Exhibit 10.3
AMENDMENT dated as of April 17,
2002 to the Credit Agreement dated as of
August 4, 1999, as amended and restated as
of April 3, 2000, as amended (the "Credit
Agreement"), among ON SEMICONDUCTOR
CORPORATION (formerly known as SCG HOLDING
CORPORATION, "Holdings"), SEMICONDUCTOR
COMPONENTS INDUSTRIES, LLC (the "Borrower"),
the LENDERS party thereto, JPMORGAN CHASE
BANK (formerly known as THE CHASE MANHATTAN
BANK), as administrative agent, collateral
agent and syndication agent, and CREDIT
LYONNAIS NEW YORK BRANCH, CREDIT SUISSE
FIRST BOSTON and XXXXXX COMMERCIAL PAPER
INC., as co-documentation agents.
A. Pursuant to the Credit Agreement, the Lenders have extended
credit to the Borrower, and have agreed to extend credit to the Borrower, in
each case pursuant to the terms and subject to the conditions set forth therein.
B. Holdings and the Borrower have requested that the Lenders
agree to amend certain provisions of the Credit Agreement pursuant to the terms
and subject to the conditions set forth herein.
C. The undersigned Lenders are willing so to amend the Credit
Agreement pursuant to the terms and subject to the conditions set forth herein.
D. Capitalized terms used but not defined herein have the
meanings assigned to them in the Credit Agreement, as amended hereby.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, and subject to the conditions set forth
herein, the parties hereto hereby agree as follows:
SECTION 1. Amendments to Section 1.01 (Defined Terms). Section
1.01 of the Credit Agreement is hereby amended as follows:
(a) by substituting the text "directors so nominated; (f) the
occurrence of a "Change of Control", as defined in the Subordinated Debt
Documents; or (g) the occurrence of a "Change of Control" as defined in the
Second Lien Documents" for the text "directors so nominated; or (f) the
occurrence of a "Change of Control", as defined in the Subordinated Debt
Documents" at the end of the definition of the term "Change in Control".
(b) by substituting the text "Subrogation and Contribution
Agreement, the Security Documents and the Intercreditor Agreement" for the text
"Subrogation and Contribution Agreement and the Security Documents" in the
definition of the term "Loan Documents".
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(c) to add each of the following defined terms in the
appropriate alphabetical order:
"Financial Report" means a report containing the financial
information set forth on Schedule 5.01, which report shall be certified by a
Financial Officer.
"Intercreditor Agreement" means the intercreditor agreement
entered into among Holdings, the Borrower, the Administrative Agent and the
trustee under the Second Lien Note Indenture (or any other trustee or agent to
which Liens are granted under the Second Lien Security Documents), providing for
(a) the priority of the Liens granted pursuant to the Security Documents over
the Liens granted pursuant to the Second Lien Security Documents and (b)
restrictions on the exercise of remedies under the Second Lien Security
Documents.
"Restructuring Liquidation Sales" means sales of plant,
property and equipment for cash consideration as part of restructuring
activities in which Holdings, the Borrower or any Subsidiary is, as of April 17,
2002, currently engaged in or committed to engage in, which activities were
disclosed to the Administrative Agent prior to April 17, 2002.
"Second Lien Documents" means the Second Lien Note Indenture,
the Intercreditor Agreement, the Second Lien Security Documents and all other
instruments, agreements and other documents evidencing or governing the Second
Lien Notes or providing for any Guarantee or other right in respect thereof.
"Second Lien Note Indenture" means the indenture pursuant to
which the Second Lien Notes are issued.
"Second Lien Notes" means the senior secured second lien notes
to be co-issued by the Borrower and Holdings pursuant to the Second Lien Note
Indenture in an initial principal amount not less than $250,000,000 and an
aggregate principal amount of not more than $500,000,000.
"Second Lien Security Documents" means any and all security
agreements, pledge agreements, mortgages and other agreements and documents
pursuant to which any Liens are granted to secure any Indebtedness or other
obligations in respect of the Second Lien Notes.
SECTION 2. Amendment to Section 2.10 (Amortization of Term
Loans). Section 2.10(f) of the Credit Agreement is hereby amended by the
deleting the first sentence thereof in its entirety and substituting the
following therefor:
(f) Any prepayment of a Term Borrowing of
any Class shall be applied to reduce the subsequent
scheduled repayments of the Term Borrowing of such
Class to be made pursuant to this Section ratably,
provided that any prepayment made pursuant to
Sections 2.11(c)(i) and 2.11(c)(ii) shall be applied
to reduce the scheduled repayments of the Term
Borrowings of such Class to be made pursuant to this
Section in reverse chronological order.
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SECTION 3. Amendment to Section 2.11 (Prepayment of Loans).
Section 2.11(c) of the Credit Agreement is hereby amended by adding the
following at the end thereof:
(iii) In the event and on each occasion that
any Net Proceeds are received by or on behalf of
Holdings, the Borrower or any Subsidiary in respect
of (A) the issuance of the Second Lien Notes, (B) any
payment by the China JV of any Indebtedness owing to
Holdings, the Borrower or any Subsidiary from the Net
Proceeds to the China JV of any Indebtedness incurred
by the China JV as contemplated by clause (xiv)(1) of
Section 6.01(a) or (C) any Indebtedness incurred by
the Borrower as contemplated by clause (xiv)(2) of
Section 6.01(a), then, in each such case, the
Borrower shall, on the date of receipt of such Net
Proceeds (in the case of any such Net Proceeds in
respect of the issuance of the Second Lien Notes or
the incurrence by the Borrower of Indebtedness
referred to in the foregoing clause (C)) or within 10
Business Days after such Net Proceeds are received
(in the case of any such Net Proceeds in respect of
Indebtedness of the China JV), prepay Term Borrowings
in an aggregate amount equal to such Net Proceeds.
SECTION 4. Amendment to Article III (Representations and
Warranties). Article III of the Credit Agreement is hereby amended by adding the
following at the end thereof:
SECTION 3.19. Senior Secured Obligations .
All the Obligations constitute "Credit Agreement
Obligations" under and as defined in the Second Lien
Note Indenture. The Liens granted pursuant to the
Security Documents are prior to the Liens granted
pursuant to the Second Lien Security Documents.
SECTION 5. Amendments to Section 5.01 (Financial Statements
and Other Information). Section 5.01 of the Credit Agreement is hereby amended
by deleting clause (h) in its entirety and substituting the following therefor:
(h) in respect of each fiscal month ending
on or prior to the earlier of (i) the Transition Date
and (ii) March 31, 2003, (A) within 30 days after the
end of each of the first two fiscal months of each
fiscal quarter of Holdings, a Financial Report for
each such month and for the then elapsed portion of
the fiscal year and (B) within 45 days after the end
of the last fiscal month of each fiscal quarter of
Holdings, a Financial Report for such fiscal month
and for such fiscal quarter and for the then elapsed
portion of the fiscal year.
SECTION 6. SECTION 6. Amendment to Section 6.01 (Indebtedness;
Certain Equity Securities). Section 6.01 of the Credit Agreement is hereby
amended as follows:
(a) Clause (xi) of Section 6.01(a) is amended by deleting the
text "and" following the semicolon.
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(b) Clause (xii) of Section 6.01(a) is amended by substituting
a semicolon for the period at the end thereof.
(c) Section 6.01(a) is further amended by inserting the
following new clauses (xiii) and (xiv) after clause (xii):
(xiii) the Second Lien Notes, provided that
the Second Lien Notes shall not be Guaranteed by any
Subsidiary that has not guaranteed the Obligations;
and
(xiv) Indebtedness for borrowed money
incurred (1) by the China JV to refinance
Indebtedness owed by the China JV to Holdings, the
Borrower or any Subsidiary or (2) by the Borrower,
which Indebtedness is guaranteed by the China JV in
consideration for the cancelation by Holdings, the
Borrower or any Subsidiary, as the case may be, of
Indebtedness of the China JV owing to Holdings, the
Borrower or such Subsidiary, as the case may be,
having an aggregate principal amount that is no
greater than the aggregate principal amount of the
Indebtedness so canceled; provided that (i) the
aggregate principal amount of such Indebtedness shall
not exceed $100,000,000, (ii) the interest rate
payable by the China JV or the Borrower in respect of
any such Indebtedness so incurred is less than the
interest rate payable by the China JV in respect of
the Indebtedness so repaid (in the case of
Indebtedness incurred under clause (1) above) or
canceled (in the case of Indebtedness incurred under
clause (2) above), (iii) such Indebtedness (x) shall
not be secured by any Lien other than Liens permitted
by Section 6.02(a)(xi), (y) shall not be Guaranteed
by any Person other than the China JV and (z) shall
not (in the case of Indebtedness incurred pursuant to
clause (2) above) mature, and no amortization or
principal payment in respect thereof shall be made,
prior to the date that is six months after the
Tranche D Maturity Date.
(d) Section 6.01 is further amended by adding the text "and
(a)(xiii)" after the text "under clause (a)(v)" in Section 6.01(b).
SECTION 7. Amendments to Section 6.02 (Liens). Section 6.02 of
the Credit Agreement is hereby amended as follows:
(a) Clause (viii) of Section 6.02(a) is amended by deleting
the text "and" following the semicolon.
(b) Clause (ix) of Section 6.02(a) is amended by substituting
the text ";" for the period at the end of such clause.
(c) The following additional clauses are added at the end of
Section 6.02(a):
(x) Liens granted under the Second Lien
Security Documents; provided that (A) such Liens
secure only obligations in respect of the Second Lien
Notes, (B) such Liens do not apply to any asset other
than
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Collateral that is subject to a prior Lien granted
under a Security Document and (C) all such Liens and
Second Lien Security Documents shall be subject to
the terms of the Intercreditor Agreement; and
(xi) Liens on the assets of the China JV
securing Indebtedness permitted under clause (xiv) of
Section 6.01(a).
(d) Section 6.02 is further amended by substituting the text
"Pledge Agreement and the Second Lien Documents and Permitted Encumbrances" for
the text "Pledge Agreement and Permitted Encumbrances" in Section 6.02(b).
SECTION 8. Amendment to Section 6.05 (Asset Sales). Clause (a)
of Section 6.05 of the Credit Agreement is hereby amended to add, after the
words "in the ordinary course of business", the words ", Restructuring
Liquidation Sales".
SECTION 9. SECTION 9. Amendment to Section 6.08 (Restricted
Payments; Certain Payments of Indebtedness). Section 6.08(b) of the Credit
Agreement is hereby amended by deleting clause (v) thereof in its entirety and
substituting the following therefor:
(v) payments on account of the redemption of
Second Lien Notes with not more than 25% of the
aggregate net proceeds of one or more issuances of
equity securities of Holdings, provided that (A)
after giving effect to such redemption, no Default or
Event of Default shall have occurred and be
continuing, (B) not more than 35% of the original
aggregate principal amount of the Second Lien Notes
is redeemed and (C) any such redemption shall be made
within 90 days of such equity issuance and otherwise
in compliance with the provisions of the Second Lien
Note Indenture.
SECTION 10. Amendments to Section 6.11 (Amendments of Material
Documents). Section 6.11(a) of the Credit Agreement is hereby amended by
substituting a comma for the word "or" at the end of clause (iii) thereof and
adding the following at the end thereof: "or (v) except for amendments to the
Second Lien Security Documents permitted by the Intercreditor Agreement, any
Second Lien Document."
SECTION 11. Amendment to Section 6.12 (Interest Expense
Coverage Ratio). Section 6.12 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
SECTION 6.12. Interest Expense Coverage
Ratio. (a) The Borrower will not permit the ratio of
(i) Consolidated EBITDA (plus, without duplication,
any Supplemental Interest deducted in calculating
Consolidated EBITDA) to (ii) Consolidated Cash
Interest Expense (excluding any Supplemental Interest
otherwise included therein) (the "Interest Expense
Coverage Ratio"), in each case for any period of four
consecutive fiscal quarters ending on any date during
any period set forth below, to be less than the ratio
set forth below opposite such period:
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Period Ratio
------ -----
January 1, 2004 to and including December 31, 2004 2.00 to 1.00
January 1, 2005 to and including July 1, 2005 2.25 to 1.00
July 2, 2005 to and including December 31, 2005 2.50 to 1.00
January 1, 2006 to and including June 30, 2006 2.75 to 1.00
July 1, 2006 and thereafter 3.00 to 1.00
(b) For purposes of calculating the Interest Expense Coverage
Ratio under clause (a) of this Section 6.12, Consolidated EBITDA for the period
of four consecutive fiscal quarters of Holdings (i) ended March 31, 2004 shall
be deemed to be equal to Consolidated EBITDA for the fiscal quarter then ended
multiplied by 4, (ii) ended June 30, 2004 shall be deemed to be equal to
Consolidated EBITDA for the two consecutive fiscal quarters then ended
multiplied by 2 and (iii) ended September 30, 2004 shall be deemed to be equal
to Consolidated EBITDA for the three consecutive fiscal quarters then ended
multiplied by 4/3.
SECTION 12. Amendment to Section 6.13 (Leverage Ratio).
Section 6.13 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
SECTION 6.13. Leverage Ratio. (a) The
Borrower will not permit the Leverage Ratio as of the
end of any fiscal quarter during any period set forth
below to exceed the ratio set forth opposite such
period:
Period Ratio
------ -----
January 1, 2004 to and including July 2, 2004 5.00 to 1.00
July 3, 2004 to and including December 31, 2004 4.75 to 1.00
January 1, 2005 to and including July 1, 2005 4.50 to 1.00
July 2, 2005 to and including December 31, 2005 4.25 to 1.00
January 1, 2006 to and including June 30, 2006 4.00 to 1.00
July 1, 2006 and thereafter 3.75 to 1.00
(b) For purposes of calculating the Leverage Ratio under
clause (a) of this Section 6.13, Consolidated EBITDA for the period of four
consecutive fiscal quarters of Holdings (i) ended March 31, 2004 shall be deemed
to be equal to Consolidated EBITDA for the fiscal quarter then ended multiplied
by 4, (ii) ended June 30, 2004 shall be deemed to be equal to Consolidated
EBITDA for the two consecutive fiscal quarters then ended multiplied by 2 and
(iii) ended September 30, 2004 shall be deemed to be equal to Consolidated
EBITDA for the three consecutive fiscal quarters then ended multiplied by 4/3.
For purposes of this Section 6.13,
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the Funded Indebtedness component of the Leverage Ratio shall be calculated
excluding any Supplemental Interest otherwise included therein.
SECTION 13. SECTION 13. Amendment to Section 6.15 (Minimum
Consolidated EBITDA). Section 6.15 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
SECTION 6.15. Minimum Consolidated EBITDA.
The Borrower will not permit Consolidated EBITDA for
any period set forth below to be less than the amount
set forth opposite such period:
Period Amount
------ ------
June 30, 2001 to and including March 29, $ 0.0
2002
June 30, 2001 to and including June 28, 2002 $ 35,000,000
September 29, 2001 to and including 80,000,000
September 27, 2002
January 1, 2002 to and including December $120,000,000
31, 2002
March 29, 2002 to and including March 28, $140,000,000
2003
June 29, 2002 to and including June 27, $160,000,000
2003
September 28, 2002 to and including $180,000,000
September 26, 2003
January 1, 2003 to and including December $200,000,000
31, 2003
SECTION 14. Amendment to Consultant Arrangement. Section 19 of
the waiver, consent and amendment to the Credit Agreement dated as of August 13,
2001, is hereby deleted.
SECTION 15. Consent to Amendment of the Leshan JV Agreement.
The Lenders hereby consent to the amendment and modification of the Leshan JV
Agreement (a) to provide for the construction of a manufacturing facility as
more fully described on Exhibit A hereto and (b) to permit the Liens
contemplated in Section 6.02(a)(xi).
SECTION 16. Amendment Fee. The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender that delivers an executed
counterpart of
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this Amendment at or prior to 4:00 p.m., New York City time, on April 17, 2002,
an amendment fee in an amount equal to 0.125% of the sum of such Lender's
Revolving Commitment and outstanding Term Loans as of the date this Amendment
becomes effective (determined after giving effect to all prepayments that are
made on such date); provided that such fee shall not be payable unless and until
this Amendment becomes effective as provided in Section 18.
SECTION 17. Representations and Warranties. Each of Holdings
and the Borrower represents and warrants to the Administrative Agent and to each
of the Lenders that:
(a) This Amendment has been duly authorized, executed and
delivered by each of Holdings and the Borrower and constitutes a legal, valid
and binding obligation of Holdings and the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
(b) After giving effect to this Amendment, each of the
representations and warranties of Holdings and the Borrower set forth in the
Loan Documents is true and correct on and as of the date hereof, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties are true and correct as of
such earlier date.
(c) Immediately after giving effect to this Amendment, no
Default shall have occurred and be continuing.
SECTION 18. Conditions to Effectiveness. This Amendment shall
become effective on the date that the Second Lien Notes are issued (which date
shall not be later than June 30, 2002), subject to satisfaction of the following
conditions on or prior to such date: (a) the Administrative Agent shall have
received counterparts of this Amendment that, when taken together, bear the
signatures of Holdings, the Borrower and the Required Lenders, (b) all fees and
expenses required to be paid or reimbursed by the Borrower under or in
connection with this Amendment or the Credit Agreement (and in the case of
expenses to be reimbursed, including fees, charges and disbursements of counsel
or other advisors, in each case to the extent invoiced in writing to the
Borrower at least three Business Days prior to the date that this Amendment
becomes effective) shall have been paid or reimbursed, as applicable (including
all fees and disbursements of counsel previously invoiced), (c) the
Intercreditor Agreement shall be satisfactory in form and substance to the
Administrative Agent and shall have been executed and delivered by all parties
thereto and shall be in full force and effect, (d) the terms and conditions of
the Second Lien Notes and the Second Lien Documents (including but not limited
to terms and conditions relating to payment, covenants, events of default,
remedies and maturity) shall be reasonably satisfactory to the Administrative
Agent and (e) the gross cash proceeds from the Second Lien Notes shall not be
less than $250,000,000.
SECTION 19. Credit Agreement. Except as specifically waived or
amended hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. After
the date hereof, any reference to the
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Credit Agreement shall mean the Credit Agreement as amended or modified hereby.
This Amendment shall be a Loan Document for all purposes.
SECTION 20. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 21. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one agreement. Delivery of an
executed signature page to this Amendment by facsimile transmission shall be
effective as delivery of a manually signed counterpart of this Amendment.
SECTION 22. Expenses. The Borrower agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Amendment, including the fees, charges and disbursements of Cravath,
Swaine & Xxxxx, counsel for the Administrative Agent.
SECTION 23. Headings. The Section headings used herein are for
convenience of reference only, are not part of this Amendment and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
ON SEMICONDUCTOR CORPORATION,
by
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President,
Chief Financial Officer,
and Treasurer
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC,
by
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
JPMORGAN CHASE BANK,
individually and as administrative agent,
by
/s/ Xxxxxx XxXxxxxx
-----------------------------------------
Name: Xxxxxx XxXxxxxx
Title: Vice President
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SIGNATURE PAGE TO THE AMENDMENT DATED AS OF
APRIL 17, 2002 TO THE CREDIT AGREEMENT AMONG
ON SEMICONDUCTOR CORPORATION, SEMICONDUCTOR
COMPONENTS INDUSTRIES, LLC, THE LENDERS
PARTY THERETO, JPMORGAN CHASE BANK, AS
ADMINISTRATIVE AGENT, COLLATERAL AGENT AND
SYNDICATION AGENT, AND CREDIT LYONNAIS NEW
YORK BRANCH, CREDIT SUISSE FIRST BOSTON AND
XXXXXX COMMERCIAL PAPER INC., AS
CO-DOCUMENTATION AGENTS.
BEAR, XXXXXXX & CO. INC.
by
/s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title: Senior Managing Director
[Signature pages for all Lenders follow in original document]
Exhibit A
The China JV proposes to construct a new manufacturing facility in
Leshan, China consisting of a multi-phased submicron capable wafer fab (the "New
Leshan Facility"). The New Leshan Facility will be constructed on real property
currently owned by the China JV that is adjacent to the China JV's existing
facilities. The approximate cost of the first phase of the construction of the
New Leshan Facility, which is currently scheduled to begin in August of 2002, is
approximately $20 million. The cost and precise timing of future phases will
depend on market conditions, but it is currently expected that future phases
would commence in late 2003 and that the New Leshan Facility would be completed
in 2006 at an aggregate cost of approximately $350 million.
The following amendments to the Leshan JV agreement, among others, may
be required in order to construct the New Leshan Facility:
- revise the scope of operations of the Leshan JV to include New
Leshan Facility;
- increase the total authorized investment by $350 million; and
- increase the registered capital by $70 million.
Any investment in the Leshan JV by Holdings, the Borrower or any other
Subsidiary remains subject to the terms of the Credit Agreement.
ON SEMICONDUCTOR, INC. Schedule 5.01
SCHEDULE OF REPORTING REQUIREMENTS
LISTING OF ITEMS REQUIRED DESCRIBED IN CFO LETTER FINANCIAL SCHEDULE
------------------------- ----------------------- ------------------
ANNUAL QUARTERLY MONTHLY ANNUAL QUARTERLY MONTHLY
------ --------- ------- ------ --------- -------
1) CFO Letter describing current
state of company performance X X X
2) Budget by Quarter
- Income Statement /
Balance Sheet /
Statement of Cash Flow X
3) Audited Financial Statements
- Income Statement /
Balance Sheet /
Statement of Cash Flow (Form 10K) X
- Statement of Stockholders'
Equity (Form 10K) X
- Footnotes (Form 10K) X
4) Unaudited Financial Statements
- Income Statement /
Balance Sheet /
Statement of Cash Flow (Form 10Q) X X
- Income Statement /
Balance Sheet /
Statement of Cash Flow
(variance to Budget) X X
- Income Statement /
Balance Sheet /
Statement of Cash Flow
(in the form of Budget) X
- Statement of Stockholders'
Equity (Form 10Q) X
- Footnotes (Form 10Q) X
5) Explanation for any Budget
variance of greater than 10%
versus actual performance X X
6) Revenue by Product Line
- Analog, ECL, Logic, Discreet, TMOS X X
7) Key Balance Sheet Metrics
- Days Sales Outstanding,
Days Payables Outstanding X X X
- Days Inventory on Hand X X
- Explanation for any non-
ordinary course inventory
write-downs X X
8) Financial Covenant Calculations
(as applicable) with full
build up as per credit agreement
definitions, noting any
variance from public filings.
- EBITDA Calculation (through 4Q03) X X
- Minimum Cash Balance X X X
- Capital Expenditures X X
- Leverage Ratio X X
- Coverage Ratio X X
9) Rolling 6-Month Monthly Cash
Forecast (as applicable)
- In sufficient detail to describe
key sources and uses of cash X X
10) High-Level Explanation of overall status
of restructuring Initiatives X X X
