EXHIBIT 4.2
EXECUTION COPY
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement"), dated July 3, 2003, is by and
among PSi Technologies Holdings, Inc., a corporation organized and existing
under the laws of the Philippines ("Holdings"), PSi Technologies, Inc., a
corporation organized and existing under the laws of the Philippines and the
principal operating subsidiary of Holdings (the "Company"), and Xxxxxxx Xxxxx
Global Emerging Markets Partners, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, USA ("MLGEMP" or the
"Purchaser").
WHEREAS:
The authorized capital of Holdings is Sixty-One Million Seven Hundred
Sixty-Three Thousand and Five Hundred Pesos (P61,763,500.00) divided into
Thirty-Seven Million Fifty Eight Thousand and One Hundred (37,058,100) shares of
common stock with a par value of one peso and two-thirds centavos (P1 2/3) per
share;
As of even date, 13,289,525 shares of common stock of Holdings have been
issued and are outstanding;
The Company desires to sell, and MLGEMP desires to buy, USD$4 million
aggregate principal amount of 10.00% Exchangeable Senior Subordinated Notes due
2008 (the "Notes"), a form of which is attached hereto as Exhibit A; and
In connection with and by virtue of the purchase of the Notes by MLGEMP and
the sale of the Notes by the Company, which redounds to the derivative benefit
of Holdings, MLGEMP, Holdings and the Company will enter into the Exchange
Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises and the
terms and conditions hereinafter set forth, the parties hereto agree as follows:
Section 1. Definitions and Interpretation
1.1 Unless otherwise defined herein, the following terms used in this
Agreement shall have the meanings specified below:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Applicable Law" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, judgment, rule of common law, order, decree, award,
Governmental Approval, concession, grant, franchise, license, agreement,
directive, guideline, policy, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, in effect
as of the date hereof and applicable to such Person or its subsidiaries or their
respective assets.
"BSP" means the Bangko Sentral ng Pilipinas or the central monetary
authority of the Philippines or any Governmental Authority of the Philippines
which assumes the functions thereof.
"BSRD" means the Bangko Sentral Registration Document issued by the BSP,
which allows the holder to source foreign exchange from the Philippine banking
system.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Company" shall have the meaning set forth in the Preamble.
"Company Board Approval" shall have the meaning set forth in Section
5.5(a).
"Consolidated Financial Statement" means the audited consolidated balance
sheet of Holdings for the fiscal year ended December 31, 2002 and the related
audited consolidated statements of income, retained earnings, stockholders'
equity and changes in financial position, together with the related notes and
schedules thereto, accompanied by the reports of accountants.
"Disclosure Schedule" means the Disclosure Schedule attached hereto, dated
as of the date hereof, delivered by Holdings and the Company to the Purchaser in
connection with this Agreement.
"Encumbrance" means any lien, mortgage, pledge, collateral assignment,
security interest, hypothecation or other encumbrance other than as established
by, under or in connection with the terms of this Agreement, the Notes and the
Exchange Agreement, and the Subscription Agreement and Note Assignment, if
applicable, or the transactions contemplated thereby.
"Exchange Act" means the Securities Exchange Act of 1934 of the United
States, as amended.
"Exchange Agreement" means the Exchange Agreement to be entered into by and
among the Purchaser, the Company and Holdings, substantially in the form of
Exhibit B hereto.
"Exchange Notice" shall have the meaning specified in the Exchange
Agreement.
"FCPA" shall have the meaning set forth in Section 4.1(o).
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"Final Order" means action taken by the relevant regulatory authority
relating to this Agreement or the transactions contemplated hereby that has not
been reversed, stayed, enjoined, set aside, annulled or suspended, with respect
to which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
"Form 20-F" means the Form 20-F for the fiscal year ended December 31, 2002
filed by Holdings with the US SEC on June 30, 2003.
"Governmental Approval" shall mean any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"Governmental Authority" shall mean any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"Holdings" shall have the meaning set forth in the Preamble.
"Holdings Board Approval" shall have the meaning set forth in Section
5.5(b).
"Indemnified Party" shall have the meaning set forth in Section 6.1.
"Losses" shall have the meaning set forth in Section 6.1.
"Mandatory Issuance Rights" shall have the meaning specified in the
Exchange Agreement.
"Material Adverse Effect" means, with respect to any Person, any event,
circumstance, change or effect that, individually or in the aggregate with all
other events, circumstances, changes or effects on such Person and its
Subsidiaries, is or is reasonably likely to be materially adverse to the
business, operations, assets or liabilities (including, without limitation,
contingent liabilities), results of operations or the financial condition of
such Person and its Subsidiaries, taken as a whole.
"MLGEMP" or "Purchaser" shall have the meaning set forth in the Preamble.
"NASDAQ" means the Nasdaq National Market.
"Note Assignment" shall have the meaning specified in the Exchange
Agreement.
"Notes" shall have the meaning set forth in the Recitals.
"Notes BSRD" shall have the meaning set forth in Section 4.1(g).
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"Organizational Documents" shall mean, with respect to any Person, the
memorandum of association, articles of association, articles of incorporation,
certificate of incorporation, bylaws and any charter, partnership agreements,
joint venture agreements or other organizational documents of such entity and
any amendments thereto.
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Exchange Act.
"Pesos" or the sign "P" shall mean the lawful currency of the Republic of
the Philippines.
"Philippine SEC" means the Securities and Exchange Commission of the
Philippines.
"Purchase Price" shall have the meaning set forth in Section 2.1(a).
"Reports" has the meaning set forth in Section 4.1(j).
"Securities Act" means the Securities Act of 1933 of the United States, as
amended.
"Securities Regulation Code" means the Securities Regulation Code of the
Philippines.
"Shareholder Approval" shall mean the approval, by a majority of the total
votes cast in person or by proxy by the holders of the outstanding Shares
entitled to vote at a duly called meeting of the shareholders of Holdings, of
the issuance of the Shares issuable pursuant to the Exchange Agreement.
"Shares" means the shares of common stock of Holdings.
"Shares BSRD" shall have the meaning set forth in Section 4.1(g).
"Subscription Agreement" shall have the meaning specified in the Exchange
Agreement.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(a) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof, or (b) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled,
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directly or indirectly, by any Person or one or more Subsidiaries of such Person
or entity or a combination thereof.
"Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts,
and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority.
"Tax Returns" shall have the meaning set forth in Section 4.1(p).
"Transaction Expenses" has the meaning set forth in Section 7.1.
"US GAAP" means United States generally accepted accounting principles and
practices in effect from time to time applied consistently throughout the
periods involved.
"US SEC" means the Securities and Exchange Commission of the United States
of America.
1.2 The words "hereof", "herein" and "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning in the plural and vice versa.
1.3 References herein to Sections are to Sections of this Agreement. The
titles of the Sections and paragraphs of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.
Section 2. Purchase of Notes
2.1 Purchase and Payment.
(a) The Company hereby agrees to issue and sell to the Purchaser, and
the Purchaser agrees to purchase from the Company, USD$4 million aggregate
principal amount of the Notes, for an aggregate price of USD$4 million (the
"Purchase Price").
(b) On the Closing Date (as defined in Section 3.1 hereof), the
Purchaser will pay for the Notes in accordance with Section 3.2 hereof.
Section 3. Closing
3.1 The closing of the transactions contemplated hereby shall take place at
the offices of Holdings located at FTI Complex, Electronics Avenue, Taguig City,
Metro Manila, Philippines, as soon as practicable following the satisfaction or
waiver of all of the conditions set forth in Sections 3.3 and 3.4 hereof, but in
no event later than July , 2003 (or on such other date as shall be mutually
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agreed upon by the parties in writing). The time and date upon which the closing
occurs is herein called the "Closing Date".
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3.2 At the closing, (a) the Purchaser shall deliver to the Company the
Purchase Price for the Notes by interbank transfer of immediately available
funds to the Company's Account No. 400-935309 with JPMorgan Chase Bank, New York
and such documents as may be required to be delivered in accordance with Section
3.4 below and (b) the Company shall deliver to the Purchaser the Notes and such
documents as may be required to be delivered in accordance with Section 3.3
below.
3.3 The obligation of the Purchaser to purchase and pay for the Notes shall
be subject to the satisfaction or waiver, at or prior to the Closing Date, of
the following conditions:
(a) Representations, Warranties and Covenants. The representations and
warranties of Holdings and the Company contained in this Agreement shall be
(without regard to any materiality qualifiers contained therein) true and
correct in all respects on and as of the Closing Date, unless the failure of
such representations and warranties to be so true and correct has not had or is
not reasonably likely to have a Material Adverse Effect on Holdings or the
Company and the covenants and agreements contained in this Agreement to be
complied with by Holdings and the Company on or before the Closing Date shall
have been complied with in all material respects, and the Purchaser shall have
received a certificate of each of Holdings and the Company to such effect signed
by a duly authorized officer thereof;
(b) Shareholder Approval. The Shareholder Approval shall have been
obtained;
(c) Certificate from BSP. The Company shall have received a letter of
approval from the BSP approving the issuance of the Notes by the Company;
(d) Notice to the Philippine SEC. Prior to the Closing Date, the
Company shall have notified the Philippine SEC of its exemption from the
registration requirements under the Securities Regulation Code with respect to
the issuance of the Notes by the Company;
(e) Exchange Agreement. Each of Holdings and the Company shall have
executed and delivered to the Purchaser the Exchange Agreement;
(f) No Events. There shall not be in effect any statute, regulation,
order, decree or judgment of any Governmental Authority which makes illegal or
enjoins or prevents the consummation of the transactions contemplated by this
Agreement;
(g) No Proceeding or Litigation by any Governmental Authority. Except
as set forth on Section 3.3(g) of the Disclosure Schedule, there shall not have
been any action, suit, investigation or proceeding by any Governmental Authority
pending, or to the best of its knowledge, threatened against or affecting
Holdings or any of its Subsidiaries, any of its properties, revenues or assets,
or this Agreement;
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(h) No Proceeding or Litigation by a Third Party. Except as set forth
on Section 3.3(h) of the Disclosure Schedule, there shall not have been any
action, suit, investigation or proceeding by any third party before any court,
administrative agency or other Governmental Authority pending or, to the best of
its knowledge, threatened against or affecting Holdings or any of its
Subsidiaries, any of their properties, revenues or assets, or this Agreement,
which could reasonably be expected to have a Material Adverse Effect on the
Company;
(i) Board Resolutions. Each of Holdings and the Company shall have
delivered to the Purchaser the resolutions of the Board of Directors, certified
by the Corporate Secretary of Holdings and the Company, as the case may be,
authorizing Holdings or the Company, as the case may be, to enter into this
Agreement, the Notes and the Exchange Agreement, and the Subscription Agreement
and Note Assignment, if applicable, and to consummate all the transactions
contemplated by this Agreement, the Notes and the Exchange Agreement, and the
Subscription Agreement and Note Assignment, if applicable, and in the case of
Holdings, authorizing Holdings to reserve and issue the Shares issuable pursuant
to the terms of the Exchange Agreement out of its authorized capital; and
(j) Opinions of Counsel. The Purchaser shall have received opinions of
X.X. Xxx Law Offices and Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, counsel to Holdings
and the Company addressed to the Purchaser, dated as of the Closing Date and in
form and substance reasonably satisfactory to the Purchaser, with respect to
matters of Philippine law and the United States law respectively, applicable to
this Agreement.
3.4 The obligation of Holdings and the Company to sell the Notes on the
Closing Date shall be subject to the satisfaction or waiver, at or prior to the
Closing Date, of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement shall be (without regard to any
materiality qualifiers contained therein) true and correct in all respects on
and as of the Closing Date, unless the failure of such representations and
warranties to be so true and correct has not had or is not reasonably likely to
have a Material Adverse Effect on the Purchaser and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser on or before
the Closing Date shall have been complied with in all material respects, and
each of Holdings and the Company shall have received a certificate of the
Purchaser to such effect signed by a duly authorized officer thereof;
(b) Shareholder Approval. The Shareholder Approval shall have been
obtained; and
(c) Exchange Agreement. The Purchaser shall have executed and
delivered to Holdings and the Company the Exchange Agreement.
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Section 4. Representations and Warranties
4.1 Representations and Warranties of Holdings and the Company. As of the
date hereof, Holdings and the Company hereby jointly and severally represent and
warrant to the Purchaser as follows:
(a) Each of Holdings and the Company is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of the
Philippines, and each has all necessary power and authority to enter into this
Agreement, the Notes and the Exchange Agreement, as applicable, and the
Subscription Agreement and Note Assignment, if applicable, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated by this Agreement, the Notes and the Exchange Agreement, and the
Subscription Agreement and Note Assignment, if applicable.
(b) The authorized capital stock of Holdings consists of 37,058,100
shares of common stock with par value of one Peso and two-thirds centavos per
share. As of the date hereof, 13,289,525 shares of common stock of Holdings were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable. Other than employee stock options to acquire 591,850 Shares,
there are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the
issuance of additional shares of common stock by Holdings. Holdings is the owner
of 99.99% of the issued and outstanding shares of common stock of the Company.
The authorized capital stock of the Company consists of 400,000,000 shares of
capital stock consisting of 270,000,000 shares of common stock with par value of
one Peso per share and 130,000,000 shares of 12% cumulative convertible
non-participating preferred stock with par value of one Peso per share. As of
the date hereof, 387,000,000 shares of capital stock of the Company were issued
and outstanding consisting of 257,000,000 shares of common stock and 130,000,000
shares of 12% cumulative convertible non-participating preferred stock. Except
as set forth on Section 4.1(b) of the Disclosure Schedule, there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the issuance of additional shares of
capital stock or other equity interests of the Company, or obligating Holdings,
the Company or any of their respective Subsidiaries to issue or sell any shares
of capital stock of, or any other interest in, any Subsidiary of Holdings.
(c) Holdings will reserve such number of Shares as would be required,
in the event the Purchaser exercises its rights under the Exchange Agreement,
for issuance of Shares upon an exchange of the Notes or pursuant to the
Purchaser's Mandatory Issuance Rights. Holdings will not issue or agree to issue
any Shares or options, rights or warrants to purchase Shares or securities
convertible into or exchangeable for Shares or take any other action if, after
giving effect thereto, the number of Shares remaining unissued and duly reserved
for issuance upon exchange of the Notes or pursuant to the Purchaser's Mandatory
Issuance Rights shall be insufficient to permit the issuance of the Shares
pursuant to the terms of the Exchange Agreement.
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(d) The execution and delivery of this Agreement, the Notes and the
Exchange Agreement, and the Subscription Agreement and Note Assignment, if
applicable, by each of Holdings and the Company, the performance by each of
Holdings and the Company of its respective obligations hereunder and thereunder
and the consummation by each of Holdings and the Company of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of each of Holdings and the Company other than the Company
Board Approval and the Holdings Board Approval, and no other proceedings
(corporate or otherwise) on the part of each of Holdings and the Company or any
other Person are necessary to authorize this Agreement, the Notes and the
Exchange Agreement, and the Subscription Agreement and Note Assignment, if
applicable, or to consummate the transactions contemplated hereby and thereby
other than as provided by Section 4.1(g).
(e) This Agreement has been, and upon their execution and delivery the
Exchange Agreement and the Notes, and the Subscription Agreement and Note
Assignment, if applicable, shall be, duly executed and delivered by Holdings and
the Company, and (assuming due authorization, execution and delivery by the
Purchaser) this Agreement, the Exchange Agreement and the Notes, and the
Subscription Agreement and Note Assignment, if applicable, shall constitute
legal, valid and binding obligations of Holdings and the Company, enforceable
against Holdings and the Company in accordance with their terms.
(f) The execution, delivery and consummation of this Agreement, the
Notes and the Exchange Agreement, and the Subscription Agreement and Note
Assignment, if applicable, do not and will not (i) conflict with, or result in a
breach of or default under, any terms or conditions of Holdings' or the
Company's Organizational Documents; (ii) conflict with or violate any Applicable
Laws; (iii) result in the creation of any Encumbrance on the Notes, the Shares
issuable upon exchange of the Notes or exercise of the Purchaser's Mandatory
Issuance Rights or the assets of Holdings and the Company; or (iv) result in any
breach of, or constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument to which Holdings or the Company is a party.
(g) The execution, delivery and performance of this Agreement by
Holdings and the Company, including, without limitation, the issuance and the
sale of the Notes and the issuance of the Shares pursuant to the terms of the
Exchange Agreement, do not and will not require any consent, approval,
authorization, Governmental Approval or other action by, or filing with or
notification or payment to, any third party or any Governmental Authority other
than (i) receipt of the letter of approval from the BSP approving the issuance
of the Notes by the Company (subject to the conditions set forth therein), (ii)
notification to the Philippine SEC regarding the exemption from the registration
requirements under the Securities Regulation Code with respect to the issuance
of the Notes, (iii) receipt of a BSRD from the BSP certifying registration with
the BSP of the Notes as a foreign currency loan to allow for the purchase of
U.S. dollars
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from the Philippine banking system (the "Notes BSRD"), (iv) (A) confirmation
from the Philippine SEC regarding the exemption from the registration
requirements under the Securities Regulation Code with respect to the issuance
of the Shares issuable upon exchange of the Notes and approval by the Philippine
SEC of the issuance of the Shares issuable upon exchange of the Notes or (B)
notification to the Philippine SEC regarding the exemption from the registration
requirements under the Securities Regulation Code with respect to the issuance
of the Shares pursuant to an exercise of the Purchaser's Mandatory Issuance
Rights, (v) receipt of a BSRD from the BSP certifying registration with the BSP
of the Shares issuable pursuant to the terms of the Exchange Agreement to allow
for the purchase of U.S. dollars from the Philippine banking system (the "Shares
BSRD"), (vi) payment by the Company of the documentary stamp taxes due on the
issuance of the Notes, (vii) payment by Holdings of the documentary stamp taxes
due on the issuance of the Shares issuable upon exchange of the Notes, (viii)
payment of filing fees with the Philippine SEC in connection with the
confirmatory ruling request to be filed in accordance with clause (iv)(A) above,
(ix) filing by the Company of Form 1601F with the Philippine Bureau of Internal
Revenue and payment of withholding taxes on the interest on the Notes, (x)
payment of Transaction Expenses in accordance with Section 7.1 hereof and (xi)
filing by the Company of a tax treaty relief application to avail itself of
rates available under the applicable tax treaty.
(h) The Shares issued by Holdings pursuant to the terms of the
Exchange Agreement (i) will be, upon issuance, free and clear of any security
interests, liens, claims or other Encumbrances, (ii) have been duly and validly
authorized by Holdings and upon issuance in accordance with the Exchange
Agreement will be duly and validly issued and non-assessable, (iii) will not
have been individually or collectively issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of Holdings,
(iv) will not subject the holders thereof to personal liability by reason of
being such holders and (v) will be, upon issuance, registerable with the BSP to
allow for the purchase of foreign exchange needed to service the repatriation of
dividends, distributions or proceeds from the sale of the Shares to be sourced
from the Philippine banking system in accordance with the laws and regulations
implemented by the BSP.
(i) There is no action, suit, investigation or proceeding by or before
any court, arbitrator, administrative agency or other Governmental Authority
pending or, to the best of knowledge of Holdings or the Company, threatened
against Holdings or the Company that would materially affect the execution by
Holdings or the Company of, or the performance by Holdings or the Company of
their respective obligations under this Agreement or affecting the Shares that
would be issued pursuant to the terms of the Exchange Agreement.
(j) Since January 1, 2001, Holdings has made all the requisite filings
(the "Reports"), under the Securities Act and the Exchange Act with the US SEC,
including all forms, statements, reports, written agreements and all documents,
exhibits, amendments and supplements appertaining thereto, and Holdings has
complied in all material respects with all applicable requirements of the
Exchange Act and the rules and regulations thereunder. As of their respective
dates, the Reports did not contain any
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untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Form 20-F filed by
Holdings with the US SEC does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. To the extent applicable, the statutory certification
requirements of Section 302 and Section 906 of the Xxxxxxxx-Xxxxx Act of 2002
have been complied with in all respects by Holdings.
(k) The Consolidated Financial Statements of Holdings (i) were
prepared in accordance with the books of account and other financial records of
Holdings and its consolidated Subsidiaries, (ii) present fairly the consolidated
financial condition and results of operations of Holdings and its consolidated
Subsidiaries as of the dates thereof or for the periods covered thereby, and
(iii) have been prepared in accordance with US GAAP applied on a basis
consistent with past practices and (iv) include all adjustments (consisting only
of normal recurring accruals) that are necessary for a fair presentation of
consolidated financial condition and results of the operations as of the dates
thereof or for the periods covered thereby.
(l) The Company has duly authorized the Notes and upon issuance
pursuant to this Agreement the Notes will be legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or equity).
(m) The representations and warranties of Holdings and the Company in
this Agreement and all written statements and certificates furnished or to be
furnished to the Purchaser pursuant to this Agreement, or in connection with the
transactions contemplated by this Agreement, taken as a whole do not contain or
will not contain any untrue statement of a material fact, or do not or will not
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
(n) The issuance of the Notes hereunder and the issuance of the Shares
pursuant to the terms of the Exchange Agreement are not required to be
registered under the Securities Act or the Securities Regulation Code, subject
to compliance with Section 6.01 of the Note, and the issuance of the Shares
pursuant to the terms of the Exchange Agreement will not violate any applicable
rules or regulations of the NASDAQ.
(o) Holdings and the Company are familiar with the purposes and
provisions of the Foreign Corrupt Practices Act of 1977, as amended by the
Omnibus Trade and Competitiveness Act of 1988, and the rules and regulations
promulgated thereunder (the "FCPA"), and will take no action and make no payment
in violation of, or which is likely to cause Holdings, the Company, any
Subsidiary of Holdings or the Company or the Purchaser to be in violation of,
the FCPA. In connection with the
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performance of its obligations under this Agreement, the Notes and the Exchange
Agreement, and the Subscription Agreement and Note Assignment, if applicable,
each of Holdings and the Company further represents and warrants, that no person
employed by it or any of its Subsidiaries is an official of the government of
any country, or of any agency or instrumentality thereof. Each of Holdings and
the Company further covenants, represents and warrants that it has not and will
not offer, promise, authorize or make, directly or indirectly, any payments,
contributions or gifts to any government official, political party, any
candidate for political office or any officer, director or employee of any
governmental instrumentality in violation of any Applicable Law. Notwithstanding
any other provision of this Agreement, Holdings and the Company expressly agree
that in no event shall it request the Purchaser to take any action or provide
any information which is prohibited under any United States antiboycott law or
regulation or provision of the Internal Revenue Code, or which, under any such
law, regulation or provision, would be reportable, and that any such apparent
request will be deemed null and void. Nothing in this Agreement or in any other
related document will be construed to require or to constitute an agreement by
the Purchaser to take any action or provide any information which is prohibited
under any United States antiboycott law or regulation or provision of the
Internal Revenue Code. Neither Holdings, the Company nor any of their respective
representatives or any other Person, in connection with operating their
respective business entered into any contract, agreement or transaction with any
Governmental Authority, agent, representative or Person based or resident in,
any country that now or at the time of such contract, agreement or transaction
was the subject of regulations of the United States Treasury Department set
forth under 31 CFR, Subtitle B, Chapter V, as amended, or any enabling
legislation or executive order relating thereto.
(p) (i) All returns and reports in respect of Taxes ("Tax Returns")
required to be filed by or with respect to Holdings and the Company have been
timely filed; (ii) all Taxes required to be shown on such Tax Returns or
otherwise due have been timely paid and (iii) all such Tax Returns are true,
correct and complete in all material respects.
(q) Holdings has obtained the Shareholder Approval.
4.2 Representations and Warranties of the Purchaser. As of the date hereof,
the Purchaser hereby represents and warrants to Holdings and the Company as
follows:
(a) The Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to enter into this Agreement and the
Exchange Agreement , and the Subscription Agreement and the Note Assignment, if
applicable, to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated by this Agreement.
(b) The Purchaser has the full power and authority and has taken all
action necessary to authorize and permit it to execute and deliver this
Agreement and the Exchange Agreement, and the Subscription Agreement and the
Note Assignment, if
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applicable, and to carry out the terms of this Agreement and the Exchange
Agreement, and the Subscription Agreement and the Note Assignment, if
applicable, and none of such actions will violate any provision of the
Purchaser's Organizational Documents or any Applicable Law, or result in the
breach of, or constitute a default (or event which, with notice or lapse of time
or both, would constitute a default) under, any agreement, instrument or
understanding to which the Purchaser is a party or by which it is bound. This
Agreement has been, and upon its execution and delivery the Exchange Agreement,
and the Subscription Agreement and the Note Assignment, if applicable, shall be
duly executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by Holdings and the Company) this Agreement and the
Exchange Agreement, and the Subscription Agreement and Note Assignment, if
applicable, shall constitute legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except to the extent limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application related to
the enforcement of creditor's rights generally and (ii) general principles of
equity.
(c) The Purchaser has or will have at the closing sufficient funds to
consummate the transactions contemplated in this Agreement.
(d) The Purchaser understands that the offering and sale of the Notes
and the issuance of Shares pursuant to the Notes is intended to be exempt from
registration under the Securities Act. The Purchaser is an "accredited investor"
as such term is defined in Rule 501(a) of Regulation D under the Securities Act.
The Purchaser is acquiring the Notes to be acquired hereunder (and will acquire
the Shares pursuant to the Exchange Agreement) for its own account, for
investment and not with a view to the public resale or distribution thereof, in
violation of any United States or Philippine securities law.
Section 5. Agreements
5.1 Filings with the Philippine SEC.
(a) Within fifteen (15) days from the Closing Date, Holdings shall
file with the Philippine SEC any and all notices, documents and papers as may be
necessary to obtain (i) the confirmation from the Philippine SEC that the
issuance of the Shares in exchange for the Notes in the event of an exercise of
the Purchaser's Exchange Rights is exempt from the registration requirements of
the Securities Regulation Code and (ii) the unqualified approval of the
Philippine SEC of the issuance of the Shares in exchange for the Notes.
(b) In the event of an exercise of the Purchaser's Mandatory Issuance
Rights on or prior to the date of any closing or subsequent closing pursuant to
the Exchange Agreement, Holdings shall file a notification with the Philippine
SEC of its exemption from the registration requirements under the Securities
Regulation Code with respect to the issuance of the Shares issuable pursuant to
the exercise of the Mandatory Issuance Rights.
13
5.2 Filings with the BSP.
(a) Holdings and the Company agree that, on or prior to September 1,
2003, they shall have (i) taken all action necessary to register the full amount
of the Notes as a foreign currency loan with the BSP and (ii) obtained the
related Notes BSRD; provided, however, that if the Purchaser delivers to
Holdings an Exchange Notice prior to September 1, 2003, Holdings and the Company
shall promptly take all action necessary to register the amount of Notes subject
to such Exchange Notice and obtain the related Notes BSRD. Such action shall
include filing of proof of receipt of the Purchase Price, documents pertaining
to the use of proceeds from the Purchase Price and all other documents that may
be required by the BSP to register the Notes and issue the Notes BSRD.
(b) Holdings and the Company agree that, for the benefit of the
Purchaser or any transferee of the Purchaser they shall have, (i) within 5 days
of any closing or subsequent closing pursuant to the Exchange Agreement, taken
all action necessary to register the Shares issuable pursuant to the terms of
the Exchange Agreement with the BSP and (ii) within 30 days of any closing or
subsequent closing pursuant to the Exchange Agreement, obtained the related
Shares BSRD, provided, however, that in the event that both (A) the Purchaser
exercises an Exchange Right prior to September 1, 2003 and (B) the Philippine
SEC has not approved the confirmatory ruling requested in accordance with
Section 5.1(a) hereof, all actions set forth in this Section 5.2(b) shall be
completed within 60 days of such closing or subsequent closing pursuant to the
Exchange Agreement instead of 30 days. Such action shall include filing of the
requisite Notes BSRD, if applicable, and all other documents that may be
required by the BSP to register the Shares and issue the Shares BSRD.
5.3 Payment of Documentary Stamp Taxes.
(a) The Company further agrees that it shall pay the documentary stamp
taxes due upon the issuance of the Notes pursuant to this Agreement by the fifth
day of the month immediately following the month on which the closing occurs.
(b) Holdings agrees that is shall pay the documentary stamp taxes due
upon the issuance of the Shares issuable pursuant to the terms of the Exchange
Agreement prior to the closing date of such issuance pursuant to the terms of
the Exchange Agreement.
5.4 Tax Information.
For such time as any Shares or Notes are held by the Purchaser, Holdings
and the Company shall promptly provide the Purchaser with such information as
shall be required or reasonably requested by the Purchaser for purposes of
allowing the Purchaser to prepare and file its Tax Returns.
5.5 Approval of the Company Board and the Holdings Board.
14
(a) The Company agrees that it shall take all action necessary to
obtain the approval of the Board of Directors of the Company (the "Company Board
Approval"), if the Company is required to make interest payments on the Notes in
kind pursuant to the terms of the Notes, in the event the Company meets the
financial criteria set forth in Section 2.01 of the Notes. The Board of
Directors of the Company may not obtain the Company Board Approval, however, if
the Board of Directors of the Company in its good faith judgment and after
receiving the written advice of independent legal counsel that obtaining such
Company Board Approval would cause the Board of Directors of the Company to
breach its fiduciary duties to the Company and the shareholders of the Company
under Applicable Law, provided, however, that such failure to pay the interest
required pursuant to the terms of the Notes shall constitute an Event of Default
(as defined in the Notes) under the Notes.
(b) Holdings agrees that it shall take all action necessary to obtain
the approval of the Board of Directors of Holdings (the "Holdings Board
Approval") to treat the Purchaser's contribution of the Notes upon an exchange
of such Notes for Shares of Holdings as additional paid-in capital of Holdings'
equity in the Company.
Section 6. Indemnification
6.1 Indemnification by Holdings and the Company.
Holdings and the Company shall jointly and severally indemnify, defend and
hold harmless the Purchaser and its shareholders, directors, officers,
employees, controlling persons, agents, representatives, successors and assigns
(each an "Indemnified Party") from and after the closing, from and against any
and all losses, claims, damages, liabilities, obligations, penalties, judgments,
awards, reasonable and documented costs, expenses and disbursements as incurred
(and any and all actions, suits, proceedings and investigations in respect
thereof and any and all reasonable and documented legal and other costs,
expenses or disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation, the
reasonable and documented costs, expenses and disbursements as and when
incurred, of investigating, preparing or defending any such action, suit,
proceeding or investigation (whether or not such Indemnified Party is a party)
(the "Losses"), directly or indirectly, caused by, relating to, based upon,
arising out of or in connection with any facts or circumstances that constitute
(i) breach of any representation or warranty of Holdings or the Company
contained herein, or in any agreement, certificate or instrument delivered
pursuant hereto set forth therein and (ii) breach of any agreement or covenant
of Holdings or the Company contained herein. To the extent that Holdings' and
the Company's undertakings set forth in this Section 6.1 may be unenforceable,
Holdings and the Company shall contribute the maximum amount that they are
permitted to contribute under Applicable Law to the payment and satisfaction of
all Losses incurred by the Indemnified Parties (including any Schedule or
Exhibit attached hereto), (provided that Holdings or the Company, as the case
may be, is given written notice of such Loss).
6.2 Indemnification Procedures; Third Party Claims.
15
An Indemnified Party shall give Holdings or the Company, as the case may
be, prompt written notice of any claim, assertion, event or proceeding
concerning any liability or damage as to which it may request indemnification
from Holdings or the Company hereunder; provided, however, that any failure by
an Indemnified Party to notify Holdings or the Company shall not relieve
Holdings or the Company from its obligations hereunder except to the extent
Holdings or the Company is materially prejudiced by such failure and shall not
relieve Holdings or the Company from any other obligation or liability that it
may have to any Indemnified Party otherwise than under this Section 6. If
Holdings or the Company, as the case may be, so elects or is requested by an
Indemnified Party, Holdings or the Company, as the case may be, will assume the
defense of such action or proceeding including the employment of counsel
reasonably satisfactory to such Indemnified Party and the payment of the fees
and expenses of such counsel. In the event, however, such Indemnified Party
reasonably determines in its judgment that having common counsel would present
such counsel with a conflict of interest or if Holdings or the Company, as the
case may be, (a) fails to assume the defense of the action or proceeding in a
timely manner, (b) in the reasonable judgment of the Indemnified Party, the
defense is being handled in such a manner that the Indemnified Party's
reputation or future business prospects will be damaged or (c) a court of
competent jurisdiction rules that Holdings or the Company, as the case may be,
has failed or is failing to prosecute or defend vigorously such claim, then such
Indemnified Party may employ separate counsel to represent or defend it in any
such action or proceeding and Holdings or the Company, as the case may be, will
pay the fees and expenses of such counsel. In any action or proceeding the
defense of which Holdings or the Company assumes, the Indemnified Party will
have the right to participate in such litigation and to retain its own counsel
at such Indemnified Party's own expense.
Holdings and the Company agree that, without the prior written consent of
the Purchaser, it will not settle, compromise or consent to entry of any
judgment in any pending or threatened claim, action or proceeding in respect of
which indemnification could be sought under the indemnification provision of
this Agreement (whether or not the Purchaser or any other Indemnified Party is
an actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding and does not include a statement as to an admission of fault,
culpability or a failure to act on behalf of an Indemnified Party.
Section 7. Miscellaneous
7.1 Expenses.
Except as otherwise specified in this Agreement, all reasonable costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors, accountants, and filing fees and documentary stamp and
similar taxes incurred in connection with this Agreement, the Notes, the
Exchange Agreement, the Subscription Agreement, the Note Assignment and the
transactions contemplated hereby and thereby (the "Transaction Expenses") shall
be paid by Holdings and the Company. To the extent
16
that the Purchaser pays any Transaction Expenses, Holdings shall, as promptly as
reasonably practicable, reimburse the Purchaser for the full amount of the
Transaction Expenses paid by the Purchaser.
7.2 Waivers and Amendments.
This Agreement may only be modified with the written consent of the parties
hereto. Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by a statement in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
7.3 Notices.
Except as otherwise provided in this Agreement, all notices and other
communications pursuant to this Agreement shall be in writing and shall be
delivered in person, by courier or by facsimile transmission (with written
confirmation of receipt) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 7.3):
(a) if to Holdings or the Company,
PSi Technologies Holdings, Inc.
Electronic Avenue
FTI Industrial Complex
Taguig City
Metro Manila 1604
Philippines
Attention: Xxxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
with a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
X.X. Xxx Law Offices
No. 48, SMC Court
Celery Drive, Xxxxx Verde 0
Xxxxx Xxxx, Xxxxx Xxxxxx
Xxxxxxxxxxx
Attention: Xxxxx Go Xxx
Fax: (000) 000-0000
17
(b) if to the Purchaser:
Xxxxxxx Xxxxx Global Emerging Markets Partners, LLC
World Financial Center - Xxxxx Xxxxx
000 Xxxxx Xxxxxx - 23rd floor
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
7.4 Severability.
In the event that any one or more provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the parties shall negotiate in good
faith with a view to the substitution therefor of a suitable and equitable
solution in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid provision; provided, however, that the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
7.5 Governing Law; Jurisdiction.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
(a) Any claim, action, suit or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby may be heard and determined in any New
York State or federal court sitting in The City of New York, County of
Manhattan, and each of the parties hereto consents to the exclusive jurisdiction
of such courts (and of the appropriate appellate courts therefrom in any such
claim, action, suit or proceeding) and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any such claim, action, suit or proceeding in any such court or that
any such claim, action, suit or proceeding that is brought in any such court has
been brought in an inconvenient forum.
18
(b) Subject to Applicable Law, process in any such claim, action, suit or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Nothing herein shall affect the
right of any party to serve legal process in any manner permitted by law or at
equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH
COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS
RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN
ANY SUCH PROCEEDING.
7.6 No Strict Construction.
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
7.7 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
7.8 Assignment.
This Agreement may not be assigned by operation of law or otherwise without
the express written consent of Holdings or the Company, as the case may be, or
the Purchaser (which consent may be granted or withheld in the sole discretion
of Holdings or the Company, as the case may be, or the Purchaser); provided,
however, that the Purchaser may assign this Agreement or any of its rights and
obligations hereunder to one or more Affiliates without the consent of Holdings
or the Company. The rights of any Purchaser with respect to the Notes shall be
transferred to any Person who is a transferee of such Notes; provided that such
transferees shall have assumed the obligations of the Purchaser hereunder in a
form satisfactory to Holdings or the Company. All obligations of Holdings and
the Company hereunder shall survive any such transfer.
7.9 Third Party Beneficiaries and Transfers.
Except for the provisions of Section 6 relating to Indemnified Parties,
this Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person, any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
7.10 Entire Agreement.
19
This Agreement, the Notes and the Exchange Agreement constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both written and
oral, among Holdings, the Company and the Purchaser with respect to the subject
matter hereof and thereof.
7.11 Public Announcements.
Subject to its legal obligations (including requirements of any
Governmental Authorities, stock exchanges and other similar regulatory bodies
and other than as may be required pursuant to the Exchange Act, the Securities
Regulation Code or any other Applicable Law), no party shall make any
announcement regarding the entering into of this Agreement or the closing to the
financial community, governmental entities, employees, customers or the general
public without the prior consent of the other party, which shall not be
unreasonably withheld, and the parties shall cooperate with each other as to the
timing and contents of any such announcement. Notwithstanding anything herein to
the contrary, each party and its representatives may consult any tax advisor
regarding the tax treatment and tax structure of the transactions contemplated
by this Agreement, the Notes and the Exchange Agreement, and the Subscription
Agreement and the Note Assignment, if applicable, and, from and after the date
of execution of this Agreement, the Notes and the Exchange Agreement, and the
Subscription Agreement and the Note Assignment, if applicable, (or, if earlier,
the date of public announcement of the transactions contemplated by this
Agreement, the Notes and the Exchange Agreement, and the Subscription Agreement
and the Note Assignment, if applicable, or public announcement of discussions
between the parties relating to the transactions contemplated by this Agreement,
the Notes and the Exchange Agreement, and the Subscription Agreement and the
Note Assignment, if applicable,), may disclose to any Person, without limitation
of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement, the Notes and the Exchange Agreement, and the
Subscription Agreement and the Note Assignment, if applicable, and all materials
(including opinions or other tax analyses) that are provided relating to such
treatment or structure; provided, however, that each party and its
representatives, shall not disclose the identities of the parties to this
Agreement, the Notes and the Exchange Agreement, and the Subscription Agreement
and the Note Assignment, if applicable, in such communications, without the
prior consent of the other party.
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
Xxxxxxx Xxxxx Global Emerging
Markets Partners, LLC
By: Xxxxxxx Xxxxx Global Emerging Markets
Partners, L.P., as its Managing Member
By: Xxxxxxx Xxxxx Global Capital, L.L.C., as
its General Partner
By: Xxxxxxx Xxxxx Global Partners, Inc., as
its Managing Member
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
PSi Technologies Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board and
Chief Executive Officer
PSi Technologies, Inc.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------------
Name:
Title:
Exhibit A
FORM OF NOTES
A-1
EXECUTION COPY
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER.
THE NOTE HAS NOT BEEN REGISTERED WITH THE PHILIPPINE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
REGULATION CODE (THE "CODE"). ANY FUTURE OFFER OR SALE
THEREOF IS SUBJECT TO REGISTRATION REQUIREMENTS UNDER THE
CODE UNLESS SUCH OFFER OR SALE QUALIFIES AS AN EXEMPT
TRANSACTION.
PSI TECHNOLOGIES, INC.
USD$4,000,000 10.00% Exchangeable Senior Subordinated Note
Dated as of July 3, 2003
FOR VALUE RECEIVED, the undersigned, PSi Technologies, Inc., a
corporation organized and existing under the laws of the Philippines (the
"Company"), HEREBY PROMISES TO PAY XXXXXXX XXXXX GLOBAL EMERGING MARKETS
PARTNERS, LLC or its permitted registered assigns ("MLGEMP" or as further
defined herein, the "Holder") the aggregate principal amount of USD$4,000,000
plus all accrued and unpaid interest on June 1, 2008 (the "Maturity Date").
The Company hereby promises to pay interest on the unpaid principal
amount hereof from the date hereof until such principal amount is paid in full,
payable on the dates and at the rates hereinafter set forth.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The following terms used in this Note shall have the following
meanings (unless otherwise expressly provided in this Note):
"ADSs" means the American Depository Shares of Holdings, each
representing one share of Common Stock.
"Affiliate" means with respect to any Person, any other Person
controlling, controlled by, or under common control with such first Person. For
the avoidance of doubt, the Company and its Affiliates shall be considered
Affiliates of the Company and the Holders and their Affiliates shall not be
considered Affiliates of the Company.
"Bankruptcy" means, with respect to a Person, (a) that such Person has
(i) made an assignment for the benefit of creditors; (ii) filed a voluntary
petition in bankruptcy; (iii) been adjudged bankrupt, or insolvent; or had
entered against such Person an order of relief in any bankruptcy or insolvency
proceeding; (iv) filed a petition or an answer seeking for such Person any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation or filed an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in any proceeding of such nature; or (v)
sought, consented to, or acquiesced in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of such Person's
properties; (b) 60 days have elapsed after the commencement of any proceeding
against such Person seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation and such proceeding has not been dismissed; or (c) 60 days have
elapsed since the appointment without such Person's consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any substantial part
of such Person's properties and such appointment has not been vacated or stayed
or the appointment is not vacated within 60 days after the expiration of such
stay.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or any
other day that is a legal holiday under the laws of the State of New York or
Taguig, Philippines or a day on which national banking associations in New York
or Taguig, Philippines are authorized or required by law or other governmental
action to close.
"Common Stock" means the common stock, par value PHP 1 2/3 per share,
of Holdings.
"Company" has the meaning set forth in the Preamble.
"Conversion Principal Amount" shall have the meaning set forth in the
Exchange Agreement.
"Default Interest" shall have the meaning set forth in Section 2.04.
"Director" means a director of the Board of Directors.
"EBITDA" means, without duplication, the consolidated Net Income of
Holdings and its Subsidiaries determined in accordance with GAAP consistently
applied, plus any amounts subtracted in calculating Net Income in respect of net
interest expense, income taxes, depreciation and amortization, less (i) any gain
plus any loss realized in connection with the sale of any assets or disposition
of any securities, other than those included in cash flow from operations, (ii)
any extraordinary or non-recurring gain plus any loss or (iii) any non-cash
extraordinary gain, plus (iv) any non-cash extraordinary loss; provided,
however, that all expenses arising directly out of the transactions contemplated
by the Purchase Agreement, the Exchange Agreement and this Note, and the
Subscription Agreement and Note Agreement, if applicable, and expenses arising
directly out of future capital-raising transactions shall be deemed
extraordinary expenses and excluded from EBITDA for purposes of this definition.
2
"Encumbrance" means any lien, mortgage, pledge, collateral assignment,
security interest, hypothecation or other encumbrance, other than as established
by, under or in connection with the terms of this Note, the Purchase Agreement
or the Exchange Agreement, and the Subscription Agreement and Note Assignment,
if applicable, or the transactions contemplated thereby.
"Exchange Agreement" means the Exchange Agreement, dated as of July
[3], 2003, by and among the Company, Holdings and the Holder, as amended,
restated, supplemented or otherwise modified pursuant to the terms thereof from
time to time.
"Events of Default" shall have the meaning set forth in Section 4.01.
"Fiscal Quarter" means any three-month accounting period of the
Company in the Fiscal Year.
"Fiscal Year" means the annual accounting period of the Company, which
shall be the calendar year or such portion of a calendar year during which the
Company is in existence.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, consistently applied.
"Holder" means any Person identified as the registered holder of this
Note in the Register.
"Holdings" means PSi Technologies Holdings, Inc., a corporation
organized and existing under the laws of the Philippines.
"Holdings Common Stock" means the common stock of Holdings, par value
PHP 1 2/3 per share.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade and non-trade payables and accrued liabilities
arising in the ordinary course of business), (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all capitalized lease obligations
of such Person, (f) all obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities securing Indebtedness
and all interest rate or foreign exchange hedging transactions, (g) all
unconditional obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock, (h) all Indebtedness of any
other Person of the type referred to in clauses (a) through (g) guaranteed by
such Person or for which such Person shall otherwise (including pursuant to any
keepwell, makewell or similar arrangement) become directly or indirectly liable
(other than indirectly as a result of a performance guarantee not entered into
with respect to Indebtedness), and (i) all third party
3
Indebtedness of the type referred to in clauses (a) through (h) above secured by
any lien or security interest on property (including accounts and contract
rights) owned by the Person whose Indebtedness is being measured, even though
such Person has not assumed or become liable for the payment of such third party
Indebtedness, the amount of such obligation being deemed to be the lesser of the
net book value of such property or the amount of the obligation so secured;
provided that true sales of accounts receivable shall not constitute
"Indebtedness" hereunder.
"Interest Payment Date" means each June 30 and December 31, and if
such day is not a Business Day, then the next succeeding Business Day, until the
Maturity Date.
"Invested Principal Amount" shall have the meaning set forth in the
Exchange Agreement.
"Investment" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of guarantee
or similar arrangement; but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the balance sheet of the Company or its Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of capital stock, bonds, notes, debentures or other
similar instruments issued by, such Person.
"Mandatory Issuance" shall have the meaning set forth in the Exchange
Agreement.
"Nasdaq" means the Nasdaq National Market.
"Net Income" means with respect to any Fiscal Year, or part thereof,
the net income (or net loss) of the Company for such period as determined on a
consolidated basis and in accordance with GAAP.
"Note" means this 10.00% Exchangeable Senior Subordinated Note, each
other Note and each additional Note issued upon any transfer of an interest in
all or any part of this Note; and "Notes" means, collectively, all of the
foregoing.
"Note Assignment" shall have the meaning set forth in the Exchange
Agreement.
"Officer" means an officer of the Company.
"Person" means any individual, corporation, partnership, limited
liability company, trust, joint venture, governmental entity or other
unincorporated entity, association or group.
"PHP" means the lawful currency of the Philippines.
"Purchase Agreement" means the Purchase Agreement, dated as of July
[3], 2003, by and between the Company, Holdings and the Holder, as amended,
restated, supplemented or otherwise modified pursuant to the terms thereof from
time to time.
4
"Redemption Date" shall have the meaning set forth in Section 2.05(a).
"Redemption Notice" shall have the meaning set forth in Section
2.05(a).
"Redemption Price" shall have the meaning set forth in Section
2.05(a).
"Register" has the meaning set forth in Section 6.03.
"Registration Rights Agreement" means the Registration Rights
Agreement among Holdings, the Holder and JAFCO Investment (Asia Pacific) Ltd.,
dated May 29, 2001.
"Senior Credit Facility" means (a) the Revolving Facility Agreement
among the Company and PSi Technologies Laguna, Inc., as Borrowers, and
Raiffeisen Zentralbank Xxxxxxxxxxx XX (RZB-Austria), Singapore Branch, as Bank,
dated September 24, 2002, including any extensions, renewals or refinancings
thereof on the same terms that currently exist; provided, however, that the
credit facility may be increased from $5 million to $10 million; (b) the LC/TR
Credit Facility between the Company and KBC Bank N.V. (Manila Branch), dated
October 30, 2002, including any extensions, renewals or refinancings thereof on
the same terms and for the same amount that currently exist; (c) the Onmibus
Line (Import LC/TR Credit Facility) between the Company and Rizal Commercial
Banking Corporation, dated August 14, 2002, including any extensions, renewals
or refinancings thereof on the same terms and for the same amount that currently
exist; (d) the Import LC/TR Credit Facility between the Company and Bank of
Commerce, dated April 16, 2003, including any extensions, renewals or
refinancings thereof on the same terms and for the same amount that currently
exist; (e) the Short Term Advances Credit Facility between the Company and KBC
Bank N.V. (Manila Branch), dated October 30, 2002, including any extensions,
renewals or refinancings thereof on the same terms and for the same amount that
currently exist; and (f) the Short Term Omnibus Line-Loan Facility between the
Company and Rizal Commercial Banking Corporation, dated August 14, 2002,
including any extensions, renewals or refinancings thereof on the same terms and
for the same amount that currently exist.
"Shareholder" means a shareholder of the Company.
"Subscription Agreement" shall have the meaning set forth in the
Exchange Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof, or (b) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of such Person or entity or a combination thereof. For purposes of
this Note, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or
5
other business entity gains or losses or shall be or control any managing
director, managing member, or general partner of such limited liability company,
partnership, association or other business entity.
"Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority.
"Transfer" means (a) as a noun, the transfer of ownership by sale,
exchange, assignment, gift, donation, grant or other conveyance of any kind,
whether voluntary or involuntary, including Transfers by operation of law or
legal process (and hereby expressly including, with respect to a Holder,
assignee or other Person, any voluntary or involuntary appointment of a
receiver, trustee, liquidator, custodian or other similar official for such
Holder or all or any part of such Holder, assignee or other Person or all or any
part of the property of such Holder, assignee or other Person under any
Bankruptcy, reorganization or insolvency law) and (b) as a verb, the act of
making any voluntary or involuntary Transfer.
SECTION 1.02. Other Definitional Provisions.
(a) All terms in this Note shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Note and in any certificate or other documents
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Note or in any such certificate or other document, and accounting terms
partly defined in this Note or in any such certificate or other document to the
extent not defined, shall have the respective meanings given to them under GAAP.
To the extent that the definitions of accounting terms in this Note or in any
such certificate or other document are inconsistent with the meanings of such
terms under GAAP, the definitions contained in this Note or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder," and words of similar
import when used in this Note shall refer to this Note as a whole and not to any
particular provision of this Note; Section references contained in this Note are
references to Sections in this Note unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) The definitions contained in this Note are applicable to the
singular as well as the plural forms of such terms.
(e) Common nouns and pronouns and any variations thereof shall be
deemed to refer to masculine, feminine, or neuter, singular or plural, as the
identity of the Person, Persons or other reference in the context requires.
Whenever used herein, "or" shall include both the conjunctive and disjunctive,
"any" shall mean "one or more."
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of
6
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
TERMS OF PAYMENT
SECTION 2.01. Interest Payment. The Company shall pay interest on the
unpaid principal amount of this Note at a rate per annum equal to 10.00%,
payable semi-annually in arrears on each Interest Payment Date; provided,
however, that, if (a) upon any Interest Payment Date the Company is prohibited
from paying cash interest due to restrictions in its Senior Credit Facility or
(b) the Holdings' EBITDA for the two consecutive Fiscal Quarters ending
immediately prior to any Interest Payment Date is less than USD$1,000,000, then
the Company may, by notice to the Holder, elect to pay all or any portion of
such interest by adding it to the principal amount of this Note, whereupon such
amount shall bear interest at the rate aforesaid and shall no longer be
considered to be interest due under this Section 2.01. Upon the receipt by the
Holder of a notice of such election by the Company, the Holder shall record the
amount, the date such amount is added to the principal amount of this Note and
the aggregate principal amount of this Note in accordance with its usual
practice and, prior to any transfer of this Note, such information shall be
endorsed on the grid attached hereto, which is a part of this Note.
SECTION 2.02. No Prepayment. The Company shall not be permitted to
prepay this Note in whole or in part.
SECTION 2.03. Payments and Computations. The Company shall make each
payment hereunder not later than 1:00 p.m. (New York City time) on the day when
due in U.S. dollars to the Holder at the account or accounts referred to on
Schedule I attached hereto in same day funds. All computations of interest shall
be made on the basis of a year of 360 days comprised of two 180-day halves;
provided, however, that in the case of the first interest payment under this
Note, interest shall be computed on the basis of the actual number of days
elapsed from the date of the initial funding under this Note to such first
Interest Payment Date. Whenever any payment shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall not in such case be included in
the computation of payment of interest.
SECTION 2.04. Default Interest. Upon the occurrence and during the
continuance of any Event of Default, the Company shall pay interest on (i) the
unpaid principal amount of this Note owing to the Holder, payable in arrears on
the dates referred to in Section 2.01 above and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on such principal amount pursuant to Section 2.01 above and (ii) to the fullest
extent permitted by law, the amount of any interest payable under this Note that
is not paid when due, from the date such amount shall be due until such amount
shall be paid in full, payable in arrears on the date such amount shall be paid
in full and on demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid pursuant to Section 2.01 above
("Default Interest").
7
SECTION 2.05. Redemption. (a) In the event that, at any time after July
[3], 2006, for a 30-consecutive trading day period the ADSs trading on the
Nasdaq, or any other trading facility on which the ADSs are listed, (i) shall
have traded at an average closing price of at least $3.00 per ADS and (ii) the
daily average trading volume of the ADSs shall have been equal to at least
33.33% of the number of shares of Common Stock issuable pursuant to the Exchange
Agreement, the Company may at its option send written notice (the "Redemption
Notice") to the Holders indicating that the Company desires to redeem all but
not less than all of the outstanding Notes, specifying the date of such
redemption, which shall be not earlier than 30 days after the date of the
Redemption Notice (the "Redemption Date"), the redemption price, which shall be
equal to the aggregate principal amount outstanding on the Note plus all accrued
and unpaid interest thereon (the "Redemption Price"), and the fulfillment of
clauses (i) and (ii) above.
(b) Prior to the Redemption Date, the Holders may exchange or assign
any or all of the Notes held by such Holders pursuant to the terms of the
Exchange Agreement. All Notes that have not been exchanged or assigned and are
outstanding as of the Redemption Date shall be redeemed by the Company on the
Redemption Date, subject to the terms and conditions herein.
(c) From and after the Redemption Date, interest on the Notes so
redeemed shall cease to accrue, such Notes shall no longer be deemed to be
outstanding, and all rights of the Holders thereof as holders of the Company
with respect to Notes so redeemed (except the right to receive from the Company
the Redemption Price, upon surrender at the Company's principal office (or other
place within the United States of America or the Philippines identified in the
applicable notice for surrender of Notes) of such Notes) shall cease (including
any right to receive interest otherwise payable on any record date that would
have occurred thereafter); provided, however, that to the extent the Company
defaults in the payment in full for any Notes, including unpaid interest in
respect thereof accrued to the date of redemption, such Notes shall remain
outstanding and all rights of the holders thereof as holders of the Company with
respect to such Notes shall continue until the Company has made such payment in
full for such Notes.
(d) In the event of a redemption by the Company, MLGEMP shall have one
additional demand registration right pursuant to the Registration Rights
Agreement, on the same terms and conditions set forth in the Registration Rights
Agreement, solely for the shares of Common Stock held by MLGEMP or its
Affiliates issuable pursuant to the terms of the Exchange Agreement. MLGEMP may
require that such registration be filed as a "shelf" registration statement
pursuant to Rule 415 of the Securities Act of 1933, as amended.
e) Notwithstanding the foregoing, in the event of a Mandatory Issuance
pursuant to the terms of the Exchange Agreement, simultaneously with the
consummation of such Mandatory Issuance, the Company shall redeem from the
Holder for a cash payment (including any accrued and unpaid interest (other than
accrued and unpaid interest added to the Invested Principal Amount pursuant to
Section 2.01 hereof) relating to such redeemed Notes) a portion of the
Conversion Principal Amount of the Notes specified in the notice to the Company
relating to such Mandatory Issuance equal to the purchase price of the shares of
Common Stock being issued in the Mandatory Issuance. Such cash payment shall be
paid to the Holder at the closing of such Mandatory Issuance.
8
SECTION 2.06. Taxes. (a) All payments (including additions to principal
under Section 2.01) by the Company to or for the account of the Holder hereunder
shall be made free and clear of and without deduction for present or future
Taxes (other than Taxes imposed on overall net income of the Holder by the
jurisdiction of its organization). If the Company is required under applicable
law to deduct any such Taxes, the amount payable by the Company shall be
increased so that, after the Company has made all required deductions (including
deductions applicable to additional amounts payable under this Section 2.06),
the Holder receives an amount equal to the amount it would have received had no
such deductions been made. The Company shall furnish to the Holder within 30
days after payment of such Taxes an original or certified copy of a receipt
evidencing payment thereof (or other evidence of payment reasonably satisfactory
to the Holder).
(b) In addition, the Company shall pay any present or future
documentary stamp, transfer or similar Taxes that arise from any payment made
hereunder or from the execution, delivery or registration of, performance under
or otherwise with respect to, this Note.
(c) The Company shall indemnify the Holder for the full amount of
Taxes covered by subsections (a) and (b), and for the full amount of Taxes of
any kind imposed or asserted by any jurisdiction on amounts payable under this
Section 2.06, imposed on or paid by the Holder, and any liability (including
penalties, additions to Tax, interest and expenses) arising therefrom or with
respect thereto. Amounts payable by the Company under this subsection (c) shall
be paid within 30 days after the date on which the Holder makes written demand
therefor.
(d) For the purpose of filing a tax treaty relief application, if
available, with the Philippine Bureau of Internal Revenue, the Company may
request a Holder to provide proof of residence and other documents necessary for
and relevant to such a filing. The Company shall provide such request, at least
six months prior to the date of any payment to which treaty relief will be
sought, to the Holder at the time of such request. A Holder in receipt of such a
request shall take commercially reasonable efforts to comply with such a request
(it being agreed and understood that any delay in the provision of a proof of
residence due to a lengthy review of the request for such proof by any taxing
authority shall in no event result in the actions of Holder being unreasonable).
ARTICLE III
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Reports.
(a) Periodic and Other Reports. The Company shall cause to be
delivered to the Holder, so long as it directly or indirectly holds any interest
in the Notes, financial statements, reports and notices referred to below. The
financial statements listed in clause (i) below shall be prepared, in each case
on a consolidated basis in accordance with GAAP, and such other reports as any
Holder, so long as it directly or indirectly holds any interest in the Notes,
may reasonably request from time to time.
9
(i) As soon as practicable following the end of each Fiscal Year (and
in any event not later than 181 days after the end of such Fiscal Year, or
such earlier date as may be required by law), an audited balance sheet of
Holdings as of the end of such Fiscal Year and the related statements of
operations, Shareholders' capital accounts and changes therein, and cash
flows for such Fiscal Year, together with appropriate notes to such
financial statements and supporting schedules, and in each case, to the
extent Holdings was in existence, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal Year end (in the
case of the balance sheet) and the two immediately preceding Fiscal Years
(in the case of the statements).
The statements described in clause (i) above shall be accompanied by written
certification of an Officer that such statements have been prepared in
accordance with GAAP.
(ii) As soon as practicable following the end of each month (and in
any event not later than 30 days after the end of each month), management
reports in a form agreed upon between the Holder and the Company.
(iii) A notice of the occurrence of any Event of Default, or to the
extent actually known by the Company, of any event that with notice, the
passage of time or both would become an Event of Default promptly, but in
any event no later than two Business Days, after an Officer of the Company
has actual knowledge of such occurrence, and a notice setting forth details
of the actions that the Company has taken or proposes to take with respect
thereto, as promptly as practicable, but in any event within ten Business
Days after such Officer obtains actual knowledge of such event.
(iv) Promptly following any such request, such other information as is
reasonably requested by any Holder.
(b) The Holder agrees to keep any non-public information provided to
the Holder by the Company confidential and not to disclose such information
unless required by law and acknowledges that the receipt of such information by
the Holder may restrict the ability of the Holder to trade in securities of the
Company, Holdings or their Affiliates; provided that such information may be
disclosed to the Holder's advisors, members or partners as long as they agree to
keep such information confidential.
SECTION 3.02. Restricted Actions. The Company shall not, and shall
cause its Subsidiaries not to, without the prior written consent of the Holder:
(a) Amalgamate, merge, consolidate or enter into a business
combination, including any joint venture arrangements, with another Person
or acquire (including by merger, consolidation or acquisition of stock or
assets or any other business combination) any Person or any division thereof
or any material amount of assets (other than in the ordinary course of
business);
(b) Other than in the ordinary course of business and consistent with
past practice, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or
assets, or the rendering of any service) with any Affiliate, other xxxx
Xxxxxxx Xxxxx Global Emerging Market Partners, LLC or
10
its Affiliates, except upon fair and reasonable terms no less favorable to
the Company than could be obtained, at the time of such transaction or, if
such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor in a comparable arm's length
transaction with a Person that is not an Affiliate;
(c) Sell or otherwise dispose (including pursuant to any
recapitalization or spin-off) of any Subsidiary or material assets of the
Company or any of its Subsidiaries that would result in the disposition of
more than 5% of the book value of the Company;
(d) Declare, set aside, make or pay any dividend or make any
distribution, payable in cash, stock, property or otherwise, on or with
respect to any of its capital stock; purchase, redeem, retire or otherwise
acquire value for any shares of capital stock of the Company or any of its
Subsidiaries; make any voluntary or optional principal payment, or
voluntary or optional redemption, repurchase, defeasance or other
acquisition or retirement for value, of Indebtedness of the Company that is
pari passu or subordinate in right of payment to this Note; or make any
Investment in any Person other than PSi Technologies Laguna, Inc. or any
wholly-owned Subsidiary of the Company;
(e) Create, incur, assume or otherwise suffer to exist any Indebtedness
other than (i) Indebtedness outstanding as of the date hereof and (ii)
Indebtedness under the Senior Credit Facility;
(f) Create, incur, assume or suffer to exist any Encumbrance on any of
its assets or properties of any character without making effective
provision for this Note and all other amounts due hereunder to be directly
secured equally and ratably with (or, if the obligation or liability to be
secured by such Encumbrance is subordinated in right of payment to this
Note, prior to) the obligation or liability secured by such Encumbrance,
other than (i) Encumbrances existing on the date hereof and (ii)
Encumbrances incurred in connection with the Senior Credit Facility;
(g) Cause or otherwise permit any Subsidiary of the Company, to issue,
sell, pledge, dispose of, grant or encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of (i) any shares of any
class of its capital stock or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of its capital stock or
any other ownership interest in such Subsidiary other than to the Company,
PSi Technologies Laguna, Inc. or any wholly-owned Subsidiary of the Company
or (ii) any assets of such Subsidiary; and
(h) Enter into any formal or informal agreement or otherwise make a
commitment to do any of the foregoing.
ARTICLE IV
EVENTS OF DEFAULT
SECTION 4.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
11
(a) The Company shall fail to pay any installment of principal of, or
interest on, this Note when the same becomes due and payable which in the
case of a failure to pay interest continues for five days; or
(b) The Company shall fail to perform or observe (i) any term, covenant
or agreement contained in Section 3.02 or (ii) any other term covenant or
agreement contained in this Note if such failure of clause (ii) hereof
shall remain unremedied for 30 days after written notice thereof shall have
been given to the Company by any Holder; or
(c) (i) The Company or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; provided, however, that (A) the $2.5 million of
outstanding Indebtedness owed to Semiconductor Components Industries, LLC
and (B) all long-term non-interest bearing payables owed by the Company and
its Subsidiaries to equipment suppliers shall not be deemed due pursuant to
this subsection (c)(i) until the receipt by the Company or any of its
Subsidiaries of a letter from Semiconductor Components Industries, LLC or
an equipment supplier notifying the Company or its Subsidiary of its
intention to commence legal proceedings with respect to such nonpayment of
Indebtedness or payables, as applicable, except that if such nonpayment to
an equipment supplier is only the result of a dispute between the Company
and such equipment supplier regarding the quality of equipment for which
such supplier has not received payment, such nonpayment shall not
constitute a default hereunder until a court of competent jurisdiction
shall have determined such payment is legally owed by the Company to such
equipment supplier; provided, further that each of (x) the tax assessment
currently owed to Taguig City authorities and (y) the disputed electrical
bills related to the underbilling by Meralco Electric Company shall not
constitute a default hereunder until a court of competent jurisdiction
shall have determined such tax assessment or electrical bills, as
applicable, are legally owed by the Company to the Taguig City authorities
or Meralco Electrical Company, as applicable, and either such determination
is not appealable by the Company or the Company does not appeal such
determination; (ii) any proceeding shall be instituted by or against the
Company or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to Bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of 60 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or (iii) the Company or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth
above in this subsection (c);
then, and in any such event, the Holder may, by notice to the Company, declare
the Notes, all interest hereon and all other amounts payable thereunder to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due
12
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Company; provided, however, that
in the event of an actual or deemed entry of an order for relief with respect to
the Company under the Federal Bankruptcy Code and Philippine bankruptcy law, the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Company.
ARTICLE V
SUBORDINATION
SECTION 5.01. Note Subordinate to Senior Indebtedness. The Company
agrees, and each Holder, by his acceptance of this Note, also agrees, that this
Note is and shall be subordinate, to the extent and in the manner hereinafter
set forth, to the prior payment in full of all obligations of the Company now or
hereafter existing under the Senior Credit Facility, the $2.5 million of the
currently outstanding Indebtedness owed to Semiconductor Components Industries,
LLC and any other Indebtedness of the Company that is permitted to be incurred
pursuant to Section 3.02(e) and the terms of which expressly provide it is
senior in right of payment to the Notes, whether for principal, interest
(including, without limitation, interest, as provided in such Indebtedness,
accruing after the filing of a petition initiating any proceeding referred to in
Section 5.02, whether or not such interest accrues after the filing of such
petition for purposes of the Bankruptcy Code or is an allowed claim in such
proceeding), fees, expenses or otherwise (all such obligations being the "Senior
Indebtedness").
SECTION 5.02. Events of Subordination. In the event of any dissolution,
winding up, liquidation, arrangement, reorganization, adjustment, protection,
relief or composition of the Company or its debts, whether voluntary or
involuntary, in any Bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or other similar case or proceeding under any federal or
state Bankruptcy or similar law or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the Company
or otherwise, Senior Indebtedness shall first be paid in full before the Holder
shall be entitled to receive any payment of this Note, and any payment or
distribution of any kind (whether in cash, property or securities) that
otherwise would be payable or deliverable upon or with respect to this Note in
any such case, proceeding, assignment, marshalling or otherwise (including any
payment that may be payable by reason of any other indebtedness of the Company
being subordinated to payment of this Note) shall be paid or delivered directly
to the holders or representatives of the Senior Indebtedness for application (in
the case of cash) to, or as collateral (in the case of non-cash property or
securities) for, the payment or prepayment of the Senior Indebtedness until the
Senior Indebtedness shall have been paid in full.
SECTION 5.03. In Furtherance of Subordination.
(a) All payments or distributions upon or with respect to this Note
that are received by the Holder contrary to the provisions of this Article shall
be received in trust for the benefit of the Holder and owners of Senior
Indebtedness, shall be segregated from other funds and property held by the
Holder and shall be forthwith paid over to the holders and owners of Senior
Indebtedness in the same form as so received (with any necessary endorsement) to
be
13
applied (in the case of cash) to, or held as collateral (in the case of non-cash
property or securities) for, the payment or prepayment of the Senior
Indebtedness in accordance with its terms.
(b) The holders and owners of Senior Indebtedness are hereby authorized
to demand specific performance of the provisions of this Article, whether or not
the Company shall have complied with any of the provisions hereof applicable to
it, at any time when the Holder shall have failed to comply with any of the
provisions of this Article applicable to it. The Holder of this Note hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance.
SECTION 5.04. No Commencement of Any Proceeding. So long as payments or
distributions for or on account of this Note are not permitted pursuant to
Section 5.02, the Holder will not commence, or join with any creditor other than
the holders and owners of Senior Indebtedness in commencing, directly or
indirectly cause the Company to commence, or assist the Company in commencing,
any proceeding referred to in Section 5.02.
SECTION 5.05. Rights of Subrogation. No payment or distribution to the
holders and owners of Senior Indebtedness pursuant to the provisions of this
Article shall entitle the Holder to exercise any right of subrogation in respect
thereof until the Senior Indebtedness shall have been paid in full.
SECTION 5.06. Further Assurances. The Holder and the Company each will,
at the Company's expense and at any time and from time to time, promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that any holder or owner of Senior
Indebtedness may request, in order to protect any right or interest granted or
purported to be granted hereby or to enable any holder or owner of Senior
Indebtedness to exercise and enforce its rights and remedies hereunder.
SECTION 5.07. Agreements in Respect of Subordinated Debt. No amendment,
waiver or other modification of this Note, and no agreement supplemental to this
Note, may adversely affect the rights or interests of any holder or owner of
Senior Indebtedness hereunder.
SECTION 5.08. Agreement by the Company. The Company agrees that it will
not make any payment of this Note, or take any other action, in contravention of
the provisions of this Article.
SECTION 5.09. Obligations Hereunder Not Affected. All rights and
interests of the holders and owners of Senior Indebtedness hereunder, and all
agreements and obligations of the Holder of this Note and the Company under this
Article, shall remain in full force and effect irrespective of:
(i) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Indebtedness, or any other
amendment or waiver of or any consent to any departure from any Senior
Indebtedness, including, without limitation, any increase in the Company's
obligations resulting from the extension of additional credit to the
Company or any of its subsidiaries or otherwise;
14
(ii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Senior Indebtedness;
(iii) any manner of application of collateral, or proceeds thereof, to
all or any of the Senior Indebtedness, or any manner of sale or other
disposition of any collateral for all or any of the Senior Indebtedness or
any other assets of the Company or any of its subsidiaries;
(iv) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its subsidiaries; or
(v) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company or a subordinated creditor.
The provisions of this Article V shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any holder or owner
of Senior Indebtedness upon the Bankruptcy, insolvency or reorganization of the
Company or otherwise, all as though such payment had not been made.
SECTION 5.10. Waiver. The Holder of this Note and the Company each
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Senior Indebtedness and this Article and any
requirement that any holder or owner of Senior Indebtedness protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against the Company or any other person
or entity or any collateral.
SECTION 5.11. No Waiver; Remedies. No failure on the part of any holder
or owner of Senior Indebtedness to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 5.12. Continuing Agreement. The provisions of this Article V
constitute a continuing agreement and shall (i) remain in full force and effect
until the payment in full of all Senior Indebtedness, (ii) be binding upon the
Holder of this Note, the Company and their respective successors and assigns,
and (iii) inure to the benefit of, and be enforceable by, the holders and owners
of Senior Indebtedness and their respective successors, transferees and assigns.
ARTICLE VI
TRANSFER OF NOTE
SECTION 6.01. Restrictions. The Holder acknowledges and agrees that (a)
it shall not Transfer this Note in violation of either of the Securities Act of
1933 of the United States, as amended, or the Securities Regulation Code of the
Philippines and (b) during the term of this Note, there shall not be more than
an aggregate of 19 Holders of Notes at any one time.
15
Any attempted Transfer in violation of the preceding sentence shall be deemed
void ab initio and of no force or effect whatsoever, and the Company will not
record any such Transfer on its books or treat any purported transferee as the
owner of this Note for any purpose. Except as specifically set forth in this
Section 6.01, the Holder shall not be restricted from any Transfer of the Note.
SECTION 6.02. Legend.
(a) Each certificate or instrument evidencing this Note and the
Holdings Common Stock issuable pursuant to the terms of the Exchange Agreement
shall be stamped or otherwise imprinted with legends in substantially the
following forms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER."
"THE NOTE HAS NOT BEEN REGISTERED WITH THE PHILIPPINE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES REGULATION CODE (THE "CODE"). ANY
FUTURE OFFER OR SALE THEREOF IS SUBJECT TO REGISTRATION REQUIREMENTS UNDER
THE CODE UNLESS SUCH OFFER OR SALE QUALIFIES AS AN EXEMPT TRANSACTION."
(b) In addition, each certificate or instrument evidencing this Note
and the Holdings Common Stock issuable pursuant to the terms of the Exchange
Agreement shall be stamped or otherwise imprinted with any additional legends as
may be required by the Company, as applicable to the holder of such certificate
or instrument.
SECTION 6.03. Registration of Notes. The Company shall keep at its
principal executive office a register (the "Register") for the registration and
registration of transfers of Notes. The name and address of each Holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in the Register. Prior to due
presentation for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and Holder thereof
for all purposes hereof, and the Company shall not be affected by any notice to
the contrary.
SECTION 6.04. New Notes. (i) Upon surrender of any Note for
registration of Transfer, exchange or assignment (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered Holder of such Note or
such Holder's attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense, subject to Section 6.04(ii)
hereof, one or more new Notes (as requested by the Holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall
16
be payable to such Person as such Holder may request. Each such new Note shall
be dated and bear interest from the date to which interest shall have been paid
on the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon.
(ii) All stamp taxes due as a result of the issuance of new Notes shall
be paid by the Company by the fifth day of the month immediately following the
month during which the new Notes are issued; provided, however, that if any new
Notes are issued because of a transfer of a Note or a portion of a Note by a
Holder, the stamp taxes due as a result of such issuance shall be payable by
such transferring Holder by the fifth day of the month immediately following the
month during which such new Notes are issued.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices.
(a) All notices, requests, claims, demands and other communications
under or in connection with this Note shall be given to or made upon: (i) the
Holder, at the Holder's address set forth on Schedule I attached hereto and (ii)
the Company at the following addresses (or in any case to such other address as
the addressee may from time to time designate in writing to the sender):
PSi Technologies, Inc.
Electronics Avenue
FTI Complex, Taguig
Metro Manila
Philippines
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
with copies to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
X.X. Xxx Law Offices
No. 48, SMC Court
Celery Drive, Xxxxx Verde 5
Pasig City, Metro Manila
Philippines 1600
17
Attention: Xxxxx Go Xxx
Facsimile: (000) 000-0000
(b) All notices, requests, claims, demands and other communications
under or in connection with this Note shall be in writing and shall be deemed
effectively given: (i) upon personal delivery or delivery by courier to the
party to be notified, and (ii) one Business Day after receipt of confirmation if
such notice is sent by facsimile.
SECTION 7.02. Headings and Sections. The descriptive headings in this
Note are inserted for convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of this Note or any
provision of this Note. Unless the context requires otherwise, all references in
this Note to Sections, Articles, Exhibits or Schedules shall be deemed to mean
and refer to Sections, Articles, Exhibits or Schedules of or to this Note.
SECTION 7.03. Amendments. This Note may not be amended, supplemented,
modified or restated nor may any provision herein be waived without the express
unanimous written consent of the Holders of a majority of the principal amount
of the Notes outstanding at such time, voting together as a single class;
provided, however, that no amendment, supplement or modification can be made to
the amount, term, interest rate or other economic term of the Notes without the
written consent of each Holder affected thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition of this Note. The failure of any Holder to assert any of its rights
hereunder shall not constitute a waiver of any of such rights. All rights and
remedies existing under this Note are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 7.04. Binding Effect. Except as otherwise provided in this
Note, every covenant, term and provision of this Note shall be binding upon the
Company and shall inure to the benefit of the Holder and its distributees,
heirs, legal representatives, executors, administrators, successors and
permitted assigns and designees.
SECTION 7.05. Remedies. The Holder shall be entitled to enforce its
rights under this Note specifically, to recover damages and costs (including
reasonable attorneys' fees) caused by any breach of any provision of this Note
and to exercise all other rights existing in its favor. The Company agrees and
acknowledges that money damages may not be an adequate remedy for any breach of
the provisions of this Note and that the Holder may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Note. If any time
period for giving notice or taking action under this Note expires on a day that
is not a Business Day, the time period shall be extended automatically to the
immediately succeeding Business Day.
SECTION 7.06. Waiver of Jury Trial. THE COMPANY AND, BY ACCEPTING THE
BENEFITS OF THIS NOTE, THE HOLDER HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF UNDER OR, IN CONNECTION
WITH THIS NOTE.
18
SECTION 7.07. Interpretation. The Holder and the Company have
participated jointly in the negotiation and drafting of this Note. In the event
an ambiguity or question of intent or interpretation arises, this Note shall be
construed as if drafted jointly by the Holder and the Company, and no
presumption or burden of proof shall arise favoring or disfavoring the Holder or
the Company by virtue of the authorship of any of the provisions of this Note.
SECTION 7.08. Governing Law; Consent to Jurisdiction. This Note will be
governed by, and construed in accordance with, the laws of the State of New
York. In any action or proceeding arising out of, related to, or in connection
with this Note, the Company consents to be subject to the jurisdiction and venue
of (a) the Supreme Court of the State of New York in and for the County of New
York, and (b) the United States District Court for the Southern District of New
York. The Company consents to the service of process in any action commenced
hereunder by any method or service acceptable under federal law or the laws of
the State of New York.
SECTION 7.09. Additional Documents and Acts. The Company agrees to
execute and deliver such additional documents and instruments and to perform
such additional acts as may be reasonably necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions of
this Note and the transactions contemplated hereby.
SECTION 7.10. No Third Party Beneficiaries. This Note shall inure
solely to the benefit of the Holder and its successors, assigns and designees,
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, interest, claim or benefit, of any
nature whatsoever, under or on account of this Note.
19
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its officers or other representatives thereunto duly authorized, as of the date
first above written.
PSI TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman & CEO
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Amount Added to Principal Date Added to Principal Aggregate Principal Amount
Amount of Note Under Amount of Note of Note
Section 2.01
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SCHEDULE I
HOLDERS
ADMINISTRATIVE DETAILS
Xxxxxxx Xxxxx Global Emerging Markets Partners, LLC
World Financial Center, Xxxxx Xxxxx
000 Xxxxx Xxxxxx Bank: Xxxxxxx Xxxxx XXX
Xxx Xxxx, XX 00000 Account No.: 896-07677
Attention: Xxxxx X. Xxxxxxxx ABA No.: 000000000
Facsimile: (000) 000-0000 Contact: Xxxxx Xxxx
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
S-1
Exhibit B
FORM OF EXCHANGE AGREEMENT
B-1
EXECUTION COPY
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement"), dated as of July 3, 2003,
is among PSi Technologies Holdings, Inc., a corporation organized and existing
under the laws of the Philippines ("Holdings"), PSi Technologies, Inc., a
corporation organized and existing under the laws of the Philippines and the
principal operating subsidiary of Holdings (the "Company"), and Xxxxxxx Xxxxx
Global Emerging Markets Partners, LLC ("Purchaser").
WHEREAS, any benefit to the Company is deemed a benefit to Holdings,
and in consideration for the Invested Principal Amount (as defined below) paid
to the Company, Purchaser received 10.00% Exchangeable Senior Subordinated Notes
Due 2008 of the Company (the "Notes"), pursuant to the Purchase Agreement, dated
as of the date hereof (the "Purchase Agreement"), among Holdings, the Company
and Purchaser; and
WHEREAS, the parties have agreed that the Notes owned by Purchaser are
to be exchangeable into Common Stock (as defined below) at any time and from
time to time.
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound hereby, it is agreed by the parties as follows:
1. Definitions
(a) Unless otherwise defined herein, the terms below shall have the
following meanings (such meanings being equally applicable to singular and
plural forms of the terms defined):
"ADSs" means the American Depositary Shares of Holdings, each ADS
representing one share of Common Stock.
"Affiliate" shall mean, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control
with, such specified Person.
"Aggregate Converted Principal" means, at a specified date, the sum of
all the Conversion Principal Amounts in respect of which Holdings issued
shares of Common Stock to Purchaser from the date hereof to such specified
date.
"Board" means the board of directors of Holdings.
"BSP" means the Bangko Sentral ng Pilipinas or the central monetary
authority of the Philippines or any Governmental Authority of the
Philippines that assumes the functions thereof.
"BSRD" means the Bangko Sentral Registration Document issued by the
BSP, which allows the holder to source foreign exchange from the Philippine
banking system.
"Business Day" means any day other than a Saturday, Sunday or any
other day that is a legal holiday under the laws of the State of New York
or Taguig, Philippines or a day on which national banking associations in
New York or Taguig, Philippines are authorized or required by law or other
governmental action to close.
"Common Stock" means the common stock, par value PHP 1 2/3 per share
of Holdings.
"Controls" means (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect
a majority of the board of directors or similar body governing the affairs
of such Person.
"Conversion Principal Amount" means, at a specified date, (a) an
amount set forth in an Exchange Notice that represents the portion of the
Current Invested Principal Amount of the Notes that Purchaser is requesting
to be converted into Common Stock pursuant to such Exchange Notice or (b)
an amount set forth in a Mandatory Issuance Notice that represents the
portion of the Current Invested Principal Amount of the Notes that the
Purchaser is requesting to be used to calculate the number of shares of
Common Stock to be issued in the Mandatory Issuance relating to such
Mandatory Issuance Notice.
"Current Invested Principal Amount" means, at a specified date, an
amount equal to the Invested Principal Amount less the Aggregate Converted
Principal, in each case, from the date hereof to such specified date.
"Current Market Price" means in respect of any share of Common Stock
on any date herein specified the average of the daily market prices of the
Common Stock or ADSs for five consecutive trading days commencing ten
trading days before the public announcement of any sale or other issuance
of Common Stock or Common Stock Equivalents. The daily market price for
each such trading day shall be the last reported sale price on such day on
the Nasdaq National Market (the "Nasdaq") or, if the Common Stock or ADSs
are not so listed or admitted, the last reported sale price on such day on
the Nasdaq or any other trading facility on which such Common Stock or ADSs
are then listed; provided, however, that if no sale takes place on such day
on any such exchange, market or trading facility, the average of the last
reported closing bid and ask prices on such day as officially quoted on
such exchange, market or trading facility shall be the daily market price
for such trading day. If the Common Stock or ADSs are not listed on
2
Nasdaq or any other trading facility at the time of such calculation, the
"Current Market Price" of one share of Common Stock shall be determined by
the Board in good faith.
"EBITDA" shall mean, without duplication, the consolidated net income
of Holdings and its subsidiaries determined in accordance with generally
accepted accounting principles in the United States consistently applied,
plus any amounts subtracted in calculating Net Income in respect of net
interest expense, income taxes, depreciation and amortization, less (i) any
gain plus any loss realized in connection with the sale of any assets or
disposition of any securities, other than those included in cash flow from
operations, (ii) any extraordinary or non-recurring gain plus any loss or
(iii) any non-cash extraordinary gain, plus (iv) any non-cash extraordinary
loss; provided, however, that all expenses arising directly out of the
transactions contemplated by the Purchase Agreement, this Agreement and the
Notes, and the Subscription Agreement and Note Assignment, if applicable,
and expenses arising directly out of future capital raising transactions
shall be deemed extraordinary expenses and excluded from EBITDA for
purposes of this definition.
"Encumbrance" means any lien, mortgage, pledge, collateral assignment,
security interest, hypothecation or other encumbrance, other than as
established by, under or in connection with, the terms of this Agreement,
the Notes or the Purchase Agreement, and the Subscription Agreement and the
Note Assignment, if applicable, or the transactions contemplated thereby.
"Governmental Agency" means any supranational, multinational,
municipal, provincial, federal, state, local, foreign or other governmental
agency, instrumentality, commission, authority, board or body.
"Holder" shall mean Purchaser and any transferee of Purchaser.
"Invested Principal Amount" means USD$4,000,000, plus any accreted
interest added to the Invested Principal Amount pursuant to Section 2.01 of
the Notes.
"Law" means all laws, statutes and ordinances of the United States,
any state of the United States, any foreign country, any foreign state and
any political subdivision thereof, including all decisions, orders,
judgments or decrees of courts having the effect of law in each such
jurisdiction.
"Net Income" shall mean with respect to any fiscal year, or part
thereof, the net income (or net loss) of Holdings for such period as
determined on a consolidated basis and in accordance with generally
accepted accounting principles in the United States consistently applied.
"Person" shall mean any individual, corporation, partnership, joint
venture, firm, trust, unincorporated organization, government or any agency
or political subdivision thereof or other entity.
"Philippine SEC" means the Securities and Exchange Commission of the
Philippines.
3
"PHP" shall mean the lawful currency of the Philippines.
"Regulation" means any rule or regulation of any Governmental Agency
having the effect of Law or any rule or regulation of any self-regulatory
organization.
(a) The following terms have the meanings set forth in the section set
forth opposite such term:
"Agreement".............................................................Preamble
"Closing"...............................................................3(e)
"Closing Date"..........................................................2(e)
"Common Stock Equivalents"..............................................5(b)
"Company"...............................................................Preamble
"Exchange Closing"......................................................2(e)
"Exchange Notice".......................................................2(c)
"Exchange Right"........................................................2(a)
"Exchange Shares".......................................................2(i)
"Exchange Subsequent Closing"...........................................2(c)
"Extraordinary Common Stock Event"......................................5(e)
"Holdings"..............................................................Preamble
"Issuance Purchase Price"...............................................3(a)
"Mandatory Issuance"....................................................3(a)
"Mandatory Issuance Closing"............................................3(e)
"Mandatory Issuance Closing Date".......................................3(e)
"Mandatory Issuance Notice".............................................3(b)
"Mandatory Issuance Rights".............................................3(a)
"Mandatory Issuance Shares".............................................3(f)(i)
"Mandatory Issuance Subsequent Closing".................................3(d)
"Net Consideration Per Share"...........................................5(c)
"Note Assignment".......................................................3(f)(i)
"Note Exercise Price"...................................................2(a)
"Notes".................................................................Recitals
"Notes BSRD"............................................................6(e)(i)
"Purchase Agreement"....................................................Recitals
"Purchaser".............................................................Preamble
"Redemption Payment"....................................................3(c)
"Shares BSRD"...........................................................6(e)(ii)
"Subscription Agreement"................................................3(f)(i)
"Subsequent Closing"....................................................3(d)
2. Exchange of Notes for Common Stock
(a) Grant of Exchange Right. Subject to the terms and conditions set
forth herein, Holdings hereby grants Purchaser an irrevocable right to exchange
all or part of its Notes for Common Stock (an "Exchange Right") at a price per
share of Common Stock initially equal to USD$1.47 (the "Note Exercise Price");
provided, however, that:
4
(i) if Holdings' EBITDA for the three-month period ending September 30,
2003 is less than USD$3.89 million, then the Note Exercise Price shall
be reduced to USD$1.29; and
(ii) if Holdings' EBITDA for the three-month period ending December 31,
2003 is less than USD$3.92 million, then the Note Exercise Price shall
be reduced to (A) USD$1.15, if the Note Exercise Price was reduced
pursuant to clause (i) above and, (B) USD$1.29, if the Note Exercise
Price was not reduced pursuant to clause (i) above;
provided further that if Purchaser exercises an Exchange Right prior to the
occurrence of either or both of clauses (i) and (ii) above, any subsequent
reduction in the Note Exercise Price shall not retroactively apply to such
previous exercise of Exchange Rights and Purchaser shall not be entitled to any
additional shares of Common Stock or other compensation as a result of such
subsequent reduction in the Note Purchase Price.
The Note Exercise Price is subject to adjustment as set forth in Section 5.
(b) Exercise Period of Exchange Right. At any time after the date
hereof and from time to time, the Exchange Right may be exercised by Purchaser
in its sole discretion, in whole or in part until such time as all of the Notes
are exchanged for Common Stock, paid at maturity or redeemed in accordance with
their terms.
(c) Exercise of Exchange Right. The Exchange Right shall be exercised
by written notice from Purchaser to Holdings (an "Exchange Notice") stating that
Purchaser desires to exercise an Exchange Right and setting forth: (i) the
proposed closing date, which (subject to the earlier satisfaction or waiver of
the condition set forth in Section 7) shall be within three days after the date
of delivery of such notice; provided, however, if Holdings has not received the
Notes BSRD described in Section 6(d) by such third day after the delivery of the
Exchange Notice, the Closing shall occur as soon as practicable following the
receipt of such Notes BSRD by Holdings, and (ii) the amount of Notes to be
exchanged expressed as a Conversion Principal Amount and such Conversion
Principal Amount shall be in multiples of $25,000.
(d) Exchange of Notes. (i) The Exchange Right will be deemed to be
exercised on the date of delivery of the Exchange Notice. The number of shares
of Common Stock to be issued and delivered to Purchaser in connection with the
delivery of the Exchange Notice shall be determined by dividing the Conversion
Principal Amount as set forth in such Exchange Notice by the Note Exercise Price
then in effect.
(ii) Any accrued and unpaid interest (other than accrued and unpaid
interest added to the Invested Principal Amount pursuant to Section 2.01 of the
Notes) in respect of any Notes to be exchanged into shares of Common Stock
pursuant to an Exchange Notice shall be paid in cash at the time such Notes are
exchanged.
(iii) No fractional shares of Common Stock or scrip representing
fractional shares of Common Stock shall be issued upon the exchange of the Note.
In lieu of any fractional share of Common Stock to which the Holder would
otherwise be entitled, the Company shall make a cash payment equal to the Note
Exercise Price multiplied by such fraction.
5
(e) Closing. The consummation of the exchange of Notes for Common
Stock contemplated by this Agreement (the "Exchange Closing") shall occur within
3 days after the date (a "Closing Date") of delivery of an Exchange Notice;
provided, however, if Holdings has not received the Notes BSRD described in
Section 6(d) by such third day after the delivery of the Exchange Notice, the
Closing shall occur as soon as practicable following the receipt of such Notes
BSRD by Holdings and the Company. In the event that all of Purchaser's Notes are
not exchanged pursuant to this Agreement at the Closing, Purchaser may engage in
successive closings (each, an "Exchange Subsequent Closing") with respect to the
completion of the exchange of its Notes for Common Stock.
(f) Closing Deliveries.
(i) At the Exchange Closing or any Exchange Subsequent Closing, as the
case may be, Holdings shall deliver to Purchaser (A) certificates
evidencing such number of shares of Common Stock (as calculated in
accordance with Section 2(d) above) (the "Exchange Shares"), pursuant to
the Exchange Notice to which the Exchange Closing or such Exchange
Subsequent Closing relates, in definitive form and registered in the name
of Purchaser and/or such assigns permitted pursuant to the Note and in such
denominations as Purchaser shall reasonably request, (B) proof of the
payment prior to such Closing Date of applicable documentary stamp taxes
and any other fees or costs imposed on the issuance of the Exchange Shares
by any Governmental Agency having jurisdiction over such issuance, and (C)
one or more of the Notes BSRDs, covering such amounts as necessary to cause
the registration of the Exchange Shares with the BSP and any other
document, certificate or report that may be required by the BSP in respect
of such registration.
(ii) At the Exchange Closing or any Exchange Subsequent Closing, as
the case may be, the Company shall deliver to Purchaser (A) an amount in
cash equal to any accrued and unpaid interest (other than accrued and
unpaid interest added to the Invested Principal Amount pursuant Section
2.01 of the Notes) in respect of the Notes exchanged into Common Stock
pursuant to the Exchange Notice delivered to Holdings under Section 2(d)
above and (B) a new Note representing the Current Invested Principal
Amount, if any.
(iii) At the Exchange Closing or any Exchange Subsequent Closing, as
the case may be, Purchaser shall deliver to Holdings such number of Notes
owned by Purchaser with an aggregate principal amount equal to the
Conversion Principal Amount as set forth in the Exchange Notice to which
the Exchange Closing or such Exchange Subsequent Closing relates, together
with an instrument of transfer reasonably satisfactory to Holdings duly
executed by Purchaser. Upon such delivery, and subject to Section 2(d)(ii)
above, Holdings shall receive the relevant Notes and all the rights
pertaining to a holder thereof other than the Exchange Rights.
3. Mandatory Issuance of Common Stock
(a) Mandatory Issuance Rights. Subject to the terms and conditions set
forth herein, at any time after the date hereof and from time to time,
Purchaser, in its sole discretion,
6
may elect to replace all of its Exchange Rights with the right (the "Mandatory
Issuance Rights") to (i) assign a portion or all of the Notes to the Company;
provided, however, that prior to such assignment, the Company shall redeem a
portion of such Notes pursuant to Section 3(c) hereof, and (ii) subscribe for
shares of Common Stock (the "Mandatory Issuance") at a price per share equal to
the then par value of one share of Common Stock (the "Issuance Purchase Price").
(b) Exercise of Mandatory Issuance Rights. The Mandatory Issuance
Right shall be exercised by written notice from Purchaser to Holdings (a
"Mandatory Issuance Notice") stating that Purchaser desires to exercise a
Mandatory Issuance Right and setting forth: (i) the proposed closing date, which
(subject to the earlier satisfaction or waiver of the condition set forth in
Section 7) shall be within three days after the date of delivery of such notice,
and (ii) the number of shares of Common Stock to be issued to Purchaser in
connection with the delivery of the Mandatory Issuance Notice, which shall be
determined by dividing (A) the Conversion Principal Amount specified in the
Mandatory Issuance Notice by (B) the Note Exercise Price then in effect;
provided, however, that if the Holder would receive any fractional share of
Common Stock pursuant to this calculation, Holdings shall make a cash payment to
Purchaser equal to the Note Exercise Price then in effect multiplied by such
fraction.
(c) Redemption of Notes. Simultaneously with the consummation of the
Mandatory Issuance, the Company shall redeem from Purchaser for a cash payment
(including any accrued and unpaid interest (other than accrued and unpaid
interest added to the Invested Principal Amount pursuant to Section 2.01 of the
Notes) relating to such redeemed Notes, the "Redemption Payment") a portion of
the Conversion Principal Amount of the Notes specified in the Mandatory Issuance
Notice equal to the Issuance Purchase Price of the Shares being issued in the
Mandatory Issuance. Such redemption shall not be taken into account in
calculating the number of Mandatory Issuance Shares to be issued pursuant to
Section 3(b)(ii) above.
(d) Payment of Interest. Any accrued and unpaid interest (other than
accrued and unpaid interest added to the Invested Principal Amount pursuant to
Section 2.01 of the Notes) on the assigned Notes shall be paid in cash at the
time such Notes are assigned.
(e) Closing. The consummation of the Mandatory Issuance contemplated
by this Agreement (the " Mandatory Issuance Closing", together with the Exchange
Closing, the "Closing") shall occur within three days after the date (a
"Mandatory Issuance Closing Date") of delivery of a Mandatory Issuance Notice.
In the event that all of Purchaser's Notes are not assigned pursuant to this
Agreement at the Mandatory Issuance Closing, Purchaser may engage in successive
closings (each, a "Mandatory Issuance Subsequent Closing", together with an
Exchange Subsequent Closing, a "Subsequent Closing") with respect to the
completion of the Mandatory Issuance.
(f) Closing Deliveries.
(i) At the Mandatory Issuance Closing or any Mandatory Issuance
Subsequent Closing, as the case may be, Holdings shall deliver to Purchaser
(A) certificates evidencing such number of shares of Common Stock (as
calculated in accordance with Section 3(b)(ii) above) (the "Mandatory
Issuance Shares"), pursuant to the Mandatory Issuance Notice to which the
Mandatory Issuance Closing or such
7
Mandatory Issuance Subsequent Closing relates, in definitive form and
registered in the name of Purchaser and/or such assigns permitted pursuant
to the Note and in such denominations as Purchaser shall reasonably
request, (B) proof of the payment prior to such Mandatory Issuance Closing
Date of applicable documentary stamp taxes and any other fees or costs
imposed on the issuance of the Mandatory Issuance Shares by any
Governmental Agency having jurisdiction over such issuance, (C) an executed
signature page of the Subscription Agreement, a form of which is attached
hereto as Exhibit A (the "Subscription Agreement") and (D) an executed
signature page of the Note Assignment, a form of which is attached hereto
as Exhibit B (the "Note Assignment").
(ii) At the Mandatory Issuance Closing or any Mandatory Issuance
Subsequent Closing, as the case may be, the Company shall deliver to
Purchaser (A) an amount in cash equal to the sum of (x) any accrued and
unpaid interest (other than accrued and unpaid interest added to the
Invested Principal Amount pursuant Section 2.01 of the Notes) in respect of
the Notes assigned pursuant to the Mandatory Issuance Notice delivered to
Holdings under Section 3(b)(ii) above, (y) any cash payment in lieu of any
fractional share of Common Stock pursuant to Section 3(b)(ii) above, and
(z) the Redemption Payment, and (B) a new Note representing the Current
Invested Principal Amount, if any.
(iii) At the Mandatory Issuance Closing or any Mandatory Issuance
Subsequent Closing, as the case may be, Purchaser shall deliver to Holdings
(A) an executed signature page of the Subscription Agreement, (B) an
executed signature page of the Note Assignment, (C) such number of Notes
owned by Purchaser with an aggregate principal amount equal to the
Conversion Principal Amount as set forth in the Mandatory Issuance Notice
to which the Mandatory Issuance Closing or such Mandatory Issuance
Subsequent Closing relates, together with an instrument of transfer
reasonably satisfactory to Holdings duly executed by Purchaser, and (D) the
Issuance Purchase Price for the Mandatory Issuance Shares. Upon such
delivery, and subject to Section 3(c) above, Holdings shall receive the
relevant Notes and all the rights pertaining to a holder thereof other than
the Exchange Rights.
4. Representations and Warranties of Holdings and Purchaser
(a) As of the date hereof and as of the date of the Closing and each
Subsequent Closing, Holdings hereby represents and warrants to Purchaser as
follows:
(i) Existence. Holdings is a corporation duly organized, validly
existing and in good standing under the laws of the Philippines and has
full corporate power and authority to conduct its business and own and
operate its properties as now conducted, owned and operated.
(ii) Authorization and Enforceability. Holdings has the full power and
authority and has taken all required corporate and other action necessary
to authorize and permit Holdings to execute and deliver this Agreement and
to carry out the terms hereof and to issue and deliver the Common Stock,
and none of such actions will violate any provision of Holdings' Articles
of Incorporation or any applicable Law, or rule of any
8
stock exchange where the ADSs are listed, or result in the breach of, or
constitute a default (or event which, with notice or lapse of time or both,
would constitute a default) under, any agreement, instrument or
understanding to which Holdings is a party or by which it is bound. This
Agreement constitutes a legal, valid and binding obligation of Holdings,
enforceable against Holdings in accordance with its terms, except to the
extent limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws of general application
related to the enforcement of creditor's rights generally and (ii) general
principles of equity.
(iii) Issuance of Common Stock. The shares of Common Stock that may be
issued pursuant to this Agreement have been duly authorized and, when
issued and delivered in accordance with this Agreement, will be validly
issued and outstanding and will be fully paid, nonassessable and
registrable with the BSP.
(b) As of the date hereof and as of the date of the Closing and each
Subsequent Closing, Purchaser hereby represents and warrants to Holdings and the
Company as follows:
(i) Existence. Purchaser is a limited liability company, duly
organized and validly existing and in good standing under the laws of the
State of Delaware.
(ii) Authorization and Enforceability. Purchaser has the full power
and authority and has taken all action necessary to authorize and permit it
to execute and deliver this Agreement and to carry out the terms hereof and
none of such actions will violate any provision of Purchaser's
organizational documents or any applicable Law, or result in the breach of,
or constitute a default (or event which, with notice or lapse of time or
both, would constitute a default) under, any agreement, instrument or
understanding to which Purchaser is a party or by which it is bound. This
Agreement constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except to the
extent limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application related to the
enforcement of creditor's rights generally and (ii) general principles of
equity.
5. Anti-Dilution Adjustments
(a) If Holdings shall, while Purchaser's Exchange Rights or Mandatory
Issuance Rights under this Agreement are outstanding, issue or sell shares of
Common Stock or Common Stock Equivalents (as defined below) without
consideration or at a price per share or Net Consideration Per Share (as defined
below) less than the Current Market Price in effect immediately prior to such
issuance or sale then in such case the Note Exercise Price, except as
hereinafter provided, shall be lowered so as to be equal to an amount determined
by multiplying such Note Exercise Price by the following fraction:
9
N//0// + N//1//
---------------
N//0// + N//2//
Where:
N//0// = the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares of Common Stock
or Common Stock Equivalents (calculated on a fully diluted basis assuming
the exercise or conversion of all then exercisable or convertible options,
warrants, purchase rights and convertible securities).
N//1// = the number of shares of Common Stock which the aggregate
consideration (without giving effect to any underwriter's discounts or
commissions) if any (including the Net Consideration Per Share with respect
to the issuance of Common Stock Equivalents), received or receivable by
Holdings for the total number of such additional shares of Common Stock so
issued or deemed to be issued would purchase at the Current Market Price in
effect immediately prior to such issuance.
N//2// = the number of such additional shares of Common Stock so
issued or deemed to be issued.
(b) For purposes of this Section 5, if a part or all of the
consideration received by Holdings in connection with the issuance of any
securities described in this Section 5 consists of property other than cash,
such consideration shall be deemed to have a fair market value as is reasonably
determined in good faith by the Board or a committee thereof. For the purposes
of this Section 5, the issuance of any warrants, options or subscription or
purchase rights with respect to shares of Common Stock and the issuance of any
securities convertible into or exchangeable for shares of Common Stock,
including the ADSs, and the issuance of any warrants, options or subscription or
purchase rights with respect to such convertible or exchangeable securities
(collectively, "Common Stock Equivalents") shall be deemed an issuance of Common
Stock. For the avoidance of doubt, if a Common Stock Equivalent is issued or
sold as part of a unit with any other security of Holdings or its Affiliates
that is not independent of a Common Stock Equivalent, such other security shall
not constitute a Common Stock Equivalent. Any obligation, agreement or
undertaking to issue Common Stock Equivalents at any time in the future shall be
deemed to be an issuance at the time such obligation, agreement or undertaking
is made or arises and no additional adjustment of the Note Exercise Price shall
be made upon issuance of the Common Stock pertaining thereto.
(c) For purposes of this Section 5, the "Net Consideration Per Share"
which shall be receivable by Holdings for any Common Stock issued upon the
exercise or conversion of any Common Stock Equivalents shall be determined as
follows:
(i) The amount equal to the total amount of consideration, if any,
received by Holdings for the issuance of such Common Stock Equivalents
(without giving effect to any underwriting discounts or commissions), plus
the minimum amount of consideration, if any, payable to Holdings upon
exercise, or conversion or exchange thereof, divided by
10
the aggregate number of shares of Common Stock that would be issued if all
such Common Stock Equivalents were exercised, exchanged or converted.
(ii) In each instance such determination shall be made as of the date
of issuance of Common Stock Equivalents without giving effect to any
possible future upward price adjustments or rate adjustments which may be
applicable with respect to such Common Stock Equivalents.
(d) Section 5(a) shall not apply under any of the circumstances that
would constitute an Extraordinary Common Stock Event (as described below).
Further, Section 5(a) shall not apply with respect to the issuance or sale of
shares of Common Stock, or the grant of options or other Common Stock
Equivalents exercisable therefor, to current or former directors, officers,
employees and consultants of Holdings or any subsidiary pursuant to any
qualified or non-qualified stock option plan or agreement, stock purchase plan
or agreement, stock restriction agreement, employee stock ownership plan,
consulting agreement, or such other options, issuances, arrangements, agreements
or plans intended principally as a means of providing compensation for
employment or services, provided that in each such case such plan, agreement, or
other arrangement or issuance is approved by the vote or consent of the Board.
(e) Upon the happening of an Extraordinary Common Stock Event (as
described below), simultaneously with the happening of such Extraordinary Common
Stock Event, the Note Exercise Price shall be adjusted by multiplying the Note
Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such Extraordinary
Common Stock Event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such Extraordinary Common Stock
Event, and the product so obtained shall thereafter be the Note Exercise Price.
An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.
(f) If the Common Stock shall be changed into the same or a different
number of shares of any other class or classes of capital stock, whether by
capital reorganization, recapitalization, reclassification or consolidation or
merger of Holdings with another corporation, or the sale of all or substantially
all of its assets to another corporation or otherwise (other than an
Extraordinary Common Stock Event), then in each such event Purchaser shall have
the right thereafter to receive upon exercise hereof, in lieu of the number of
shares of Common Stock which Purchaser would otherwise have been entitled to
receive, the kind and amount of shares of capital stock and other securities and
property which it would have received upon such reorganization,
recapitalization, reclassification or consolidation or merger of Holdings with
another corporation, or the sale of all or substantially all of its assets or
other change had Purchaser exercised the Exchange Right immediately prior to
such reorganization, recapitalization, reclassification or consolidation or
merger of Holdings with another corporation, or the sale of all or substantially
all of its assets or change, all subject to further adjustment as
11
provided herein. The provision for such adjustments shall be a condition
precedent to the consummation by Holdings of any such transaction.
(g) Whenever on or after the date of this Agreement the number of
shares of Common Stock for which this Exchange Right is exercisable or the Note
Exercise Price is adjusted, as herein provided, Holdings shall promptly give
notice thereof to Purchaser, in accordance with Section 9(b), by delivering a
certificate which sets forth the Note Exercise Price after such adjustment and a
brief statement of the facts requiring such adjustment. Such certificate shall
also set forth the kind and amount of stock or other securities or property for
which this Exchange Right shall be exercisable following the occurrence of any
of the events specified above. The foregoing anti-dilution adjustments shall not
apply to any securities outstanding prior to the date hereof.
6. Covenants
(a) Holdings Reservation of the Common Stock. Holdings shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purposes of issuance upon exchange of the Notes or
pursuant to a Mandatory Issuance in accordance with this Agreement, such number
of shares of the Common Stock as are issuable upon the exchange of all then
outstanding Notes or pursuant to a Mandatory Issuance pursuant to this
Agreement. All shares of Common Stock that are so issuable shall, when issued,
be duly and validly issued, fully paid and non-assessable and free from all
taxes, charges and Encumbrances. Holdings shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable Law or Regulation or of any requirements of
any domestic securities exchange upon which shares of Common Stock may be listed
(except for official notice of issuance, which shall be immediately transmitted
by Holdings upon issuance).
(b) Filings; Etc. Subject to the terms and conditions herein provided,
Purchaser, Holdings and the Company shall:
(i) make any required filings, and obtain the consents, approvals,
permits or authorizations, required to be made or obtained prior to the
Closing or a Subsequent Closing, as the case may be, with or from any
Governmental Agency;
(ii) to the extent permitted by Law and Regulation, agree not to
participate in any meeting or discussion with any Governmental Agency in
respect of any filings, investigation or other inquiry concerning this
Agreement or the transactions contemplated hereby unless they consult with
the other parties in advance and, to the extent permitted by such
Governmental Agency, gives the other parties the opportunity to attend and
participate in such meeting or discussion;
(iii) to the extent permitted by Law and Regulation, furnish the other
parties with copies of all correspondence, filings and communications (and
memoranda setting forth the substance thereof) between them and their
subsidiaries and their respective representatives on the one hand, and any
Governmental Agency or members of any such
12
agency's staff on the other hand, with respect to this Agreement and the
transactions contemplated hereby; and
(iv) furnish the other parties with such necessary information and
reasonable assistance as such other parties and their Affiliates may
reasonably request in connection with their preparation of necessary
filings, registrations or submissions of information to any governmental or
regulatory authorities.
(c) Without limiting Section 6(b), Purchaser, Holdings and the Company
shall:
(i) each use reasonable best efforts to avoid the entry of, or to have
vacated, terminated or modified, any decree, order or judgment that would
restrain, prevent or delay the consummation of the transactions
contemplated by this Agreement; and
(ii) each use reasonable best efforts to take any and all steps
necessary to obtain any consents and approvals or make any required filings
under Section 6(b) above or eliminate any impediments to the consummation
of the transactions contemplated by this Agreement.
(d) SEC Notification. In the event of a Mandatory Issuance, on or
prior to the Closing Date or any Subsequent Closing Date, Holdings shall have
notified the Philippine SEC of its exemption from registration requirements
under the Securities Regulation Code with respect to the issuance of the
Mandatory Issuance Shares by Holdings.
(e) BSP Filings. (i) Holdings and the Company agree that, on or prior
to September 1, 2003, they shall have (A) taken all action necessary to register
the full amount of the Notes as a foreign currency loan with the BSP and (B)
obtained the related BSRD (the "Notes BSRD"); provided, however, that if
Purchaser delivers to Holdings an Exchange Notice prior to September 1, 2003,
Holdings and the Company shall promptly take all action necessary to register
the amount of Notes subject to such Exchange Notice and obtain the related Notes
BSRD. Such action shall include filing of proof of receipt of the Purchase
Price, documents pertaining to the use of proceeds from the Purchase Price and
all other documents that may be required by the BSP to register the Notes and
issue the Notes BSRD.
(ii) Holdings and the Company agree that, for the benefit of Purchaser
or any transferee of Purchaser, they shall have (A) within 5 days of the Closing
or any Subsequent Closing, taken all action necessary to register the shares of
Common Stock issuable upon exchange of the Notes or pursuant to Mandatory
Issuance with the BSP and (B) within 30 days of the Closing or the Subsequent
Closing obtained the related BSRD (the "Shares BSRD"); provided, however, that
in the event that both (x) Purchaser exercises an Exchange Right prior to
September 1, 2003 and (y) the Philippine SEC has not approved the confirmatory
ruling, all actions set forth in this Section 7(e)(ii) shall be completed within
60 days of such Closing or Subsequent Closing instead of 30 days. Such action
shall include filing of the requisite Notes BSRD, if applicable, and all other
documents that may be required by the BSP to register the shares of Common Stock
and issue the Shares BSRD.
13
7. Conditions.
The obligations of Holdings and Purchaser to complete the exchange of
Notes for Common Stock upon the exercise of an Exchange Right or to consummate a
Mandatory Issuance upon exercise of a Mandatory Issuance Right shall be subject
to the condition that none of the parties hereto shall be subject to any Law,
decree, order or injunction that prohibits the consummation of the transactions
contemplated hereby issued by a court of competent jurisdiction of (i) the
United States or any state or other jurisdiction in the United States or (ii)
the Republic of the Philippines; provided, however, that, prior to invoking this
condition, each party shall have complied with Section 6(b), and with respect to
other matters not covered by Section 6(b), shall have used its reasonable best
efforts to have any such decree, order or injunction lifted or vacated; and no
Law or Regulation shall have been enacted by any Governmental Agency which
prohibits or makes unlawful the consummation of the transactions contemplated by
this Agreement.
8. Owners of Notes Not Deemed Shareholders.
No owner of Notes shall, as such, be entitled to vote or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of
Exchange Rights or Mandatory Issuance Rights for any purpose whatsoever, nor
shall anything contained herein be construed to confer upon the owner of the
Notes, as such, any of the rights of a shareholder of Holdings or any right to
vote for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issue or reclassification of stock, change
of par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings until such owner shall have exercised Exchange Rights or
Mandatory Issuance Rights in accordance with the provisions hereof.
9. General Provisions
(a) Survival of Representation and Warranties. The representations and
warranties of Holdings and Purchaser shall survive the Closing and each
Subsequent Closing until all of the Notes have been exchanged into shares of
Common Stock or assigned to Holdings, as applicable, paid at maturity or are
redeemed in accordance with their terms and all of the Mandatory Issuance Shares
have been issued, if applicable.
(b) Notice Generally. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by courier
service or by facsimile transmission (with written confirmation of receipt) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified by notice given in accordance with this Section
9(b)):
(i) If to Purchaser, at
Xxxxxxx Xxxxx Global Emerging Markets Partners, LLC
World Financial Center, North Tower
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
14
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
and to any Holder, at the address
provided by such Holder
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
(ii) If to Holdings or the Company, at
PSi Technologies, Inc.
Electronics Avenue
FTI Complex, Taguig
Metro Manila
Philippines
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and to:
X.X. Xxx Law Offices
No. 48, SMC Court
Celery Drive, Xxxxx Verde 5
Pasig City, Metro Manila
Philippines 1600
Attention: Xxxxx Go Xxx
Facsimile: (000) 000-0000
(c) Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto as hereinafter provided. The rights of Purchaser
with respect to the Notes shall be transferred to any Person who is a transferee
of such Notes. All obligations of Holdings hereunder shall survive any such
transfer. No person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.
15
(d) Headings. The headings and subheadings in this Agreement are
included for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
(e) Governing Law; Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
(i) Any claim, action, suit or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be heard and
determined in any New York State or federal court sitting in The City of
New York, County of Manhattan, and each of the parties hereto hereby
consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom in any such claim, action, suit or
proceeding) and irrevocably waives, to the fullest extent permitted by law,
any objection that it may now or hereafter have to the laying of venue of
any such claim, action, suit or proceeding in any such court or that any
such claim, action, suit or proceeding that is brought in any such court
has been brought in an inconvenient forum.
(ii) Subject to applicable law, process in any such claim, action,
suit or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Nothing
herein shall affect the right of any party to serve legal process in any
manner permitted by law or at equity. WITH RESPECT TO ANY SUCH CLAIM,
ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES
IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY,
AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.
(f) Severability. If any term or other provision of this Agreement is
held to be invalid, illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner materially adverse
to any party. Upon a determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
(g) Amendments. This Agreement may not be amended, supplemented,
modified or restated nor may any provision herein be waived without the express
unanimous written consent of the Holders of a majority of the principal amount
of the Notes outstanding at such time, voting together as a single class;
provided, however, that no amendment, supplement or modification can be made to
the terms of the Exchange Right, including the Note Exercise Price, or the
Mandatory Issuance Rights, without the written consent of each Holder affected
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition of this Agreement. The failure of any
Holder to assert any of its rights hereunder shall not constitute a waiver of
any of such rights. All rights and remedies existing
16
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
(h) Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
(i) Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
(j) Construction. Each party hereto acknowledges and agrees that it
has had the opportunity to draft, review and edit the language of this Agreement
and that no presumption for or against any party arising out of drafting all or
any part of this Agreement will be applied in any dispute relating to, in
connection with or involving this Agreement. Accordingly, the parties hereto
hereby waive the benefit of any rule of Law or any legal decision that would
require, in cases of uncertainty, that the language of a contract should be
interpreted most strongly against the party who drafted such language.
(k) Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
17
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
PSI TECHNOLOGIES HOLDINGS, INC.
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board and Chief
Executive Officer
PSI TECHNOLOGIES, INC.
By:
---------------------------------------
Name:
Title:
XXXXXXX XXXXX GLOBAL EMERGING
MARKETS PARTNERS, LLC
By: Xxxxxxx Xxxxx Global Emerging Markets
Partners, L.P.
as its Managing Member
By: Xxxxxxx Xxxxx Global Capital, L.L.C.
as its General Partner
By: Xxxxxxx Xxxxx Global Partners, Inc.
as its Managing Member
By:
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
