Exhibit 10.7
EXECUTION COPY
COLLATERAL ASSIGNMENT dated as of May 6, 2002, between
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, a Delaware limited
liability company ("SCI LLC"), and WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking
association ("Wells Fargo Bank"), as trustee under the
Indenture referred to below and as collateral agent (in such
capacity, the " Collateral Agent") for the Secured Parties
(as defined in the Security Agreement). Capitalized terms
used but not defined herein shall have the meanings assigned
to such terms in the Indenture (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to the terms, conditions and provisions of (a) the
Indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), among SCI LLC, ON
Semiconductor Corporation, a Delaware Corporation (the "Company "), the
Guarantors (as defined in the Indenture) and Wells Fargo Bank, as trustee (the
"Trustee"), and (b) the Purchase Agreement dated as of May 1, 2002, among the
Issuers, the Guarantors and Credit Suisse First Boston Corporation, Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc. and J.P. Morgan Securities
Inc. (the " Initial Purchasers"), the Issuers are issuing $300,000,000 aggregate
principal amount of 12% Senior Secured Notes due 2008 and may issue, from time
to time, additional notes in accordance with the provisions of the Indenture
(collectively, the "Notes") which will be guaranteed on a senior secured basis
by each of the Guarantors;
WHEREAS, pursuant to the Collateral Assignment dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time), between
SCI LLC and JPMorgan Chase Bank (as successor to The Chase Manhattan Bank), a
New York banking corporation ("JPMorgan"), as collateral agent, the Company has
granted to the Senior Agent (as defined below) a first-priority lien and
security interest in the Assigned Contracts (as defined below) in connection
with the Credit Agreement dated as of August 4, 1999, as amended and restated as
of April 3, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among SCI LLC, as borrower, the Company, the
lenders from time to time party thereto (the "Lenders"), JPMorgan, as
administrative agent, collateral agent and syndication agent (in such capacity,
the "Senior Agent") for the Lenders, and Credit Lyonnais New York Branch, Credit
Suisse First Boston and Lehman Commercial Paper Inc., as co-documentation
agents;
WHEREAS, the Company, SCI LLC, the Collateral Agent and the Senior
Agent have entered into an Intercreditor Agreement, dated as of the date hereof
(the " Intercreditor Agreement"), pursuant to which the lien and security
interest in the Assigned Contracts granted by this Agreement are and shall be
subordinated in all respects to the lien and security interest in the Assigned
Contracts granted pursuant to, and all terms and conditions of, the Senior
Lender Documents (as defined in the Intercreditor Agreement);
WHEREAS, SCI LLC is executing and delivering this Agreement pursuant
to the terms of the Indenture to induce the Trustee to enter into the Indenture
and the Initial Purchasers to purchase the Notes; and
WHEREAS, SCI LLC has duly authorized the execution, delivery and
performance of this Agreement.
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NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to induce the Trustee to enter
into the Indenture and the Initial Purchasers to purchase the Notes, SCI LLC and
the Collateral Agent, on behalf of itself and each Secured Party (and each of
their respective successors or assigns), hereby agree as follows:
SECTION 1. Collateral Assignment. As collateral security for the
Obligations (as defined in the Security Agreement), SCI LLC hereby assigns to
the Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties a security interest in,
all of SCI LLC's right, title and interest in, to and under the following
contracts and instruments, as the same may be modified, amended or supplemented
from time to time:
(a) the Transition Agreements (as defined in the Credit Agreement);
and
(b) such other contracts and instruments of SCI LLC as the Senior
Agent (or, if the First-Lien Termination Date (as defined in the Security
Agreement) has occurred, the Collateral Agent) shall designate from time
to time to SCI LLC in writing unless such assignment is prohibited (i) by
the terms thereof, and SCI LLC cannot reasonably obtain a waiver or an
amendment of such prohibition or (ii) by applicable law.
The contracts and instruments listed in clauses (a) and (b), as amended and in
effect from time to time, are referred to collectively as the "Assigned
Contracts". The security interest assigned by this Section 1 shall include (a)
any and all rights to receive and demand payments under any and all Assigned
Contracts, (b) any and all rights to receive and compel performance under any
and all Assigned Contracts, (c) the right to make all waivers, amendments,
determinations and agreements of or under any and all Assigned Contracts, (d)
the right to take such action, including commencement, conduct and consummation
of legal, administrative or other proceedings, as shall be permitted by the
Assigned Contracts or by law and (e) any and all other rights, interests and
claims now existing or hereafter arising under or in connection with any and all
Assigned Contracts.
SECTION 2. Agreements, Representations and Warranties. SCI LLC
further agrees, represents and warrants to the Collateral Agent and the Secured
Parties that:
(a) as of the date hereof, the Assigned Contracts are in full force
and effect, there being no default thereunder by SCI LLC. SCI LLC will not
permit any waiver, supplement, amendment, change or modification to be made to
the Assigned Contracts, without the written consent of the Senior Agent (or, if
the First-Lien Termination Date has occurred, the Collateral Agent), except as
permitted in accordance with Section 6.11(b) of the Credit Agreement and the
Indenture (to the extent consistent with the Intercreditor Agreement); and
(b) it has the right, power and authority to grant to the Collateral
Agent a security interest in its right, title and interest in and to the
Assigned Contracts. It has not heretofore hypothecated, assigned, mortgaged,
pledged, encumbered or otherwise transferred its right, title or interest under
the Assigned Contracts in any manner to any person other than the Senior Agent
and the Collateral Agent, nor will it do so at any time hereafter without the
Collateral Agent's prior written consent in each instance. Any such assignment,
mortgage, pledge or encumbrance without the Collateral Agent's consent shall be
void and of no force or effect.
SECTION 3. No Obligations for Collateral Agent. SCI LLC specifically
acknowledges and agrees that the Collateral Agent does not assume, and shall
have no responsibility for, the performance of any obligations to be performed
under or with respect to the Assigned Contracts or by it and it hereby agrees to
indemnify and hold harmless the
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Collateral Agent with respect to any and all claims by any person relating to
such obligations. The Collateral Agent, in its discretion, may file or record
this Agreement. The Collateral Agent agrees to notify SCI LLC promptly after any
such filing or recording.
SECTION 4. Remedies upon Default. In accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement, upon the
commencement and during the continuance of an Event of Default, the Collateral
Agent may, at its option, without notice to or demand upon SCI LLC (both of
which are hereby waived for the purpose of this Section 4), in addition to all
other rights and remedies provided under any of the Indenture Documents, in its
own name or the name of SCI LLC, demand, sue upon or otherwise enforce the
Assigned Contracts to the same extent as if the Collateral Agent were the party
named in the Assigned Contracts, and exercise all other rights of SCI LLC under
the Assigned Contracts in such manner as it may determine. Any moneys actually
received by the Collateral Agent pursuant to the exercise of any of the rights
and remedies granted in this Collateral Assignment shall be applied as provided
in the Security Agreement.
SECTION 5. Reimbursement of Collateral Agent. In accordance with,
and to the extent consistent with, the terms of the Intercreditor Agreement, (a)
SCI LLC agrees to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of SCI LLC to perform or observe any of the provisions hereof applicable
to it.
(b) Without limitation of its indemnification obligations under the
other Indenture Documents, SCI LLC agrees to indemnify the Collateral Agent and
the other Indemnitees (as defined in the Security Agreement) against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to any of the Assigned Contracts, whether or not any Indemnitee is a party
thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any Affiliate of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 5 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Indenture Document,
the consummation of the transactions contemplated hereby, the repayment of any
of the Notes, the invalidity or unenforceability of any term or provision of
this Agreement or any other Indenture Document, or any investigation made by or
on behalf of the Collateral Agent or any other Secured Party. All amounts due
under this Section 5 shall be payable upon written demand therefor.
SECTION 6. Collateral Agent Appointed Attorney-in-Fact. Upon the
occurrence and during the continuation of an Event of Default, the Collateral
Agent shall have the right, as the true and lawful attorney-in-fact and agent of
SCI LLC, with power of substitution for SCI LLC and in the SCI LLC's name, the
Collateral Agent's name or otherwise for the use and benefit of the Collateral
Agent (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Assigned Contracts or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Assigned Contracts; (c) to sign
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the name of SCI LLC on any invoice or bill of lading relating to any of the
Assigned Contracts; (d) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Assigned Contracts or to
enforce any rights in respect of any Assigned Contracts; (e) to settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Assigned Contracts; and (f) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Assigned Contracts, and to do all other acts and things necessary
to carry out the purposes of this Collateral Assignment, as fully and completely
as though the Collateral Agent were SCI LLC named in the Assigned Contracts;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Assigned Contracts or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby, and no action taken or omitted to be taken by the Collateral
Agent or any Secured Party with respect to the Assigned Contracts or any part
thereof shall give rise to any defense, counterclaim or offset in favor of SCI
LLC or to any claim or action against the Collateral Agent or any Secured Party.
It is understood and agreed that the appointment of the Collateral Agent as the
agent and attorney-in-fact of SCI LLC for the purposes set forth above is
coupled with an interest and is irrevocable. The provisions of this Section 6
shall in no event relieve SCI LLC of any of its obligations hereunder or under
the other Indenture Documents with respect to the Assigned Contracts or any part
thereof or impose any obligation on the Collateral Agent or any Secured Party to
proceed in any particular manner with respect to the Assigned Contracts or any
part thereof, or in any way limit the exercise by the Collateral Agent or any
Secured Party of any other or further right that it may have on the date of this
Collateral Assignment or hereafter, whether hereunder, under any other Indenture
Document, by law or otherwise.
Notwithstanding anything in this Section 6 to the contrary, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 6 unless it does so in accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement.
SECTION 7. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent and the other Secured Parties under the other
Indenture Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Indenture Document or consent to any departure by SCI LLC
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on SCI LLC in any case shall entitle SCI LLC to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except (i) in accordance with the Indenture pursuant to an
agreement or agreements in writing entered into by the Collateral Agent and SCI
LLC with respect to which such waiver, amendment or modification is to apply, or
(ii) as otherwise provided in the Intercreditor Agreement.
SECTION 8. Security Interest Absolute. All rights of the Collateral
Agent hereunder and all obligations of SCI LLC hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Indenture, any other Indenture Document, any agreement with respect to any of
the Obligations or any other agreement or
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instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Indenture, any other Indenture Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien (as defined in the
Intercreditor Agreement) on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, SCI LLC in
respect of the Obligations or this Agreement.
SECTION 9. Termination. This Agreement shall terminate at the time
provided in Section 10.08 of the Indenture. Upon such termination, the
Collateral Agent shall take such action as SCI LLC shall reasonably request at
the expense of SCI LLC to reassign and deliver to SCI LLC, without recourse or
warranty, the Assigned Contracts and related documents, if any, in which the
Collateral Agent shall have any interest under this Collateral Assignment and
which shall then be held by the Collateral Agent or be in its possession and the
SCI LLC's obligations hereunder and the security interest of the Collateral
Agent in the Assigned Contracts shall terminate. In connection with any
termination or release, the Collateral Agent shall execute and deliver to SCI
LLC, at SCI LLC's expense, all Uniform Commercial Code termination statements
and similar documents, including, without limitation, authorization for the
Grantors to file Uniform Commercial Code termination statements, that the SCI
LLC shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 9 shall
be without recourse to or warranty by the Collateral Agent.
SECTION 10. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 12.02 of the Indenture.
SECTION 11. Further Assurances. SCI LLC covenants to execute and
deliver to the Collateral Agent, promptly after demand, such additional
assurances, writings or other instruments as may reasonably be required by the
Collateral Agent to effectuate the purposes hereof.
SECTION 12. Binding Effect: Several Agreement; Assignments. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party, and all
covenants, promises and agreements by or on behalf of SCI LLC that are contained
in this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to SCI LLC when a counterpart
hereof executed on behalf of SCI LLC shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon SCI LLC and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of SCI LLC, the Collateral Agent and the other Secured Parties and
their respective successors and assigns, except that SCI LLC shall have no right
to assign or transfer its rights or obligations hereunder or any interest herein
(and any such assignment or transfer shall be void) except as expressly
contemplated by this Agreement or the other Indenture Documents.
SECTION 13. Survival of Agreement: Severability. (a) All covenants.
agreements, representations and warranties made by SCI LLC herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Indenture Document shall be considered
to have been relied upon by the Secured Parties and shall survive the purchase
of the Notes by the Initial Purchasers, regardless of any investigation made by
the Initial Purchasers or on their behalf, and shall continue in full force and
effect until this Agreement shall terminate.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and
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enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Counterparts. This Agreement 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 contract (subject to Section 12),
and shall become effective as provided in Section 12. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 16. Jurisdiction; Consent to Service of Process. (a) SCI LLC
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Indenture Documents, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Indenture Documents
against SCI LLC or its properties in the courts of any jurisdiction.
(b) SCI LLC irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Indenture Documents in any New
York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER INDENTURE
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 17.
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SECTION 18. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Security Agreement shall be applicable to this
Agreement.
SECTION 19. Subject to Intercreditor Agreement. Notwithstanding anything
herein to the contrary, the lien and security interest granted to the Collateral
Agent pursuant to this Agreement and the exercise of any right or remedy by the
Collateral Agent hereunder are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SEMICONDUCTOR COMPONENTS
INDUSTRIES, LLC,
by /s/ John T. Kurtzweil
_______________________________
Name: John T. Kurtzweil
Title: Senior Vice President,
Chief Financial Officer,
and Treasurer
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Collateral
Agent,
by /s/ Joseph P. O'Donnell
_______________________________
Name: Joseph P. O'Donnell
Title: Corporate Trust Officer