rate" means, with respect to each day
--------------------------------
during each Interest Period pertaining to a Eurodollar Rate Loan, a rate
per annum determined for such day in accordance with the following formula:
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Responsible Officer" means the chairman of the board of directors (if
-------------------
an officer), chief executive officer, president, executive vice president,
general counsel, chief financial officer, assistant treasurer, assistant
secretary, principal financial or accounting officer or the secretary of
ChipPAC, or as applicable, a Subsidiary of ChipPAC or another officer
designated by the board of ChipPAC or any of its Subsidiaries but, in any
event, with respect to financial reporting matters, the chief executive
officer, chief financial officer or treasurer of ChipPAC.
"Restricted Payment" means (i) any dividend or other distribution,
------------------
direct or indirect, on account of any shares of any class of stock (or of
any other Capital Stock) of ChipPAC or any of its Subsidiaries now or
hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock (or of
any other Capital Stock) of ChipPAC or any of its Subsidiaries now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock (or of any other Capital Stock) of ChipPAC or
any of its Subsidiaries now or hereafter outstanding, and (iv) any payment
or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in substance or
legal defeasance), sinking fund or similar payment with respect to,
Subordinated Debt.
"Revolving Loan Commitment" means the commitment of a Lender to make
-------------------------
Revolving Loans to Company pursuant to subsection 2.1A(iv), and "Revolving
---------
Loan Commitments" means such commitments of all Lenders in the aggregate.
----------------
"Revolving Loan Commitment Termination Date" means July 31, 2005.
------------------------------------------
"Revolving Loan Exposure" means, with respect to any Lender as of any
-----------------------
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b)
----
in the event that Lender is an Issuing Bank, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (net of any
participations
33
purchased by other Lenders in such Letters of Credit) plus (c) the
----
aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any
Letters of Credit plus (d) the aggregate amount of all participations
----
purchased by that Lender in any outstanding Swing Line Loans plus (e) in
----
the case of the Swing Line Lender, the sum of the aggregate outstanding
principal amount of all Swing Line Loans (in each case net of any
participations therein purchased by other Lenders).
"Revolving Loans" means the Loans made by the Lenders to Company
---------------
pursuant to subsection 2.1A(iv).
"S&P" means Standard & Poor's Ratings Services.
---
"Securities" means any stock, shares, partnership interests, voting
----------
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, and any successor statute.
"Security Agreements" means, collectively, the Principal Security
-------------------
Agreement, the Korean Security Agreement, the Chinese Security Agreements
and the Recapitalization Security Agreements.
"Shareholders Agreement" means that certain Shareholders Agreement to
----------------------
be entered into on or prior to the Closing Date by and among ChipPAC and
certain shareholders of ChipPAC which Shareholders Agreement shall be in
the form delivered to the Administrative Agent on or prior to the Closing
Date and as such Shareholders Agreement may hereafter be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.11A.
"Sole Lead Arranger" has the meaning assigned to that term in the
------------------
Preamble to this Agreement.
"Solvent" means, with respect to any Person, that as of the date of
-------
determination both (i) (a) the then fair saleable value of the property
sold as a going concern of such Person is (y) greater than the total amount
of liabilities (including contingent liabilities but excluding amounts
payable under intercompany promissory notes) of such Person and (z) not
less than the amount that will be required to pay the probable liabilities
on such Person's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to such Person; (b) such Person's capital is not unreasonably
small in relation to its business or any contemplated or undertaken
transaction; and (c) such Person does not intend to incur, or believe that
it will incur, debts beyond its ability to pay such debts as they become
due;
34
and (ii) such Person is "solvent" within the meaning given that term and
similar terms under applicable laws relating to fraudulent transfers and
conveyances. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all
of the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"SPC" has the meaning assigned to that term in subsection 10.1F.
---
"Sponsor Advisory Services Agreements" means each of the Advisory
------------------------------------
Services Agreements by and between ChipPAC and each of the Sponsors, dated
on or about the Closing Date, in form delivered to the Administrative Agent
on or prior to the Closing Date, as the same may thereafter be amended,
restated, supplemented or otherwise modified from time to time to the
extent permitted under subsection 7.11A.
"Sponsor Management Fees" means the fees (including one-time fees
-----------------------
payable in connection with acquisitions, divestitures and financings) and
expenses payable to the Sponsors pursuant to the Sponsor Advisory Services
Agreements.
"Sponsors" means Xxxx and the SXI Holders.
--------
"Standby Letter of Credit" means any standby letter of credit or
------------------------
similar instrument, issued for the purpose of supporting obligations of
ChipPAC and its Subsidiaries incurred or arising in the ordinary course of
business; provided that Standby Letters of Credit may not be issued for the
--------
purpose of supporting trade payables.
"Subordinated Debt" means (i) subordinated, unsecured Indebtedness of
-----------------
Company evidenced by the Subordinated Debt Documents and issued on or prior
to the Closing Date (and any Indebtedness issued in exchange for such
Indebtedness as contemplated by the Subordinated Debt Documents) in any
aggregate principal amount of not less than $150,000,000 and (ii) any
Additional Subordinated Debt.
"Subordinated Debt Documents" means the documents pursuant to which
---------------------------
the Subordinated Debt is issued (or exchanged) in the form delivered to
Administrative Agent on or prior to the Closing Date, as such documents may
be amended, restated, supplemented or otherwise modified from time to time
to the extent permitted under Subsection 7.11A.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
35
"Subsidiary Guarantor" means any Subsidiary of ChipPAC that is a party
--------------------
to the Guaranty on the Closing Date (which shall be each such Subsidiary
(other than Company, ChipPAC Shanghai I and ChipPAC Shanghai II) existing
as of the Closing Date) or at any time after the Closing Date pursuant to
subsection 6.9.
"Swing Line Lender" means CSFB, or any Person serving as a successor
-----------------
Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"Swing Line Loan Commitment" means the commitment of the Swing Line
--------------------------
Lender to make Swing Line Loans to Company pursuant to subsection 2.1A(v).
"Swing Line Loans" means the Loans made by the Swing Line Lender
----------------
pursuant to subsection 2.1A(v).
"SXI Holders" means (a) Citicorp Venture Capital, Ltd., (b) any
-----------
officers, employees or directors of the foregoing or any trust partnership
or entity established solely for the benefit or such officers, employees or
directors and (c) any Affiliates (including SXI Group LLC) of the
foregoing.
"Systems" has the meaning assigned to that term in the definition of
-------
Year 2000 Problems.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
--- -----
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; provided that "Tax on the overall net income" of a Person
-------- -----------------------------
shall be construed as a reference to a tax on all or part of the net
income, profits or gains of that Person (whether worldwide, or only insofar
as such income, profits or gains are considered to arise in or to relate to
a particular jurisdiction, or otherwise) including a franchise tax imposed
in lieu of a net income tax.
"Term A Loan Commitment" means the commitment of a Lender to make a
----------------------
Term A Loan to Company pursuant to subsection 2.1A(i), and "Term A Loan
-----------
Commitments" means such commitments of all Lenders in the aggregate.
-----------
"Term A Loan Exposure" means, with respect to any Lender, as of any
--------------------
date of determination (i) prior to the funding of the Term A Loans, that
Lender's Term A Loan Commitment and (ii) after the funding of the Term A
Loans, the outstanding principal amount of the Term A Loans of that Lender.
"Term A Loans" means the Loans made by the Lenders pursuant to
------------
subsection 2.1A(i).
"Term B Loan Commitment" means the commitment of a Lender to make a
----------------------
Term B Loan to Company pursuant to subsection 2.1A(ii), and "Term B Loan
-----------
Commitments" means such commitments of all Lenders in the aggregate.
-----------
36
"Term B Loan Exposure" means, with respect to any Lender, as of any
--------------------
date of determination (i) prior to the funding of the Term B Loans, that
Lender's Term B Loan Commitment and (ii) after the funding of the Term B
Loans, the outstanding principal amount of the Term B Loans of that Lender.
"Term B Loans" means the Loans made by the Lenders pursuant to
------------
subsection 2.1A(ii).
"Term Delayed Draw Loan Commitment" means the commitment of a Lender
---------------------------------
to make a Term Delayed Draw Loan to Company pursuant to subsection
2.1A(iii), and "Term Delayed Draw Loan Commitments" means such commitments
----------------------------------
of all Lenders in the aggregate.
"Term Delayed Draw Loan Commitment Termination Date" means July 31,
--------------------------------------------------
2001.
"Term Delayed Draw Loan Exposure" means, with respect to any Lender,
-------------------------------
as of any date of determination, (i) prior to the Term Delayed Draw Loan
Commitment Termination Date, that Lender's Term Delayed Draw Loan
Commitment and (ii) after the Term Delayed Draw Loan Commitment Termination
Date, the outstanding principal amount of the Term Delayed Draw Loans of
that Lender.
"Term Delayed Draw Loans" means the Loans made by the Lenders pursuant
-----------------------
to subsection 2.1A(iii).
"Term Loan Commitment" means the Term A Loan Commitment, the Term B
--------------------
Loan Commitment or the Term Delayed Draw Loan Commitment of a Lender, and
"Term Loan Commitments" means such commitments of all Lenders in the
---------------------
aggregate.
"Term Loan Exposure" means, with respect to any Lender as of any date
------------------
of determination, the aggregate Term A Loan Exposure, Term B Loan Exposure
and Term Delayed Draw Loan Exposure of that Lender.
"Term Loans" means, collectively, the Term A Loans, the Term B Loans
----------
and the Term Delayed Draw Loans.
"Total Utilization of Revolving Loan Commitments" means, as at any
-----------------------------------------------
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the
purpose of repaying any Refunded Swing Line Loans or reimbursing the
applicable Issuing Bank for any amount drawn under any Letter of Credit but
not yet so applied) plus (ii) the aggregate principal amount of all
----
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
----
"Transaction Costs" means the fees, costs and expenses payable by
-----------------
ChipPAC and its Subsidiaries in connection with the transactions
contemplated by the Transaction Documents including, without limitation,
amounts payable to the Agents and the Lenders.
37
"Transaction Documents" means, collectively, (i) any documentation
---------------------
related to the Equity Contribution, (ii) the Recapitalization Agreement,
(iii) the Shareholders Agreement, (iv) the Sponsor Advisory Services
Agreements, (v) the Subordinated Debt Documents, (vi) the Subordinated
Debt, and (vii) any and all other documents, agreements, instruments and
arrangements related to or in connection with the Recapitalization
Transactions.
"Year 2000 Problems" means limitations in the capacity or readiness to
------------------
handle date information (including, without limitation, calculations based
on date information) for the Year 1999 or years beginning January 1, 2000
of any of the hardware, firmware or software systems ("Systems") associated
-------
with information processing and delivery, operations or services (e.g.,
security and alarms, elevators, communications, and HVAC), including,
without limitation, equipment containing embedded microchips, in each case
necessary to the business or operations of ChipPAC and its Subsidiaries
taken as a whole.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
------------------------------------------------------------------------
Agreement.
----------
Except as otherwise expressly provided in this Agreement, (a) all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP; and (b) financial statements and other
information required to be delivered by ChipPAC to the Lenders pursuant to
clauses (i), (ii), (iii) and (xiii) of subsection 6.1 shall be prepared in
accordance with GAAP without giving effect to Accounting Principles Board
Opinions 16 and 17 with respect to any Permitted Acquisition. In the event that
a change in GAAP or other accounting principles and policies after the date
hereof affects in any material respect the calculations of the compliance by
ChipPAC and its Subsidiaries with the covenants contained herein, the Lenders
and ChipPAC agree to negotiate in good faith to amend the affected covenants
(and related definitions) to compensate for the effect of such changes so that
the restrictions, limitations and performance standards effectively imposed by
such covenants, as so amended, are substantially identical to the restrictions,
limitations and performance standards imposed by such covenants as in effect on
the date hereof; provided that if the Requisite Lenders and ChipPAC fail to
--------
reach agreement with respect to such amendment within a reasonably period of
time following the date of effectiveness of any such change, calculation of
compliance by ChipPAC and its Subsidiaries with the covenants contained herein
shall be determined in accordance with GAAP as in effect immediately prior to
such change.
1.3 Other Definitional Provisions.
-----------------------------
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The words "includes," "including" and similar forms used in any Loan
Document shall be construed as if followed by the words "without limitation."
38
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans.
------------------
A. Commitments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Loan Parties set
forth herein and in the other Loan Documents, each Lender hereby severally
agrees to make the Loans described in subsections 2.1A(i), 2.1A(ii), 2.1A(iii)
and 2.1A(iv) and the Swing Line Lender hereby agrees to make the Swing Line
Loans as described in subsection 2.1A(v).
(i) Term A Loans. Each Lender severally agrees to make Loans to
------------
Company on the Closing Date in an aggregate amount not exceeding its Pro
Rata Share of the aggregate amount of the Term A Loan Commitments, to be
used for the purposes identified in subsection 2.5A. The amount of each
Lender's Term A Loan Commitment is set forth opposite its name in Schedule
--------
2.1 annexed hereto; provided that the Term A Loan Commitments of the
--- --------
Lenders shall be adjusted to give effect to any assignments of the Term A
Loan Commitments pursuant to subsection 10.1B. The aggregate original
principal amount of the Term A Loan Commitments is $70,000,000. Each
Lender's Term A Loan Commitment shall expire immediately and without
further action on August 15, 1999 if the Term A Loans are not made on or
before that date. Company may make only one borrowing under the Term A
Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) Term B Loans. Each Lender severally agrees to make Loans to
------------
Company on the Closing Date in an aggregate amount not exceeding its Pro
Rata Share of the aggregate amount of the Term B Loan Commitments, to be
used for the purposes identified in subsection 2.5A. The amount of each
Lender's Term B Loan Commitment is set forth opposite its name in Schedule
--------
2.1 annexed hereto; provided that the Term B Loan Commitments of the
--- --------
Lenders shall be adjusted to give effect to any assignments of the Term
Loan Commitments pursuant to subsection 10.1B. The aggregate original
principal amount of the Term B Loan Commitments is $80,000,000. Each
Lender's Term B Loan Commitment shall expire immediately and without
further action on August 15, 1999 if the Term B Loans are not made on or
before that date. Company may make only one borrowing under the Term B
Loan Commitments. Amounts borrowed under this subsection 2.1A(ii) and
subsequently repaid or prepaid may not be reborrowed.
(iii) Term Delayed Draw Loans. Each Lender severally agrees, subject
-----------------------
to the limitations set forth below with respect to the maximum amount of
Term Delayed Draw Loans, to lend to Company from time to time during the
period from the Closing Date to but excluding the Term Delayed Draw Loan
Commitment Termination Date an aggregate amount not exceeding its Pro Rata
Share of the aggregate amount of the Term Delayed Draw Loan Commitments, to
be used for the purposes identified in subsection 2.5B. The original
amount of each Lender's Term Delayed Draw Loan Commitment is set forth
opposite its name in Schedule 2.1 annexed hereto and the aggregate original
------------
amount of the Term Delayed Draw Loan Commitments is $20,000,000; provided
--------
that the Term Delayed Draw Loan Commitments of the Lenders shall be
adjusted to give effect to any assignments of the Term Delayed Draw Loan
Commitments pursuant to
39
subsection 10.1B; provided further that the amount of the Term Delayed Draw
-------- -------
Loan Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4B. Each Lender's Term
Delayed Draw Loan Commitment shall expire on the Term Delayed Draw Loan
Commitment Termination Date to the extent that Term Delayed Draw Loans have
not been made on or before that date. Amounts borrowed under this
subsection 2.1A(iii) may be repaid and reborrowed, subject to the
limitations and conditions set forth herein, to but excluding the Term
Delayed Draw Loan Commitment Termination Date.
(iv) Revolving Loans. Each Lender severally agrees, subject to the
---------------
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company
from time to time during the period from the Closing Date to but excluding
the Revolving Loan Commitment Termination Date Revolving Loans, to be used
for the purposes identified in subsection 2.5C, provided that after giving
effect to such Loans its Revolving Loan Exposure shall not exceed its Pro
Rata Share of the aggregate amount of the Revolving Loan Commitments. The
original amount of each Lender's Revolving Loan Commitment is set forth
opposite its name in Schedule 2.1 annexed hereto and the aggregate original
------------
amount of the Revolving Loan Commitments is $50,000,000 less the aggregate
amount of the Local Lines of Credit; provided that the Revolving Loan
--------
Commitments of the Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to subsection 10.1B;
provided further that the amount of the Revolving Loan Commitments shall be
-------- -------
reduced from time to time by the amount of any reductions thereto made
pursuant to subsection 2.4C. Each Lender's Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all Revolving
Loans and all other amounts owed hereunder with respect to the Revolving
Loans and the Revolving Loan Commitments shall be paid in full no later
than that date. Amounts borrowed under this subsection 2.1A(iv) may be
repaid and reborrowed, subject to the limitations and conditions set forth
herein, to but excluding the Revolving Loan Commitment Termination Date.
Notwithstanding anything contained herein to the contrary, (i) in no
event shall the Total Utilization of Revolving Loan Commitments at any time
exceed the Revolving Loan Commitments then in effect and (ii) prior to the
Chinese Security Effective Date, in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed $15,000,000.
(v) Swing Line Loans. The Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum aggregate
amount of all Swing Line Loans outstanding from time to time, to make a
portion of the Revolving Loan Commitments available to Company from time to
time during the period from the Closing Date to but excluding the Revolving
Loan Commitment Termination Date by making Base Rate Loans as Swing Line
Loans to Company in an aggregate amount not to exceed the amount of the
Swing Line Loan Commitment, to be used for the purposes identified in
subsection 2.5C, notwithstanding the fact that such Swing Line Loans, when
aggregated with the sum of the Swing Line Lender's outstanding Revolving
Loans and the Swing Line Lender's Pro Rata Share of the Letter of Credit
Usage then in effect, may exceed the Swing Line Lender's Revolving Loan
Commitment. The original amount of
40
the Swing Line Loan Commitment is $10,000,000; provided that the amounts of
--------
the Swing Line Loan Commitment are subject to reduction as provided in
clause (b) of the next paragraph. The Swing Line Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all Swing Line
Loans and all other amounts owed hereunder with respect to the Swing Line
Loans shall be paid in full no later than that date. Amounts borrowed under
this subsection 2.1A(v) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Notwithstanding anything contained herein to the contrary, the Swing
Line Loans and the Swing Line Loan Commitment shall be subject to the
following limitations:
(a) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in
effect;
(b) prior to the Chinese Security Effective Date, in no event
shall the Total Utilization of Revolving Loan Commitments exceed
$15,000,000; and
(c) any reduction of the Revolving Loan Commitments made pursuant
to subsection 2.4B which reduces the aggregate Revolving Loan
Commitments to an amount less than the then current amount of the
Swing Line Loan Commitment shall result in an automatic corresponding
reduction of the Swing Line Loan Commitment such that the amount
thereof equals the amount of the Revolving Loan Commitments, as so
reduced, without any further action on the part of Company, the
Administrative Agent or the Swing Line Lender.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), the Swing Line Lender
may, at any time in its sole and absolute discretion, deliver to the
Administrative Agent (with a copy to Company), no later than 11:00 a.m.
(New York time) at least one (1) Business Day in advance of the proposed
Funding Date, a notice (which shall be deemed to be a Notice of Borrowing
given by Company) requesting the Lenders to make Revolving Loans that are
Base Rate Loans to Company on such Funding Date in an amount equal to the
amount of such Swing Line Loans (the "Refunded Swing Line Loans")
-------------------------
outstanding on the date such notice is given which the Swing Line Lender
requests the Lenders to prepay. Anything contained in this Agreement to
the contrary notwithstanding, (i) the proceeds of such Revolving Loans made
by the Lenders other than the Swing Line Lender shall be immediately
delivered by the Administrative Agent to the Swing Line Lender (and not to
Company) and applied to repay a corresponding portion of the Refunded Swing
Line Loans and (ii) on the day such Revolving Loans are made, the Swing
Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by the Swing
Line Lender to Company, and such portion of the Swing Line Loans deemed to
be so paid shall no longer be outstanding as Swing Line Loans but shall
instead constitute part of the Swing Line Lender's outstanding Revolving
Loans to Company. Company hereby authorizes the Administrative Agent and
the Swing Line Lender to charge
41
Company's accounts with the Administrative Agent and the Swing Line Lender
(up to the amount available in each such account) in order to immediately
pay the Swing Line Lender the amount of the Refunded Swing Line Loans to
the extent the proceeds of such Revolving Loans made by the Lenders,
including the Revolving Loan deemed to be made by the Swing Line Lender,
are not sufficient to repay in full the Refunded Swing Line Loans. If any
portion of any such amount paid (or deemed to be paid) to the Swing Line
Lender should be recovered by or on behalf of Company from the Swing Line
Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If for any reason Revolving Loans are not made pursuant to this
subsection 2.1A(v) in an amount sufficient to repay any amounts owed to the
Swing Line Lender in respect of any outstanding Swing Line Loans on or
before the third Business Day after demand for payment thereof by the Swing
Line Lender, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans, and in an
amount equal to its Pro Rata Share of the applicable unpaid amount together
with accrued interest thereon. Upon one (1) Business Day's notice from the
Swing Line Lender, each Lender shall deliver to the Swing Line Lender an
amount equal to its respective participation in the applicable unpaid
amount in same day funds at the office of the Swing Line Lender located at
the Funding and Payment Office. In order to evidence such participation
each Lender agrees to enter into a participation agreement at the request
of the Swing Line Lender in form and substance satisfactory to the Swing
Line Lender. In the event any Lender fails to make available to the Swing
Line Lender the amount of such Lender's participation as provided in this
paragraph, the Swing Line Lender shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the rate
customarily used by the Swing Line Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate, as
applicable.
Notwithstanding anything contained herein to the contrary, (i) each
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including without limitation (a) any setoff, counterclaim, recoupment,
defense or other right which such Lender may have against the Swing Line
Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of a Default or Event of Default; (c) any
adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company or any of its
Subsidiaries; (d) any breach of this Agreement or any other Loan Document
by any party thereto; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided that
--------
such obligations of each Lender are subject to the condition that the Swing
Line Lender believed in good faith that all conditions under Section 4 to
the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans
or unpaid Swing Line Loans were made, or the satisfaction of any such
condition not satisfied had been waived by
42
Requisite Lenders prior to or at the time such Refunded Swing Line Loans or
other unpaid Swing Line Loans were made; and (ii) the Swing Line Lender
shall not be obligated to make any Swing Line Loans if it has elected not
to do so after the occurrence and during the continuation of a Default or
Event of Default.
B. Borrowing Mechanics. Term Loans or Revolving Loans (including any
such Loans made as Eurodollar Rate Loans with a particular Interest Period) made
on any Funding Date (other than Revolving Loans made pursuant to a request by
the Swing Line Lender pursuant to subsection 2.1A(v) for the purpose of repaying
any Refunded Swing Line Loans and Revolving Loans made pursuant to subsection
3.3B for the purpose of reimbursing the Issuing Bank for the amount of a drawing
or payment under a Letter of Credit issued by it) shall be in an aggregate
minimum amount of $500,000 and integral multiples of $100,000 in excess of that
amount; provided that any Eurodollar Rate Loan shall be in a minimum amount of
--------
$1,000,000 and integral multiples of $100,000 in excess of that amount. Swing
Line Loans made on any Funding Date shall be in an aggregate minimum amount of
$100,000 and integral multiples of $50,000 in excess of that amount. Whenever
Company desires that the Lenders make Term Loans or Revolving Loans it shall
deliver to the Administrative Agent a Notice of Borrowing no later than 1:00
p.m. (New York time), at least three (3) Business Days in advance of the
proposed Funding Date in the case of a Eurodollar Rate Loan, or at least one (1)
Business Day in advance of the proposed Funding Date in the case of a Base Rate
Loan. Whenever Company desires that the Swing Line Lender make a Swing Line
Loan, it shall deliver to Administrative Agent a Notice of Borrowing no later
than 1:00 p.m. (New York time) on the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing
Line Loans, that such Loans shall be Base Rate Loans, (iv) in the case of any
Loans other than Swing Line Loans, whether such Loans shall be Base Rate Loans
or Eurodollar Rate Loans, and (v) in the case of any Loans requested to be made
as Eurodollar Rate Loans, the initial Interest Period requested therefor. Term
Loans and Revolving Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give the
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
--------
promptly confirmed in writing by delivery of a Notice of Borrowing to the
Administrative Agent on or before the applicable Funding Date.
Neither the Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that the
Administrative Agent believes in good faith to have been given by a duly
authorized officer authorized to borrow on behalf of Company or for otherwise
acting in good faith under this subsection 2.1B, and upon funding of Loans by
the Lenders in accordance with this Agreement pursuant to any such telephonic
notice, Company shall have effected Loans hereunder.
Company shall notify the Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing are no longer true and correct
(with such materiality qualifications as is set forth in a particular matter to
which Company is required to certify) as of the applicable Funding Date, and the
acceptance by Company of the proceeds of any Loans shall constitute a re-
certification by Company, as of the applicable
43
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and all Revolving Loans under
this Agreement shall be made by the Lenders simultaneously and proportionately
to their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by the
Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B (or
telephonic notice in lieu thereof), the Administrative Agent shall notify each
Lender or the Swing Line Lender, as the case may be, of the proposed borrowing
and of the amount of such Lender's Pro Rata Share of the applicable Loans.
Each Lender shall make the amount of its Loan available to the
Administrative Agent not later than 1:00 P.M. (New York time) on the applicable
Funding Date and the Swing Line Lender shall make the amount of its Swing Line
Loan available to the Administrative Agent not later than 2:00 P.M. (New York
time) on the applicable Funding Date, in each case in same day funds, at the
Funding and Payment Office. Except as provided in subsection 2.1A(v) or
subsection 3.3B with respect to Revolving Loans used to repay Refunded Swing
Line Loans or to reimburse the Issuing Bank for the amount of an honored drawing
or payment under a Letter of Credit issued by it, upon satisfaction or waiver of
the conditions precedent specified in subsections 4.1 (in the case of Loans made
on the Closing Date) and 4.2 (in the case of all Loans), the Administrative
Agent shall make the proceeds of such Loans available to Company on the
applicable Funding Date by causing an amount of same day funds equal to the
proceeds of all such Loans received by the Administrative Agent from the Lenders
or the Swing Line Lender, as the case may be, to be credited to the account of
Company at the Funding and Payment Office.
Unless the Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to the Administrative Agent the amount of such Lender's Loan requested
on such Funding Date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on such Funding Date and
the Administrative Agent may, in its sole discretion, but shall not be obligated
to, make available to Company a corresponding amount on such Funding Date. If
such corresponding amount is not in fact made available to the Administrative
Agent by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to the
Administrative Agent, at the customary rate set by the Administrative Agent for
the correction of errors among banks for three Business Days and thereafter at
the Base Rate. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify Company and Company shall immediately pay such corresponding
44
amount to the Administrative Agent, together with interest thereon for each day
from such Funding Date until the date such amount is paid to the Administrative
Agent at the rate applicable to such Loan. Nothing in this subsection 2.1C
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.
D. The Register.
(i) The Administrative Agent shall maintain, at its address referred
to in subsection 10.8, a register for the recordation of the names and
addresses of the Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). The Register shall be available for
--------
inspection by Company or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(ii) The Administrative Agent shall record in the Register the
Commitments and the outstanding Loans from time to time of each Lender and
each repayment or prepayment in respect of the principal amount of the
outstanding Loans of each Lender. Any such recordation shall be conclusive
and binding on Company and each Lender, absent manifest error; provided
--------
that failure to make any such recordation, or any error in such
recordation, shall not affect Company's Obligations in respect of the
applicable Loans.
(iii) Each Lender shall record on its internal records the amount of
each Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error in
--------
such recordation, shall not affect Company's Obligations in respect of the
applicable Loans; and provided, further, that in the event of any
-------- -------
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern absent manifest error with
respect to the Register.
(iv) Company, the Administrative Agent and the Lenders shall deem and
treat the Persons listed as the Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any Commitment or Loan
shall be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
the Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Company hereby designates CSFB and any financial institution
serving as a successor Administrative Agent to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent CSFB serves
in such capacity, CSFB
45
and its officers, directors, employees, agents and affiliates shall
constitute Indemnitees for all purposes under subsection 10.3.
E. Evidence of Debt; Repayment of Loans.
(i) Company hereby unconditionally promises to pay to the
Administrative Agent (a) for the account of the Swingline Lender, the then
unpaid principal amount of each Swingline Loan, on the date of each
borrowing of a Revolving Loan or, if earlier, on the Revolving Loan
Commitment Termination Date, (b) for the account of each Lender holding
Term Loans, the principal amount of each Term Loan of such Lender as
provided in subsection 2.4A and (c) for the account of each Lender holding
Revolving Loans, the then unpaid principal amount of each Revolving Loan of
such Lender on the Revolving Loan Commitment Termination Date.
(ii) Any Lender may request that the Loans made by it hereunder be
evidenced by a promissory note. In such event, Company shall execute and
deliver to such Lender a promissory note payable to such Lender and its
registered assigns and in a form and substance reasonably acceptable to the
Administrative Agent and Company. Notwithstanding any other provision of
this Agreement, in the event any Lender shall request and receive such a
promissory note, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant
to subsection 10.1) be represented by one or more promissory notes payable
to the payee named therein or its registered assigns.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made to maturity (whether by acceleration
or otherwise) at a rate determined by reference to the Base Rate or the Reserve
Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made to maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any Loan shall be
selected by Company initially at the time a telephonic notice or Notice of
Borrowing is given with respect to such Loan pursuant to subsection 2.1B (so
long as Company delivers to Administrative Agent a Notice of Borrowing within
one Business Day prior thereto). The basis for determining the interest rate
with respect to any Term Loan or any Revolving Loan may be changed from time to
time pursuant to subsection 2.2D. If on any day any Term Loan or Revolving Loan
is outstanding with respect to which notice has not been delivered to the
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate. Subject
to the provisions of subsections 2.2E and 2.7, the Term Loans and the Revolving
Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Base Rate Margin; or
46
(ii) if a Eurodollar Rate Loan, then at the sum of the Reserve
Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
----
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line Loans
shall bear interest to maturity at the sum of the Base Rate plus the Applicable
----
Base Rate Margin for Revolving Loans less 0.50% per annum.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, on behalf of Company select an
interest period (each an "Interest Period") to be applicable to such Loan, which
---------------
Interest Period shall be, at Company's option, either a one, two, three or six
month period (or, provided that any such interest period is available from all
the Lenders in a particular tranche for which an Interest Period is being
selected, a two- week, nine- month, twelve- month or other period as requested
by Company); provided that:
--------
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice
of Conversion/Continuation, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Term A
Loans or Term Delayed Draw Loans shall extend beyond the sixth Anniversary
of the Closing Date, no Interest Period with respect to any portion of the
Term B Loans shall extend beyond the seventh Anniversary of the Closing
Date and no Interest Period with respect to any portion of the Revolving
Loans shall extend beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term Loans
shall extend beyond a date on which Company is required to make a scheduled
payment of principal of the Term A Loans, the Term B Loans or the Term
Delayed Draw Loans, as the case may be, unless the aggregate principal
amount of Term A Loans, Term B Loans or Term Delayed Draw Loans, as the
case may be,
47
that are Base Rate Loans plus the aggregate principal amount of Term A
----
Loans, Term B Loans or Term Delayed Draw Loans, as the case may be, that
are Eurodollar Rate Loans with Interest Periods expiring on or before such
date equals or exceeds the principal amount required to be paid on the Term
A Loans or Term B Loans or Term Delayed Draw Loans, as the case may be, on
such date;
(vii) Company may not select an Interest Period of longer than one
month prior to the end of the Initial Period;
(viii) there shall be no more than one Interest Period outstanding at
any time during the Initial Period, and thereafter no more than twenty
Interest Periods shall be outstanding at any time; and
(ix) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity, by acceleration or otherwise); provided that in the event that any
--------
Swing Line Loans, Revolving Loans or any Term Loans that are Base Rate Loans are
prepaid pursuant to subsection 2.4B(i), interest accrued on such Loans through
the date of such prepayment shall be payable on the next succeeding Interest
Payment Date applicable to Base Rate Loans (or, if earlier, at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans equal to $500,000 and integral
multiples of $100,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis (provided that any Loan being
converted to a Eurodollar Rate Loan shall be in a minimum amount of $1,000,000
and integral multiples of $100,000 in excess of such amount) or (ii) upon the
expiration of any Interest Period applicable to a Eurodollar Rate Loan, to
continue all or any portion of such Loan equal to $1,000,000 and integral
multiples of $100,000 in excess of that amount as a Eurodollar Rate Loan;
provided, however, that a Eurodollar Rate Loan may only be converted into a Base
-------- -------
Rate Loan on the expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 12:00 Noon at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to a Base
Rate Loan), and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan). A Notice of Conversion/ Continuation shall specify
(i) the proposed conversion/continuation date (which shall be a Business Day),
(ii) the amount and type of the Loan to be converted/continued, (iii) the nature
of the proposed conversion/continuation, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Default or Event
48
of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, Company may give the
Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
--------
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to the Administrative Agent within one Business Day
prior to the proposed conversion/continuation date.
Neither the Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that the
Administrative Agent believes in good faith to have been given by a duly
authorized officer authorized to act on behalf of Company or for otherwise
acting in good faith under this subsection 2.2D, and upon conversion or
continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Post-Default Interest. The outstanding principal amount of Loans not
paid when due and, to the extent permitted by applicable law, any interest
payments thereon not paid when due, and any fees and other amounts then due and
payable hereunder and not paid, shall thereafter bear interest (including post-
petition interest in any proceeding under any Bankruptcy Law) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Revolving
Loans that are Base Rate Loans); provided that, in the case of Eurodollar Rate
--------
Loans, upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate equal to 2% per annum in excess of the interest rates otherwise
payable under this Agreement for Base Rate Loans that are Term A Loans, Term B
Loans, Term Delayed Draw Loans or Revolving Loans, as applicable. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Administrative Agent or any Lender.
F. Computation of Interest. Interest on Loans shall be computed on the
basis of a 360-day year (or a 365- or 366-day year, as applicable, in the case
of Base Rate Loans based on the Prime Rate) and for the actual number of days
elapsed in the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar
49
Rate Loan, as the case may be, shall be excluded; provided that if a Loan is
--------
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan.
2.3 Fees.
----
A. Commitment Fees.
(i) Revolving Loan Commitments. Company agrees to pay to the
--------------------------
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share of the Revolving Loan Commitments, commitment fees
for the period from and including the date hereof to and excluding the
Revolving Loan Commitment Termination Date equal to the sum of (x) the
average of the daily excess of the Revolving Loan Commitments over the sum
of the aggregate principal amount of Revolving Loans outstanding (but not
any Swing Line Loans outstanding) plus (y) the Letter of Credit Usage
----
multiplied by 0.50% per annum.
-------------
(ii) Term Delayed Draw Loan Commitments. Company agrees to pay to the
----------------------------------
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share of the Term Delayed Draw Loan Commitments,
commitment fees for the period from and including the date hereof to and
excluding the Term Delayed Draw Loan Commitment Termination Date equal to
the daily Term Delayed Draw Loan Commitments multiplied by 1.00% per annum.
-------------
(iii) Calculation and Payment. All of the foregoing commitment fees
-----------------------
shall be calculated on the basis of a 360-day year and the actual number of
days elapsed and shall be payable quarterly in arrears on the last Business
Day in each of March, June, September and December of each year, commencing
in September 1999, and on the Revolving Loan Commitment Termination Date
and the Term Delayed Draw Loan Commitment Termination Date.
B. Other Fees. Company agrees to pay to Sole Lead Arranger and
Administrative Agent such fees in the amounts and at the times separately agreed
upon between Company, Sole Lead Arranger and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Commitments; General Provisions
-------------------------------------------------------------------------
Regarding Payments.
------------------
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Term A Loans. Company shall make principal
----------------------------------
payments on the Term A Loans in installments on the dates set forth below,
each such installment to be in an amount equal to the corresponding amount
set forth below:
50
===============================================
SCHEDULED REPAYMENT
DATE OF
TERM A LOANS
===============================================
June 30, 2000 $1,000,000
September 30, 2000 $1,000,000
December 31, 2000 $2,000,000
March 31, 2001 $2,500,000
-----------------------------------------------
June 30, 2001 $2,500,000
September 30, 2001 $3,000,000
December 31, 2001 $3,000,000
March 31, 2002 $3,000,000
-----------------------------------------------
June 30, 2002 $3,000,000
September 30, 2002 $3,000,000
December 31, 2002 $3,000,000
March 31, 2003 $3,000,000
-----------------------------------------------
June 30, 2003 $3,000,000
September 30, 2003 $3,750,000
December 31, 2003 $3,750,000
March 31, 2004 $3,750,000
-----------------------------------------------
June 30, 2004 $3,750,000
September 30, 2004 $5,500,000
December 31, 2004 $5,500,000
March 31, 2005 $5,500,000
-----------------------------------------------
July 31, 2005 $5,500,000
===============================================
; provided that the scheduled installments of principal of the Term A Loans
--------
set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term A Loans in accordance with subsection
2.4C; and provided, further, that the final installment specified above for
-------- -------
the repayment by Company of the Term A Loans shall be in an amount, if such
amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Term A
Loans.
(ii) Scheduled Payments of Term B Loans. Company shall make principal
----------------------------------
payments on the Term B Loans in 25 consecutive installments on the last
Business Day of March, June, September and December of each year,
commencing on the last Business Day of March 2000; provided, however, that
-------- -------
Company shall make the final installment payment on July 31, 2006. Each
such installment shall be in an amount equal to $200,000, with the balance
due and payable on the July 31, 2006; provided that the scheduled
--------
installments of principal of the Term B Loans set forth above shall be
reduced in connection with any voluntary or mandatory prepayments of the
Term B Loans in accordance with subsection 2.4C.
(iii) Scheduled Payments of Term Delayed Draw Loans. Company shall
---------------------------------------------
make principal payments on the Term Delayed Draw Loans in installments on
the
51
dates set forth below, each such installment to be in an amount equal to
the corresponding percentages set forth below of the principal amount of
the Term Delayed Draw Loans outstanding on the Term Delayed Draw Loan
Commitment Termination Date:
===============================================
SCHEDULED REPAYMENT
DATE OF
TERM A LOANS
===============================================
September 30, 2001 3.75%
December 31, 2001 3.75%
March 31, 2002 3.75%
June 30, 2002 3.75%
-----------------------------------------------
September 30, 2002 5.63%
December 31, 2002 5.63%
March 31, 2003 5.63%
June 30, 2003 5.63%
-----------------------------------------------
September 30, 2003 6.25%
December 31, 2003 6.25%
March 31, 2004 6.25%
June 30, 2004 6.25%
-----------------------------------------------
September 30, 2004 9.38%
December 31, 2004 9.38%
March 31, 2005 9.38%
July 31, 2005 9.38%
===============================================
; provided that the scheduled installments of principal of the Term Delayed
--------
Draw Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Delayed Draw Loans in
accordance with subsection 2.4C; and provided, further, that the final
-------- -------
installment specified above for the repayment by Company of the Term
Delayed Draw Loans shall be in an amount, if such amount is different from
that specified above, sufficient to repay all amounts owing by Company
under this Agreement with respect to the Term Delayed Draw Loans.
B. Prepayments and Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic
---------------------
notice to the Administrative Agent on or prior to 1:00 P.M. (New York time)
on the date of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay, without
premium or penalty, any Swing Line Loan on any Business Day in whole or in
part in an aggregate minimum amount of $100,000 and integral multiples of
$50,000 in excess of that amount. In addition, Company may, upon not less
than one (1) Business Day's, in the case of Base Rate Loans, and upon not
less than three (3) Business Days', in the case of Eurodollar Rate Loans,
prior written or telephonic notice, promptly confirmed in writing to the
Administrative Agent (which notice
52
the Administrative Agent will promptly transmit by facsimile or telephone
to each Lender), at any time and from time to time prepay, without premium
or penalty, the Loans (other than Swing Line Loans) on any Business Day in
whole or in part in an aggregate minimum amount of $500,000 and integral
multiples of $100,000 in excess of that amount; provided, however, that in
-------- -------
the event Company shall prepay a Eurodollar Rate Loan other than on the
expiration of the Interest Period applicable thereto, Company shall, at the
time of such prepayment, also pay any amounts payable under subsection 2.6D
hereof. Notice of prepayment having been given as aforesaid, the Loans
shall become due and payable on the prepayment date specified in such
notice and in the aggregate principal amount specified therein. Any
voluntary prepayments pursuant to this subsection 2.4B(i) shall be applied
as specified in subsection 2.4C.
(ii) Voluntary Reductions of Commitments. Company may, upon not less
-----------------------------------
than three (3) Business Days' prior written or telephonic notice, promptly
confirmed in writing to the Administrative Agent (which notice the
Administrative Agent will promptly transmit by facsimile or telephone to
each Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, (x) the Revolving
Loan Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments at
the time of such proposed termination or reduction or (y) the Term Delayed
Draw Loan Commitments; provided that any such partial reduction of the
--------
Revolving Loan Commitments or the Term Delayed Draw Loan Commitments shall
be in an aggregate minimum amount of $1,000,000 and integral multiples of
$100,000 in excess of that amount. Company's notice to the Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Revolving Loan Commitments or the Term
Delayed Draw Loan Commitments shall be effective on the date specified in
such notice and shall reduce the Revolving Loan Commitment or the Term
Delayed Draw Loan Commitment, respectively, of each Lender proportionately
to its respective Pro Rata Share. Any such voluntary reduction of the
Revolving Loan Commitment or the Term Delayed Draw Loan Commitments shall
be applied as specified in subsection 2.4C.
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
-------------------------------------------------------------
The Loans shall be prepaid and/or the Revolving Loan Commitments and Term
Delayed Draw Loan Commitments shall be reduced in the manner provided in
subsection 2.4C upon the occurrence of the following circumstances:
(a) Asset Sales. No later than the fifth (5/th/) Business Day
-----------
following the date of receipt by ChipPAC or any of its Subsidiaries of
Cash Proceeds of any Asset Sale, Company shall prepay the Loans
(and/or the Revolving Loan Commitments or Term Delayed Draw Loan
Commitments shall be reduced) in an amount equal to the Net Cash
Proceeds received with respect thereto; provided that, if ChipPAC
--------
shall have delivered a Reinvestment Notice to the Administrative Agent
no later than the fifth (5/th/) Business Day following the
consummation of such Asset Sale, Company shall not be required to make
any prepayment with
53
the proceeds of such Asset Sale to the extent that any of such
proceeds are reinvested (or as to which a contract has been entered
into to reinvest) in Reinvestment Assets within 365 days from the date
of receipt of such proceeds; provided further that the aggregate
-------- -------
amount of Net Cash Proceeds that may be reinvested pursuant to the
immediately preceding proviso shall not exceed $15,000,000 in any
Fiscal Year (or $30,000,000 in any Fiscal Year at any time the
Leverage Ratio, determined on a Pro Forma Basis after giving effect to
such Asset Sale, is less than 3.50:1.00); and provided still further
-------- ----- -------
that, on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied to prepay the Loans (and/or the
Revolving Loan Commitments or Term Delayed Draw Loan Commitments shall
be reduced). Concurrently with any prepayment of Loans (and/or any
reduction in the Revolving Loan Commitments or Term Delayed Draw Loan
Commitments) pursuant to this subsection 2.4B(iii)(a), ChipPAC shall
deliver to the Administrative Agent an Officer's Certificate
demonstrating in detail reasonably satisfactory to the Administrative
Agent the derivation of the Net Cash Proceeds of the correlative Asset
Sale from the gross sales price thereof. In addition, in the event
that ChipPAC shall, at any time after receipt of proceeds of any
Reinvestment Event requiring a prepayment (and/or a reduction in the
Revolving Loan Commitments) pursuant to this subsection 2.4B(iii)(a),
determine that the prepayments (and/or a reduction in the Revolving
Loan Commitments) previously made in respect of such Reinvestment
Event were in an aggregate amount less than that required by the terms
of this subsection 2.4B(iii)(a), Company shall promptly cause to be
made an additional prepayment of the Loans (and/or reduction in the
Revolving Loan Commitments) in an amount equal to the amount of any
such deficit, and ChipPAC shall concurrently therewith deliver to the
Administrative Agent an Officer's Certificate demonstrating the
derivation of the additional proceeds resulting in such deficit. If
Company is otherwise required to apply any portion of Net Cash
Proceeds to prepay Indebtedness evidenced by the Subordinated Debt
then, notwithstanding anything contained in this Agreement to the
contrary, ChipPAC shall cause such Net Cash Proceeds to be applied to
the prepayment of the Loans so as to eliminate or minimize any
obligation to be applied to prepay the Subordinated Debt.
(b) Issuances of Debt. On or prior to the first (1/st/) Business
-----------------
Day after receipt by ChipPAC or any of its Subsidiaries of any
proceeds (net of any payment of underwriting discounts, commission and
other costs and expenses associated therewith (including legal costs
and expenses)) of any Indebtedness (other than the Loans, the
Subordinated Debt and any other Indebtedness permitted by this
Agreement), Company shall prepay the Loans (and/or the Revolving Loan
Commitments or Term Delayed Draw Loan Commitments shall be reduced) in
an amount equal to the amount of such proceeds; provided that payment
--------
or acceptance of the amounts provided for in this subsection
2.4B(iii)(b) shall not constitute a waiver of any Event of Default
resulting from the incurrence of such Indebtedness or otherwise
prejudice any rights or remedies of the Administrative Agent or any
Lender. If Company is otherwise required to
54
apply any portion of such proceeds to prepay Indebtedness evidenced by
the Subordinated Debt then, notwithstanding anything contained in this
Agreement to the contrary, ChipPAC shall cause such proceeds to be
applied to the prepayment of the Loans so as to eliminate or minimize
any obligation to prepay the Subordinated Debt.
(c) Issuances of Equity Securities. On or prior to the first
------------------------------
(1/st/) Business Day after receipt by ChipPAC or any of its
Subsidiaries of any Equity Proceeds (net of any payment of
underwriting discounts, commission and other costs and expenses
associated therewith (including legal costs and expenses)) other than
(w) capital contributions made by ChipPAC or any of its Subsidiaries,
(x) Equity Proceeds received by ChipPAC as payment for any shares of
Capital Stock purchased by, or of the exercise price under any option
for any shares of Capital Stock of ChipPAC held by, any officer,
director, employee or consultant of ChipPAC or any of its
Subsidiaries, (y) Equity Proceeds received from the Investors or their
respective Affiliates or customers or suppliers of ChipPAC or its
Subsidiaries, and (z) Equity Proceeds received by ChipPAC or any of
its Subsidiaries solely to the extent that such Equity Proceeds are
used to finance a Permitted Acquisition), Company shall prepay the
Loans (and/or the Revolving Loan Commitments or Term Delayed Draw Loan
Commitments shall be reduced) in an amount equal to (i) 75% of all
such Equity Proceeds, if at such time the Leverage Ratio, on a Pro
Forma basis, is greater than or equal to 3.50:1.00 or (ii) 50% of all
such Equity Proceeds, if at such time the Leverage Ratio, on a Pro
Forma Basis, is less than 3.50:1.00; provided, however, that
notwithstanding the foregoing, ChipPAC may use the first $50,000,000
of Equity Proceeds of a Qualified Public Equity Offering, at its
option, (i) to redeem HEI Preferred Stock, (ii) to redeem Intel
Preferred Stock and/or (iii) to repurchase Subordinated Debt. If
Company is otherwise required to apply any portion of such Equity
Proceeds to prepay Indebtedness evidenced by the Subordinated Debt
then, notwithstanding anything contained in this Agreement to the
contrary, ChipPAC shall cause such Equity Proceeds to be applied to
the prepayment of the Loans so as to eliminate or minimize any
obligation to repurchase the Subordinated Debt.
(d) Insurance and Condemnation Proceeds. No later than the fifth
-----------------------------------
(5/th/) Business Day following the date of receipt by ChipPAC or any
of its Subsidiaries of any cash payments under any insurance policy as
a result of any damage to or loss of all or any portion of the
Collateral or any other tangible asset (net of actual costs incurred
and any taxes paid or payable by ChipPAC or any of its Subsidiaries in
connection with adjustment and settlement thereof, "Insurance
---------
Proceeds") or any proceeds resulting from the taking of assets by the
power of eminent domain, condemnation or otherwise (net of actual
costs incurred and any taxes paid or payable by ChipPAC or any of its
Subsidiaries in connection with adjustment and settlement thereof,
"Condemnation Proceeds") (any such event resulting in the recovery of
---------------------
Insurance Proceeds or Condemnation Proceeds, a "Recovery Event"),
--------------
Company shall prepay the Loans (and/or the Revolving Loan Commitments
or Term Delayed Draw Loan Commitments shall be reduced) in an amount
equal to the
55
Insurance Proceeds or Condemnation Proceeds, as the case may be,
received; provided that, if ChipPAC shall have delivered a
--------
Reinvestment Notice to the Administrative Agent no later than five (5)
Business Days prior to the consummation of such Recovery Event and no
Event of Default exists at the time of such consummation and the time
of delivery of such notice, Company shall not be required to make any
prepayment (and/or reduction in the Revolving Loan Commitments or Term
Delayed Draw Loan Commitments) with the proceeds of such Recovery
Event to the extent that (x) all or any portion of such proceeds are
reinvested (or a contract has been entered into to reinvest) in
Reinvestment Assets within 365 days from the date of receipt of such
proceeds, and (y) after giving effect thereto, the aggregate amount of
proceeds not used to make mandatory prepayments of Loans (and/or
reduce the Revolving Loan Commitments or Term Delayed Draw Loan
Commitments) pursuant to this proviso does not exceed $10,000,000
during any Fiscal Year; provided, further, that, on each Reinvestment
-------- -------
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount
with respect to the relevant Reinvestment Event shall be applied to
prepay the Loans (and/or the Revolving Loan Commitments or Term
Delayed Draw Loan Commitments shall be reduced). In addition, in the
event that ChipPAC shall, at any time after receipt of proceeds of any
Reinvestment Event requiring a prepayment (and/or reduction in the
Revolving Loan Commitments or Term Delayed Draw Loan Commitments)
pursuant to this subsection 2.4B(iii)(d), determine that the
prepayments (and/or reduction in the Revolving Loan Commitments or
Term Delayed Draw Loan Commitments) previously made in respect of such
Reinvestment Event were in an aggregate amount less than that required
by the terms of this subsection 2.4B(iii)(d), Company shall promptly
cause to be made an additional prepayment of the Loans (and/or reduce
the Revolving Loan Commitments or Term Delayed Draw Loan Commitments)
in an amount equal to the amount of any such deficit, and ChipPAC
shall concurrently therewith deliver to the Administrative Agent an
Officer's Certificate demonstrating the derivation of the additional
proceeds resulting in such deficit. If Company is otherwise required
to apply any portion of such proceeds to prepay Indebtedness evidenced
by the Subordinated Debt then, notwithstanding anything contained in
this Agreement to the contrary, ChipPAC shall cause such Insurance
Proceeds and Condemnation Proceeds to be applied to the prepayment of
the Loans so as to eliminate or minimize any obligation to prepay the
Subordinated Debt.
(e) Consolidated Excess Cash Flow. In the event that there shall
-----------------------------
be Consolidated Excess Cash Flow for any Fiscal Year (commencing with
the Fiscal Year ending December 31, 2000), Company shall, no later
than ninety-five (95) days after the end of such Fiscal Year, prepay
the Loans (and/or the Revolving Loan Commitments or Term Delayed Draw
Loan Commitments shall be reduced) in an aggregate amount equal to (i)
75% of such Consolidated Excess Cash Flow if the Leverage Ratio at the
end of such Fiscal Year was greater than or equal to 3.50:1.00 or (ii)
50% of such Consolidated Excess Cash Flow if the Leverage Ratio at the
end of such Fiscal Year was less than 3.50:1.00; provided, however,
-------- -------
that no such
56
payment shall be required if the Leverage Ratio at the end of such
Fiscal Year was less than or equal to 2.75:1.00.
(f) Reductions or Restrictions of Revolving Loan Commitments.
--------------------------------------------------------
Company shall prepay the Swing Line Loans and/or Revolving Loans from
time to time to the extent necessary so that (1) the Total Utilization
of Revolving Loan Commitments shall not at any time exceed the
Revolving Loan Commitments then in effect, and (2) the aggregate
principal amount of all outstanding Swing Line Loans shall not at any
time exceed the Swing Line Loan Commitment then in effect. All Swing
Line Loans shall be prepaid in full prior to the prepayment of any
Revolving Loans pursuant to this subsection 2.4B(iii)(f). If at any
time that there are no Revolving Loans and Swing Line Loans
outstanding (whether after giving effect to any prepayment thereof
pursuant to this subclause (f) or otherwise) the Total Utilization of
Revolving Loan Commitments exceeds the Revolving Loan Commitment,
Company shall deposit into the Collateral Account such amounts as are
necessary so that, after giving effect thereto, the amount on deposit
in the Collateral Account pursuant to this subclause (f) is at least
equal to such excess.
C. Application of Prepayments and Unscheduled Reductions of Commitments.
(i) Application of Prepayments by Type of Loans. Any voluntary
-------------------------------------------
prepayments pursuant to subsection 2.4B(i) shall be applied as specified by
Company in the applicable notice of prepayment; provided that in the event
--------
Company fails to specify the Loans to which any such prepayment shall be
applied, such prepayment shall be applied first to repay outstanding Swing
-----
Line Loans to the full extent thereof, second to repay outstanding
------
Revolving Loans to the full extent thereof, and third to repay outstanding
-----
Term Loans to the full extent thereof. Any amount required to be applied as
a prepayment of Loans or Revolving Loan Commitment or Term Delayed Draw
Loan Commitment reduction pursuant to any of subsections 2.4B(iii)(a)
through (e) or this subsection 2.4C(i) shall be applied first to repay Term
-----
Loans as selected by Company in an amount not in excess of an amount equal
to the scheduled amortization payments on such Term Loans selected for the
immediately succeeding twelve-month period, second to further prepay the
------
Term Loans ratably to the full extent thereof, third to prepay Swing Line
-----
Loans to the full extent thereof and to permanently reduce the Revolving
Loan Commitments by the amount of such prepayment, fourth to prepay
------
Revolving Loans to the full extent thereof and to further permanently
reduce the Revolving Loan Commitments by the amount of such prepayment,
fifth to prepay outstanding reimbursement obligations with respect to
-----
Letters of Credit, sixth to cash collateralize Letters of Credit as
-----
provided in the Collateral Account Agreement, seventh to reduce the Term
-------
Delayed Draw Loan Commitment and eighth, to the extent of any remaining
------
amount, to further reduce the Revolving Loan Commitments. Anything
contained herein to the contrary notwithstanding, so long as any Term A
Loans or Term Delayed Draw Loans are outstanding, in the case of any
voluntary or mandatory prepayments of Term Loans pursuant to subsection
2.4A or 2.4B or this subsection 2.4C, (a) Company shall use reasonable
efforts to notify the Lenders of such prepayment in advance of payment to
the Administrative Agent of such
57
amount, (b) upon receipt of such payment, the Administrative Agent shall
notify the Lenders of such payment, (c) in the event any Lender with Term B
Loans elects to waive such Lender's right to receive such prepayment in
respect of any such Loans, such Lender shall so advise the Administrative
Agent in writing no later than the close of business on the date it
receives such notice from the Administrative Agent and (d) upon receipt of
such written advice from such Lender, the Administrative Agent shall apply
the amount waived by such Lender to prepay Term A Loans and Term Delayed
Draw Loans.
(ii) Application of Prepayments of Term Loans to Installments. The
--------------------------------------------------------
amount of any prepayments of Term A Loans, Term B Loans or Term Delayed
Draw Loans, as applicable, shall be applied first to reduce each scheduled
-----
installment thereof set forth in subsection 2.4A(i), 2.4A(ii) or 2.4A(iii),
as applicable, that is unpaid and due within the next twelve months of the
date of such prepayment in the order that such installments are scheduled
to occur, and second to ratably reduce each scheduled installment of
------
principal thereof set forth in subsection 2.4A(i), 2.4A(ii) or 2.4A(iii),
as applicable.
(iii) Application of Prepayments of Loans to Base Rate Loans and
----------------------------------------------------------
Eurodollar Rate Loans. Considering Loans constituting Term A Loans, Term B
---------------------
Loans, Term Delayed Draw Loans and Revolving Loans being prepaid
separately, any prepayment thereof shall be applied first to Base Rate
Loans to the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.
D. Application of Proceeds of Collateral and Payments Under Guaranties.
(i) Application of Proceeds of Collateral. All proceeds received by
-------------------------------------
the Administrative Agent or the Collateral Agent, as the case may be, in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral under any Collateral Document may, in the
discretion of the Collateral Agent, be held by the Collateral Agent as
Collateral for, and applied in full by the Administrative Agent against,
the applicable Secured Obligations (as defined in such Collateral Document)
in the following order of priority:
(a) to the payment of all costs and expenses of such sale,
collection or other realization, including all other reasonable
expenses, liabilities and advances made or incurred by such Agents in
connection therewith, and all amounts for which such Agents are
entitled to indemnification under such Collateral Document and all
advances made by the Collateral Agent thereunder for the account of
the applicable Loan Party, and to the payment of all reasonable costs
and expenses paid or incurred by the Collateral Agent in connection
with the exercise of any right or remedy under such Collateral
Document, all in accordance with the terms of this Agreement and such
Collateral Document;
(b) thereafter, to the extent of any excess proceeds, to the
payment of all other such Secured Obligations for the ratable benefit
of the holders thereof; and
58
(c) thereafter, to the extent of any excess proceeds, to the
payment to or upon the order of such Loan Party or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
----------------------------------------
by the Administrative Agent under any Guaranty shall be applied promptly
from time to time by the Administrative Agent in the following order of
priority:
(a) to the payment of the reasonable costs and expenses of any
collection or other realization under such Guaranty, including all
reasonable expenses, liabilities and advances made or incurred by the
Administrative Agent in connection therewith, all in accordance with
the terms of this Agreement and such Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Obligations (as defined in such Guaranty) for
the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to the applicable Guarantor or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
E. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
--------------------------
principal, interest, fees and other Obligations hereunder shall be made in
same day funds and without defense, setoff or counterclaim, free of any
restriction or condition, and delivered to the Administrative Agent not
later than 12:00 Noon (New York time) on the date due at the Funding and
Payment Office for the account of the Lenders; funds received by the
Administrative Agent after that time on such due date shall be deemed to
have been paid by Company on the next succeeding Business Day. Company
hereby authorizes the Administrative Agent to charge its accounts with the
Administrative Agent in order to cause timely payment to be made to the
Administrative Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in its accounts for
that purpose).
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest, on the
principal amount being repaid or prepaid, and all such payments (and in any
event any payments made in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to the Lenders' respective
Pro Rata Shares. The Administrative Agent shall promptly distribute to each
Lender, at its
59
applicable Lending Office specified in Schedule 2.1 or at such other
------------
address as such Lender may request, its Pro Rata Share of all such payments
received by the Administrative Agent and the commitment fees of such Lender
when received by the Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4E(iii) if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, the Administrative Agent shall give effect thereto
in apportioning payments received thereafter.
(iv) Payments on Business Days. Except if expressly provided
-------------------------
otherwise, whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or of the
commitment fees hereunder, as the case may be.
2.5 Use of Proceeds.
---------------
A. Term Loans Made on the Closing Date. The proceeds of the Term Loans
to be made to Company on the Closing Date shall be applied, together with the
net cash proceeds of the issuance and sale of the Subordinated Debt to fund the
ChipPAC Hungary Capital Contribution and the Recapitalization Loans.
B. Term Delayed Draw Loans. The proceeds of any Term Delayed Draw Loans
shall be applied by Company only for the purpose of acquiring equipment or
making other capital expenditures required in connection with the performance by
the Operating Subsidiaries with respect to Micro BGA Capital Expenditures.
C. Revolving Loans; Swing Line Loans. The proceeds of any Revolving Loans
and any Swing Line Loans shall be applied for working capital and general
corporate purposes of the Operating Subsidiaries.
D. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 11:00 A.M. (New York time) on each Interest Rate Determination Date, the
Administrative Agent shall determine (which determination shall, absent manifest
error,
60
be final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. Inability to Determine Applicable Interest Rate. In the event that the
Administrative Agent shall have reasonably determined (which determination shall
be final and conclusive and binding upon all parties hereto), on any Interest
Rate Determination Date with respect to any Eurodollar Rate Loans, that by
reason of circumstances arising after the date of this Agreement affecting the
London interbank market, adequate and fair means do not exist for ascertaining
the interest rate applicable to such Loans on the basis provided for in the
definition of Reserve Adjusted Eurodollar Rate the Administrative Agent shall on
such date give notice (by telecopy or by telephone confirmed in writing) to
Company and each Lender of such determination, whereupon (i) no Loans may be
made or continued as, or converted to, Eurodollar Rate Loans, until such time as
the Administrative Agent notifies Company and the Lenders that the circumstances
giving rise to such notice no longer exist (such notification not to be
unreasonably withheld or delayed) and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and the Administrative
Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such Lender in good faith
with any law, treaty, governmental rule, regulation, guideline or order (or
would conflict with any such treaty, governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply therewith
would not be unlawful) or (ii) has become impracticable, or would cause such
Lender material hardship, as a result of contingencies occurring after the date
of this Agreement which materially and adversely affect the London interbank
market, then, and in any such event, such Lender shall be an "Affected Lender"
---------------
and it shall on that day give notice (by telecopy or by telephone confirmed in
writing) to Company and the Administrative Agent of such determination (which
notice the Administrative Agent shall promptly transmit to each other Lender).
Thereafter (a) the obligation of the Affected Lender to make Loans as, or to
convert Loans to, Eurodollar Rate Loans, shall be suspended until such notice
shall be withdrawn by the Affected Lender, (b) to the extent such determination
by the Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of Conversion/
Continuation, the Affected Lender shall make such Loan as (or convert such Loan
to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation
to maintain its outstanding Eurodollar Rate Loans, as the case may be (the
"Affected Loans"), shall be terminated at the earlier to occur of the expiration
--------------
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by
61
giving notice (by telecopy or by telephone confirmed in writing) to the
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
the Administrative Agent shall promptly transmit to each other Lender). Except
as provided in the immediately preceding sentence, nothing in this subsection
2.6C shall affect the obligation of any Lender other than an Affected Lender to
make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. Compensation for Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to the lenders of funds borrowed by it to make or
carry its Eurodollar Rate Loans and any loss, expense or liability sustained by
that Lender in connection with the liquidation or re-employment of such funds)
which that Lender may sustain: (i) if for any reason (other than a default by
that Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including any prepayment pursuant to subsection 2.4B) or conversion of any of
its Eurodollar Rate Loans occurs on a date that is not the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.
E. Booking of Eurodollar Rate Loans. Subject to its obligations under
subsection 2.8, any Lender may make, carry or transfer Eurodollar Rate Loans at,
to, or for the account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Reserve Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and, through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
-------- -------
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of an Event of Default, unless the Requisite Lenders
otherwise consent, (i) Company may not elect to have a Loan be made or
maintained as, or converted to, a Eurodollar Rate Loan after the expiration of
any Interest Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to a
62
requested borrowing or conversion/continuation that has not yet occurred shall
be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the Closing
Date, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) results in a change in the basis of taxation of such Lender (or
its applicable lending office) (other than a change with respect to any Tax
on the overall net income of such Lender or franchise tax in lieu thereof)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Reserve Adjusted Eurodollar
Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder, or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Eurodollar Rate Loans hereunder or to
reduce any amount received or receivable by such Lender (or its applicable
lending office) with respect thereto; then, in any such case, the Lender shall
promptly notify Company and the Administrative Agent thereof and Company shall
promptly pay to such Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender shall reasonably determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder, provided that notwithstanding anything to the contrary contained in
--------
this subsection 2.7A, unless a Lender gives notice to Company that it is
obligated to pay an amount under this subsection within six months after the
later of (x) the date such Lender incurs such increased cost or suffers such
reduction in amounts received or receivable and (y) the date such Lender has
actual knowledge of such costs or reduction
63
in amounts received or receivable, then such Lender shall only be entitled to be
compensated for such amount to the extent of the increased cost or reduction in
amounts received or receivable that is incurred or suffered on or after the date
which occurs six months prior to such Lender giving notice to Company that it is
obligated to repay the respective amounts pursuant to this subsection 2.7A. Such
Lender shall deliver to Company (with a copy to the Administrative Agent) a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
-----------------------------
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of the Administrative Agent or any Lender imposed, levied, collected
or assessed by any jurisdiction from or through which a payment is made by
or on behalf of Company.
(ii) Withholding of Taxes. If Company or any other Person is required
--------------------
by law to make any deduction or withholding on account of any Tax (other
than a Tax on the overall net income of the Administrative Agent or any
Lender) from any sum paid or payable by Company to the Administrative Agent
or any Lender under any of the Loan Documents:
(a) Company shall notify the Administrative Agent of any such
requirement or any change in any such requirement as soon as
practicable;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on the Administrative Agent or such Lender, as the case may
be) on behalf of and in the name of the Administrative Agent or such
Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment (including deduction, withholding or
payment with respect to additional sums payable under this subsection
2.7B(ii)), the Administrative Agent or such Lender, as the case may
be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment of such tax
been required or made; provided that no such additional amount shall
be required to be paid to any Lender under this clause (c) except to
the extent that any change after the Closing Date or after the date of
the Assignment Agreement pursuant to which such Lender became a Lender
(in the case of each other Lender) in any such requirement for a
deduction, withholding or payment shall result in the imposition, or
an increase in the rate, of such deduction, withholding or payment in
respect of payments to such Lender. Notwithstanding the preceding
clause, additional sums shall be required to be paid to any
64
Lender to the extent that such Lender (or its assignor) was entitled,
at the time of designation of a new lending office (or assignment), to
receive additional amounts from Company in respect of payments to such
Lender (or its assignor);
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to the Administrative
Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to the
relevant taxing or other authority; and
(e) Company shall indemnify the Administrative Agent or any
Lender for the full amount of any such Tax paid by the Administrative
Agent or any Lender on or with respect to any payment on account of
any obligation of Company under this subsection 2.7B(ii) and any
penalties, interest and reasonable expenses with respect thereto,
whether or not such Tax was legally imposed or asserted by the
relevant governmental authority, within 15 Business Days after written
request for such indemnification. A certificate as to the amount of
such payment or liability delivered to Company by the Administrative
Agent or any Lender shall be conclusive absent manifest error.
(iii) Other Taxes. Company shall also pay any and all present or
-----------
future recording, stamp, documentary, excise, transfer, sales, property or
similar Taxes arising from any payment made hereunder or from the
execution, delivery or enforcement or registration of, or otherwise with
respect to, this Agreement and the other Loan Documents. In the case of any
such payments made by the Administrative Agent or any Lender, Company shall
reimburse the Administrative Agent or such Lender for the full amount of
such Taxes paid by the Administrative Agent or any Lender within 15
Business Days following receipt by Company of a written statement or
invoice setting forth in reasonable detail the basis for such reimbursement
request.
C. Tax Refunds. If any Lender receives a refund or otherwise would have
received a refund but for the offset of the amount of such refund against
such Lender's Taxes (a "Tax Refund"), which in the good faith judgment of
----------
such Lender is allocable to Company, it shall promptly pay such refund net
of all out-of-pocket expenses of the Lender and without interest (other
than any interest paid by the relevant jurisdiction with respect to such
refund) to Company; provided, however, that Company agrees to promptly
-------- -------
return such Tax Refund (plus any penalties, interest or other charges
imposed by the relevant jurisdiction) to the applicable Lender if it
receives notice from such Lender that such Lender is required to repay such
Tax Refund. Nothing contained in this subsection 2.7C shall require any
Lender to make available its Tax returns (or any other information relating
to its Taxes which it deems confidential) to Company or any other Person.
D. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the Closing
Date of any
65
law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Lender (or its applicable lending office) with any guideline, request
or directive regarding capital adequacy (whether or not having the force of
law) of any such governmental authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on the capital
of such Lender or any corporation controlling such Lender as a consequence
of, or with reference to, such Lender's Loans or Commitments or Letters of
Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which
such Lender reasonably determines such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into consideration
the policies of such Lender or such controlling corporation with regard to
capital adequacy), then, within fifteen Business Days after receipt by
Company from such Lender of the statement referred to in the next sentence,
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling corporation on an after-tax
basis for such reduction. Such Lender shall deliver to Company (with a copy
to the Administrative Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts,
which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
E. Substitute Lenders. In the event (i) Company is required under the
provisions of this subsection 2.7 or subsection 3.6 to make payments to any
Lender or in the event any Lender fails to lend to Company in accordance
with this Agreement, or (ii) any Lender fails to consent to a proposed
change, waiver, discharge or termination under the Loan Documents otherwise
approved by Requisite Lenders, then, in either case, Company may elect to
terminate such Lender as a party to this Agreement; provided that,
--------
concurrently with such termination, (i) Company shall pay that Lender all
principal, interest and fees and other amounts (including without
limitation amounts, if any, owed under this subsection 2.7) due to be paid
to such Lender with respect to all periods through such date of
termination, (ii) another financial institution satisfactory to Company and
the Administrative Agent (or, in the event the Administrative Agent is also
the Lender to be terminated, the successor Administrative Agent) shall
agree, as of such date, to become a Lender for all purposes under this
Agreement (whether by assignment or amendment) and to assume all
obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the reasonable judgment of
the Administrative Agent (or, in the event the Administrative Agent is also
the Lender to be terminated, the successor Administrative Agent) to
evidence the substitution of such Lender shall have been received and
approved by the Administrative Agent as of such date.
2.8 Obligation of Lenders and Issuing Bank to Mitigate.
--------------------------------------------------
Each of the Lender and the Issuing Bank agrees that, as promptly as
practicable after the officer of such Lender or the Issuing Bank responsible for
administering the Loans or Letters of Credit of such Lender or the Issuing Bank,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would
66
cause such Lender to become an Affected Lender or that would entitle such Lender
or the Issuing Bank to receive payments under subsection 2.7 or subsection 3.6,
it will, to the extent not inconsistent with the internal policies of such
Lender or the Issuing Bank and any applicable legal or regulatory restrictions,
use reasonable efforts to (i) make, issue, fund or maintain the Commitments of
such Lender or the affected Loans or Letters of Credit of such Lender or the
Issuing Bank through another lending or letter of credit office of such Lender
or the Issuing Bank, or (ii) take such other measures as such Lender or the
Issuing Bank may deem reasonable, if as a result thereof the circumstances which
would cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
or the Issuing Bank pursuant to subsection 2.7 or subsection 3.6 would be
reduced and if, as determined by such Lender or the Issuing Bank in its
reasonable discretion, the making, issuing, funding or maintaining of such
Commitments or Loans or Letters of Credit through such other lending or letter
of credit office or in accordance with such other measures, as the case may be,
would not otherwise materially adversely affect such Commitments or Loans or
Letters of Credit or the interests of such Lender or the Issuing Bank; provided
--------
that such Lender or the Issuing Bank will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection 2.8 unless
Company agrees to pay all incremental expenses incurred by such Lender or the
Issuing Bank as a result of utilizing such other lending or letter of credit
office. A certificate as to the amount of any such expenses payable by Company
pursuant to this subsection 2.8 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender or the Issuing Bank to
Company (with a copy to the Administrative Agent) shall be conclusive absent
manifest error.
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
---------------------------------------------------------------------
Therein.
-------
A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(iv) and that the Swing Line Lender
make Swing Line Loans pursuant to subsection 2.1A(v), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the date which is five (5)
Business Days before the Revolving Loan Commitment Termination Date, that the
Issuing Bank issue Letters of Credit for the account of ChipPAC or any of its
Subsidiaries to the extent and for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to and upon
the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Loan Parties herein set forth, the Issuing
Bank agrees to issue such Letters of Credit in accordance with the provisions of
this subsection 3.1; provided that Company shall not request that the Issuing
--------
Bank issue (and the Issuing Bank shall not issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect;
67
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed the Letter of Credit Subfacility
Commitment;
(iii) any Letter of Credit prior to the Chinese Security Effective
Date, if, after giving effect to such issuance, the Total Utilization of
Revolving Loan Commitments would exceed $15,000,000;
(iv) any Standby Letter of Credit having an expiration date later
than the earlier of (a) five (5) Business Days prior to the Revolving Loan
Commitment Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit; provided that the
--------
immediately preceding clause (b) shall not prevent the Issuing Bank from
agreeing that a Standby Letter of Credit will automatically be extended for
one or more successive periods absent a Default or Event of Default,
subject to the immediately preceding clause (a), not to exceed one year
each unless the Issuing Bank elects not to extend for any such additional
period; provided, further, that, unless the Requisite Lenders otherwise
-------- -------
consent, the Issuing Bank shall give notice that it will not extend such
Standby Letter of Credit if it has knowledge that a Default or Event of
Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) on the last day on which such Issuing Bank
may give notice to the beneficiary that it will not extend such Standby
Letter of Credit; or
(v) any Commercial Letter of Credit (a) having an expiration date
later than the earlier of (x) thirty (30) days prior to the Revolving Loan
Commitment Termination Date and (y) the date which is one hundred eighty
(180) days from the date of issuance of such Commercial Letter of Credit or
(b) that is otherwise unacceptable to the Issuing Bank in its reasonable
discretion.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to the Issuing Bank, at the Letter of
Credit Issuing Office, and the Administrative Agent, at the Funding and
Payment Office, a Notice of Issuance of Letter of Credit no later than
12:00 Noon (New York time) at least three (3) Business Days (in the case of
Standby Letters of Credit) and five (5) Business Days (in the case of
Commercial Letters of Credit), or such shorter period as may be agreed to
by the Issuing Bank in any particular instance, in advance of the proposed
date of issuance. The Notice of Issuance of Letter of Credit shall specify
(a) the proposed date of issuance (which shall be a Business Day), (b) the
face amount of or maximum aggregate liability under, as applicable, the
Letter of Credit, (c) the expiration date of the Letter of Credit, (d) the
name and address of the account party and beneficiary, and (e) either the
verbatim text of the proposed Letter of Credit or the proposed terms and
conditions thereof, including a precise description of any documents and
the verbatim text of any certificates to be presented by the beneficiary
which, if presented by the beneficiary prior to the expiration date of the
Letter of Credit, would require the Issuing Bank to make payment
thereunder; and provided that the Issuing Bank, in its reasonable
--------
discretion, may require changes in the text of the proposed Letter of
Credit or any such documents or certificates; provided further that no
-------- -------
Letter of Credit shall require payment against a conforming draft or other
request for
68
payment to be made thereunder on the same business day (under the laws of
the jurisdiction in which the office of the Issuing Bank to which such
draft or other request for payment is required to be presented is located)
that such draft or other request for payment is presented if such
presentation is made after 10:00 A.M. (in the time zone of such office of
the Issuing Bank) on such Business Day.
Company shall notify the Issuing Bank (and the Administrative Agent,
if not such Issuing Bank) prior to the issuance of any Letter of Credit in
the event that any of the matters to which Company is required to certify
in the applicable Notice of Issuance of Letter of Credit is no longer true
and correct as of the proposed date of issuance of such Letter of Credit,
and upon the issuance of any Letter of Credit, Company shall be deemed to
have re-certified, as of the date of such issuance, as to the matters to
which Company is required to certify in the applicable Notice of Issuance
of Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Bank shall issue the requested Letter of Credit in
accordance with the Issuing Bank's standard procedures, and upon its
issuance of such Letter of Credit the Issuing Bank shall promptly notify
the Administrative Agent and each Lender of such issuance, which notice
shall be accompanied by a copy of such Letter of Credit.
(iii) Reports to Lenders. Within thirty (30) days after the end of
------------------
each calendar quarter ending after the Closing Date, so long as any Letter
of Credit shall have been outstanding during such calendar quarter, the
Issuing Bank shall deliver to the Administrative Agent and the
Administrative Agent shall deliver to each Lender a report setting forth
for such calendar quarter the daily maximum amount available to be drawn
under the Letters of Credit that were outstanding during such calendar
quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Bank a
participation in such Letter of Credit and any drawings honored or payments made
thereunder in an amount equal to such Lender's Pro Rata Share (with respect to
the Revolving Loan Commitments) of the maximum amount which is or at any time
may become available to be drawn or required to be paid thereunder.
3.2 Letter of Credit Fees.
---------------------
Company agrees to pay the following amounts to the Issuing Bank with
respect to Letters of Credit issued by it for the account of Company:
(i) with respect to each Letter of Credit, (a) a fronting fee equal
to 0.250% per annum of the daily maximum amount available to be drawn under
such Letter of Credit and (b) a Letter of Credit fee equal to the product
of (x) the then Applicable Eurodollar Rate Margin with respect to Revolving
Loans and (y) the daily maximum amount available to be drawn under such
Letter of Credit, in each case payable in arrears on and to the last
Business Day in each of March, June, September and December of each year,
commencing September 1999, and
69
on the Revolving Loan Commitment Termination Date and computed on the basis
of a 360-day year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit (without duplication of the fees payable under clause (i)
above), documentary and processing charges in accordance with such Issuing
Bank's standard schedule for such charges in effect at the time of such
issuance, amendment or transfer, as the case may be.
Promptly upon receipt by such Issuing Bank of any amount described in clause
(i)(b) of this subsection 3.2, such Issuing Bank shall distribute to each other
Lender having Revolving Loan Exposure its Pro Rata Share of such amount.
3.3 Drawings and Payments and Reimbursement of Amounts Drawn or Paid Under
----------------------------------------------------------------------
Letters of Credit.
-----------------
A. Responsibility of Issuing Bank With Respect to Requests for Drawings
and Payments. In determining whether to honor any drawing or request for payment
under any Letter of Credit by the beneficiary thereof, the Issuing Bank shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and to use reasonable
care so that they comply on their face with the requirements of such Letter of
Credit.
B. Reimbursement by Company of Amounts Drawn or Paid Under Letters of
Credit. In the event an Issuing Bank has determined to honor a drawing or
request for payment under a Letter of Credit issued by it, the Issuing Bank
shall immediately notify Company and the Administrative Agent, and Company shall
reimburse such Issuing Bank on or before the Business Day immediately following
the date on which such drawing is honored or such payment is made (the
applicable "Reimbursement Date") in an amount in same day funds equal to the
------------------
amount of such honored drawing; provided that, anything contained in this
--------
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified the Administrative Agent and the Issuing Bank prior to 12:00 Noon (New
York time) on the date immediately following the date of such honored drawing or
request for payment that Company intends to reimburse such Issuing Bank for the
amount of such honored drawing or payment with funds other than the proceeds of
Revolving Loans, Company shall be deemed to have given a timely Notice of
Borrowing to the Administrative Agent requesting the Lenders to make Revolving
Loans which are Base Rate Loans on the applicable Reimbursement Date in an
amount equal to the amount of such honored drawing or payment and (ii) subject
to satisfaction or waiver of the conditions specified in subsection 4.2B, the
Lenders shall, on the applicable Reimbursement Date, make Revolving Loans in the
amount of such honored drawing or payment, the proceeds of which shall be
applied directly by the Administrative Agent to reimburse the Issuing Bank for
the amount of such honored drawing or payment; provided further that if for any
-------- -------
reason proceeds of Revolving Loans are not received by the Issuing Bank on the
applicable Reimbursement Date in an amount equal to the amount of such honored
drawing or payment, Company shall reimburse the Issuing Bank, on demand, in an
amount in same day funds equal to the excess of the amount of such honored
drawing or payment over the aggregate amount of such Revolving Loans, if any,
which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on the terms and
conditions set forth in this Agreement, and Company shall retain any and all
rights it
70
may have against any Lender resulting from the failure of such Lender to make
such Revolving Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings or Payments Under Letters
of Credit.
(i) Payment by Lenders. In the event that Company shall fail for any
------------------
reason to reimburse any Issuing Bank as provided in subsection 3.3B in an
amount equal to the amount of any honored drawing or payment made by such
Issuing Bank under a Letter of Credit issued by it, such Issuing Bank shall
promptly notify each other Lender of the unreimbursed amount of such
honored drawing or payment and of such other Lender's respective
participation therein based on such Lender's Pro Rata Share of the
Revolving Loan Commitments. Each Lender shall make available to such
Issuing Bank an amount equal to its respective participation, in same day
funds, at the office of such Issuing Bank specified in such notice, not
later than 2:00 P.M. (New York time) on the first business day (under the
laws of the jurisdiction in which such office of such Issuing Bank is
located) after the date notified by such Issuing Bank. In the event that
any Lender fails to make available to such Issuing Bank on such business
day the amount of such Lender's participation in such Letter of Credit as
provided in this subsection 3.3C, such Issuing Bank shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the rate customarily used by such Issuing Bank for the
correction of errors among banks for three Business Days and thereafter at
the Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice
the right of any Lender to recover from any Issuing Bank any amounts made
available by such Lender to such Issuing Bank pursuant to this subsection
3.3C in the event that it is determined by the final judgment of a court of
competent jurisdiction that the payment with respect to a Letter of Credit
by such Issuing Bank in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct on the part of such
Issuing Bank.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event any Issuing Bank shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any honored
drawing or payment made by such Issuing Bank under a Letter of Credit
issued by it, such Issuing Bank shall distribute to each other Lender which
has paid all amounts payable by it under subsection 3.3C(i) with respect to
such honored drawing or payment such other Lender's Pro Rata Share of all
payments subsequently received by such Issuing Bank from Company in
reimbursement of such honored drawing or payment when such payments are
received. Any such distribution shall be made to a Lender at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Lender may request.
D. Interest on Amounts Drawn or Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Bank, with respect to drawings or payments made under any Letters
of Credit issued by it, interest on the amount paid by such Issuing Bank in
respect of each such drawing or payment from the date such drawing is
honored or payment
71
is made to but excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B) at a rate equal to (a) for the period from the
date such drawing is honored or payment is made to but excluding the
applicable Reimbursement Date, the Base Rate plus the Applicable Base Rate
----
Margin with respect to Revolving Loans, and (b) thereafter, a rate which is
2% per annum in excess of the rate of interest described in the foregoing
clause (a). Interest payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related drawing
or payment under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Bank. Promptly upon
-------------------------------------------------
receipt by any Issuing Bank of any payment of interest pursuant to
subsection 3.3D(i), (a) such Issuing Bank shall distribute to each other
Lender, out of the interest received by such Issuing Bank in respect of the
period from the date of the applicable honored drawing or payment under a
Letter of Credit issued by such Issuing Bank to but excluding the date on
which such Issuing Bank is reimbursed for the amount of such drawing or
payment (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such other Lender would
have been entitled to receive in respect of the Letter of Credit fee that
would have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored or payment had
been made under such Letter of Credit, and (b) in the event such Issuing
Bank shall have been reimbursed by other Lenders pursuant to subsection
3.3C(i) for all or any portion of such drawing or payment, such Issuing
Bank shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such drawing or
payment such other Lender's Pro Rata Share of any interest received by such
Issuing Bank in respect of that portion of such drawing or payment so
reimbursed by other Lenders for the period from the date on which such
Issuing Bank was so reimbursed by other Lenders to and including the date
on which such portion of such drawing or payment is reimbursed by Company.
Any such distribution shall be made to a Lender at its Lending Office set
forth in Schedule 2.1 or at such other address as such Lender may request.
------------
3.4 Obligations Absolute.
--------------------
The obligation of Company to reimburse each Issuing Bank for drawings
honored or payments made under the Letters of Credit issued by it and to repay
any Revolving Loans made by the Lenders pursuant to subsection 3.3B and the
obligations of the Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right which
Company or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Bank or other Lender or any other
Person or, in the
72
case of a Lender, against Company whether in connection with this
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between ChipPAC or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the applicable Issuing Bank under any Letter of
Credit against presentation of a demand, draft or certificate or other
document which appears to substantially comply with the terms of such
Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of ChipPAC or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that Default or Event of Default shall have occurred
and be continuing;
provided, in each case, that payment by the applicable Issuing Bank under the
--------
applicable Letter of Credit shall not have constituted bad faith, gross
negligence or willful misconduct of such Issuing Bank under the circumstances in
question.
3.5 Indemnification; Nature of Issuing Bank's Duties.
------------------------------------------------
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Bank, other than as a result of (a) the bad faith, gross negligence or willful
misconduct of such Issuing Bank or (b) subject to the following clause (ii), the
wrongful dishonor by such Issuing Bank of a proper demand for payment made under
any Letter of Credit issued by it or (ii) the failure of such Issuing Bank to
honor a drawing or other request for payment under any such Letter of Credit as
a result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority (all such acts
or omissions herein called "Governmental Acts").
-----------------
B. Nature of Issuing Bank's Duties. As between Company and any Issuing
Bank, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Bank by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Bank shall not
73
be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the
application for and issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure
of the beneficiary of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing or payment under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of such Issuing Bank,
including without limitation any Governmental Acts, and none of the above shall
affect or impair, or prevent the vesting of, any of such Issuing Bank's rights
or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Bank under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put such Issuing Bank under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Bank for
any liability arising out of the bad faith, gross negligence or willful
misconduct of such Issuing Bank.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be controlling
with respect to matters covered thereby), in the event that any Issuing Bank or
any Lender shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the Closing Date, or compliance by any Issuing Bank or
Lender with any guideline, request or directive issued or made after the Closing
Date by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subject to any additional Tax such Issuing Bank or any Lender
(or its applicable lending or letter of credit office) (other than a change
with respect to any Tax on the overall net income of such Issuing Bank or
Lender) with respect to the issuing or maintaining of any Letters of Credit
or the purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being imposed
on or suffered by any particular Issuing Bank;
74
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing Bank
or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Bank or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Bank or Lender of agreeing to issue, issuing or maintaining any Letter of Credit
or agreeing to purchase, purchasing or maintaining any participation therein or
to reduce any amount received or receivable by such Issuing Bank or Lender (or
its applicable lending or letter of credit office) with respect thereto; then,
in any case, Company shall promptly pay to such Issuing Bank or Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts (reasonably determined by such Issuing Bank or Lender) as may
be necessary to compensate such Issuing Bank or Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Issuing Bank
or Lender shall deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Issuing Bank or Lender under this subsection 3.6, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction (or waiver) of
the following conditions.
4.1 Conditions to Loans.
-------------------
The obligations of the Lenders to make the Loans to be made on the Closing
Date are, in addition to the conditions precedent specified in subsection 4.2,
subject to prior or concurrent satisfaction (or waiver) of the following
conditions:
A. Company Documents. On or before the Closing Date, each of ChipPAC and
Company shall deliver to the Administrative Agent the following, each, unless
otherwise noted, dated the Closing Date:
(i) Certified copies of its Organizational Certificate, together
with a good standing certificate from the Secretary of State of the State
of Delaware or the appropriate Governmental Authority of the British Virgin
Islands, as applicable, and each other jurisdiction in which it is
qualified as a foreign corporation to do business (except any such
jurisdiction in which failure to be qualified could not reasonably be
expected to have a Material Adverse Effect), each dated a recent date prior
to the Closing Date;
75
(ii) Copies of its Organizational Documents, certified as of the
Closing Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents and the Transaction Documents to which it is a party,
certified as of the Closing Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment;
(iv) Incumbency certificates of its officers executing this
Agreement and the other Loan Documents to which it is a party as of the
Closing Date;
(v) Executed originals of this Agreement and the other Loan
Documents to which it is a party;
(vi) Certified copies of each of the Transaction Documents to which
it is a party; and
(vii) Such other documents as the Administrative Agent may reasonably
request.
B. Subsidiary Documents. On or before the Closing Date, ChipPAC shall
deliver or cause to be delivered to the Administrative Agent for the Lenders the
following for each of its Subsidiaries other than Company (which may be waived
by the Agents for any Subsidiaries of ChipPAC with respect to the items
described in clause (i) below) after giving effect to the Recapitalization
Transactions, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Organizational Certificate, together
with a good standing certificate (to the extent such a certificate is
applicable and available in the relevant jurisdiction) from the applicable
Governmental Authority of its jurisdiction of incorporation, organization
or formation and each other jurisdiction in which it is qualified as a
foreign corporation or other entity to do business (except any such state
in which failure to be qualified could not reasonably be expected to have a
Material Adverse Effect), each dated a recent date prior to the Closing
Date;
(ii) Copies of the Organizational Documents of such Subsidiary,
certified as of the Closing Date by its corporate secretary or an assistant
secretary;
(iii) Copies of the Organizational Authorizations of such Subsidiary
approving and authorizing the execution, delivery and performance of the
Guaranty, as applicable, and the other Loan Documents and the Transaction
Documents to which such Subsidiary is party, certified as of the Closing
Date by its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
(iv) Incumbency certificates of its officers executing the Guaranty,
as applicable, and the other Loan Documents to which such Subsidiary is
party;
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(v) Executed originals of the Guaranty and the other Loan Documents
to which such Subsidiary is party; and
(vi) Such other documents as the Administrative Agent may reasonably
request.
C. Consummation of the Recapitalization Transactions.
(i) (a) Each of the material terms and conditions of the
Transaction Documents shall be in form and substance reasonably
satisfactory to the Administrative Agent and each such Transaction Document
shall be in full force and effect and (b) all conditions to the
Recapitalization Transactions set forth in the Transaction Documents shall
have been satisfied or the fulfillment of any such conditions shall have
been waived with the reasonable consent of the Requisite Lenders (such
consent not to be unreasonably withheld);
(ii) on or before the Closing Date, the Investors shall have made
the Equity Contribution;
(iii) on or before the Closing Date, the Recapitalization
Transactions shall have been consummated in accordance with the
Recapitalization Agreement and the Administrative Agent shall have received
evidence reasonably satisfactory to it of the foregoing; and
(iv) on or before the Closing Date, Company shall have issued and
sold for Cash not less than $150,000,000 in gross aggregate principal
amount of Subordinated Debt in accordance with the terms and conditions of
the Subordinated Debt Documents.
D. Loan Documents. Each of the Loan Documents shall have been duly
executed by the parties thereto, shall have been delivered to the Administrative
Agent and shall be in full force and effect.
E. Necessary Consents. ChipPAC shall have obtained all consents of
Governmental Authorities and other Persons necessary in connection with the
Recapitalization Transactions, and each of the foregoing shall be in full force
and effect and in form and substance reasonably satisfactory to the
Administrative Agent (other than any such consents, the failure to obtain which,
either individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect). All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
Recapitalization Transactions or the financing thereof and no action, request
for stay, petition for review or rehearing, reconsideration or appeal shall be
pending and any time for agency action to set aside its consent on its own
motion has expired.
F. Indebtedness. After giving effect to the Recapitalization Transactions
and the other transactions contemplated hereby, on the Closing Date, neither
ChipPAC nor any of its Subsidiaries shall have outstanding any Indebtedness or
preferred stock other than (i) the Loans and extensions of credit hereunder,
(ii) the Subordinated Debt, (iii) the Preferred Stock, (iv) the Intercompany
Notes, (v) the Local Lines of Credit, (vi) the Asian Letters of Credit and (vii)
Indebtedness listed in Schedule 7.1.
------------
77
G. Perfection of Security Interests. Except with respect to such actions
set forth on Schedule 4.1G, which shall be taken as promptly as practicable
-------------
following the Closing Date, ChipPAC shall have taken or caused to be taken such
actions in such a manner so that the Collateral Agent upon filing and recording
has a valid and perfected First Priority security interest in the entire
personal property (both tangible and intangible) constituting Collateral. Such
actions shall include, without limitation: (i) the delivery pursuant to the
applicable Collateral Documents of (a) such certificates or other instruments
(each of which shall be registered in the name of the Collateral Agent or
properly endorsed in blank for transfer or accompanied by irrevocable undated
stock or equivalent powers duly endorsed in blank, all in form and substance
reasonably satisfactory to the Collateral Agent) representing all of the shares
or other interests of Capital Stock required to be pledged pursuant to the
Collateral Documents and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner reasonably satisfactory to the
Collateral Agent) evidencing any Collateral; (ii) the delivery to the Collateral
Agent of (a) the results of a recent search, by a Person reasonably satisfactory
to the Collateral Agent, of all effective UCC financing statements and fixture
filings and all judgment and tax lien filings which may have been made with
respect to any personal or mixed property of any Loan Party, together with
copies of all such filings disclosed by such search; (iii) the delivery to the
Collateral Agent of Uniform Commercial Code financing statements executed by the
applicable Loan Parties as to all such Collateral granted by such Loan Parties
for all jurisdictions as may be reasonably necessary to perfect the
Administrative Agent's security interest in such Collateral; (iv) the delivery
to the Collateral Agent of evidence reasonably satisfactory to the Collateral
Agent that all other filings (including, without limitation, Uniform Commercial
Code termination statements and releases), recordings and other actions the
Collateral Agent deems reasonably necessary to establish, preserve and perfect
the First Priority Liens granted to the Collateral Agent in personal (both
tangible and intangible) and mixed property shall have been made; and (v) such
other filings, registrations, recordings and other actions the Collateral Agent
deems reasonably necessary to establish, preserve and perfect the First Priority
Liens granted to the Collateral Agent in any Collateral, which by the nature,
location or pledgor thereof, should be made or taken in or with respect to any
foreign jurisdiction.
H. Solvency Opinion. The Lenders shall have received a written opinion of
Valuation Research Corporation, in form and substance reasonably satisfactory to
the Administrative Agent, that ChipPAC and its Subsidiaries after giving effect
to the Recapitalization Transactions and the financing transactions contemplated
hereby are Solvent.
I. Transaction Costs. The Transaction Costs shall not exceed
approximately $30,000,000.
J. Opinions of Loan Parties' Counsel. The Agent and its counsel shall
have received originally executed copies for each Agent and Lenders of one or
more favorable written opinions of Xxxxxxxx & Xxxxx, special New York counsel
for the Loan Parties, (ii) Xxx, Shin & Yu, special Korean counsel to the Loan
Parties, (iii) King & Wood, special Chinese counsel to the Loan Parties, (iv)
PricewaterhouseCoopers Kft., special Hungarian counsel to the Loan Parties, (v)
Xxxxxx Westwood & Riegels, special British Virgin Islands counsel to the Loan
Parties, (vi) Chancery Xxxxxxxx, special Barbados counsel to the Loan Parties
and (vii) PricewaterhouseCoopers Societe a responsabilite limitee, special
Luxembourg counsel to the Loan Parties, setting forth
78
substantially the opinions designated in Exhibit VIII annexed hereto and
------------
otherwise in form and substance reasonably satisfactory to the Administrative
Agent.
K. Opinions of Counsel in the Recapitalization Transactions. The
Administrative Agent and its counsel shall have received copies of each legal
opinion, if any, delivered by any counsel for any Loan Party pursuant to the
Transaction Documents, together with a letter from counsel rendering each such
opinion authorizing the Agents and the Lenders to rely upon the applicable
opinion to the same extent as though it were addressed to the Agents and the
Lenders.
L. Fees and Expenses. Company shall have paid to the Administrative
Agent, for distribution (as appropriate) to the Agents and the Lenders, the fees
payable on the Closing Date referred to in subsection 2.3 and all reasonable
expenses owing to any such Person by Company as of the Closing Date for which
invoices have been presented prior to the Closing Date.
M. Financial Statements. On or before the Closing Date, the
Administrative Agent and the Lenders shall have received from ChipPAC, the
financial information and projections described in subsection 5.3 hereof (which,
in the case of the financial statements provided pursuant to subsection 5.3B,
shall not be materially inconsistent with the estimated financial statements
previously provided by ChipPAC to the Administrative Agent), all in form and
substance reasonably satisfactory to the Administrative Agent.
N. Evidence of Insurance. The Administrative Agent shall have received
satisfactory certificates of insurance with respect to each of the insurance
policies required pursuant to subsection 6.4, and the Administrative Agent shall
be reasonably satisfied with the nature and scope of these insurance policies.
O. No Material Adverse Effect. (i) Since December 31, 1998, no Material
Adverse Effect shall have occurred.
P. Corporate and Capital Structure, Ownership, Management, Etc.
(i) Corporate Structure. The corporate organizational structure of
-------------------
ChipPAC and its Subsidiaries, both before and after giving effect to the
Recapitalization Transactions, shall be as set forth in Schedule 4.1P
-------------
annexed hereto.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of ChipPAC after giving effect to the Recapitalization
Transactions, shall be as set forth in Schedule 4.1P annexed hereto.
-------------
Q. Representations and Warranties. Each of ChipPAC and Company shall have
delivered to the Administrative Agent (with a sufficient number of originally
executed counterparts for the Lenders) an Officer's Certificate, in form and
substance reasonably satisfactory to the Administrative Agent, to the effect
that the representations and warranties in Section 5 hereof are true and correct
in all material respects on and as of the Closing Date, and both before and
after giving effect to the Recapitalization Transactions, to the same extent as
though made on and as of that date.
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R. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel, and the Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents, instruments and legal opinions as the
Administrative Agent may reasonably request.
4.2 Conditions to All Loans.
-----------------------
The obligations of the Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. The Administrative Agent shall have received before that Funding Date,
in accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by a Responsible Officer on behalf of
Company and delivered to the Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects on
and as of that Funding Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on
and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute a Default or Event of Default;
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it, on that Funding Date; and
(iv) The making of the Loans requested on such Funding Date shall
not violate any law including, without limitation, Regulation T, Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System.
4.3 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Bank is obligated to issue such Letter of Credit) is subject
to the following additional conditions precedent:
A. On or before the date of issuance of such Letter of Credit, the
Issuing Bank and the Administrative Agent shall have received, in accordance
with the provisions of subsection 3.1B(i), an originally executed Notice of
Issuance of Letter of Credit, signed by a Responsible Officer of Company on
behalf of Company and delivered to the Administrative Agent, together with all
other information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Bank may reasonably require in connection
with the issuance of such Letter of Credit.
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B. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make the
Loans, to induce the Issuing Bank to issue Letters of Credit and to induce the
other Lenders to purchase participations therein, each of ChipPAC and Company
represents and warrants to each Lender and the Issuing Bank, on the date of this
Agreement, on the Closing Date, on each Funding Date, and on the date of
issuance of each Letter of Credit, that the following statements are true and
correct.
5.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
------------
A. Organization and Powers. Each Loan Party which is a corporation is
organized, existing and in good standing (to the extent such concept is relevant
in the jurisdiction of organization of such Loan Party) under the laws of its
respective jurisdiction of organization. Each Subsidiary Guarantor which is a
partnership or limited liability company is a duly organized and validly
existing limited partnership or limited liability company under the laws of its
jurisdiction of formation and is in good standing in such jurisdiction. ChipPAC,
Company and each Subsidiary has all requisite corporate, partnership or limited
liability company (as applicable) power and authority to own and operate their
respective properties, to carry on their respective business as now conducted
and as proposed to be conducted, to enter into the Loan Documents, to carry out
the transactions contemplated thereby and, in the case of Company, to borrow
hereunder.
B. Qualification and Good Standing. ChipPAC, Company and each Loan Party
is qualified or authorized to do business and in good standing (to the extent
such concept is relevant in such jurisdiction) in every jurisdiction where their
respective assets are located and wherever necessary to carry out their
respective businesses and operations, except in jurisdictions where the failure
to be so qualified or in good standing has not had and would not reasonably be
expected to have a Material Adverse Effect.
C. Conduct of Business. ChipPAC and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.13.
D. ChipPAC and Subsidiaries. All of the Subsidiaries of ChipPAC as of the
Closing Date (after giving effect to the Recapitalization Transactions) are
identified in Schedule 5.1 annexed hereto, as it may be supplemented from time
------------
to time in accordance with the provisions of subsection 6.9. The Capital Stock
or other equity interests of ChipPAC and each of the Subsidiaries identified in
Schedule 5.1 annexed hereto is duly authorized, validly issued, fully paid and
------------
nonassessable (except in the case of any limited liability company or
partnership interests) and none of such Capital Stock or other equity interests
constitutes Margin Stock. Schedule 5.1 annexed hereto correctly sets forth the
------------
direct or indirect ownership interest of ChipPAC in each of its Subsidiaries
identified therein.
81
5.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate and/or
partnership (as applicable) action on the part of each of the Loan Parties party
thereto.
B. No Conflict. After giving effect to the consummation of the
transactions contemplated hereby to occur on the Closing Date, the execution,
delivery and performance by each of the applicable Loan Parties of the Loan
Documents, and the consummation of the transactions contemplated by the Loan
Documents, do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to any Loan Party, the Organizational
Certificate or any other Organizational Documents of any Loan Party or any
order, judgment or decree of any court or other agency of government binding on
any Loan Party, which violation would reasonably be expected to have a Material
Adverse Effect, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
of any Loan Party, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of any Loan Party (other than any
Liens created under any of the Loan Documents), or (iv) require any approval of
shareholders, partners or members or any approval or consent of any Person under
any Contractual Obligation of any Loan Party, except for such approvals or
consents which will be obtained on or before the Closing Date, approvals or
consents with respect to the Chinese Agreements (or, with respect to certain
other notifications to be made pursuant to foreign security arrangements, on or
within 20 days after the Closing Date) or where failure to obtain or make the
foregoing would not reasonably be expected to have a Material Adverse Effect.
C. Governmental Consents. The execution, delivery and performance by the
Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents and the Transaction Documents do not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body except to the extent obtained on or before the Closing Date (or, with
respect to certain filings to be made in various foreign jurisdictions to create
and perfect Liens, other than with respect to the Chinese Agreements, on or
within 20 days after the Closing Date) or where the failure to obtain or make
the foregoing would not reasonably be expected to have a Material Adverse
Effect.
D. Binding Obligation. Each of the Loan Documents has been duly executed
and delivered by each of the Loan Parties party thereto and is the legally valid
and binding obligation of each such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
E. Valid Issuance of the Subordinated Debt. Company has the power and
authority to issue the Subordinated Debt. The Subordinated Debt, when issued and
paid for, will be the legally valid and binding obligation of Company,
enforceable against Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability. The Subordinated Debt, when issued and sold in the
manner contemplated by the Transaction Documents
82
on the Closing Date, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
5.3 Financial Condition; Projections.
--------------------------------
A. Financial Statements. ChipPAC has heretofore delivered to the
Administrative Agent, the following financial statements and information:
(i) pro forma consolidated balance sheet of ChipPAC and its
Subsidiaries as at (a) March 31, 1999, together with the related pro forma
consolidated statements of income for the twelve month period then ended,
and (b) the three month period ended March 31, 1999, and the year ended
December 31, 1998, in each case reflecting pro forma adjustments that give
effect to the consummation of the Recapitalization Transactions; and
(ii) (a) unaudited consolidated balance sheet of ChipPAC and its
Subsidiaries as at March 31, 1999, together with the related consolidated
statements of income for the three month period then ended, and (b) audited
consolidated balance sheets for ChipPAC and its Subsidiaries as at December
31, 1996, December 31, 1997 and December 31, 1998, together with the
related audited consolidated statements of operations and cash flows for
each Fiscal Year then ended.
All such statements in clause (ii) hereof were prepared in conformity with GAAP
and fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments and the absence of
footnote disclosure required in accordance with GAAP. On the Closing Date and
after giving effect to the transactions contemplated by the Loan Documents and
the Transaction Documents to occur on such date, neither ChipPAC nor any of its
Subsidiaries has any Contingent Obligation, contingent liability or liability
for taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the financial statements referred to in the preceding clauses
of this subsection (except for the one-time charges related to HEI's union
change in control in Korea), or the notes thereto and which in any such case is
material in relation to the business, results of operations or financial
condition of ChipPAC and its Subsidiaries taken as a whole.
B. Projections. On and as of the Closing Date, the projections of ChipPAC
and its Subsidiaries for the period from the Closing Date through the seventh
anniversary of the Closing Date previously delivered to the Lenders (the
"Projections") are based on good faith estimates and assumptions made by the
-----------
management of ChipPAC, and on the Closing Date are reasonable, it being
recognized, however, that projections as to future events are not to be viewed
as facts and that the actual results during the period or periods covered by the
Projections may differ from the projected results and that the differences may
be material.
83
5.4 No Material Adverse Change.
--------------------------
84
Since December 31, 1998, there shall not have occurred or become known to
the Collateral Agent any event or events, adverse condition or change in or
affecting ChipPAC that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.5 Title to Properties; Liens; Real Property; Intellectual Property.
----------------------------------------------------------------
A. Title to Properties; Liens. After giving effect to the transactions
contemplated by the Loan Documents and the Transaction Documents to occur on the
Closing Date, ChipPAC and its Subsidiaries have good title to or a valid
leasehold interest in or license in all of their respective material properties
and assets reflected in the financial statements referred to in subsection 5.3
or in the most recent financial statements delivered pursuant to subsection 6.1,
in each case subject to Permitted Encumbrances and Liens permitted under
subsection 7.2, except for assets disposed of since the date of such financial
statements or as otherwise permitted under subsection 7.7 and except for such
defects that neither individually nor in the aggregate could reasonably be
expected to have a Material Adverse Effect. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5B annexed hereto
-------------
contains a true, accurate and complete list of all fee interests and leasehold
properties of any Loan Party. Except as specified in Schedule 5.5B annexed
-------------
hereto, each lease or sublease, as applicable, for each such Leasehold Property
is in full force and effect and neither ChipPAC nor Company has knowledge of any
material default by any party thereto that has occurred and is continuing
thereunder (except where the consequences of any such default would not
reasonably be expected to have a Material Adverse Effect), and each such
agreement constitutes the legally valid and binding obligation of each
applicable Loan Party, enforceable against such Loan Party in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
C. Intellectual Property. ChipPAC and its Subsidiaries own or have the
valid right to use all trademarks and service marks, tradenames, patents,
copyrights, trade secrets and technology used in or necessary to conduct
ChipPAC's and its Subsidiaries' business (collectively, the
"Intellectual Property"), free and clear of any and all Liens other than
---------------------
Permitted Encumbrances except where the failure to so own or have the right to
use could not reasonably be expected to have a Material Adverse Effect. All
currently existing registrations of Intellectual Property owned by ChipPAC or
any of its Subsidiaries are in full force and effect and, to the best of
ChipPAC's and its Subsidiaries' knowledge, are valid and enforceable. The
conduct of ChipPAC's and its Subsidiaries' business as currently conducted,
including, but not limited to, all processes or services, provided, offered or
sold by ChipPAC and its Subsidiaries, does not infringe upon, violate,
misappropriate or dilute any intellectual property of any third party which
infringement, violation, misappropriation or dilution could reasonably be
expected to have a Material Adverse Effect. To the best of ChipPAC's and its
Subsidiaries' knowledge, no third party is infringing upon the Intellectual
Property in any material respect. Except as set forth in Schedule 5.5C on the
-------------
Closing Date, there is no pending or, to the best of ChipPAC's and its
Subsidiaries' knowledge, threatened claim or litigation contesting ChipPAC's or
any Subsidiary of ChipPAC's right to own or use any material Intellectual
Property or the validity or enforceability thereof.
85
5.6 Litigation; Adverse Facts.
-------------------------
There is no action, suit, proceeding, arbitration or governmental
investigation (whether or not purportedly on behalf of ChipPAC or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of ChipPAC or
any of its Subsidiaries (after due inquiry), threatened against or affecting
ChipPAC or any of ChipPAC's Subsidiaries or any property of ChipPAC or any of
ChipPAC's Subsidiaries that, individually or in the aggregate, could reasonably
be expected to result in, a Material Adverse Effect. Neither ChipPAC nor any of
ChipPAC's Subsidiaries is (i) in violation of any applicable law that has had,
or could reasonably be expected to result in, a Material Adverse Effect or (ii)
subject to or in default with respect to any final judgment, writ, injunction,
decree, rule or regulation of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that has had, or could reasonably be
expected to result in, a Material Adverse Effect.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3, all material tax returns
and reports of ChipPAC and its Subsidiaries required to be filed by any of them
have been timely filed and all material taxes, assessments, fees and other
governmental charges upon ChipPAC and its Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. Neither ChipPAC nor any of its Subsidiaries
knows of any proposed material tax assessment against ChipPAC or any of its
Subsidiaries other than those which are being actively contested by ChipPAC or
such Subsidiary in good faith and by appropriate proceedings and for which
reserves or other appropriate provisions, if any, as may be required in
conformity with GAAP shall have been made or provided therefor.
5.8 Performance of Agreements.
-------------------------
Neither ChipPAC nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a material default, except, in each case, individually or
in the aggregate, where the consequences, direct or indirect, of such default or
defaults, if any, would not have a Material Adverse Effect.
5.9 Governmental Regulation.
-----------------------
Neither ChipPAC nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal, state or local statute or regulation which may limit its ability to
incur the Indebtedness to be incurred by it in connection with the
Recapitalization Transactions or which may otherwise render all or any portion
of the Obligations unenforceable.
86
5.10 Securities Activities.
---------------------
Neither Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11 Employee Benefit Plans.
----------------------
A. Company and each of its ERISA Affiliates are in material compliance
with all applicable provisions and requirements of ERISA with respect to each
Employee Benefit Plan, and have performed in all material respects all their
obligations under each Employee Benefit Plan, except to the extent that any non-
compliance with ERISA or any such failure to perform would not have a Material
Adverse Effect on Company or any of its ERISA Affiliates. ChipPAC and each of
its Subsidiaries are in material compliance with all requirements of law with
respect to each Foreign Pension Plan, and have performed in all material
respects all their obligations under each Foreign Pension Plan, except to the
extent that any noncompliance with any requirements of law applicable to such
Foreign Pension Plans would not have a Material Adverse Effect on ChipPAC or any
of its Subsidiaries.
B. No ERISA Event or Foreign Benefit Event has occurred which has
resulted or to the knowledge of ChipPAC or its Subsidiaries is reasonably
expected to occur which has or would reasonably be expected to have a Material
Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code and/or Section 601 of ERISA, neither ChipPAC nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of ChipPAC or any of its Subsidiaries that would be reasonably
expected to have a Material Adverse Effect.
5.12 Certain Fees.
------------
Except as set forth in Schedule 5.12, no broker's or finder's fee or
-------------
commission will be payable with respect to this Agreement or any of the
transactions contemplated hereby, and ChipPAC and Company hereby jointly and
severally indemnify the Lenders against, and agree that they will hold the
Lenders harmless from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
5.13 Environmental Matters.
---------------------
(i) ChipPAC, each of its Subsidiaries (including without
limitation, all operations and conditions at or in the Facilities presently
owned and operated by ChipPAC or its Subsidiaries), and, to the knowledge
of ChipPAC and its Subsidiaries, each of the tenants under any leases or
occupancy agreements governing any portion of any Facilities presently
owned or operated by ChipPAC or its Subsidiaries, are in compliance with
all applicable Environmental Laws (which compliance includes, but is not
limited to, the possession by ChipPAC, each of its Subsidiaries and each of
such tenants of all permits and other
87
Governmental Authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof), except where failure
to be in compliance would not reasonably be expected to have a Material
Adverse Effect.
(ii) There is no Environmental Claim pending or, to ChipPAC's and
its Subsidiaries' knowledge, threatened against ChipPAC or any of its
Subsidiaries or, to the best knowledge of ChipPAC and its Subsidiaries,
against any Person whose liability for any Environmental Claim ChipPAC or
any of its Subsidiaries has retained or assumed contractually or by
operation of law in each such case which, individually or in the aggregate,
would have a Material Adverse Effect.
(iii) There are no past or present (or to the best knowledge of
ChipPAC and its Subsidiaries, future) actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the Release
or presence of any Hazardous Material at, from, under or onto any Facility
or any other location, which could reasonably be expected to form the basis
of any Environmental Claim against ChipPAC or any of its Subsidiaries, or
to the best knowledge of ChipPAC and its Subsidiaries, against any Person
whose liability for any Environmental Claim ChipPAC or any of its
Subsidiaries has retained or assumed contractually or by operation of law
in each such case which would have a Material Adverse Effect.
(iv) Except as would not reasonably be expected to have a Material
Adverse Effect, none of the Facilities contain any: underground storage
tanks; asbestos; polychlorinated biphenyls ("PCBs"); underground injection
----
xxxxx; radioactive materials; or septic tanks or waste disposal pits in
which process wastewater or any Hazardous Materials have been discharged or
disposed.
5.14 Employee Matters.
----------------
There is no strike or work stoppage in existence or threatened involving
ChipPAC or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 Solvency.
--------
ChipPAC and its Subsidiaries, taken as a whole, are, and, upon the
incurrence of any Obligations by any Loan Party (including, without limitation,
the making of the Loans, the delivery of the Guaranties and the Liens created by
the Collateral Documents) on any date on which this representation is made, and
after giving effect to the Recapitalization Transactions and the incurrence of
Indebtedness in connection therewith, will be, Solvent.
5.16 Disclosure.
----------
The representations and warranties of ChipPAC and its Subsidiaries
contained in the Loan Documents and the information contained in the other
documents, certificates and written statements furnished to any of the Agents or
the Lenders (including, without limitation, the Information Memorandum) by or on
behalf of ChipPAC or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement or any other Loan Document, when
taken together, do not contain any untrue statement of
88
a material fact or omit to state a material fact (known to ChipPAC or the
applicable Subsidiary, in the case of any document not furnished by it)
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by ChipPAC to be
reasonable at the time made, it being recognized by the Agents and the Lenders
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results and that the differences may be material.
There is no fact known to ChipPAC or any of its Subsidiaries (other than matters
of a general economic nature) that has had, or could reasonably be expected to
result in, a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to the Lenders
for use in connection with the transactions contemplated hereby.
5.17 Year 2000 Matters.
-----------------
ChipPAC reasonably believes that, as relating to ChipPAC and its
Subsidiaries, taken as a whole, (x) the assessment and correction of any Year
2000 Problems, in each case, which, individually or in the aggregate, if not
corrected could reasonably be expected to have a Material Adverse Effect, will
be substantially completed on or prior to September 30, 1999, (y) a Material
Adverse Effect will not occur as a result of any Year 2000 Problem, and (z) the
aggregate costs and expenses incurred and reasonably expected to be incurred in
connection with the assessment and correction of Year 2000 Problems, including,
without limitation, a plan of correction ("Plan of Correction"), with respect to
------------------
any Year 2000 Problems, and the testing and monitoring of all Systems and the
correction of Year 2000 Problems, could not reasonably be expected to have a
Material Adverse Effect.
SECTION 6.
AFFIRMATIVE COVENANTS
Each of ChipPAC and Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until payment in full of
all of the Loans and other Obligations (other than indemnification obligations
not due and payable), and the cancellation or expiration of all Letters of
Credit, unless the Requisite Lenders shall otherwise give prior written consent,
ChipPAC and Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------------------------------------
ChipPAC will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. ChipPAC will deliver to the Administrative Agent (and the
Administrative Agent shall deliver to each Lender):
(i) Monthly Financials: as soon as available and in any event within
------------------
thirty (30) days after the end of each month, commencing September 30, 1999
(but not, in any case, for any month in which a Fiscal Quarter ends), the
89
consolidated balance sheet of ChipPAC and its Subsidiaries as at the end of
such month and the related consolidated statements of income, stockholders'
equity and cash flows of ChipPAC for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, all in
reasonable detail and certified by a principal financial officer of ChipPAC
that they fairly present, in all material respects, the financial condition
of ChipPAC and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments and the
absence of footnotes;
(ii) Quarterly Financials: as soon as available and in any event
--------------------
within forty-five (45) days after the end of each Fiscal Quarter commencing
with the Fiscal Quarter ending September 30, 1999, (a) the consolidated
balance sheets of ChipPAC and its Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated statements of income and consolidated
statement of cash flows of ChipPAC and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter, setting forth, in the case of
statements of income only, in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year (except to the
extent such comparative information is not available for the one-year
period prior to the Closing Date) and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year
delivered pursuant to subsection 6.1(xiii), all prepared in accordance with
the GAAP and in reasonable detail and certified by the chief executive
officer or chief financial officer of ChipPAC that they fairly present, in
all material respects, the financial condition of ChipPAC and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments and the absence of
footnotes; and (b) a narrative report;
(iii) Year-End Financials: as soon as available and in any event
-------------------
within ninety (90) days after the end of each Fiscal Year, (a) the
consolidated balance sheets of ChipPAC and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated statements of income and
consolidated statement of cash flows of ChipPAC and its Subsidiaries for
such Fiscal Year, setting forth, in the case of statements of income only,
in comparative form the corresponding figures for the previous Fiscal Year
(except to the extent such comparative information is not available for the
one-year period prior to the Closing Date) and the corresponding figures
from the consolidated plan and financial forecast delivered pursuant to
subsection 6.1(xiii) for the Fiscal Year covered by such financial
statements, all prepared in accordance with the GAAP and in reasonable
detail and certified by the chief executive officer or chief financial
officer of ChipPAC that they fairly present, in all material respects, the
financial condition of ChipPAC and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated; (b) a narrative report describing the operations of
ChipPAC and its Subsidiaries in the form prepared for presentation to
senior management for such Fiscal Year; provided, however, that ChipPAC may
-------- -------
deliver to Administrative Agent in lieu of such narrative report, copies of
the report filed by ChipPAC with the Securities and Exchange Commission on
Form 10-K in respect of such Fiscal Year; and (c) in the case of such
consolidated financial statements, a report thereon of independent
certified
90
public accountants of recognized national standing selected by ChipPAC and
reasonably satisfactory to the Administrative Agent, which report shall be
unqualified as to going concern and scope of audit, and shall state that
such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of ChipPAC and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the audit by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(iv) Officer's and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of ChipPAC and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
ChipPAC stating that the signer has reviewed the terms of this Agreement
and has made, or caused to be made under his or her supervision, a review
in reasonable detail of the transactions and condition of ChipPAC and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signer did not have
knowledge of the existence as at the date of such Officer's Certificate of
any condition or event that constitutes a Default or Event of Default, or,
if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action ChipPAC has taken, is taking
and proposes to take with respect thereto; (b) a Compliance Certificate
(which may be delivered after the applicable Fiscal Quarter or Fiscal Year
end but prior to the date of delivery of such financial statements for
purposes of determining the Applicable Leverage Ratio) demonstrating in
reasonable detail compliance during and at the end of the applicable
accounting periods with the restrictions contained in Section 7 (but only
to the extent compliance with such restrictions is required to be tested at
the end of the applicable accounting period); provided, that ChipPAC shall
--------
deliver to Administrative Agent a Compliance Certificate and an Officer's
Certificate upon and together with the delivery of a Pricing Certificate;
and (c) if any portion of the proceeds of the Intel Preferred Stock or the
HEI Unspent Amount was used during the preceding Fiscal Quarter, an
Officer's Certificate of ChipPAC to such effect, showing the amount so used
and the amount that may be used in subsequent periods;
(v) [Intentionally Omitted];
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of ChipPAC and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit has included a reading of the terms of this Agreement and the
other Loan Documents as they relate to the covenants set forth in
subsection 7.6 and accounting matters, and (b) stating whether, in
connection with their audit examination, any condition or event, insofar as
such condition or event relates to the covenants set forth in subsection
7.6 or accounting matters, that constitutes a Default or Event of Default
has come to their attention and, if such a condition or event has come to
their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any failure
--------
to obtain knowledge
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of any such Default or Event of Default that would not be disclosed in the
course of their audit examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to ChipPAC by national independent certified public accountants
in connection with each annual, interim or special audit of the financial
statements of ChipPAC and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by ChipPAC to its
security holders (but only in their capacity as security holders), (b) all
regular and periodic reports and all registration statements (other than on
Form S-8 or a similar form) and prospectuses, if any, filed by ChipPAC or
any of its Subsidiaries with any securities exchange or with the Securities
and Exchange Commission or any governmental or private regulatory
authority, and (c) all press releases and other statements made available
generally by ChipPAC or any of its Subsidiaries to the public concerning
material developments in the business of ChipPAC or any of its
Subsidiaries;
(ix) Events of Default, etc.: promptly upon any Responsible Officer
-----------------------
of ChipPAC or Company obtaining knowledge (a) of any condition or event
that constitutes a Default or an Event of Default, or becoming aware that
any Lender has given any notice (other than to the Administrative Agent) or
taken any other action with respect to a claimed Default or Event of
Default, (b) that any Person has given any notice to ChipPAC or any of its
Subsidiaries or taken any other action with respect to a claimed default or
event or condition of the type referred to in subsection 8.2, or (c) of the
occurrence of any event or change that has caused or evidences or could be
reasonably expected to cause, either in any case or in the aggregate, a
Material Adverse Effect, an Officer's Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person and the nature of such
claimed Default, Event of Default, default, event or condition, and what
action ChipPAC (or applicable Subsidiary) has taken, is taking and proposes
to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon any Responsible
-------------------------------
Officer of ChipPAC or Company obtaining knowledge of (x) the institution
of, or nonfrivolous threat of, any material action, suit, proceeding
(whether administrative, judicial or otherwise), Environmental Claim,
governmental investigation or arbitration against or affecting ChipPAC or
any of its Subsidiaries or any property of ChipPAC or any of its
Subsidiaries (collectively, "Proceedings") not previously disclosed in
-----------
writing by Company to the Administrative Agent or (y) any material
development in any Proceeding that, in any case:
(a) could reasonably be expected to have a Material Adverse
Effect; or
92
(b) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to ChipPAC to enable the Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events and Foreign Benefit Events: promptly upon
---------------------------------------
ChipPAC or Company becoming aware of the occurrence of any ERISA Event or
Foreign Benefit Event that would reasonably be expected to result in a
material liability of ChipPAC or any of its Subsidiaries, a written notice
specifying the nature thereof, what action ChipPAC or any of its
Subsidiaries has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor, the PBGC or any comparable Governmental
Authority with respect thereto;
(xii) ERISA and Foreign Benefit Notices: with reasonable
---------------------------------
promptness, copies of (a) all written notices received by ChipPAC or any of
its Subsidiaries from a Multiemployer Plan or Foreign Benefit Plan sponsor
concerning an ERISA Event or a Foreign Benefit Event which would reasonably
be expected to result in a material liability; and (b) such other documents
or governmental reports or filings relating to any Multiemployer Plan or
Foreign Benefit Plan as the Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
---------------
later than 45 days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for the next succeeding Fiscal Year, including
without limitation (a) a forecasted consolidated balance sheet and
forecasted consolidated statements of income and consolidated statement of
cash flows of ChipPAC and its Subsidiaries for such Fiscal Year, together
with a pro forma Compliance Certificate for such Fiscal Year and an
--- -----
explanation of the assumptions on which such forecasts are based, and (b)
such other information and projections as the Administrative Agent may
reasonably request:
(xiv) Insurance: as soon as practicable and in any event by the
---------
last day of each Fiscal Year, a report in form and substance reasonably
satisfactory to the Administrative Agent outlining all material changes
made to insurance coverage maintained as of the date of such report by
ChipPAC and its Subsidiaries; and
(xv) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to ChipPAC or any of ChipPAC's
Subsidiaries as from time to time may be reasonably requested by the
Administrative Agent or the Requisite Lenders.
6.2 Corporate Existence
-------------------
Except as otherwise permitted under subsection 7.7, ChipPAC will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to the
business of ChipPAC and its Subsidiaries (on a consolidated basis) or the Loan
Parties, taken as a whole; provided,
--------
93
however that neither ChipPAC nor any of its Subsidiaries shall be required to
-------
preserve any such right or franchise if the Board of Directors of ChipPAC or
such Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of business of such entity.
6.3 Payment of Taxes and Claims; Tax Consolidation.
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any material penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable which, if unpaid, might
become a Lien (other than a Permitted Encumbrance) upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such tax, charge or claim need be paid if
--------
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. ChipPAC will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than ChipPAC and Subsidiaries of ChipPAC).
6.4 Maintenance of Properties; Insurance.
------------------------------------
ChipPAC will, and will cause each of its Subsidiaries to, maintain or cause
to be maintained in good repair, working order and condition, ordinary wear and
tear and damage by casualty or condemnation excepted, all material properties
used or useful in the business of ChipPAC and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof. ChipPAC will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and businesses of its Subsidiaries
against loss or damage of the kinds and with respect to liability customarily
carried or maintained under similar circumstances by corporations of established
reputation engaged in similar businesses. Each such policy of casualty insurance
covering damage to or loss of property shall name the Collateral Agent for the
benefit of the Lenders as additional insured and as the loss payee thereunder
for all losses, subject to application of proceeds as required by subsection
2.4B(iii)(d), each such policy of liability insurance coverage shall name the
Collateral Agent for the benefit of the Lenders as additional insured, and all
such policies of insurance shall provide for at least thirty (30) days' prior
written notice to the Collateral Agent of any modification or cancellation of
such policy.
6.5 Inspection; Lender Meeting.
--------------------------
ChipPAC shall, and shall cause each of its Subsidiaries to, permit the
Administrative Agent and any authorized representatives designated by any Lender
to visit and inspect any of the properties of ChipPAC or any of ChipPAC's
Subsidiaries, including its and their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants, provided ChipPAC may be present at
94
these discussions upon reasonable advance notice and at such reasonable times
during normal business hours and as often as may be reasonably requested;
provided, further, that each Lender shall coordinate with the Administrative
-------- -------
Agent the frequency and timing of any such visits, inspections and discussions
so as to reasonably minimize the burden imposed on ChipPAC and its Subsidiaries;
provided still further that, unless an Event of Default has occurred, no single
-------- ----- -------
Lender shall be entitled to more than one inspection during any twelve month
period. Without in any way limiting the foregoing, ChipPAC will, upon the
reasonable request of the Administrative Agent, participate in a meeting of the
Administrative Agent and the Lenders once during each Fiscal Year to be held at
ChipPAC's corporate offices (or such other location as may be agreed to by
ChipPAC and the Administrative Agent) at such time as may be agreed to by
ChipPAC and the Administrative Agent.
6.6 Compliance with Laws, etc.
--------------------------
ChipPAC shall, and shall cause each of its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which, individually or in the
aggregate with other non-compliances, could reasonably be expected to cause a
Material Adverse Effect.
6.7 Environmental Disclosure and Inspection.
---------------------------------------
A. ChipPAC agrees that the Administrative Agent may retain, at ChipPAC's
expense, an independent professional consultant reasonably acceptable to ChipPAC
to review any report relating to Hazardous Materials prepared by or for ChipPAC
and to conduct its own investigation (reasonable in scope under the
circumstances) of any Facility currently owned, leased, operated or used by
ChipPAC or any of its Subsidiaries, if (x) a Default or an Event of Default
related to environmental matters shall have occurred and be continuing, or (y)
the Administrative Agent reasonably believes that a violation of an
Environmental Law on or around such Facility has occurred or is likely to occur,
which could, in either such case, reasonably be expected to result in a Material
Adverse Effect. In the event that the conditions specified in (x) or (y) above
exist, ChipPAC shall use its commercially reasonable efforts to obtain for the
Administrative Agent and its agents, employees, consultants and contractors the
right, upon reasonable notice to ChipPAC, to enter into or on to the Facilities
currently owned, leased, operated or used by ChipPAC or any of its Subsidiaries
to perform such tests on such property as are reasonably necessary to conduct a
review and/or investigation of the matters giving rise to the request. Any such
investigation of any Facility shall be conducted, unless otherwise agreed to by
ChipPAC and the Administrative Agent, during normal business hours, and shall be
conducted so as not to interfere with the ongoing operations at any such
Facility or to cause any damage or loss to any property at such Facility.
ChipPAC and the Administrative Agent hereby acknowledge and agree that any
report of any investigation conducted at the request of the Administrative Agent
pursuant to this subsection 6.7A will be obtained and shall be used by the
Administrative Agent and the Lenders for the purposes of the Lenders' internal
credit decisions, to monitor and police the Loans and to protect the Lenders'
security interests, if any, created by the Loan Documents. The Administrative
Agent agrees, upon request by ChipPAC, to deliver a copy of any such report to
Company with the understanding that ChipPAC acknowledges and agrees that (i)
consistent with the terms of subsection 10.3 hereof, it will indemnify and hold
harmless the Administrative Agent and each Lender from any costs, losses or
liabilities relating to ChipPAC's use of or reliance on such report, (ii)
neither Agent nor
95
any Lender makes any representation or warranty with respect to such report, and
(iii) by delivering such report to ChipPAC, neither the Administrative Agent nor
any Lender is requiring or recommending the implementation of any suggestions or
recommendations contained in such report.
B. ChipPAC shall promptly notify the Administrative Agent of (i) any
proposed acquisition of stock, assets, or property by ChipPAC or any of its
Subsidiaries that could reasonably be expected to expose ChipPAC or any of its
Subsidiaries to, or result in, Environmental Liability that could have a
Material Adverse Effect and (ii) any proposed action to be taken by ChipPAC or
any of its Subsidiaries to modify current operations in a manner that could
reasonably be expected to subject ChipPAC or any of its Subsidiaries to material
additional obligations under Environmental Laws where such obligations would
reasonably be expected to have a Material Adverse Effect.
C. ChipPAC shall, at its own expense, provide copies of such documents or
information as the Administrative Agent may reasonably request in relation to
any matters disclosed pursuant to this subsection 6.7.
6.8 ChipPAC's Remedial Action Regarding Hazardous Materials.
-------------------------------------------------------
ChipPAC shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, handling, storage, use, disposal, transportation or Release or
threatened Release of any Hazardous Materials on, under or affecting any
Facility in order to comply with all applicable Environmental Laws and
Governmental Authorizations unless the failure to so comply could not reasonably
be expected to have a Material Adverse Effect. In the event ChipPAC or any of
its Subsidiaries undertakes any Cleanup action with respect to the presence,
Release or threatened Release of any Hazardous Materials on or affecting any
Facility, Company or such Subsidiary shall conduct and complete such Cleanup
action in compliance with all applicable Environmental Laws where failure to do
so would reasonably be expected to have a Material Adverse Effect.
6.9 Execution of Guaranty and Collateral Documents by Future Subsidiaries.
---------------------------------------------------------------------
In the event that any Person becomes a Subsidiary of ChipPAC (including any
Subsidiary created in accordance with subsection 7.7(vi)), ChipPAC will promptly
notify the Administrative Agent of that fact and cause such Subsidiary to
execute and deliver to the Administrative Agent and the Collateral Agent a
counterpart of the Guaranty and such of the Pledge Agreements and the Security
Agreements (except to the extent that any such guarantee, pledge or security
arrangements are not permissible under the applicable law of such Subsidiary's
jurisdiction of organization or incorporation) as the Collateral Agent may
request, and to take all such further action and execute all such further
documents and instruments as may be required to grant and perfect in favor of
the Collateral Agent, for the benefit of the Lenders, a First Priority Lien in
all (subject to exceptions for assets in which a security interest cannot be
granted) of the real, mixed and personal property assets of such Subsidiary. In
addition, ChipPAC shall pledge (if it is the direct owner of Capital Stock of
such Subsidiary) or shall cause each of its applicable Subsidiaries to pledge
(if any of such other Subsidiaries is the direct owner of Capital Stock of such
Subsidiary, each such owner, whether Company or any of its other Subsidiaries,
the "Pledging Parent") all of the Capital Stock of such Subsidiary to the
---------------
Collateral Agent pursuant to the applicable Collateral Documents and to take all
such further action and
96
execute all such further documents and instruments as may be reasonably required
to grant and perfect in favor of the Collateral Agent, for the benefit of the
Lenders, a First Priority security interest in such Capital Stock. ChipPAC shall
deliver to the Administrative Agent, together with such Loan Documents, in the
case of each such Subsidiary that is required to be a party to any Loan
Document: (i) (a) certified copies of such Subsidiary's Organizational
Certificate together, if applicable, with a good standing certificate from the
jurisdiction of its incorporation, formation or organization, as applicable,
each to be dated a recent date prior to their delivery to the Administrative
Agent to the extent such concept is relevant in such jurisdiction, (b) a copy of
such Subsidiary's Organizational Documents, certified by its secretary or an
assistant corporate secretary (or Person holding an equivalent title or having
equivalent duties and responsibilities) as of a recent date prior to their
delivery to the Administrative Agent, (c) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (x) the incumbency
and signatures of the officers of such Subsidiary executing such Guaranty, the
Collateral Documents and the other Loan Documents to which such Subsidiary is a
party and (y) the fact that the attached Organizational Authorizations of such
Subsidiary authorizing the execution, delivery and performance of such Guaranty,
such Collateral Documents and such other Loan Documents are in full force and
effect and have not been modified or rescinded, and (ii) to the extent
reasonably requested by the Administrative Agent, an opinion of counsel to such
Subsidiary, that is reasonably satisfactory to the Administrative Agent and its
counsel, as to (a) the due organization and good standing of such Subsidiary to
the extent such concept in relevant is such jurisdiction, (b) the due
authorization, execution and delivery by such Subsidiary of such Guaranty, the
Collateral Documents and any other Loan Documents to which it is a party and (c)
the enforceability of such Guaranty and such Collateral Documents against such
Subsidiary, (d) the validity and perfection of the security interests granted by
such Subsidiary (and by the Pledging Parent of such Subsidiary in respect of the
Capital Stock of such Subsidiary) in favor of the Collateral Agent pursuant to
the Collateral Documents, and (e) such other matters as any Agent may reasonably
request, all of the foregoing to be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel.
6.10 Interest Rate Protection.
------------------------
Within 90 days following the Closing Date, ChipPAC (or its Subsidiaries, as
applicable) shall maintain in effect one or more Interest Rate Agreements in
form and substance reasonably satisfactory to the Administrative Agent and the
Borrower to the extent necessary so that, for a period of at least two years
following the Closing Date, interest on the portion of the aggregate outstanding
principal amount of funded Indebtedness of ChipPAC and its Subsidiaries equal to
at least 50% of the aggregate outstanding principal amount of such Indebtedness
is covered by such Interest Rate Agreements.
6.11 Further Assurances.
------------------
At any time or from time to time upon the reasonable request of the
Administrative Agent or the Collateral Agent, ChipPAC will, at its expense,
promptly execute, acknowledge and deliver such further documents and do such
other acts and things as the Administrative Agent or the Collateral Agent may
reasonably request in order to effect fully the purposes of the Loan Documents
and to provide for payment of the Obligations in accordance with the terms of
this Agreement and the other Loan
97
Documents. In furtherance and not in limitation of the foregoing, ChipPAC shall
take, and cause each of its Subsidiaries to take, such actions as the
Administrative Agent or the Collateral Agent may reasonably request from time to
time (including the execution and delivery (where permitted by applicable law)
of guaranties, security agreements and pledge agreements, mortgages and deeds of
trust with respect to real property with a fair market value of at least
$5,000,000, landlord's consents and estoppels for leased properties with an
annual rent of at least $500,000, or stock powers, financing statements and
other documents, the filing or recording of any of the foregoing, title
insurance with respect to any of the foregoing that relates to an interest in
real property, and the delivery of stock certificates and other collateral with
respect to which perfection is obtained by possession) to ensure that the
Obligations are guarantied by the Guarantors and are secured, directly or
indirectly, by substantially all of the assets of ChipPAC and its Subsidiaries
and all of the outstanding Capital Stock of the Subsidiaries of ChipPAC. In
addition to the foregoing, ChipPAC will use commercially reasonable efforts to
obtain, as promptly as practicable after the Closing Date, all necessary
approvals for the Chinese Agreements and shall cause the Liens to be created
thereunder to be granted and to become effective. Promptly upon obtaining such
approvals and causing all such Liens and security interests to be effective,
ChipPAC shall provide written notice thereof to the Administrative Agent,
together with certified copies of such approvals (if such approvals are issued
in writing) and the Chinese Agreements (the date of such notice being referred
to herein as the "Chinese Security Effective Date").
-------------------------------
6.12 Year 2000 Matters.
-----------------
ChipPAC shall (i) promptly advise the Administrative Agent of any material
(A) disruption or delay in the implementation of the Plan of Correction, as the
same may be updated from time to time; and (ii) periodically report to the
Administrative Agent, in such form as the Administrative Agent may reasonably
request but in no event no more frequently than once per calendar quarter, on
(a) the progress of ChipPAC and its Subsidiaries in implementing the Plan of
Correction, (b) the budget for, and actual financial performance with respect
to, implementation of the Plan of Correction and (c) the assessment of ChipPAC,
any senior manager of ChipPAC or any Subsidiary of ChipPAC, or any consultant of
the adequacy of the Plan of Correction or the related implementation budget.
SECTION 7.
NEGATIVE COVENANTS
Each of ChipPAC and Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until payment in full of
all of the Loans and other Obligations (other than indemnification obligations
not due and payable) and the cancellation or expiration of all Letters of
Credit, unless the Requisite Lenders shall otherwise give prior written consent,
each of ChipPAC and Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness.
------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness
except:
98
(i) Each of the Loan Parties may become and remain liable with
respect to its respective Obligations;
(ii) Company may become and remain liable with respect to
Indebtedness evidenced by, and with respect to guaranties of, the
Subordinated Debt;
(iii) ChipPAC and the Operating Subsidiaries may remain liable with
respect to Indebtedness described in Schedule 7.1 annexed hereto, and any
------------
refinancing, modification replacement or renewal thereof that does not
increase the principal amount thereof;
(iv) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection 7.4
and, upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(v) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to (i) Indebtedness under Capital Leases, (ii)
Indebtedness to customers and suppliers that enables the Operating
Subsidiaries to acquire assets from, or to be used to provide services to,
such customers and suppliers, and (iii) other Indebtedness secured by Liens
permitted under subsection 7.2A(iii); provided, that the aggregate amount
--------
of all Indebtedness outstanding under this clause (v) at any time shall not
exceed $20,000,000;
(vi) ChipPAC may become and remain liable with respect to
Indebtedness owed to (on an intercompany basis) any of its Subsidiaries,
and any Subsidiary may become and remain liable with respect to
Indebtedness to (on an intercompany basis) ChipPAC or any other Subsidiary;
provided that, in each case, (a) all intercompany Indebtedness shall be
--------
evidenced by promissory notes or loan agreements which shall have been
pledged to the Collateral Agent pursuant to the Collateral Documents, (b)
all intercompany Indebtedness owed by ChipPAC or Company to any of its
respective Subsidiaries shall be unsecured (except for the Recapitalization
Loans) and subordinated in right of payment to the payment in full of the
Obligations pursuant to the terms of the applicable promissory notes or an
intercompany subordination agreement that in any such case are reasonably
satisfactory to the Administrative Agent, and (c) any payment by any
Subsidiary of ChipPAC under any Guaranty shall result in a pro tanto
--- -----
reduction of the amount of any intercompany Indebtedness owed by such
Subsidiary to ChipPAC or to any of its Subsidiaries for whose benefit such
payment is made;
(vii) ChipPAC and its Subsidiaries may become and remain liable with
respect to Permitted Seller Paper with respect to any Permitted
Acquisition; provided that any cash payments individually or in the
--------
aggregate of principal, interest or other amounts with respect thereto
required to be made prior to the payment in full of the Obligations shall
not exceed $20,000,000;
(viii) The Operating Subsidiaries may become and remain liable with
respect to Indebtedness under the Local Lines of Credit;
99
(ix) Any Subsidiary of to a ChipPAC acquired pursuant to a Permitted
Acquisition may become and remain liable with respect to Indebtedness
existing at the time of consummation of the Permitted Acquisition; provided
--------
that (a) such Indebtedness was not incurred in connection with or in
anticipation of such Permitted Acquisition, (b) such Indebtedness does not
constitute debt for borrowed money (other than debt for borrowed money
incurred in connection with industrial revenue or industrial development
bond or similar financings), it being understood and agreed that Capital
Lease obligations shall not constitute debt for borrowed money for purposes
of this clause (ix), and (c) at the time of such Permitted Acquisition such
Indebtedness does not exceed 50% of the total purchase price paid
(including, for purposes of determining the total purchase price paid,
Indebtedness assumed in connection with such Permitted Acquisition) with
respect to the assets acquired in the related Permitted Acquisition;
(x) ChipPAC and its Subsidiaries may become and remain liable with
respect to Indebtedness consisting of the financing in the ordinary course
of business of insurance premiums with respect to coverage required to be
maintained under subsection 6.4;
(xi) Subsidiaries of ChipPAC may become and remain liable with
respect to Indebtedness consisting of a converted equity Investment by
ChipPAC or another Subsidiary of ChipPAC in such Subsidiaries; provided
--------
that the underlying equity Investment was permitted hereunder at the time
of such conversion;
(xii) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to other Indebtedness in an aggregate principal amount
not to exceed at any time outstanding $20,000,000; and
(xiii) ChipPAC and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of performance bonds, completion
guarantees and surety and appeal bonds entered into by ChipPAC and its
Subsidiaries in the ordinary course of business.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. ChipPAC shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of ChipPAC or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement, or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, domestic or foreign, except:
(i) Permitted Encumbrances;
(ii) Liens described in Schedule 7.2A annexed hereto;
-------------
100
(iii) Purchase money security interests (including mortgages,
conditional sales, Capital Leases and any other title retention, deferred
purchase devices or consignments) in real or tangible personal property of
ChipPAC or any Operating Subsidiary acquired after the Closing Date and
existing or created at the time of acquisition thereof or within one
hundred eighty (180) days thereafter, and the renewal, extension and
refunding of any such security interest in an amount not exceeding the
amount thereof remaining unpaid immediately prior to such renewal,
extension or refunding; provided, that the Indebtedness secured by such
--------
Lien is permitted by subsection 7.1(v); provided, further, that such Liens
-------- -------
do not at any time (including, without limitation, in connection with any
renewal, extension and refunding) cover or encumber any assets or property
other than the assets or property financed by such Indebtedness;
(iv) Liens on the working capital assets and equipment of ChipPAC
Korea, ChipPAC Shanghai I or ChipPAC Shanghai II that secure only the
Indebtedness permitted pursuant to Section 7.1(viii);
(v) Liens on assets of the Operating Subsidiaries not otherwise
permitted under this subsection 7.2A, to the extent attaching to properties
and assets with an aggregate fair market value not in excess of, and
securing liabilities not in excess of, an aggregate amount not to exceed
$7,500,000 at any time outstanding;
(vi) Liens securing any Indebtedness permitted pursuant to Section
7.1(ix); provided that such Liens only encumber the assets acquired in the
--------
related Permitted Acquisition; and provided further that such Liens were
-------- -------
not granted in contemplation of the related Permitted Acquisition; and
(vii) Liens in favor of the Collateral Agent granted pursuant to the
Collateral Documents or granted in favor of any Agent or Lender pursuant to
subsection 10.4 hereof.
B. No Further Negative Pledges. Except with respect to specific property
encumbered by a Lien permitted under this Agreement or to secure payment of
particular Indebtedness or to be sold pursuant to an executed agreement with
respect to an Asset Sale or the sale of all or substantially all of the stock
(or assets) of a Subsidiary permitted under this Agreement, neither ChipPAC nor
any of its Subsidiaries shall enter into any agreement (other than any documents
of a type described in subdivisions (c) through (f) of subsection 7.2C, the Loan
Documents and the Subordinated Debt Documents) prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
C. No Restrictions on Subsidiary Distributions to ChipPAC or Other
Subsidiaries. Except as otherwise provided herein, ChipPAC will not, and will
not permit any of its Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance, limitation or restriction
of any kind on the ability of any such Subsidiary to (i) pay dividends or make
any other distributions on any of such Subsidiary's Capital Stock owned by
ChipPAC or any other Subsidiary of ChipPAC, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to ChipPAC or any other Subsidiary of
ChipPAC, (iii) make loans or advances to ChipPAC or any other Subsidiary of
ChipPAC, or (iv) transfer any of its property or assets to ChipPAC or any other
101
Subsidiary of ChipPAC, except for such encumbrances or restrictions existing
under or by reason of (a) applicable law, (b) this Agreement and the other Loan
Documents, (c) customary provisions restricting subletting or assignment of any
lease governing a leasehold interest of ChipPAC or any of its Subsidiaries, (d)
customary provisions restricting assignment of any licensing agreement entered
into by ChipPAC or any of its Subsidiaries in the ordinary course of business,
(e) customary provisions restricting the transfer of assets subject to Liens
permitted under subsection 7.2A(iii) or (iv), (f) joint ventures entered into
pursuant to subsection 7.3, and (g) the Subordinated Debt Documents.
7.3 Investments; Joint Ventures.
---------------------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment except:
(i) ChipPAC and its Subsidiaries may (x) continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
ChipPAC, and (y) make and own additional Investments in any Loan Party;
(ii) ChipPAC and its Subsidiaries may make and own intercompany
loans to the extent permitted by subsection 7.1(vi);
(iii) ChipPAC and its Subsidiaries may make and own Investments in
Cash Equivalents;
(iv) ChipPAC and its Subsidiaries may make and own Consolidated
Capital Expenditures and Micro BGA Capital Expenditures permitted by
subsection 7.6D;
(v) ChipPAC and its Subsidiaries may make and own Investments
consisting of notes received in connection with any Asset Sale permitted
under subsection 7.7(iv);
(vi) ChipPAC and its Subsidiaries may make loans to officers,
employees, directors, executives or consultants of ChipPAC and its
Subsidiaries (a) in the ordinary course of business for travel, moving,
entertainment or similar expenses, or (b) otherwise in an aggregate amount
not to exceed $2,000,000 outstanding at any time;
(vii) ChipPAC and its Subsidiaries may make and own Permitted
Acquisitions;
(viii) ChipPAC and its Subsidiaries may continue to own the
Investments described in Schedule 7.3 annexed hereto;
------------
(ix) ChipPAC and its Subsidiaries may make loans and advances to
employees, officers, executives or consultants to Company and its
Subsidiaries in the ordinary course of business of ChipPAC and its
Subsidiaries as presently conducted for the purpose of purchasing capital
stock of ChipPAC so long as the proceeds of such loans or advances are used
in their entirety to purchase such capital stock;
102
(x) ChipPAC and its Subsidiaries may make and own Investments in
Subsidiaries pursuant to subsection 7.7(vi) or Permitted Acquisitions under
subsection 7.7(v) and other Investments owned by entities acquired pursuant
to such Permitted Acquisitions to the extent owned as at the time of
consummation of such Permitted Acquisitions;
(xi) ChipPAC and its Subsidiaries may make and own Investments in
wholly owned Subsidiaries of ChipPAC consisting of intercompany
Indebtedness (other than the Recapitalization Notes) of such Subsidiaries
converted to equity Investments; provided that (a) the underlying
--------
intercompany Indebtedness was permitted hereunder at the time of such
conversion and (b) up to $7,000,000 aggregate principal amount of the
ChipPAC Shanghai I Loan may be converted to equity at the time and to the
extent required by applicable law so long as (x) Company gives prior notice
thereof to the Administrative Agent, (y) at the time of such conversion no
Default or Event of Default shall have occurred and be continuing and (z)
Company complies with the applicable provisions of Section 6.11 with
respect to the resulting equity interest;
(xii) ChipPAC and its Subsidiaries may make and own Investments not
otherwise permitted under this subsection 7.3 in an aggregate amount not in
excess of $20,000,000, plus the Excess Proceeds Amount;
----
(xiii) ChipPAC and its Subsidiaries may consummate the
Recapitalization Transactions; and
(xiv) ChipPAC and its Subsidiaries may enter into Interest Rate
Agreements entered into pursuant to this Agreement or otherwise in the
ordinary course of its business, and not for speculative purposes.
7.4 Contingent Obligations.
----------------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) ChipPAC and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of Letters of Credit; the
Subsidiary Guarantors may become and remain liable with respect to
Contingent Obligations arising under the Guaranties; and ChipPAC Korea,
ChipPAC Shanghai I and ChipPAC Shanghai II may become and remain liable
with respect to Asian Letters of Credit;
(ii) ChipPAC and the Subsidiary Guarantors may become and remain
liable with respect to Contingent Obligations arising under their
guaranties of the Subordinated Debt as are required under the Subordinated
Debt Documents;
(iii) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations of any such
Person incurred in connection with Asset Sales or other sales of assets;
103
(iv) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees in the
ordinary course of business of the obligations of suppliers, landlords,
customers, franchisees, workers' compensation providers and licensees of
ChipPAC and its Subsidiaries;
(v) ChipPAC and the Operating Subsidiaries, as applicable, may
remain liable with respect to Contingent Obligations described in
Schedule 7.4 annexed hereto and any modifications, extensions or renewal of
------------
such Contingent Obligations;
(vi) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided, that the
--------
maximum aggregate liability, contingent or otherwise, of ChipPAC and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $7,500,000;
(vii) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Hedge Agreements entered into pursuant to this
Agreement or otherwise in the ordinary course of business, and not for
speculative purposes;
(viii) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to guaranties of Indebtedness assumed in connection
with a Permitted Acquisition pursuant to subsection 7.1(ix); provided,
--------
that, such guaranties were existing at the time of consummation of the
Permitted Acquisition and not incurred in connection with, or in an
anticipation of, such Permitted Acquisition;
(ix) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Contingent Obligations arising out of the indemnity
obligations under the Recapitalization Agreement; and
(x) ChipPAC and the Operating Subsidiaries may become and remain
liable with respect to Contingent Obligations arising out of any guaranties
of Indebtedness of any Subsidiary permitted under this Agreement; provided
--------
that if such indebtedness is subordinated to the Obligations, any such
guaranties shall be subordinated to the same extent.
7.5 Restricted Payments.
-------------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided that ChipPAC and its Subsidiaries may make the
--------
following the Restricted Payments:
(i) any Subsidiary of ChipPAC or its Subsidiaries may pay dividends
to ChipPAC or a Subsidiary of ChipPAC;
(ii) Company may make regularly scheduled payments (but, except as
contemplated by subsection 2.4B(iii)(c) with respect to the proceeds of a
Qualified Public Equity Offering, not prepayments) of principal and
interest in
104
respect of the Subordinated Debt in accordance with the terms of, and
subject to the subordination provision contained in, the Subordinated Debt
Documents;
(iii) ChipPAC or any Subsidiary may make regularly scheduled
principal and interest payments in respect of Permitted Seller Paper to the
extent permitted under subsection 7.1(vii) in accordance with the terms of,
and subject to the subordination provisions contained in, such Permitted
Seller Paper;
(iv) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, then ChipPAC and its
Subsidiaries, collectively, may make cash Restricted Payments in an
aggregate amount not to exceed $2,500,000 in any Fiscal Year, plus an
----
amount equal to any cash Restricted Payments permitted to be made during
one or more preceding Fiscal Years under this clause (iv) but not made
during such preceding Fiscal Year(s) in an aggregate amount not in excess
of $10,000,000;
(v) ChipPAC and its Subsidiaries, collectively, may make cash
Restricted Payments in any Fiscal Year to the extent necessary to make
repurchases of Securities (and options or warrants to purchase such
Securities) of ChipPAC from employees, officers or directors upon
termination (including by reason of death, disability or retirement) of
such employees, officers or directors in an aggregate amount not to exceed
$5,000,000 plus cash proceeds of any "key man" life insurance policies used
to make such repurchases and the proceeds from any resales of such stock;
(vi) ChipPAC may make Restricted Payments in connection with
repurchases of equity Securities, including Capital Stock, deemed to occur
upon the exercise of stock options if such Securities represent a portion
of the exercise price thereof;
(vii) ChipPAC may make Restricted Payments (other than payments in
cash in respect of the HEI Preferred Stock and the Intel Preferred Stock,
in each case except to the extent expressly permitted hereby) contemplated
by the Recapitalization Transactions;
(viii) So long as no Default or Event of Default has occurred and is
continuing, ChipPAC may make Restricted Payments in respect of the Earnout;
(ix) So long as no Default or Event of Default has occurred and is
continuing, ChipPAC may make Restricted Payments in connection with
payments of cash dividends when due on and after five and one-half years
from the closing of the Recapitalization Transactions on the HEI Preferred
Stock pursuant to the terms thereof;
(x) So long as (a) no Default or Event of Default has occurred and
is continuing and (b) the Leverage Ratio is less than or equal to
2.00:1.00, ChipPAC may make Restricted Payments in connection with (i) any
mandatory or voluntary redemption of the Intel Preferred Stock and (ii) any
required payment of accrued and unpaid dividends on the Intel Preferred
Stock at any time such stock is converted into Capital Stock of ChipPAC,
both pursuant to the terms of the Intel Preferred Stock; and
105
(xi) ChipPAC may redeem the HEI Preferred Stock and or the Intel
Preferred Stock to the extent contemplated by subsection 2.4B(iii)(c) with
the proceeds of a Qualified Public Equity Offering.
7.6 Financial Covenants.
-------------------
A. Minimum Interest Coverage Ratio. The ratio (the
"Interest Coverage Ratio") of (i) Consolidated Adjusted EBITDA to (ii)
-----------------------
Consolidated Interest Expense payable in cash (excluding, to the extent
Consolidated Interest Expense, (i) fees paid to the Administrative Agent on and
after the Closing Date; (ii) cash payments made under consulting agreements; and
(iii) cash payments made under Hedge Agreements or Interest Rate Agreements) for
(w) the five month period ending December 31, 1999, (x) the eight month period
ending March 31, 2000, (y) the eleven month period ending June 30, 2000 or (z)
any four-Fiscal Quarter period thereafter ending during or at the end of any of
the periods set forth below (each applicable period being a
"Calculation Period") shall not be less than the correlative ratio indicated
------------------
below:
=====================================================================
Period During Which Minimum Interest
Calculation Period Ends Coverage Ratio
=====================================================================
December 31, 1999 through September 30, 2000 2.00:1.00
---------------------------------------------------------------------
December 31, 2000 through September 30, 2001 2.25:1.00
---------------------------------------------------------------------
Thereafter 2.50:1.00
=====================================================================
B. Maximum Leverage Ratio. The ratio (the "Leverage Ratio") of (i)
--------------
Consolidated Total Debt as of the last day (any such day being a
"Calculation Date") of any Fiscal Quarter ending during any of the periods set
----------------
forth below, to (ii) Consolidated Adjusted EBITDA for (w) the five month period
ending December 31, 1999, (x) the eight month period ending March 31, 2000, (y)
the eleven month period ending June 30, 2000 or (z) any four-Fiscal Quarter
period thereafter ending on such Calculation Date shall not exceed the
correlative ratio indicated below:
=====================================================================
Period During Which Maximum
Calculation Date Occurs Leverage Ratio
---------------------------------------------------------------------
December 31, 1999 through June 30, 2000 4.75:1.0
---------------------------------------------------------------------
September 30, 2000 4.50:1.0
---------------------------------------------------------------------
December 31, 2000 4.25:1.0
---------------------------------------------------------------------
March 31, 2001 through September 30, 2001 4.00:1.0
---------------------------------------------------------------------
December 31, 2001 through September 30, 2002 3.50:1.0
---------------------------------------------------------------------
December 31, 2002 through September 30, 2003 3.00:1.0
---------------------------------------------------------------------
Thereafter 2.50:1.0
=====================================================================
106
C. Consolidated Capital Expenditures.
(i) Except as provided below, Company shall not, and shall not permit
its Subsidiaries to, make or incur Consolidated Capital Expenditures in any
Fiscal Year (or specified portion thereof) in an aggregate amount in excess
of the corresponding amount (the
"Maximum Consolidated Capital Expenditures Amount") set forth below
------------------------------------------------
opposite such Fiscal Year (or such portion thereof) as indicated below;
provided, that the Maximum Consolidated Capital Expenditures Amount for any
--------
Fiscal Year shall be increased by an amount equal to the excess, if any, of
(x) the Maximum Consolidated Capital Expenditures Amount (excluding, and
without giving effect to, any increases thereto from any prior carryover of
amounts pursuant to this clause for the previous Fiscal Year (or specified
portion thereof) but including any increases thereto as a result of the
application of the further proviso to this clause (i)) over (y) the actual
amount of Consolidated Capital Expenditures for such previous Fiscal Year
(or specified portion thereof) (the amount of such increase described in
this proviso being the "Carryforward" from such preceding Fiscal Year):
------------
==============================================================
Fiscal Year Maximum Consolidated
(or Portion Thereof) Capital Expenditures Amount
==============================================================
Fiscal Year 1999 $20,000,000
--------------------------------------------------------------
Fiscal Year 2000 $30,000,000
--------------------------------------------------------------
Fiscal Year 2001 $50,000,000
--------------------------------------------------------------
Fiscal Year 2002 $55,000,000
--------------------------------------------------------------
Fiscal Year 2003 $60,000,000
--------------------------------------------------------------
Fiscal Year 2004 and thereafter $60,000,000
==============================================================
; provided further that, the Maximum Consolidated Capital Expenditure
-------- -------
Amount for each period during or after a Permitted Acquisition occurs shall
be increased by an amount equal to the Acquired Capital Expenditures
Percentage of such Maximum Capital Expenditure Amount for such period.
(ii) Except as provided below, Company shall not, and shall not
permit its Subsidiaries to, make or incur Micro BGA Capital Expenditures in
any Fiscal Year (or specified portion thereof) in an aggregate amount (the
"Maximum Micro BGA Capital Expenditures Amount") in excess of the
---------------------------------------------
corresponding amount set forth below opposite such Fiscal Year (or such
portion thereof) as indicated below; provided that the Maximum Micro BGA
--------
Capital Expenditures Amount for any Fiscal Year ending on or prior to
December 31, 2001, shall be increased by an amount equal to the excess, if
any, of (x) the Maximum Micro BGA Capital Expenditures Amount (excluding,
and without giving effect to, any increases thereto from any prior carry
over of amounts pursuant to this clause for the previous Fiscal Year (or
specified portion thereof) over (y) the actual amount of Micro BGA Capital
Expenditures for such previous Fiscal Year (or specified portion thereof):
107
==============================================================
Fiscal Year Maximum Micro BGA
(or Portion Thereof) Capital Expenditures Amount
==============================================================
Fiscal Year 1999 $ 5,000,000
--------------------------------------------------------------
Fiscal Year 2000 $30,000,000
--------------------------------------------------------------
Fiscal Year 2001 The amount, if any earned forward
from Fiscal Year 2000
==============================================================
(iii) In addition to the Consolidated Capital Expenditures made
pursuant to the foregoing clause (i) of the subsection 7.6C, ChipPAC and
its Subsidiaries may make additional Consolidated Capital Expenditures not
in excess of the Excess Proceeds Amount.
D. Minimum Fixed Charge Coverage Ratio. The ratio (the
"Fixed Charge Coverage Ratio") of (i) Consolidated Adjusted EBITDA to (ii)
---------------------------
the sum, without duplication, of (a) Consolidated Interest Expense payable
in cash (excluding, to the extent otherwise included in Consolidated
Interest Expense, (i) fees paid to the Administrative Agent after the
Closing Date; (ii) cash payments made under consulting agreements; and
(iii) cash payments made under Hedge Agreements or Interest Rate
Agreements), plus (b) Consolidated Capital Expenditures, plus (c) the
---- ----
provision for taxes (including, without duplication, foreign withholding
taxes and any single business, unitary or similar taxes) based on income of
ChipPAC and its Subsidiaries and paid or payable in cash, plus (d) the
----
principal amount of all Indebtedness scheduled to be paid during such
period (calculated as of the first day of such period), plus (e) Cash
----
dividends and distributions paid by ChipPAC, in each case for (1) the five
month period ending December 31, 1999, (2) the eight month period ending
March 31, 2000, (3) the eleven month period ending June 30, 2000 or (4) any
four-Fiscal Quarter period thereafter ending during or at the end of any of
the periods set forth below (each applicable four-Fiscal Quarter period
being a "Calculation Period") (all amounts in the preceeding lettered
------------------
lettered clauses (a) through (e) referred to collectively as the "Fixed
Charges") shall not be less than the correlative ratio indicated below:
======================================================================
Period During Which Minimum Fixed
Calculation Period Ends Charge Coverage
Ratio
======================================================================
December 31, 1999 through September 30, 2000 1.00:1.00
----------------------------------------------------------------------
December 31, 2000 through December 31, 2002 1.05:1.00
----------------------------------------------------------------------
Thereafter 1.10:1.00
======================================================================
108
E. Certain Calculations.
With respect to any period during which any Permitted Acquisition
occurs or any business of any other Person is acquired by ChipPAC or any of
its Subsidiaries as permitted pursuant to the terms hereof, for purposes of
determining compliance or Pro Forma Compliance with the financial covenants
set forth in this subsection 7.6, Consolidated Adjusted EBITDA,
Consolidated Interest Expense and Fixed Charges shall be calculated with
respect to such periods and such Permitted Acquisition or business on a Pro
Forma Basis.
7.7 Restriction on Fundamental Changes; Asset Sales.
-----------------------------------------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of ChipPAC or any of its Subsidiaries
or enter into any transaction of merger or consolidation, or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of all or any portion of its
business or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or a substantial part of the business or assets of, or
Capital Stock or other evidence of beneficial ownership of, any Person or any
unit or division thereof, except:
(i) Any Subsidiary of ChipPAC (other than Company) may be merged
with or into ChipPAC or any wholly owned Subsidiary, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed of,
in one transaction or a series of transactions, to ChipPAC or any wholly
owned Subsidiary; provided that, in the case of such a merger involving
--------
ChipPAC, ChipPAC shall be the continuing or surviving corporation and in
the case of any other merger involving a Loan Party, a Loan Party shall be
the continuing or surviving corporation;
(ii) ChipPAC and its Subsidiaries may acquire inventory, equipment
and other assets in the ordinary course of business;
(iii) ChipPAC and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (determined in good faith by the
board of directors of ChipPAC or its Subsidiaries, as the case may be);
(iv) ChipPAC and its Subsidiaries may make Asset Sales of assets
having a fair market value (determined in good faith by the board of
directors of ChipPAC or its Subsidiaries, as the case may be) not in excess
of $15,000,000 (or $30,000,000 if, after giving effect to such Asset Sale,
the Leverage Ratio determined on a Pro Forma Basis is less than 3.50:1.00)
for any Fiscal Year; provided that, in each such case, (x) the
--------
consideration received for such assets shall be in an amount at least equal
to the fair market value thereof (determined in good faith by the board of
directors of ChipPAC); and (y) the proceeds of such Asset Sales shall be
applied as required by subsection 2.4B(iii)(a);
(v) ChipPAC and its Subsidiaries may acquire the stock or other
equity Securities of any Person that, as a result of such acquisition,
becomes a wholly
109
owned Subsidiary of ChipPAC or any of its Subsidiaries or is merged into
ChipPAC or its Subsidiaries, or may acquire the business, property or
assets of any Person; provided, that (x) on a Pro Forma Basis, ChipPAC
--------
shall be in compliance with each of the covenants set forth in subsection
7.6, (y) no Default or Event of Default shall have occurred and be
continuing or result therefrom and (z) after giving effect to such
Acquisition, if the Leverage Ratio determined on a Pro Forma Basis shall
exceed 2.75:1.00, then the aggregate consideration paid or assumed in
respect of all Permitted Acquisitions under this Agreement shall not exceed
the sum of $50,000,000 and the Excess Proceeds Amount;
(vi) ChipPAC or its Subsidiaries may create or, if permitted by
clause (v) above, acquire new Subsidiaries; provided that, (a) promptly
--------
after the formation or acquisition of each such Subsidiary, ChipPAC or such
Subsidiary, as applicable, shall deliver or cause to be delivered each of
the items and execute each of the documents, if any, required pursuant to
subsection 6.9; and
(vii) ChipPAC may consummate the Recapitalization Transactions.
7.8 Sales and Lease-Backs.
---------------------
Except for the transactions described in Schedule 7.8, ChipPAC shall not,
------------
and shall not permit any of its Subsidiaries to, directly or indirectly, become
or remain liable as lessee or as a guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real, personal or mixed), whether now owned or hereafter acquired, (i) which
ChipPAC or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than ChipPAC or any of its Subsidiaries) or
(ii) which ChipPAC or any of its Subsidiaries intends to use for substantially
the same purpose as any other property which has been or is to be sold or
transferred by ChipPAC or any of its Subsidiaries to any Person (other than
ChipPAC or any of its Subsidiaries) in connection with such lease.
7.9 Transactions with Shareholders and Affiliates.
---------------------------------------------
ChipPAC shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of ChipPAC or such Subsidiary or with any Affiliate
of ChipPAC or of any such Subsidiary or holder involving consideration in excess
of $1,500,000, on terms that are less favorable to ChipPAC or that Subsidiary,
as the case may be, than those that might be obtained at the time from Persons
who are not such a holder or Affiliate; provided that the foregoing restriction
--------
shall not apply to (i) transactions between ChipPAC and any Subsidiary or
between Subsidiaries; (ii) reasonable and customary fees paid to members of the
boards of directors of ChipPAC and its Subsidiaries; (iii) management and one-
time transaction (acquisitions, divestitures and financings) fees paid by
ChipPAC pursuant to the Sponsor Advisory Services Agreements, plus reasonable
----
out-of-pocket expenses related thereto; provided, in no event shall any
--------
management fees be paid (but may accrue) under the Sponsor Advisory Services
Agreements at any time an Event of Default under any of subsection 8.1, 8.6, or
8.7 has occurred and is continuing; (iv) loans and advances permitted to be made
under subsections 7.3(vi) or (ix); (v) Restricted Payments permitted to be made
under subsection 7.5; (vi) issuance of capital stock and/or grants of stock
110
options to any Affiliates, including employees and consultants of ChipPAC
pursuant to employment or consulting arrangements; (vii) employment and
consulting arrangements entered into in the ordinary course of business; (viii)
the Recapitalization Transactions (including performance under the terms of the
Transaction Documents); (ix) any agreement with ChipPAC or any Subsidiary as in
effect on the Closing Date or any amendment or replacement thereto or any
transaction contemplated thereby (including pursuant to any amendment or
replacement thereto) so long as any amendment or replacement agreement is not
more disadvantageous to ChipPAC or such Subsidiary in any material respect than
the original agreement as in effect on the Closing Date; and (x) transactions
with customers, clients, suppliers, joint venture partners or purchasers or
sellers of goods or services, in each case in the ordinary course of business
(including, without limitation, pursuant to joint venture agreements) and
otherwise in compliance with the terms of this Agreement which are fair to
ChipPAC and its Subsidiaries, in the reasonable determination of the applicable
board of directors or the senior management thereof, or are on terms at least as
favorable as might reasonably have been obtained at such time from an
unaffiliated party.
7.10 Ownership of Subsidiary Stock.
-----------------------------
ChipPAC shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity
Securities of any of its Subsidiaries, except as permitted under this
Agreement and the Collateral Documents or to qualify directors or for
nominee holders if required by applicable law; or
(ii) except as a result of a sale permitted hereby of all of the
outstanding Capital Stock of a Loan Party to a third party, permit any
Capital Stock of any Loan Party to be directly or indirectly owned by any
person other than ChipPAC, Company or a Subsidiary Guarantor;
(iii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of Capital
Stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except as permitted under this Agreement and the Collateral
Documents, to ChipPAC or another Subsidiary of ChipPAC or to qualify
directors or for nominee holders, if required by applicable law.
7.11 Amendments or Waivers of Certain Agreements.
-------------------------------------------
A. Amendments or Waivers of Transaction Documents. None of ChipPAC nor
any of its Subsidiaries shall terminate or agree to any amendment, restatement,
supplement or other modification to, or waive any of its rights under, any
Transaction Document (other than any document relating to the Subordinated Debt)
if such termination, amendment, restatement, supplement, modification or waiver
would reasonably be expected to be materially adverse to the Lenders without
obtaining the prior written consent of the Requisite Lenders to such amendment
or waiver.
B. Amendments of Documents Relating to Subordinated Debt. ChipPAC shall
not, and shall not permit any of its Subsidiaries to, amend or otherwise change
the
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terms of any Subordinated Debt, or make any payment consistent with an amendment
thereof or change thereto, if the effect of such amendment or change is (i) to
increase the interest rate on such Subordinated Debt, (ii) change (to earlier
dates) any dates upon which payments of principal or interest are due thereon,
(iii) change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), (iv) change the redemption, prepayment or
defeasance provisions thereof, (v) change the subordination provisions of such
Subordinated Debt or any guaranty of any Subordinated Debt, or (vi) if the
effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Debt (or a trustee or other representative on their behalf) which
would reasonably be expected to be materially adverse to the Lenders without
obtaining the prior written consent of the Requisite Lenders to such amendment
or waiver.
C. Amendments or Waivers of Certain Intercompany Documents. ChipPAC shall
not, and shall not permit any of its Subsidiaries to, terminate or agree to any
amendment, restatement, supplement or other modification to, or waiver of any of
its rights under, the Korean Pledge Agreement, any Intercompany Note or any
other intercompany document pursuant to which any property, assets or rights of
a Subsidiary are pledged to ChipPAC or another Subsidiary and further pledged by
such latter Person to the Collateral Agent to secure the Obligations if such
termination, amendment, restatement, supplement, modification or waiver would
reasonably be expected to be adverse to the Lenders without obtaining the prior
written consent of the Requisite Lenders to such amendment or waiver.
7.12 Fiscal Year.
-----------
Neither ChipPAC nor any of its Subsidiaries shall change its Fiscal Year-
end from December 31 of each calendar year.
7.13 Conduct of Business.
-------------------
ChipPAC shall not, nor shall it permit any of its Subsidiaries to, engage
in any business or activities other than of the type engaged in as of the
Closing Date or similar, related or supportive businesses or those consented to
by the Requisite Lenders, including the performance of its obligations
hereunder, under the other Loan Documents and under the Transaction Documents.
SECTION 8.
EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of Default") shall
-----------------
occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; failure by Company to pay when due any amount payable to an Issuing
Bank in reimbursement of any drawing honored or payment made under a Letter of
Credit; or failure by Company
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to pay any interest on any Loan or any fee or any other amount due under this
Agreement or any other Loan Document within five (5) Business Days after the
date due; or
8.2 Default in Other Agreements.
---------------------------
(i) Failure of ChipPAC or any of its Subsidiaries to pay when due (a) any
principal of or interest on any Indebtedness (other than Indebtedness referred
to in subsection 8.1) in an individual principal amount of $2,500,000 or more or
any items of Indebtedness with an aggregate principal amount of $7,500,000 or
more, in each case beyond the end of any grace period provided therefor; or (b)
any Contingent Obligation in an individual principal amount of $2,500,000 or
more or any Contingent Obligations with an aggregate principal amount of
$7,500,000 or more, in each case beyond the end of any grace period provided
therefor; or (ii) breach or default by ChipPAC or any of its Subsidiaries with
respect to any other material term of (a) any evidence of any Indebtedness in an
individual principal amount of $2,500,000 or more or any items of Indebtedness
with an aggregate principal amount of $7,500,000 or more or any Contingent
Obligation in an individual principal amount of $2,500,000 or more or any
Contingent Obligations with an aggregate principal amount of $7,500,000 or more,
in each case beyond the end of any grace period provided thereof; or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
Indebtedness or Contingent Obligation(s), or the occurrence of any other event,
condition or circumstance in respect of any such Indebtedness or Contingent
Obligations if in any case under this clause (ii) the effect of such breach or
default or event, condition or circumstance is to cause, or to permit the holder
or holders of that Indebtedness or Contingent Obligation(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable (or redeemable) prior to
its stated maturity or the stated maturity of any underlying obligation, as the
case may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
8.3 Breach of Certain Covenants.
---------------------------
Failure of any Loan Party to perform or comply with any term or condition
contained in subsection 2.5, 6.2, or Section 7 of this Agreement; provided,
--------
however, that such failure with respect to the covenants contained in
-------
subsections 7.1 through 7.5 shall not constitute an Event of Default for ten
(10) days after such failure so long as such Loan Party is diligently pursuing
the cure of such failure; or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or other statement made by
ChipPAC or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by ChipPAC or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within thirty (30) days after the
earlier of (i) a Responsible
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Officer of ChipPAC or Company becoming aware of the occurrence of such default
or (ii) receipt by ChipPAC or Company of notice from the Administrative Agent of
such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of ChipPAC or any of its Subsidiaries (other than
Immaterial Subsidiaries) in an involuntary case under any Bankruptcy Law, which
decree or order is not stayed; or any other similar relief shall be granted
under any applicable Bankruptcy Law; or (ii) an involuntary case shall be
commenced against ChipPAC or any of its Subsidiaries (other than Immaterial
Subsidiaries) under any Bankruptcy Law; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
ChipPAC or any of its Subsidiaries (other than Immaterial Subsidiaries), or over
all or a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver, trustee
or other custodian of ChipPAC or any of its Subsidiaries (other than Immaterial
Subsidiaries) for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of ChipPAC or any of its Subsidiaries (other
than Immaterial Subsidiaries), and any such event described in this clause (ii)
shall continue for sixty (60) days unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
(i) ChipPAC or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall have an order for relief entered with respect to it or
commence a voluntary case under any Bankruptcy Law now or hereafter in effect,
or shall consent to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
ChipPAC or any of its Subsidiaries (other than Immaterial Subsidiaries) shall
make any assignment for the benefit of creditors; or (ii) ChipPAC or any of its
Subsidiaries (other than Immaterial Subsidiaries) shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Board of Directors of ChipPAC or any of its
Subsidiaries (other than Immaterial Subsidiaries) (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii); or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $2,500,000 or (ii)
in the aggregate at any time an amount in excess of $7,500,000 (in either case
not adequately covered by insurance) shall be entered or filed against ChipPAC
or any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days
(or in any event later than five days prior to the date of any proposed sale
thereunder); or
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8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered against ChipPAC or any of
its Subsidiaries decreeing the dissolution or split-up of ChipPAC or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of thirty (30) days; or
8.10 Employee Benefit Plans.
----------------------
(i) Company or one of its ERISA Affiliates shall have engaged in a
transaction which is prohibited under Section 4975 of the Internal Revenue Code
or Section 406 of ERISA which results in the imposition of a liability which has
a material adverse effect on Company or any of its Subsidiaries; or (ii) there
shall occur any Foreign Benefit Events which, individually or in the aggregate,
results in the imposition of a liability which has a Material Adverse Effect on
ChipPAC or any of its Subsidiaries; or
8.11 Change in Control.
-----------------
(i) The Sponsors shall beneficially own less than, in the aggregate, any
other Person or "group" (within meaning of 13d-3 or 13d-5 of the Exchange Act)
of all issued and outstanding equity securities of ChipPAC representing economic
and voting interests in ChipPAC; (ii) the Sponsors shall cease to beneficially
own less than, in the aggregate, 51% of the outstanding equity securities of
ChipPAC (excluding equity securities issued to management pursuant to management
stock option plans or similar arrangements) representing economic interests in
ChipPAC; (iii) a majority of the members of the Board of Directors of ChipPAC
shall not be Continuing Directors; (iv) Company or any Operating Subsidiary
shall cease to be a wholly owned Subsidiary of ChipPAC or (v) any "Change of
Control" shall occur under the Subordinated Debt Documents; or
8.12 Invalidity of Guaranties.
------------------------
At any time after the execution and delivery thereof, any Guaranty of the
Obligations of Company for any reason, other than the satisfaction in full of
all Obligations (other than indemnification obligations not due and payable),
ceases to be in full force and effect (other than in accordance with its terms)
or is declared to be null and void, or any Loan Party denies in writing that it
has any further liability, including without limitation with respect to future
advances by the Lenders, under any Loan Document to which it is a party; or
8.13 Failure of Security.
-------------------
Any Collateral Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral thereunder in accordance
with the terms hereof or thereof, the satisfaction in full of the Obligations
(other than indemnification obligations not due and payable) or any other
termination of such Collateral Document in accordance with the terms hereof or
thereof) or shall be declared null and void, or the validity or enforceability
thereof shall be contested in writing by any Loan Party, or the Collateral Agent
shall not have or shall cease to have a valid security interest in any
Collateral purported to be covered thereby having a fair market value exceeding
$1,000,000, perfected and with the priority required by the relevant Collateral
Document, for any reason other than the failure of the Collateral Agent, the
Administrative Agent or
115
any Lender to take any action within its control, subject only to Liens
permitted under the applicable Collateral Documents;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit) and (c) all other Obligations, shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by ChipPAC and Company, and the obligation of each Lender to make any
Loan and the obligation of the Issuing Bank to issue any Letter of Credit shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, the Administrative Agent shall, upon the written
request of the Requisite Lenders, by written notice to Company, declare all or
any portion of the amounts described in clauses (a) through (c) above to be, and
the same shall forthwith become, immediately due and payable, and the obligation
of each Lender to make any Loan and the obligation of the Issuing Bank to issue
any Letter of Credit shall thereupon terminate; provided that the foregoing
--------
shall not affect in any way the obligations of the Lenders under subsection
3.3C(i).
Notwithstanding anything contained in the preceding paragraph, if at any
time within sixty (60) days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Defaults and
Events of Default (other than non-payment of the principal of and accrued
interest on the Loans, in each case which is due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to subsection 10.6, then the
Requisite Lenders, by written notice to Company, may at their option rescind and
annul such acceleration and its consequences; but such action shall not affect
any subsequent Default or Event of Default or impair any right consequent
thereon. The provisions of this paragraph are intended merely to bind the
Lenders to a decision which may be made at the election of the Requisite Lenders
and are not intended to benefit Company and do not grant Company the right to
require the Lenders to rescind or annul any acceleration hereunder or preclude
the Agents or the Lenders from exercising any of the rights or remedies
available to them under any of the Loan Documents, even if the conditions set
forth in this paragraph are met.
SECTION 9.
AGENTS
9.1 Appointment.
-----------
A. CSFB is hereby appointed the Administrative Agent and Sole Lead
Arranger hereunder and under the other Loan Documents. CSFB is also hereby
appointed the Collateral Agent hereunder and under the Collateral Documents.
Each Lender hereby authorizes each Agent to act as its agent in accordance with
the terms of this Agreement and the other Loan Documents. Each Agent agrees to
act upon the express conditions
116
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of the Agents and the
Lenders and neither ChipPAC nor Company shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of the
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for ChipPAC or any
of its Subsidiaries. Upon the conclusion of the Initial Period, all obligations
of the Sole Lead Arranger hereunder shall terminate and thereafter the Sole Lead
Arranger shall have no obligations or liabilities under any of the Loan
Documents.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case the Administrative Agent or the
Collateral Agent deems that by reason of any present or future law of any
jurisdiction the Administrative Agent or the Collateral Agent may not exercise
any of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that the Administrative Agent or the
Collateral Agent appoint an additional individual or institution as a separate
trustee, co-trustee, collateral agent or collateral co-agent (any such
additional individual or institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as "Supplemental Collateral
----------------------------- -----------------------
Agents").
------
In the event that the Administrative Agent or the Collateral Agent appoints
a Supplemental Collateral Agent with respect to any Collateral, (i) each and
every right, power, privilege or duty expressed or intended by this Agreement or
any of the other Loan Documents to be exercised by or vested in or conveyed to
the Administrative Agent or the Collateral Agent with respect to such Collateral
shall be exercisable by and vest in such Supplemental Collateral Agent to the
extent, and only to the extent, necessary to enable such Supplemental Collateral
Agent to exercise such rights, powers and privileges with respect to such
Collateral and to perform such duties with respect to such Collateral, and every
covenant and obligation contained in the Loan Documents and necessary to the
exercise or performance thereof by such Supplemental Collateral Agent shall run
to and be enforceable by either the Administrative Agent or the Collateral Agent
or such Supplemental Collateral Agent, and (ii) the provisions of this Section 9
and of subsections 10.2 and 10.3 that refer to the Administrative Agent or the
Collateral Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to the Administrative Agent or the Collateral
Agent shall be deemed to be references to the Administrative Agent or the
Collateral Agent and/or such Supplemental Collateral Agent, as the context may
require.
Should any instrument in writing from ChipPAC, Company or any other Loan
Party be required by any Supplemental Collateral Agent so appointed by the
Administrative Agent or the Collateral Agent for more fully and certainly
vesting in and confirming to him or it such rights, powers, privileges and
duties, ChipPAC shall, or shall cause such Loan Party to, execute, acknowledge
and deliver any and all such instruments promptly upon request by the
Administrative Agent or the Collateral Agent. In case any Supplemental
Collateral Agent, or a successor thereto, shall die, become incapable of
117
acting, resign or be removed, all the rights, powers, privileges and duties of
such Supplemental Collateral Agent, to the extent permitted by law, shall vest
in and be exercised by the Administrative Agent or the Collateral Agent until
the appointment of a new Supplemental Collateral Agent.
9.2 Powers; General Immunity.
------------------------
A. Duties Specified. Each Lender irrevocably authorizes each Agent to
take such action on such Lender's behalf and to exercise such powers hereunder
and under the other Loan Documents as are specifically delegated to such Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents and
it may perform such duties by or through its agents or employees. No Agent shall
have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender, and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon any Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished by any Agent to the Lenders or by or on behalf of ChipPAC
and/or its Subsidiaries to any Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of ChipPAC, Company or any other Person liable for
the payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Default or Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, the
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Total Utilization of Revolving Loan
Commitments or the component amounts thereof.
C. Exculpatory Provisions. Neither any Agent nor any of such Agent's
respective officers, directors, employees or agents shall be liable to the
Lenders for any action taken or omitted by such Agent under or in connection
with any of the Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. If any Agent shall request instructions from
the Lenders with respect to any act or action (including the failure to take an
action) in connection with this Agreement or any of the other Loan Documents,
such Agent shall be entitled to refrain from such act or taking such action
unless and until such Agent shall have received instructions from the Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6). Without prejudice to the generality of the foregoing,
(i) such Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and
118
shall be protected in relying on opinions and judgments of attorneys (who may be
attorneys for ChipPAC and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against such Agent as a result of such Agent acting or (where
so instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the Requisite Lenders (or
such other Lenders as may be required to give such instructions under subsection
10.6). Such Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement or any of the other
Loan Documents unless and until it has obtained the instructions of the
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. Agents Entitled to Act as the Lender. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Each Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with ChipPAC or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from ChipPAC and/or its Subsidiaries for services in
connection with this Agreement and otherwise without having to account for the
same to the Lenders.
9.3 Representations and Warranties; No Responsibility for Appraisal of
------------------------------------------------------------------
Creditworthiness.
----------------
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of ChipPAC and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of ChipPAC and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of the
Lenders or, except as expressly provided elsewhere in this Agreement, to provide
any Lender with any credit or other information with respect thereto (except as
provided in Section 4 or subsection 6.1), whether coming into its possession
before the making of the Loans or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to the Lenders.
9.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, reasonable counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against such Agent in performing its duties hereunder or under
the other Loan Documents or otherwise in its capacity as such Agent in any way
119
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
--------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to any Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5 Successor Administrative Agent and Swing Line Lender.
----------------------------------------------------
A. Successor Administrative Agent. The Administrative Agent may resign at
any time by giving thirty (30) days' prior written notice thereof to the
Lenders, ChipPAC and Company. Upon any such notice of resignation, the Requisite
Lenders shall have the right, upon five (5) Business Days' notice to ChipPAC and
Company, to appoint a successor Administrative Agent with the consent of ChipPAC
and Company. Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's resignation hereunder
as the Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation of the Administrative
Agent pursuant to subsection 9.5A shall also constitute the resignation of CSFB
or its successor as the Swing Line Lender, and any successor Administrative
Agent appointed pursuant to subsection 9.5A shall, upon its acceptance of such
appointment, become the successor Swing Line Lender for all purposes hereunder.
In such event any outstanding Swing Line Loans made by the retiring
Administrative Agent in its capacity as Swing Line Lender shall be transferred
to the successor Swing Line Lender.
9.6 Collateral Documents; Successor Collateral Agent.
-------------------------------------------------
Each Lender hereby further authorizes the Collateral Agent to enter into
each Collateral Document as secured party on behalf of and for the benefit of
the Lenders and the other beneficiaries named therein and agrees to be bound by
the terms of each Collateral Document; provided that the Collateral Agent shall
--------
not enter into or consent to any material amendment, modification, termination
or waiver of any provision contained in any Collateral Document without the
prior consent of the Requisite Lenders (or, if required pursuant to subsection
10.6, all the Lenders); provided further, however, that, without further written
-------- ------- -------
consent or authorization from any Lender, the Collateral Agent may execute any
documents or instruments necessary to effect the release of any asset
constituting Collateral from the Lien of the applicable Collateral Document in
the event that such asset is sold in a transaction to which the Requisite
Lenders have consented or otherwise disposed of in a transaction permitted by
this Agreement, or to the extent otherwise permitted or required by any
Collateral Document. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
(including without limitation through the exercise of a right of set-off against
call deposits of such Lender in which any funds on deposit in the Collateral
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Account may from time to time be invested), it being understood and agreed that
all rights and remedies under the Collateral Documents may be exercised solely
by the Collateral Agent for the benefit of the Lenders and the other
beneficiaries named therein in accordance with the terms thereof. The Collateral
Agent may resign at any time, and a successor Collateral Agent may be appointed,
in accordance with subsection 9.5 as if such subsection 9.5 applied to the
Collateral Agent in lieu of the Administrative Agent.
SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
-------------------------------------------------------------
A. General. Subject to subsection 10.1B or 10.1C, as applicable, each
Lender shall have the right at any time to (i) sell, assign, transfer or
negotiate to any Eligible Assignee, or (ii) sell participations to any Person
in, all or any part of its Commitments (together with its Letters of Credit or
participations therein made or arising pursuant to its Revolving Loan
Commitment) or any Loan or Loans made by it or any other interest herein or in
any other Obligations owed to it; provided that no such sale, assignment,
--------
transfer or participation shall, without the consent of ChipPAC or Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided further that no
-------- -------
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by the Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided, further
-------- -------
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation. Except as otherwise provided in this
subsection 10.1, no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or any granting of participations in,
all or any part of its Commitments or the Loans, the Letters of Credit or
participations therein or the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit, or participation therein or other Obligation may (a) be assigned
in any amount to another Lender who is a Non-Defaulting Lender, or to an
Approved Fund or an Affiliate of the assigning Lender or another Lender
who, in either such case, is a Non-Defaulting Lender, with the giving of
notice to Company and the Administrative Agent or (b) be assigned in an
aggregate amount of not less than $5,000,000 (or such lesser amount (1) as
shall constitute the aggregate amount of the Commitments, Loans, Letters of
Credit, and participations therein and other Obligations of the assigning
Lender, or (2) as may be agreed to by Company and the Administrative Agent)
to any other Eligible Assignee with the consent of the Administrative Agent
(such consent not to be unreasonably withheld) and so long as no Event of
Default shall have occurred and be continuing with the consent of Company
(such consent not to be unreasonably withheld). To the extent of any
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such assignment in accordance with either clause (a) or (b) above, the
assigning Lender shall be relieved of its obligations with respect to its
Commitments, Loans, Letters of Credit, or participations therein or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement, together
with a processing fee of $3,500 payable by the assigning Lender, and, if
requested by the Administrative Agent, a completed administrative
questionnaire in the Administrative Agent's customary form with respect to
the assignee under such Assignment Agreement. Upon such execution,
delivery, acceptance and recordation, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights and be released from its obligations under this
Agreement (and, in the case of an Assignment Agreement covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto); provided
--------
that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Bank such Lender shall
continue to have all rights and obligations of the Issuing Bank with
respect to outstanding Letters of Credit until the cancellation or
expiration of such Letters of Credit and the reimbursement of any amounts
drawn thereunder. The Commitments hereunder shall be modified to reflect
the Commitments of such assignee and any remaining Commitments of such
assigning Lender.
(ii) Acceptance by the Administrative Agent; Recordation in Register.
---------------------------------------------------------------
Upon its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together with
the processing fee referred to in subsection 10.1B(i), the Administrative
Agent shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit IX hereto and if the Administrative Agent
----------
has consented to the assignment evidenced thereby (to the extent such
consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of the Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company. The
Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
(i) effecting the extension of the final maturity of the Loan allocated to such
participation or (ii) effecting a reduction of the principal amount of or
affecting the rate of interest payable on any Loan or any fee allocated to such
participation. ChipPAC, Company and each Lender hereby acknowledge and agree
that, solely for purposes of subsections 2.6D, 2.7, 3.6, 10.2, 10.3, 10.4 and
10.5, (a) any participation will give rise to a direct obligation of ChipPAC and
Company to the participant and (b) the participant shall be considered to be a
"Lender".
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D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans and the
other Obligations owed to such Lender to any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal Reserve Bank;
and any Lender which is an investment fund may pledge all or any portion of its
Loans to its trustee in support of its obligations to such trustee; provided
--------
that (i) no Lender shall, as between Company and such Lender, be relieved of any
of its obligations hereunder as a result of any such assignment and pledge and
(ii) in no event shall such Federal Reserve Bank be considered to be a "Lender"
or be entitled to require the assigning Lender to take or omit to take any
action hereunder.
E. Information. Each Lender may furnish any information concerning
ChipPAC and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.21.
F. Special Purpose Funding Vehicle. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Bank") may grant to a special
-------------
purpose funding vehicle (a "SPC"), identified as such in writing from time to
---
time by the Granting Bank to the Administrative Agent, ChipPAC and Company, the
option to provide to Company all or any part of any Loan that such Granting Bank
would otherwise be obligated to make to Company pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
--------
make any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this subsection 10.1F, any SPC may (i) with notice to, but without the prior
written consent of, Company, ChipPAC and the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Bank or to any financial institutions (consented to by
Company, ChipPAC and the Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC. This
section may not be amended without the written consent of the SPC.
G. Limitation. No assignee, participant or other transferee of any
Lender's rights shall be entitled to receive any greater payment under
subsection 2.7 than such Lender would have been entitled to receive with respect
to the rights transferred, unless
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such transfer is made with Company's prior written consent or at a time when the
circumstances giving rise to such greater payment did not exist.
10.2 Expenses.
--------
ChipPAC and Company agree, jointly and severally, to pay promptly (i) all
the actual and reasonable costs and out-of-pocket expenses of the Agents in
connection with the preparation of the Loan Documents; (ii) all costs of
furnishing all opinions by counsel for ChipPAC and its Subsidiaries (including
without limitation any opinions requested by the Lenders or Agents as to any
legal matters arising hereunder) and of each of ChipPAC's and Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming compliance with
environmental and insurance requirements; (iii) the reasonable fees, expenses
and disbursements of counsel to the Agents (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loans and any consents, amendments,
waivers or other modifications hereto or thereto, in each case, requested by or
for the benefit of ChipPAC or Company and any other documents or matters
requested by Company; (iv) all other reasonable costs and expenses incurred by
the Agents in connection with the negotiation, preparation and execution of the
Loan Documents and the transactions contemplated hereby and thereby and the
syndication of the Loans and Commitments; and (v) after the occurrence of a
Default or Event of Default, all the respective reasonable costs and expenses,
including reasonable attorneys' fees (including allocated costs of internal
counsel) and costs of settlement, incurred by the Agents and the Lenders in
enforcing any Obligations of or in collecting any payments due from ChipPAC or
Company hereunder or under the other Loan Documents by reason of such Default or
Event of Default or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, ChipPAC and
Company agree, jointly and severally, to defend (subject to Indemnitees'
selection of counsel), indemnify, pay and hold harmless on an after-tax basis
the Agents and the Lenders, and the officers, directors, employees, agents,
attorneys and affiliates of the Agents and the Lenders (collectively called the
"Indemnitees") from and against any and all other liabilities, obligations,
-----------
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including without limitation
the reasonable fees and disbursements of counsel for such Indemnitees, and all
such fees and disbursements, as well as other costs and expenses, incurred by
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including without limitation
securities and commercial laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of this Agreement or the other Loan Documents or the
124
transactions contemplated hereby or thereby (including without limitation the
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds of any of the Loans or the issuance of Letters of Credit hereunder or
the use or intended use of any of the Letters of Credit) or any Environmental
Liabilities that arise from or relate to the management, use, control,
ownership, occupancy or operation of any Facility or assets of any Loan Party or
its Subsidiaries (including without limitation, all on-site and off-site
activities involving Hazardous Materials), or the Release or threatened Release
of any Hazardous Materials (or allegations of the same) on or from any of the
Facilities or on or from any other property where Hazardous Materials are or
were (or are or were alleged to be) Released or threatened to be Released in
connection with any of the Facilities or the business of any of the Loan
Parties, their Subsidiaries, or any predecessor in interest to the Loan Parties
or their Subsidiaries (collectively called the "Indemnified Liabilities");
-----------------------
provided that neither ChipPAC nor Company shall have any obligation to any
--------
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
that such Indemnified Liabilities arose from the bad faith, gross negligence or
willful misconduct of that Indemnitee. To the extent that the undertaking to
defend, indemnify, pay and hold harmless set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, each of
ChipPAC and Company shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized by each of
ChipPAC and Company at any time or from time to time, without notice to ChipPAC
or Company or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender
(at any office of that Lender wherever located) to or for the credit or the
account of ChipPAC or Company against and on account of the obligations and
liabilities of ChipPAC or Company to that Lender under this Agreement, the
Letters of Credit and participations therein, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Each of ChipPAC and Company hereby further grants to the Administrative Agent
and each Lender a security interest in all deposits and accounts maintained with
the Administrative Agent or such Lender as security for the Obligations.
10.5 Ratable Sharing.
---------------
The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the
125
exercise of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash collateral under any
Bankruptcy Law, receive payment or reduction of a proportion of the aggregate
amount of principal, interest, amounts payable in respect of Letters of Credit,
fees and other amounts then due and owing to that Lender hereunder or under the
other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender)
---------------------
which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify the Administrative Agent and
each other Lender of the receipt of such payment and (ii) apply a portion of
such payment to purchase participations (which it shall be deemed to have
purchased from each seller of a participation simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all the Lenders in proportion to the Aggregate Amounts Due to them;
provided that if all or part of such proportionately greater payment received by
--------
such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy, reorganization or insolvency proceeding of ChipPAC or Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Each of ChipPAC and Company
expressly consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by ChipPAC or
Company to that holder with respect thereto as fully as if that holder were owed
the amount of the participation held by that holder.
10.6 Amendments and Waivers.
----------------------
A. No amendment, modification, termination or waiver of any provision of
this Agreement, or consent to any departure by ChipPAC, Company or any other
Loan Party therefrom, shall in any event be effective without the written
consent of the Requisite Lenders; provided that any such amendment,
--------
modification, termination, waiver or consent which: (a) reduces the principal
amount of any of the Loans; (b) changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or consent of all
the Lenders; (c) postpones the scheduled final maturity date of any of the
Loans; (d) reduces the percentage specified in the definition of the "Requisite
Lenders" (it being understood that, with the consent of the Requisite Lenders,
additional extensions of credit pursuant to this Agreement may be included in
the definition of the "Requisite Lenders" on substantially the same basis as the
Term A Loans, Term A Loan Commitments, Term B Loans, Term B Loan Commitments,
Term Delayed Draw Loans, Term Delayed Draw Loan Commitments, Revolving Loans and
Revolving Loan Commitments are included on the Closing Date); (e) postpones the
date or reduces the amount of any scheduled payment (but not prepayment) of
principal of any of the Loans or of any scheduled reduction of the Revolving
Credit Commitments or Term Delayed Draw Loan Commitments; (f) postpones the date
on which any interest or any fees are payable; (g) decreases the interest rate
borne by any of the Loans (other than any waiver of any increase in the interest
rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount
of any fees payable hereunder; (h) releases all or substantially all of the
Collateral; (i) except as permitted by this Agreement (subsection 7.7) or any
Guaranty, releases any of the Guarantors from their obligations under the
Guaranties; (j) reduces the amount or postpones the due date of any amount
126
payable in respect of, or extends the required expiration date of, any Letter of
Credit; or (k) changes in any manner the provisions contained in this subsection
10.6, shall be effective only if evidenced by a writing signed by or on behalf
of all the Lenders to whom Obligations are owed or who have Commitments
outstanding being directly affected by such amendment, modification,
termination, waiver or consent. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 4 shall be
effective only if evidenced by a writing signed by or on behalf of the
Administrative Agent, (ii) no increase in the Commitments of any Lender over the
amount thereof then in effect shall be effective without the written concurrence
of that Lender, it being understood and agreed that in no event shall waivers or
modifications of conditions precedent, covenants, Defaults, Events of Default or
of a mandatory prepayment or a reduction of any or all of the Commitments be
deemed to constitute an increase of the Commitment of any Lender and that an
increase in the available portion of any Commitment of any Lender shall not be
deemed to constitute an increase in the Commitment of such Lender, (iii) no
amendment, modification, termination or waiver of any provision of subsection
2.1A(v) or any other provision of this Agreement relating to the Swing Line Loan
Commitment or the Swing Line Loans shall be effective without the written
concurrence of the Swing Line Lender, (iv) no amendment, modification,
termination or waiver of any provision of Section 3 relating to the rights or
obligations of the Issuing Bank shall be effective without the written
concurrence of the Issuing Bank with respect to any Letter of Credit then
outstanding, and (v) no amendment, modification, termination or waiver of any
provision of Section 9 or of any other provision of this Agreement which, by its
terms, expressly requires the approval or concurrence of any Agent shall be
effective without the written concurrence of such Agent. The Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender
and no amendment, modification, termination or waiver of any provision of
subsection 2.4 which has the effect of changing any voluntary or mandatory
prepayments or Commitment reductions applicable to any Class (the
"Affected Class") in a manner that disproportionately disadvantages such Class
--------------
relative to any other Class shall be effective without the written concurrence
of the Requisite Class Lenders of the Affected Class (it being understood and
agreed that any amendment, modification, termination or waiver of any such
provision which only postpones or reduces any voluntary or mandatory prepayment
or Commitment reduction from those set forth in subsection 2.4 with respect to
one Class but not the other Classes shall be deemed to disproportionately
disadvantage such one Class but not to disproportionately disadvantage such
other Classes for purposes of this clause). Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on ChipPAC or Company in any case shall
entitle ChipPAC or Company to any other or further notice or demand in similar
or other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this subsection 10.6 shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by
ChipPAC or Company, on ChipPAC or Company.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another
127
such covenant shall not avoid the occurrence of an Default or Event of Default
if such action is taken or condition exists.
10.8 Notices.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telecopy or telex, or four Business Days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed. For the purposes hereof, the address of
each party hereto shall be as set forth on the signature pages hereof attached
hereto, or such other address as shall be designated by such party in a written
notice delivered to the Administrative Agent, ChipPAC and Company.
10.9 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the respective agreements of ChipPAC and Company set forth in
subsections 2.6D, 2.7, 3.5A, 3.6, 10.2, 10.3 and 10.4, as applicable and the
agreements of the Lenders set forth in subsections 9.2C, 9.4, 10.4, 10.5 and
10.21 shall survive the payment of the Loans, the cancellation or expiration of
the Letters of Credit and the reimbursement of any amounts drawn or paid
thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of any Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
Neither any Agent nor any Lender shall be under any obligation to marshal
any assets in favor of ChipPAC, Company or any other party or against or in
payment of any or all of the Obligations. To the extent that ChipPAC or Company
makes a payment or payments to the Administrative Agent or the Lenders (or to
the Administrative Agent or Collateral Agent for the benefit of the Lenders), or
any Agent or the Lenders enforce any security interests or exercise their rights
of setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor
128
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of the Lenders' Rights.
--------------------------------------------------------------
The obligations of the Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
the Lenders pursuant hereto or thereto, shall be deemed to constitute the
Lenders as a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
10.14 Maximum Amount.
--------------
A. It is the intention of ChipPAC, Company and the Lenders to conform
strictly to the usury and similar laws relating to interest from time to time in
force, and all agreements between the Loan Parties and their respective
Subsidiaries and the Lenders, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in no contingency
or event whatsoever, whether by acceleration of maturity hereof or otherwise,
shall the amount paid or agreed to be paid in the aggregate to the Lenders as
interest (whether or not designated as interest, and including any amount
otherwise designated but deemed to constitute interest by a court of competent
jurisdiction) hereunder or under the other Loan Documents or in any other
agreement given to secure the Indebtedness or obligations of ChipPAC or Company
to the Lenders, or in any other document evidencing, securing or pertaining to
the Indebtedness evidenced hereby, exceed the maximum amount permissible under
applicable usury or such other laws (the "Maximum Amount"). If under any
--------------
circumstances whatsoever fulfillment of any provision hereof, or any of the
other Loan Documents, at the time performance of such provision shall be due,
shall involve exceeding the Maximum Amount, then, ipso facto, the obligation to
be fulfilled shall be reduced to the Maximum Amount. For the purposes of
calculating the actual amount of interest paid and/or payable hereunder in
respect of laws pertaining to usury or such other laws, all sums paid or agreed
to be paid to the holder hereof for the use, forbearance or detention of the
Indebtedness of ChipPAC or Company evidenced hereby, outstanding from time to
time shall, to the extent permitted by Applicable Law, be amortized, pro-rated,
allocated and spread from the date of disbursement of the proceeds of the Loans
until payment in full of all of such Indebtedness, so that the actual rate of
interest on account of such Indebtedness is uniform through the term hereof. The
terms and provisions of this subsection shall control and supersede every other
provision of all agreements between ChipPAC, Company and the Lenders.
129
B. If under any circumstances any Lender shall ever receive an amount
which would exceed the Maximum Amount, such amount shall be deemed a payment in
reduction of the principal amount of the Loans and shall be treated as a
voluntary prepayment under subsection 2.4B(i) and shall be so applied in
accordance with subsection 2.4 hereof or, if such excessive interest exceeds the
unpaid balance of the Loans and any other Indebtedness of ChipPAC or Company in
favor of such Lender, the excess shall be deemed to have been a payment made by
mistake and shall be refunded to ChipPAC or Company, as applicable.
10.15 Headings.
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.16 Applicable Law.
--------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.17 Successors and Assigns.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders (it being understood that
the Lenders' rights of assignment are subject to subsection 10.1). Neither
ChipPAC's or Company's respective rights or obligations hereunder nor any
interest therein may be assigned or delegated by ChipPAC or Company without the
prior written consent of all Lenders.
10.18 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST CHIPPAC OR COMPANY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 10.8;
130
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.18 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
10.19 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP OR OTHER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and represents that
it has reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF THE PARTIES HERETO),
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
10.20 Judgment Currency.
------------------
A. The obligations of Company and the other Loan Parties hereunder
and under the other Loan Documents to make payments in dollars (the "Obligation
----------
Currency") shall not be discharged or satisfied by any tender or recovery
--------
pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency,
131
except to the extent that such tender or recovery results in the effective
receipt by the Administrative Agent or a Lender or the Issuing Bank of the full
amount of the Obligation Currency expressed to be payable to the Administrative
Agent or such Lender or the Issuing Bank under this Agreement or the other Loan
Documents. If, for the purpose of obtaining or enforcing judgment against
Company or any other Loan Party or in any court or in any jurisdiction, it
becomes necessary to convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the
"Judgment Currency") an amount due in the Obligation Currency, the conversion
-----------------
shall be made at the rate of exchange (as quoted by the Administrative Agent or
if the Administrative Agent does not quote a rate of exchange on such currency,
by a known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the
"Judgment Currency Conversion Date").
---------------------------------
B. If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, Company covenants and agrees to pay, or cause to be paid, as a separate
obligation and notwithstanding any judgment, such additional amounts, if any
(but in any event not a lesser amount), as may be necessary to ensure that the
amount paid in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
C. For purposes of determining the rate of exchange for this Section,
such amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.
10.21 Confidentiality.
---------------
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking and investing practices, it being
understood and agreed by ChipPAC and Company that in any event a Lender may make
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Loans or any participation therein or as required or requested by
any governmental agency or representative thereof or pursuant to legal process;
provided that nothing herein shall prevent any Agent or any Lender from
--------
disclosing any such information (i) to the Administrative Agent or any other
Lender, (ii) any of its employees, directors, officers, agents or affiliates who
need to know such information in accordance with customary safe and sound
banking or commercial lending practices who receive such information having been
made aware of the confidential nature thereof, (iii) upon the request or demand
of any Governmental Authority having jurisdiction over it, (iv) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Applicable Laws, (v) if required to do so in connection
with any litigation or similar proceeding, (vi) which has been publicly
disclosed other than in breach of this subsection 10.21 or (vii) to the National
Association of Insurance Commissioners or any securities exchange or any similar
organization, or any nationally recognized rating agency that requires access to
132
information about a Lender's investment portfolio in connection with ratings
issued with respect to such Lender. In the event that any Lender discloses any
information pursuant to clauses (iv) or (v) of the preceding sentence, such
Lender will, before such disclosure, give notice thereof to ChipPAC and Company
if such Lender is lawfully permitted to do so; and provided, further that in no
-------- -------
event shall any Lender be obligated or required to return any materials
furnished by ChipPAC or any of its Subsidiaries unless requested by ChipPAC or
any of its Subsidiaries to do so.
10.22 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
133
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CHIPPAC INTERNATIONAL COMPANY LIMITED
By: /s/ X.X. Xxx
----------------------------------------
Name: X.X. Xxx
Title: Senior Manager
Notice Address:
c/o HWR Services Limited
Xxxxxxxxx Xxxxxxxx, X.X. Xxx 00
Xxxx Xxxx, Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx
and
ChipPAC, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx Capital, Inc. II
Xxx Xxxxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxx Capital, Inc.
Two Xxxxxx Place
Boston, MA 02116
Attn: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: G. Xxxxxx X'Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
CHIPPAC, INC.
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director and Vice
President
Notice Address:
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx Capital, Inc. II
Xxx Xxxxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxx Capital, Inc.
Two Xxxxxx Place
Boston, MA 02116
Attn: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: G. Xxxxxx X'Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
AGENTS AND LENDERS: CREDIT SUISSE FIRST BOSTON,
individually and as the Administrative
Agent, Sole Lead Arranger and the
Collateral Agent
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
By: /s/ Wm. Xxxxxxx Xxxxxx
---------------------------------------
Name: Wm. Xxxxxxx Xxxxxx
Title: Assistant Vice President
BANKBOSTON N.A.,
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Assistant Vice President
BALANCED HIGH-YIELD FUND II
LIMITED,
By: BHF (USA) Capital Corporation, as
attorney-in-fact
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Assistant Vice President
CIBC Inc.,
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Director
CIBC World Markets Corp.,
AS AGENT
FIRST SOURCE FINANCIAL LLP
By First Source Financial, Inc.,
Its Agent/Manager
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
XXXXXX FINANCIAL, INC.,
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
CHICAGO,
By: /s/ Xxxxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxxxx Xxxx
Title: Associate Underwriter
IBM CREDIT CORPORATION,
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager, Commercial Financing
Solutions Americas
Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
SCHEDULE 1.1(i)
Certain Adjustments to EBITDA/Consolidated Interest Expense
-----------------------------------------------------------
A. Without duplication and to the extent otherwise deducted in determining
Consolidated Net Income:
(i) items classified as unusual or nonrecurring gains and losses
(including restructuring costs, severance and relocation costs, any
one-time expenses related to (or resulting from) any merger,
recapitalization or Permitted Acquisition);
(ii) one-time compensation charges, including any arising from any
recapitalization of Company's bonus program or existing stock
options, performance share or restricted stock plans resulting from
any merger or recapitalization transaction or expended in any
period prior to the consummation of the transactions contemplated
by the Transaction Documents;
(iii) non-recurring cash charges and transaction expenses incurred in
connection with the transactions contemplated by the Transaction
Documents to the extent deducted in determining Consolidated Net
Income;
(iv) non-recurring cash charges and transaction expenses incurred in
connection with Permitted Acquisitions to the extent deducted in
determining Consolidated Net Income;
(v) any translation gains and losses due solely to fluctuations in
currency values and the related tax effect in accordance with GAAP;
(vi) one-time charges related to HEI's union change in control in Korea,
to the extent paid by HEI;
(vii) non-cash charges associated with Intel's warrant to purchase
$5,000,000 of ChipPAC's common stock at a 20.0% discount to the
initial public offering price; and
(viii) the payment of management, consulting and advisory fees and related
expenses made pursuant to the Sponsor Advisory Services Agreements.
B. For purposes of calculating the Interest Coverage Ratio, the Leverage Ratio
and the Fixed Charge Coverage Ratio at or for the periods ended December
31, 1999, March 31, 2000, and June 30, 2000, Consolidated Adjusted EBITDA
and Consolidated Interest Expense shall be deemed to be (i) Consolidated
Adjusted EBITDA and Consolidated Interest Expense, respectively, for the
period from
July 31, 1999, to December 31, 1999, multiplied by 12/5, (ii) Consolidated
Adjusted EBITDA and Consolidated Interest Expense, respectively, for the
period from July 31, 1999, to March 31, 2000, multiplied by 3/2, and (iii)
Consolidated Adjusted EBITDA and Consolidated Interest Expense,
respectively, for the period from July 31, 1999, to June 30, 2000,
multiplied by 12/11.
