EXHIBIT 4.2
EXECUTION COPY
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CHIPPAC INTERNATIONAL LIMITED
Issuer
CHIPPAC MERGER CORP.
Guarantor
12 3/4% Senior Subordinated Notes Due 2009
____________________
INDENTURE
Dated as of July 29, 1999
____________________
FIRSTAR BANK OF MINNESOTA, N.A.
Trustee
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 11.03
(c) .............................. 11.03
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. 11.02
(d) .............................. 7.06
314(a) .............................. 4.02; 11.02
(b) .............................. N.A.
(c)(1) .............................. 11.04
(c)(2) .............................. 11.04
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 11.05
315(a) .............................. 7.01
(b) .............................. 7.05; 11.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) .............................. 11.06
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 11.01
N.A. means Not Applicable.
___________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
ARTICLE 1 Page
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Definitions and Incorporation by Reference
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SECTION 1.01. Definitions............................................... 1
SECTION 1.02. Other Definitions......................................... 29
SECTION 1.03. Incorporation by Reference of Trust Indenture Act......... 29
SECTION 1.04. Rules of Construction..................................... 30
ARTICLE 2
The Securities
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SECTION 2.01. Form and Dating........................................... 31
SECTION 2.02. Execution and Authentication.............................. 31
SECTION 2.03. Registrar and Paying Agent................................ 32
SECTION 2.04. Paying Agent To Hold Money in Trust....................... 32
SECTION 2.05. Securityholder Lists...................................... 33
SECTION 2.06. Transfer and Exchange..................................... 33
SECTION 2.07. Replacement Securities.................................... 34
SECTION 2.08. Outstanding Securities.................................... 34
SECTION 2.09. Temporary Securities...................................... 35
SECTION 2.10. Cancellation.............................................. 35
SECTION 2.11. Defaulted Interest........................................ 35
SECTION 2.12. CUSIP Numbers............................................. 35
SECTION 2.13. Issuance of Additional Securities......................... 36
ARTICLE 3
Redemption
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SECTION 3.01. Notices to Trustee........................................ 36
SECTION 3.02. Selection of Securities To Be Redeemed.................... 37
SECTION 3.03. Notice of Redemption...................................... 37
SECTION 3.04. Effect of Notice of Redemption............................ 38
SECTION 3.05. Deposit of Redemption Price............................... 39
SECTION 3.06. Securities Redeemed in Part............................... 39
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ARTICLE 4
Covenants
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SECTION 4.01. Payment of Securities..................................... 39
SECTION 4.02. SEC Reports............................................... 39
SECTION 4.03. Limitation on Indebtedness................................ 40
SECTION 4.04. Limitation on Restricted Payments......................... 45
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.............................. 51
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock........ 53
SECTION 4.07. Limitation on Affiliate Transactions...................... 57
SECTION 4.08. Change of Control......................................... 60
SECTION 4.09. Limitation on Assets of Non-Subsidiary Guarantors......... 62
SECTION 4.10. Limitation on Sale of the Capital Stock of the Issuer..... 62
SECTION 4.11. Future Guarantors......................................... 62
SECTION 4.12. Withholding Taxes......................................... 63
SECTION 4.13. Compliance Certificate.................................... 65
SECTION 4.14. Further Instruments and Acts.............................. 65
ARTICLE 5
Successor Company
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SECTION 5.01. When Company, Issuer, and Subsidiary Guarantors May
Merge or Transfer Assets............................. 65
ARTICLE 6
Defaults and Remedies
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SECTION 6.01. Events of Default......................................... 58
SECTION 6.02. Acceleration.............................................. 71
SECTION 6.03. Other Remedies............................................ 71
SECTION 6.04. Waiver of Past Defaults................................... 71
SECTION 6.05. Control by Majority....................................... 72
SECTION 6.06. Limitation on Suits....................................... 72
SECTION 6.07. Rights of Holders To Receive Payment...................... 73
SECTION 6.08. Collection Suit by Trustee................................ 73
SECTION 6.09. Trustee May File Proofs of Claim.......................... 73
SECTION 6.10. Priorities................................................ 73
SECTION 6.11. Undertaking for Costs..................................... 74
SECTION 6.12. Waiver of Stay or Extension Laws.......................... 74
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ARTICLE 7
Trustee
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SECTION 7.01. Duties of Trustee......................................... 75
SECTION 7.02. Rights of Trustee......................................... 76
SECTION 7.03. Individual Rights of Trustee.............................. 77
SECTION 7.04. Trustee's Disclaimer...................................... 77
SECTION 7.05. Notice of Defaults........................................ 77
SECTION 7.06. Reports by Trustee to Holders............................. 77
SECTION 7.07. Compensation and Indemnity................................ 77
SECTION 7.08. Replacement of Trustee.................................... 78
SECTION 7.09. Successor Trustee by Merger............................... 79
SECTION 7.10. Eligibility; Disqualification............................. 80
SECTION 7.11. Preferential Collection of Claims Against Company......... 80
ARTICLE 8
Discharge of Indenture; Defeasance
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SECTION 8.01. Discharge of Liability on Securities; Defeasance.......... 80
SECTION 8.02. Conditions to Defeasance.................................. 81
SECTION 8.03. Application of Trust Money................................ 83
SECTION 8.04. Repayment to Issuer....................................... 83
SECTION 8.05. Indemnity for Government Obligations...................... 84
SECTION 8.06. Reinstatement............................................. 84
ARTICLE 9
Amendments
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SECTION 9.01. Without Consent of Holders................................ 84
SECTION 9.02. With Consent of Holders................................... 83
SECTION 9.03. Compliance with Trust Indenture........................... 87
SECTION 9.04. Revocation and Effect of Consents and Waivers............. 87
SECTION 9.05. Notation on or Exchange of Securities..................... 87
SECTION 9.06. Trustee To Sign Amendments................................ 87
SECTION 9.07. Payment for Consent....................................... 88
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ARTICLE 10
Subordination
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SECTION 10.01. Agreement To Subordinate.................................. 88
SECTION 10.02. Liquidation, Dissolution, Bankruptcy...................... 88
SECTION 10.03. Default on Senior Indebtedness............................ 89
SECTION 10.04. Acceleration of Payment of Securities..................... 90
SECTION 10.05. When Distribution Must Be Paid Over....................... 90
SECTION 10.06. Subrogation............................................... 90
SECTION 10.07. Relative Rights........................................... 91
SECTION 10.08. Subordination May Not Be Impaired......................... 91
SECTION 10.09. Rights of Trustee and Paying Agent........................ 91
SECTION 10.10. Distribution or Notice to Representative.................. 92
SECTION 10.11. Article 10 Not To Prevent Events of Default
or Limit Right To Accelerate......................... 92
SECTION 10.12. Trust Moneys Not Subordinated............................. 92
SECTION 10.13. Trustee Entitled To Rely.................................. 92
SECTION 10.14. Trustee To Effectuate Subordination....................... 93
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.. 93
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................. 93
ARTICLE 11
Company Guaranty
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SECTION 11.01. Guaranty.................................................. 94
SECTION 11.02. Successors and Assigns.................................... 96
SECTION 11.03. No Waiver................................................. 96
SECTION 11.04. Modification.............................................. 96
ARTICLE 12
Subordination of Company Guaranty
---------------------------------
SECTION 12.01. Agreement to Subordinate.................................. 97
SECTION 12.02. Liquidation, Dissolution, Bankruptcy...................... 97
SECTION 12.03. Default on Senior Indebtedness of Guarantor............... 98
SECTION 12.04. Demand for Payment........................................ 98
SECTION 12.05. When Distribution Must Be Paid Over....................... 98
SECTION 12.06. Subrogation............................................... 98
SECTION 12.07. Relative Rights........................................... 99
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SECTION 12.08. Subordination May Not Be Impaired by Company.............. 99
SECTION 12.09. Rights of Trustee and Paying Agent........................ 99
SECTION 12.10. Distribution or Notice to Representative.................. 100
SECTION 12.11. Article 12 Not to Prevent Defaults Under a
Guaranty or Limit Right To Demand Payment............ 100
SECTION 12.12. Trustee Entitled To Rely.................................. 100
SECTION 12.13. Trustee To Effectuate Subordination....................... 101
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Guarantor............................ 101
SECTION 12.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................. 101
ARTICLE 13
Miscellaneous
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SECTION 13.01. Trust Indenture Act Controls.............................. 101
SECTION 13.02. Notices................................................... 102
SECTION 13.03. Communication by Holders with Other Holders............... 102
SECTION 13.04. Certificate and Opinion as to Conditions Precedent........ 103
SECTION 13.05. Statements Required in Certificate or Opinion............. 103
SECTION 13.06. When Securities Disregarded............................... 103
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.............. 104
SECTION 13.08. Legal Holidays............................................ 104
SECTION 13.09. Governing Law............................................. 104
SECTION 13.10. No Recourse Against Others................................ 104
SECTION 13.11. Successors................................................ 104
SECTION 13.12. Multiple Originals........................................ 104
SECTION 13.13. Table of Contents; Headings............................... 105
Exhibit A - Form of Security
Rule 144A/Regulation S Appendix
Exhibit 1 to Rule 144A/Regulation S Appendix
Exhibit B - Form of Subsidiary Guaranty Agreement
INDENTURE dated as of July 29, 1999, among ChipPAC
International Limited, a British Virgin Islands corporation (the
"Issuer"), ChipPAC Merger Corp., a California corporation (the
"Company") and Firstar Bank of Minnesota, N.A., a national
banking association organized under the laws of the United States
(the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of (1) the Issuer's 12 3/4%
Senior Subordinated Notes Due 2009 (the "Initial Securities") and, (2) if and
when issued pursuant to a registered exchange for Initial Securities, the
Issuer's 12 3/4% Senior Subordinated Notes Due 2009 (the "Exchange Securities")
and, (3) if and when issued pursuant to a private exchange for Initial
Securities, the Issuer's 12 3/4% Senior Subordinated Notes Due 2009 (the
"Private Exchange Securities") and, (4) if and when issued, any Additional
Securities (as defined herein, and together with the Private Exchange
Securities, the Exchange Securities and the Initial Securities, the
"Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
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SECTION 1.01. Definitions.
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"Additional Assets" means (1) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business, (2) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Restricted Subsidiary (3) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary
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described in clauses (2) or (3) above is primarily engaged in a Related
Business.
"Additional Securities" means, subject to the Issuer's compliance with
Section 4.03, 12 3/4% Senior Subordinated Notes Due 2009 issued from time to
time after the Issue Date under the terms of this Indenture (other than pursuant
to Section 2.06, 2.07, 2.09 or 3.06 and other than Exchange Securities or
Private Exchange Securities issued pursuant to an exchange offer for other
Securities outstanding under this Indenture).
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"Advisory Agreement" means each of the agreements by and among
ChipPAC, Inc., ChipPAC Limited, ChipPAC International Company Limited and each
Principal entered into pursuant to the Recapitalization, as the same may be
amended from time to time in a manner that is not more disadvantageous to the
Company in any material respect than the original agreement as in effect on the
Recapitalization Closing Date.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease (other than operating leases
entered into in the ordinary course of business), transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (1) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary), (2) all or substantially all the assets of any division
or line of business of the Company or any Restricted Subsidiary or (3) any other
assets of the Company or any Restricted Subsidiary outside of the ordinary
course of business of the Company or such Restricted Subsidiary (other than, in
the case of (1), (2) and (3) above, (w) a disposition by a Restricted Subsidiary
to the Company or by the Company or a Restricted Subsidiary to a Restricted
Subsidiary, (x) for purposes of Section 4.06 only, a disposition that
constitutes a Restricted Payment permitted by Section 4.04, (y) sales or other
dispositions of obsolete, uneconomical, negligible, worn-out or surplus
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assets in the ordinary course of business (including but not limited to
equipment and intellectual property) and (z) disposition of assets with a fair
market value of less than $1,000,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Securities, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (2) the sum of all such payments.
"Bain" means Bain Capital, Inc.
"Banks" has the meaning specified in the Credit Agreement.
"Bank Indebtedness" means all Obligations pursuant to the Credit
Agreement.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day other than a Saturday, Sunday or a day
on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Expenditure Facility" means the capital expenditure facility
contained in the Credit Agreement.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the
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Stated Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following
events:
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting power
of the Voting Stock of the Company (for the purposes of this clause (1),
such person shall be deemed to beneficially own any Voting Stock of a
Person held by any other Person (the "parent entity"), if such person is
the beneficial owner (as defined in this clause (1)), directly or
indirectly, of more than 50% of the voting power of the Voting Stock of
such parent entity;
(2) individuals who on the Issue Date constituted the Board of
Directors (together with any new directors (A) whose election by such Board
of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors on the Issue Date or
whose election or nomination for election was previously so approved or (B)
who were elected to the Board of Directors pursuant to the Shareholders
Agreement, as amended, modified or supplemented from time to time) cease
for any reason to constitute a majority of the Board of Directors then in
office; or
(3) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or
5
substantially all the assets of the Company to another Person (in each case
other than a Person that is controlled by the Permitted Holders), if the
securities of the Company that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of the
Voting Stock of the Company are changed into or exchanged for cash,
securities or property, unless pursuant to such transaction such securities
are changed into or exchanged for, in addition to any other consideration,
securities of the surviving Person or transferee that represent,
immediately after such transaction, at least a majority of the aggregate
voting power of the Voting Stock of the surviving Person or transferee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Company Guaranty" means the Guarantee by the Company of the Issuer's
obligations with respect to the Securities contained herein.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for which internal financial statements
are available ending on or prior to the date of such determination to (b)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
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that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period;
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(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period and as if the Company or such
Restricted Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used to
repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring
a calculation to be made hereunder, which constitutes all or
7
substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first
day of such period; and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company (and shall include any applicable Pro Forma Cost Savings). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries
determined in accordance with GAAP, plus, to the extent not included in such
total interest expense, and to the extent incurred by the Company or its
Restricted Subsidiaries, without duplication:
(1) interest expense attributable to Capital Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction, in each case, determined in accordance with
GAAP;
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(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing;
(6) net costs associated with Hedging Obligations involving any
Interest Rate Agreement (including amortization of fees) determined in
accordance with GAAP;
(7) dividends paid in cash or Disqualified Stock in respect of (A)
all Preferred Stock of Restricted Subsidiaries and (B) all Disqualified
Stock of the Company, in each case held by Persons other than the Company
or a Wholly Owned Subsidiary;
(8) interest actually paid by the Company or a Restricted Subsidiary
under any Guarantee of Indebtedness of any other Person; and
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust;
and less, to the extent included in such total interest expense, (A) the
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amortization during such period of capitalized financing costs associated with
the Recapitalization and the financing thereof and (B) the amortization during
such period of other capitalized financing costs.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries determined in accordance with GAAP;
provided, however, that there shall not be included in such Consolidated Net
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Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in clause (4) below, the Company's equity in the net
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income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to a Restricted Subsidiary,
to the limitations contained in clause (3) below) and (B) the Company's
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject
to the exclusion contained in clause (4) below, the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary consistent
with such restrictions during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;
(4) any gain (or loss) realized upon the sale or other disposition of
any assets of the Company or its consolidated Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (or
loss) realized upon the sale or other disposition of any Capital Stock of
any Person;
(5) any extraordinary or unusual gains or losses and the related tax
effect in accordance with GAAP;
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(6) any translation gains and losses due solely to fluctuations in
currency values and the related tax effect in accordance with GAAP;
(7) any cash charges resulting from the Recapitalization to the
extent such charges are paid or payable by Hyundai Electronics, Hyundai
Electronics America or any of their Affiliates; and
(8) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
Section pursuant to clause (a)(3)(D) thereof.
"Credit Agreement" means the Credit Agreement to be entered into by
and among the Issuer, the Company, certain of its Subsidiaries, the lenders
referred to therein and Credit Suisse First Boston, as Administrative Agent,
together with the related documents thereto (including without limitation the
term loans and revolving loans thereunder, any guarantees and security
documents), as amended, extended, renewed, restated, supplemented or otherwise
modified (in whole or in part, and without limitation as to amount, terms,
conditions, covenants and other provisions) from time to time, and any agreement
(and related document) governing Indebtedness incurred to refund or refinance,
in whole or in part, the borrowings and commitments then outstanding or
permitted to be outstanding under such Credit Agreement or a successor Credit
Agreement, whether by the same or any other lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or beneficiary.
"CVC" means Citicorp Venture Capital Ltd.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
11
"Designated Senior Indebtedness" with respect to any Person means (1)
the Bank Indebtedness; provided, however, that Bank Indebtedness outstanding
-------- -------
under any Credit Agreement that Refinanced in part, but not in whole, the
previously outstanding Bank Indebtedness shall only constitute Designated Senior
Indebtedness if it meets the requirements of succeeding clause (2); and (2) any
other Senior Indebtedness of such Person which, at the date of determination,
has an aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $10.0
million and is specifically designated by such Person in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (2) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (3) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
-------- -------
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions of Sections
4.06 and 4.08. Notwithstanding the foregoing, the Intel Preferred Stock as in
effect on the date of issuance will be deemed not to constitute Disqualified
Stock.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income, without duplication: (1) all income
tax expense of the Company and its consolidated Restricted Subsidiaries, (2)
depreciation expense of the Company and its consolidated Restricted
Subsidiaries, (3) amortization expense of the Company and its consolidated
Restricted Subsidiaries (excluding amortization expense (other than the
amortization of capitalized financing costs)
12
attributable to a prepaid cash item that was paid in a prior period) and (4) all
other non-cash charges of the Company and its consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future period),
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Offering" means a primary offering of Capital Stock (other
than Disqualified Stock) of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in (1) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (2) statements and
pronouncements of the Financial Accounting Standards Board and (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person (1)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation of such Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or
13
(2) entered into for the purpose of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
-------- -------
"Guarantee" shall not include endorsements for collection or deposit or standard
contractual indemnities, in each case in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guaranty" means the Company Guaranty and each Subsidiary Guaranty, as
applicable.
"Guaranty Agreement" means a supplemental indenture, in a form
reasonably satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor
becomes subject to the applicable terms and conditions of the Indenture.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Hyundai Earn-out" means the cash payment to Hyundai Electronics of up
to an additional $55.0 million during the four-year period following January 1,
1999 in the event the Company exceeds certain levels of EBITDA as set forth in
the Recapitalization Agreement; provided, however, in the event the final $20.0
-------- -------
million of such $55.0 million in cash is required to be paid to Hyundai
Electronics, it shall be paid by the mandatory redemption of an equal amount of
Hyundai Preferred Stock.
"Hyundai Electronics" means Hyundai Electronics Industries Company
Ltd., a Republic of Korea corporation.
"Hyundai Preferred Stock" means the 12.5% Redeemable Preferred Stock
issuable to Hyundai Electronics and/or Hyundai Electronics America in connection
with the Recapitalization.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
-------- -------
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall
14
have a correlative meaning. The accretion of principal of a non-interest bearing
or other discount security, and the issuance as interest or dividend payments of
pay-in-kind securities having identical terms to the underlying security and
which pay-in-kind securities were contemplated on the issue date of such
underlying security, in each case shall not be deemed the Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts and accrued expenses payable arising in the
ordinary course of business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to, any Preferred Stock (but excluding, in each case, any
accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons and all
15
dividends of other Persons for the payment of which, in either case, such
Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6)
of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
-------- -------
the amount outstanding at any time of any Indebtedness issued with original
issue discount shall be deemed to be the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
indebtedness at such time as determined in accordance with GAAP.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Intel" means Intel Corporation.
"Intel Preferred Stock" means the 10.0% convertible Preferred Stock
issuable to Intel pursuant to the Stock Purchase Agreement dated on or about the
Recapitalization Closing Date by and between Intel and ChipPAC Merger Corp.
"Interest Rate Agreement" means in respect of a Person any interest
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" with respect to any Person means any direct or indirect
advance, loan (other than (A) advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender and (B) commission, travel and similar advances to
16
officers and employees made in the ordinary course of business) or other
extensions of credit (including by way of Guarantee or similar arrangement) 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, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and Section
4.04:
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value
of the net assets of any Subsidiary of the Company at the time that
such Subsidiary is designated an Unrestricted Subsidiary; provided,
--------
however, that upon a redesignation of such Subsidiary as a Restricted
-------
Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such
Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time
of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
17
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of (1) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all Federal, state, provincial, foreign and local taxes required to be
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(2) all payments made on any Indebtedness which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition and (4) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Obligations" means with respect to any Indebtedness all obligations
for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
18
"Permitted Holders" means (1) the Principals and any Related Party
thereto and (2) any group of investors if deemed to be a "person" (as such terms
is used in Section 13(d)(3) of the Exchange Act) by virtue of the Shareholders
Agreement, as the same may be amended, modified or supplemented from time to
time, provided that
--------
(1) a Principal is party to such Shareholders Agreement,
(2) the persons party to the Shareholders Agreement, as so amended,
supplemented or modified from time to time that were not parties and
are not Affiliates of persons who were parties, to the Shareholders
Agreement as of the Recapitalization Closing Date, together with their
respective Affiliates (collectively, the "New Investors"), are not
direct or indirect beneficial owners (determined without reference to
the Shareholders Agreement) of more than 50% of the Voting Stock owned
by all parties to the Shareholders Agreement as so amended,
supplemented or modified, and
(3) the New Investors, individually or in the aggregate, do not, directly
or indirectly, have the right, pursuant to the Shareholders Agreement
(as so amended, supplemented or modified from time to time) or
otherwise to designate more than 50% of the members of the Board of
Directors of the Company or any direct or indirect parent entity of
the Company.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) a Restricted Subsidiary or a Person that will, upon the making of
such Investment, become a Restricted Subsidiary; provided, however, that
-------- -------
the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related
-------- -------
Business;
(3) Temporary Cash Investments;
19
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
-------- -------
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees, directors, officers or consultants
made in the ordinary course of business of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as permitted
pursuant to Section 4.06;
(9) Currency Agreements and Interest Rate Agreements entered into in
the ordinary course of the Company's business and otherwise in compliance
with the Indenture; and
(10) so long as no Default shall have occurred and be continuing (or
result therefrom), any Person in an aggregate amount which, when added
together with the amount of all the Investments made pursuant to this
clause (10) which at such time have not been repaid through repayments of
loans or advances or other transfers of assets, does not exceed the greater
of (A) $30.0 million and (B) 7.5% of Total Assets (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated
20
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Secu rity which is due or overdue or is to
become due at the relevant time.
"Principal" means Bain and SXI Holders.
"Pro Forma Cost Savings" means, with respect to any period, the
reduction in costs that were
(1) directly attributable to an asset acquisition and calculated on a
basis that is consistent with Regulation S-X under the Securities
Act in effect and applied as of the Issue Date, or
(2) implemented by the business that was the subject of any such asset
acquisition within six months of the date of the asset acquisition
and that are supportable and quantifiable by the underlying
accounting records of such business,
as if, in the case of each of clause (1) and (2), all such reductions in costs
had been effected as of the beginning of such period.
"Recapitalization" means the plan of recapitalization and merger
pursuant to the Agreement and Plan of Recapitalization and Merger dated as of
March 13, 1999 as amended on or prior to the Issue Date, among Hyundai
Electronics Industries Co., Ltd., Hyundai Electronics America, ChipPAC, Inc. and
ChipPAC Merger Corp.
"Recapitalization Closing Date" means the date the Company consummates
the Recapitalization.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem,
21
defease or retire, or to issue other Indebtedness in exchange or replacement
for, such indebtedness. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (1) such
-------- -------
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (2) such Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
Refinanced and (3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; provided further, however, that
-------- ------- -------
Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that
Refinances Indebtedness of the Company or (y) Indebtedness of the Company or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated July 29, 1999, among the Issuer, the Company, Credit Suisse
First Boston Corporation and Donaldson Lufkin & Jenrette.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder, or 80% (or more) owned Subsidiary of
such Principal;
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which
consist of such Principal and/or
22
such other Persons referred to in the immediately preceding clause
(1); or
(3) any Affiliate of any Person.
"Representative" means any trustee, agent or representative (if any)
for an issue of Senior Indebtedness of the Company; provided, however, that if
-------- -------
and for so long as any Senior Indebtedness lacks such a representative, then the
Representative for such Senior Indebtedness shall at all times be the holders of
a majority in outstanding principal amount of such senior Indebtedness.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock in their capacity as such (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made
by a Subsidiary that is not a Wholly Owned Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person or of any
Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
(other than the purchase, repurchase, or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in
23
each case due within one year of the date of acquisition); or
(4) the making of any Investment in any Person (other than a Permitted
Investment).
In determining the amount of any Restricted Payment made in property
other than cash, such amount shall be the fair market value of such property at
the time of such Restricted Payment, as determined in good faith by the Board of
Directors.
"Restricted Subsidiary" means any Subsidiary of the Company (including
the Issuer) that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the revolving credit facility
contained in the Credit Agreement and any other facility or financing
arrangement that Refinances or replaces, in whole or in part, any such revolving
credit facility.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" of any Person means all (1) Bank Indebtedness of
or guaranteed by such Person, whether outstanding on the Issue Date or
thereafter Incurred, and (2) Indebtedness of such Person, whether outstanding on
the Issue Date or thereafter Incurred, including interest thereon, in respect of
(A) Indebtedness for money borrowed, (B) Indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable and (C) Hedging Obligations, unless, in the case
of (1) and (2), in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such obligations are
subordinate in right of payment to
24
the obligations under the Notes; provided, however, that Senior Indebtedness
-------- -------
shall not include (i) any obligation of such Person to any subsidiary of such
Person, (ii) any liability for Federal, state, local or other taxes owed or
owing by such Person, (iii) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (iv) any Indebtedness of
such Person (and any accrued and unpaid interest in respect thereof) which is
subordinate or junior by its terms to any other Indebtedness or other obligation
of such Person or (v) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of the Indenture (but as to any such
Indebtedness under the Credit Agreement, no such violation shall be deemed to
exist if the Representative of the Lenders thereunder shall have received an
officers' certificate of the Company to the effect that the issuance of such
Indebtedness does not violate such covenant and setting forth in reasonable
detail the reasons therefor).
"Senior Subordinated Indebtedness" means (1) with respect to the
Issuer, the Notes and any other Indebtedness of the Issuer that specifically
provides that such Indebted ness is to rank pari passu with the Notes in right
---- -----
of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Issuer which is not Senior Indebtedness
of the Issuer and (2) with respect to the Company or a Subsidiary Guarantor,
their respective Guarantees of the Notes and any other Indebtedness of such
Person that specifically provides that such Indebtedness rank pari passu with
---- -----
such Guaranty in respect of payment and is not subordinated by its terms in
respect of payment to any Indebtedness or other obligation of such Person which
is not Senior Indebtedness of such Person.
"Shareholders Agreement" means the Shareholders Agreement to be
entered into on the Recapitalization Closing Date by and among Hyundai
Electronics, Hyundai Electronics America, SXI Group LLC, certain Bain Related
Parties and ChipPAC, Inc.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such
25
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Issuer, the
Company or any Subsidiary Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to, in
the case of the Issuer, the Securities or, in the case of the Company or such
Subsidiary Guarantor, its Guaranty, pursuant to a written agreement to that
effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) 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 (1) such Person,
(2) such Person and one or more Subsidiaries of such Person or (3) one or more
Subsidiaries of such Person.
"Subsidiary Guarantor" means ChipPAC (Barbados) Ltd., ChipPAC Limited,
ChipPAC Korea Company Ltd., ChipPAC Luxembourg S.a.R.L. and ChipPAC Liquidity
Management Hungary Limited Liability Company and any other subsidiary of the
Company that Guarantees the Company's obligations with respect to the Notes.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities.
"Subsidiary Guaranty Agreement" means the Subsidiary Guaranty
Agreement, to be dated the Recapitalization Closing Date, between the Subsidiary
Guarantors and the Issuer, in the form attached as Exhibit B to this Indenture.
"SXI Group LLC" means SXI Group LLC, a Delaware limited liability
company.
"SXI Holders" means (1) CVC, (2) SXI Group LLC and (3) any officer,
employee or director of CVC or any trust, partnership or the entity established
solely for the benefit of such officers, employees or directors.
26
"Temporary Cash Investments" means any of the
following:
(1) any evidence of indebtedness, maturing not more than one year
after the date of investment by the Company, the Issuer or any other
Restricted Subsidiary, issued by the United States of America or any
instrumentality agency thereof, or by the Republic of Korea or any
instrumentality or agency thereof, or by the Asian Development Bank, the
World Bank or any other supranational organization (collectively,
"Government Entities") and guaranteed or otherwise backed, directly or
indirectly fully as to principal, premium, if any, and interest, by the
Government Entity issuing such indebtedness;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States of America, and which bank or trust company
has capital, surplus and undivided profits aggregating in excess of $250.0
million (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) or any money-market fund sponsored by
a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
Group; and
27
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group or "A" by Moody's Investors Service,
Inc.
"Term Loan Facilities" means the term loan facilities contained in the
Credit Agreement and any other facility or financing arrangement that Refinances
in whole or in part any such term loan facility.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
------
77bbbb) as in effect on the date of this Indenture.
"Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (2) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, the Company or any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; provided, however, that either (A) the
-------- -------
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.04. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted
28
Subsidiary; provided, however, that immediately after giving effect to such
-------- -------
designation (x) the Company could Incur $1.00 of additional Indebtedness under
Section 4.03(a) and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Dollar Equivalent" means with respect to any monetary amount in
a currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase of U.S.
dollars with the applicable foreign currency as published in The Wall Street
Journal in the "Exchange Rates" column under the heading "Currency Trading" on
the date two Business Days prior to such determination.
Except as described under Section 4.03 whenever it is necessary to
determine whether the Issuer has complied with any covenant in the Indenture or
a Default has occurred and an amount is expressed in a currency other than U.S.
dollars, such amount will be treated as the U.S. Dollar Equivalent determined as
of the date such amount is initially determined in such currency.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is at least 95%
owned by the Company or one or more Wholly Owned Subsidiaries.
29
SECTION 1.02. Other Definitions.
------------------
Defined in
Term Section
---- ----------
"Additional Amounts"....................... 4.12
"Affiliate Transaction".................... 4.08
"Bankruptcy Law"........................... 6.01
"Blockage Notice".......................... 10.03
"covenant defeasance option"............... 8.01(b)
"Custodian"................................ 6.01
"Event of Default"......................... 6.01
"Excluded Holder".......................... 4.12
"legal defeasance option".................. 8.01(b)
"Legal Holiday"............................ 13.08
"Offer".................................... 4.07(b)
"Offer Amount"............................. 4.07(c)(2)
"Offer Period"............................. 4.07(c)(2)
"pay the Securities"....................... 10.03
"Paying Agent"............................. 2.03
"Payment Blockage Period".................. 10.03
"Purchase Date"............................ 4.07(c)(1)
"Registrar"................................ 2.03
"Successor Company"........................ 5.01
"Taxes".................................... 4.12
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities and each Guaranty;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture and each guaranty;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Issuer, the Company,
each Subsidiary Guarantor and any other obligor on the indenture securities.
30
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
----------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) all references to the date the Securities were originally issued
shall refer to the date the Initial Securities were originally issued.
31
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating. Provisions relating to the Initial
----------------
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix")
which is hereby incorporated in and expressly made part of this Indenture. The
Initial Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to the Appendix which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities, the Private Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Issuer is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Issuer).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in the Appendix and Exhibit A are part of the terms of this
Indenture.
SECTION 2.02. Execution and Authentication. One Officer shall sign
-----------------------------
the Securities for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount of $1,000, upon a written order of the
Issuer signed by two Officers or by an Officer and either an Assistant Treasurer
or an Assistant Secretary of the Issuer. Such order shall specify the amount of
the Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of an issuance of Additional
Securities pursuant to Section 2.13
32
after the Issue Date, shall certify that such issuance is in compliance with
Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuer to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent
has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Issuer shall maintain
---------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Issuer may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuer shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuer shall notify
the Trustee of the name and address of any such agent. If the Issuer fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Issuer initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
------------------------------------
date of the principal and interest on any Security, the Issuer shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Issuer shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the
33
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Issuer at any time may require a Paying Agent to pay all money held by
it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
---------------------
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Issuer shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
----------------------
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(1)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Issuer may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Issuer shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed or 15 days before an interest
payment date.
Prior to the due presentation for registration of transfer of any
Security, the Issuer, the Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and
34
treat the person in whose name a Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of and interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Issuer, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuer shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Issuer, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Issuer and the Trustee to protect the Issuer, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Issuer and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Issuer.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
-----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Issuer or an Affiliate of the Issuer holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Issuer receive proof satisfactory to them
that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
35
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are
---------------------
ready for delivery, the Issuer may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Issuer considers
appropriate for temporary Securities. Without unreasonable delay, the Issuer
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Issuer at any time may deliver
-------------
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Issuer unless
the Issuer directs the Trustee to deliver canceled Securities to the Issuer.
The Issuer may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuer defaults in a
-------------------
payment of interest on the Securities, the Issuer shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuer may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Issuer shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
--------------
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state
- -------- -------
36
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Issuer shall be
----------------------------------
entitled, subject to its compliance with Section 4.03, to issue Additional
Securities under this Indenture which shall have identical terms as the Initial
Securities issued on the Issue Date, other than with respect to the date of
issuance, issue price and amount of interest payable on the first payment date
applicable thereto. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Issuer shall set forth
in a resolution of the Board of Directors and an Officers' Certificate, a copy
of each which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price and the issue date of such Additional Securities
and the amount of interest payable on the first payment date applicable
thereto; provided, however, that no Additional Securities may be issued at
-------- -------
a price that would cause such Additional Securities to have "original issue
discount" within the meaning of Section 1273 of the Code; and
(3) whether such Additional Securities shall be transfer restricted
securities and issued in the form of Initial Securities as set forth in the
Appendix to this Indenture or shall be issued in the form of Exchange
Securities as set forth in Exhibit A.
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Issuer elects to redeem
-------------------
Securities pursuant to paragraph 5 of the
37
Securities or is required to redeem Securities pursuant to paragraph 6 of the
Securities, it shall notify the Trustee in writing of the redemption date, the
principal amount of Securities to be redeemed and the paragraph of the
Securities pursuant to which the redemption will occur.
If the Issuer is required to redeem Securities pursuant to paragraph 6
of the Securities, it may reduce the principal amount of Securities required to
be redeemed to the extent it is permitted a credit by the terms of the
Securities and it notifies the Trustee of the amount of the credit and the basis
for it. If the reduction is based on a credit for redeemed or canceled
Securities that the Issuer has not previously delivered to the Trustee for
cancellation, it shall deliver such Securities with the notice.
The Issuer shall give each notice to the Trustee provided for in this
Section at least 35 but not more than 60 days before the redemption date unless
the Trustee consents to a shorter period. Such notice shall be accompanied by
an Officers' Certificate and an Opinion of Counsel from the Issuer to the effect
that such redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
---------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee in its
sole discretion shall deem to be fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in amounts
of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Issuer promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
---------------------
than 60 days before a date for redemption of Securities, the Issuer shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
38
The Issuer will prepare and deliver to the Trustee the notice of the
Special Redemption on or prior to the Business Day immediately preceding, and
the Trustee will send by first class mail a copy of such notice to the Holders
of the Securities on the date it delivers notice to the Trustee pursuant to
Section 3.01.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Issuer defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the
terms of this Indenture, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at the Issuer's expense. In such event, the
Issuer shall provide the Trustee with the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued
39
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the related interest payment
date). Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
----------------------------
redemption date, the Issuer shall deposit with the Paying Agent (or, if the
Issuer or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Issuer to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
----------------------------
Security that is redeemed in part, the Issuer shall execute and the Trustee
shall authenticate for the Holder (at the Issuer's expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Issuer shall promptly pay
----------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Issuer shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Issuer may not
------------
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Issuer shall file with the SEC and provide the Trustee and
40
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and reports to be so filed and provided at the times specified for the
filing of such information, documents and reports under such Sections. The
Issuer also shall comply with the other provisions of TIA (S) 314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not,
---------------------------
and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness except that the Company and the Issuer may Incur
Indebtedness if, after giving pro forma effect thereto, the Consolidated
Coverage Ratio exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(1) Indebtedness of the Company or any Restricted Subsidiary Incurred
pursuant to any Revolving Credit Facility; provided, however, that,
-------- -------
immediately after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness incurred under this clause (1)
and then outstanding does not exceed the greater of (A) $50.0 million
and (B) the sum of (x) $20.0 million, (y) 50% of the book value of the
inventory of the Company and its Restricted Subsidiaries and (z) 80%
of the book value of the accounts receivables of the Company and its
Restricted Subsidiaries; provided, however, that such Indebtedness may
only be Incurred by a Restricted Subsidiary if such Indebtedness, when
added together with the amount of all other Indebtedness Incurred by
Restricted Subsidiaries pursuant to this clause (1) and then
outstanding, does not exceed an amount equal to 50% of the greater of
(x) the amount in clause (A) above and (y) the amount determined in
clause (B) above;
(2) Indebtedness of the Issuer Incurred pursuant to any Term Loan
Facilities; provided, however, that, after giving effect to any such
-------- -------
Incurrence, the aggregate principal amount of all Indebtedness
Incurred under this clause (2) and then outstanding does not exceed
$190.0 million less the aggregate sum of all principal payments
41
actually made from time to time after the Issue Date with respect to
such Indebtedness pursuant to paragraph (a)(3)(A) of the covenant
described under Section 4.06;
(3) Indebtedness of the Issuer Incurred prior to the second anniversary of
the Recapitalization Closing Date, pursuant to any Capital Expenditure
Facility (and Refinancing Indebtedness in respect thereof) in an
aggregate principal amount not to exceed $20.0 million;
(4) Indebtedness of the Company or any Restricted Subsidiary owed to and
held by the Company or a Restricted Subsidiary; provided, however,
-------- -------
that any subsequent issuance or transfer of any Capital Stock which
results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than
to the Company or another Restricted Subsidiary) shall be deemed, in
each case, to constitute the Incurrence of such Indebtedness by the
issuer thereof;
(5) Indebtedness consisting of the Initial Securities and the Exchange
Securities (other than Additional Securities);
(6) Indebtedness outstanding on the Issue Date (other than Indebtedness
described in clause (1), (2), (3), (4) or (5) of this covenant);
(7) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
to paragraph (a) or pursuant to clause (4), (5), (6), (8) or this
clause (7); provided, however, that to the extent such Refinancing
-------- -------
Indebtedness directly or indirectly Refinances Indebtedness of a
Subsidiary Incurred pursuant to clause (8), such Refinancing
Indebtedness shall be Incurred only by such Subsidiary;
(8) Indebtedness of a Person Incurred and outstanding on or prior to the
date on which such Person was acquired by the Company or a Restricted
Subsidiary (other than Indebtedness Incurred in anticipation of, in
connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Person was
42
acquired by the Company or a Restricted Subsidiary); provided,
--------
however, that after giving pro forma effect thereto, (a) the
-------
Consolidated Coverage Ratio increases as a consequence of such
incurrence and related acquisition and (b) the Consolidated Coverage
Ratio is at least 1.5 to 1.0;
(9) Hedging Obligations of the Company or any Restricted Subsidiary under
or with respect to Interest Rate Agreements and Currency Agreements
entered into in the ordinary course of business and not for the
purpose of speculation;
(10) Indebtedness of the Company or any Restricted Subsidiary in respect of
performance bonds, completion guarantees and surety or appeal bonds
entered into by the Company and the Restricted Subsidiaries in the
ordinary course of their business;
(11) Indebtedness consisting of the Guaranties and Guarantees of other
Indebtedness otherwise permitted to be Incurred pursuant to the
Indenture;
(12) Indebtedness of the Company or any Restricted Subsidiary arising from
the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that such Indebtedness is satisfied
within five business days of Incurrence;
(13) Indebtedness (including Capital Lease Obligations) Incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment
(whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount which,
when added together with the amount of Indebtedness Incurred pursuant
to this clause (13) and then outstanding, does not exceed the greater
of (A) $15.0 million and (B) 5% of Total Assets (in each case
including any Refinancing Indebtedness with respect thereto);
43
(14) Indebtedness Incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business including,
without limitation, letters of credit to procure raw materials, or in
respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations regarding
workers' compensation claims;
(15) Indebtedness of the Company issued to directors, employees, officers
or consultants of the Company or a Restricted Subsidiary in connection
with the redemption or purchase of Capital Stock that, by its terms,
is subordinated to the Securities, is not secured by any assets of the
Company or its Restricted Subsidiaries and does not require cash
payments prior to the Stated Maturity of the Securities and
Refinancing Indebtedness in respect thereof, in an aggregate principal
amount which, when added together with the amount of Indebtedness
Incurred pursuant to this clause (15) and then outstanding, does not
exceed $5.0 million;
(16) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary of the Company providing for indemnification, adjustment of
purchase price, earn out or other similar obligations, in each case,
incurred or assumed in connection with the disposition of any
business, assets or a Restricted Subsidiary of the Company, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the
purpose of financing such acquisition; provided that the maximum
--------
assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by the Company and
its Restricted Subsidiaries in connection with such disposition;
(17) Indebtedness arising from the Recapitalization Agreement providing for
indemnification, adjustment of purchase price, earn out or other
similar business obligations; and
(18) Indebtedness of the Company or a Restricted Subsidiary in an aggregate
principal amount which,
44
together with all other Indebtedness of the Company and the Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (1) through (17) above or paragraph
(a) above) does not exceed $20.0 million.
(c) Notwithstanding the foregoing, the Company shall not, and shall
not permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to the
foregoing paragraph (b) if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Indebtedness
shall be subordinated to the Securities or the relevant Guaranty, as applicable,
to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing
covenant, (1) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Issuer, in its
sole discretion, will classify such item of Indebtedness at the time of its
Incurrence and only be required to include the amount and type of such
Indebtedness in one of the above clauses and (2) an item of Indebtedness may be
divided and classified in more than one of the types of Indebtedness described
above.
(e) Notwithstanding paragraphs (a) and (b) above, neither the Company
nor the Issuer shall, and the Company shall not permit any Subsidiary Guarantor
to, Incur (1) any Indebtedness if such Indebtedness is subordinate or junior in
ranking in any respect to any Senior Indebtedness of the Issuer, the Company or
such Subsidiary Guarantor, as applicable, unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness or (2) any Secured Indebtedness (other than
trade payables incurred in the ordinary course of business) that is not Senior
Indebtedness unless contemporaneously therewith effective provision is made to
secure the Securities or the relevant Guaranty, as applicable, equally and
ratably with such Secured Indebtedness for so long as such Secured Indebtedness
is secured by a Lien.
(f) For purposes of determining compliance with any U.S. dollar
denominated restriction on the Incurrence of Indebtedness where the Indebtedness
Incurred is denominated in a different currency, the amount of such Indebtedness
will be the U.S. Dollar Equivalent determined on the date of the Incurrence of
such Indebtedness, provided, however, that
-------- -------
45
if any such Indebtedness denominated in a different currency is subject to a
Currency Agreement with respect to U.S. dollars, covering all principal,
premium, if any, and interest payable on such Indebtedness, the amount of such
Indebtedness expressed in U.S. dollars will be as provided in such Currency
Agreement. The principal amount of any Refinancing Indebtedness Incurred in the
same currency as the Indebtedness being Refinanced will be the U.S. Dollar
Equivalent of the Indebtedness Refinanced, except to the extent that (i) such
U.S. Dollar Equivalent was determined based on a Currency Agreement, in which
case the Refinancing Indebtedness will be determined in accordance with the
preceding sentence, and (ii) the principal amount of the Refinancing
Indebtedness exceeds the principal amount of the Indebtedness being Refinanced,
in which case the U.S. Dollar Equivalent of such excess will be determined on
the date such Refinancing Indebtedness is Incurred.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
----------------------------------
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum (without
duplication) of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Securities are originally issued to the end of the most recent fiscal
quarter for which internal financial statements are available on or
prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of, or capital contribution in respect of, its
Capital Stock (other than Disqualified Stock) subsequent to the Issue
Date (other than an issuance or sale
46
to a Subsidiary of the Company and other than an issuance or sale to
an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their employees
to the extent that the purchase by such plan or trust is financed by
Indebtedness of such plan or trust to the Company or any Subsidiary or
Indebtedness Guaranteed by the Company or any Subsidiary); and the
fair market value (as determined in good faith by resolution of the
Board of Directors of the Company) of property (other than cash that
would constitute Temporary Cash Equivalents or a Related Business)
received by the Company or a Restricted Subsidiary subsequent to the
Issue Date as a contribution to its common equity capital (other than
from a Subsidiary or that was financed with loans from the Company or
any Restricted Subsidiary);
(C) the amount by which Indebtedness of the Company or any
Restricted Subsidiary is reduced on the Company's consolidated balance
sheet upon the conversion or exchange (other than by a Subsidiary of
the Company) subsequent to the Issue Date of any Indebtedness of the
Company or any Restricted Subsidiary convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash, or the fair value of any other property,
distributed by the Company or any Restricted Subsidiary upon such
conversion or exchange); and
(D) an amount equal to the sum of (i) the net reduction in
Investments in any Person resulting from dividends, repayments of
loans or advances or other transfers of assets subsequent to the Issue
Date, in each case to the Company or any Restricted Subsidiary from
such Person, and (ii) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however,
-------- -------
that the foregoing sum shall not exceed, in the case of any Person,
the amount of Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such Person.
47
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(1) any Restricted Payment made by exchange for, or out of the
proceeds of the substantially concurrent sale of, or capital contribution
in respect of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company
or an employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their employees to
the extent that the purchase by such plan or trust is financed by
Indebtedness of such plan or trust to the Company or any Subsidiary of the
Company or Indebtedness Guaranteed by the Company or any Subsidiary of the
Company); provided, however, that (A) such Restricted Payment shall be
-------- -------
excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale shall be excluded from the calculation
of amounts under clause (3)(B) of paragraph (a) above;
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness which is permitted to be Incurred pursuant to the covenant
described under Section 4.03; provided, however, that such purchase,
-------- -------
repurchase, redemption, defeasance or other acquisition or retirement for
value shall be excluded in the calculation of the amount of Restricted
Payments;
(3) any purchase or redemption of Disqualified Stock of the Company or
a Restricted Subsidiary made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock of the Company or a
Restricted Subsidiary which is permitted to be Incurred pursuant to the
covenant described under Section 4.03; provided, however, that such
-------- -------
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(4) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided, however,
-------- -------
that such purchase or redemption shall be excluded in the calculation of
the amount of Restricted Payments;
48
(5) upon the occurrence of a Change of Control and within 60 days
after the completion of the offer to repurchase the Securities pursuant to
Section 4.08 herein (including the purchase of the Securities tendered),
any purchase or redemption of Subordinated Obligations required pursuant to
the terms thereof as a result of such Change of Control at a purchase or
redemption price not to exceed the outstanding principal amount thereof,
plus any accrued and unpaid interest; provided, however, that (A) at the
-------- -------
time of such purchase or redemption no Default shall have occurred and be
continuing (or would result therefrom), (B) the Company would be able to
Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the
covenant described under Section 4.03 after giving pro forma effect to such
Restricted Payment and (C) such purchase or redemption shall be included in
the calculation of the amount of Restricted Payments;
(6) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend shall be included
-------- -------
in the calculation of the amount of Restricted Payments;
(7) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of the Company or any of its Subsidiaries
from employees, former employees, consultants, former consultants,
directors or former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees, consultants,
former consultants, directors or former directors), pursuant to the terms
of the agreements (including employment and consulting agreements) or plans
(or amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount
-------- -------
of such repurchases shall not exceed the sum of (x) $5.0 million, (y) the
Net Cash Proceeds from the sale of Capital Stock to members of management
or directors of the Company and its Subsidiaries that occurs after the
Issue Date (to the extent the Net Cash Proceeds from the sale of such
Capital Stock have not otherwise been applied to the payment of Restricted
Payments by virtue of clause (3)(B) of paragraph (a) above and (z) the cash
proceeds of any "Key man" life insurance policies that are used to make
such
49
repurchases); provided further, however, that (A) such repurchases shall
-------- ------- -------
be excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale shall be excluded from the calculation
of amounts under clause (3)(B) of paragraph (a) above;
(8) payments required pursuant to the terms of the Recapitalization
Agreement to consummate the Recapitalization pursuant to the terms of the
Recapitalization Agreement; provided, however, that such payments shall be
-------- -------
excluded in the calculation of the amount of Restricted Payments;
(9) payments in respect of the Hyundai Earn-out pursuant to the terms
of the Recapitalization Agreement as in effect on the Issue Date; provided,
--------
however, that such payments shall be excluded in the calculation of the
-------
amount of Restricted Payments;
(10) payments of in-kind dividends when due on the Hyundai Preferred
Stock pursuant to the terms of such Hyundai Preferred Stock as in effect on
the Recapitalization Closing Date; provided, however, that such payments
-------- -------
shall be excluded in the calculation of the amount of Restricted Payments;
(11) payments of cash dividends when due on and after 5 /1/2/ years
from the Recapitalization Closing Date on the Hyundai Preferred Stock
pursuant to the terms of such Hyundai Preferred Stock as in effect on the
Recapitalization Closing Date; provided, however, that such payments shall
-------- -------
be included in the calculation of the amount of Restricted Payments;
(12) repurchases of Capital Stock deemed to occur upon the exercise of
stock options if such Capital Stock represents a portion of the exercise
price thereof; provided, however, that such payments shall be excluded in
-------- -------
the calculation of the amount of Restricted Payments;
(13) payments not to exceed $200,000 in the aggregate solely to enable
the Company to make payments to holders of its Capital Stock in lieu of the
issuance of fractional shares of its Capital Stock; provided, however, that
-------- -------
such payments shall be excluded in the calculation of the amount of
Restricted Payments;
50
(14) Restricted Payments not to exceed $15.0 million payable on
Capital Stock (including Disqualified Stock) issued to customers, clients,
suppliers or purchasers or sellers of goods or services of the Company or a
Restricted Subsidiary in connection with a strategic investment in the
Company or a Restricted Subsidiary by such customers, clients, suppliers or
purchasers or sellers of goods or services; provided, however, that such
-------- -------
payments shall be included in the calculation of the amount of Restricted
Payments; or
(15) Restricted Payments not exceeding $15.0 million in the aggregate
for any purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Obligations, provided, however,
-------- -------
that (A) at the time of such Restricted Payments, no Default shall have
occurred and be continuing (or result therefrom) and (B) such Restricted
Payments shall be included in the calculation of the amount of Restricted
Payments; or
(16) the distribution, as a dividend or otherwise, of shares of
Capital Stock or assets of an Unrestricted Subsidiary provided that the
fair market value (as determined in good faith by the Board of Directors of
the Company) of such shares of Capital Stock or assets shall not exceed the
amount of the Investments that were made (and not subsequently reduced
pursuant to clause (3)(D) of paragraph (a) above) by the Company in such
Unrestricted Subsidiary and were treated as Restricted Payments or were
included in the calculation of the amount of Restricted Payments previously
made; provided, however, that (A) such distributions shall be excluded in
-------- -------
the calculation of the amount of Restricted Payments and (B) any net
reduction in Investments in such Unrestricted Subsidiary resulting from
such distribution shall be excluded from the calculation of amounts under
clause (3)(D) of paragraph (a) above;
(17) Restricted Payments not exceeding $7.5 million in the aggregate;
provided, however, that (A) at the time of such Restricted Payments, no
-------- -------
Default shall have occurred and be continuing (or result therefrom) and (B)
such Restricted Payments shall be included in the calculation of the amount
of Restricted Payments.
51
SECTION 4.05. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company shall not, and shall not permit any
- ------------------------
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Issuer
or the Company or (c) transfer any of its property or assets to the Issuer or
the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date (including the Indenture, the
Securities and the Guaranties), or, in the case of the Credit
Agreement, as in effect on the Recapitalization Closing Date;
(2) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the
Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement (A) evidencing
Indebtedness Incurred without violation of the Indenture or (B)
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (1) or (2) of this covenant or this
clause (3) or contained in any amendment to an agreement referred to
in clause (1) or (2) of this covenant or this clause (3); provided,
--------
however, that in the case of clauses (A) and (B), the encumbrances and
-------
restrictions with respect to such Restricted Subsidiary contained in
any such refinancing agreement or amendment are, in the good faith
judgment of the Board of Directors, no more restrictive in any
material respect than the encumbrances and restrictions with respect
to such Restricted Subsidiary contained in agreements of
52
such Restricted Subsidiary in effect at, or entered into on, the Issue
Date or the Recapitalization Closing Date;
(4) any such encumbrance or restriction consisting of customary non-
assignment provisions in leases governing leasehold interests to the
extent such provisions restrict the transfer of the lease or the
property leased thereunder or in licenses entered into in the ordinary
course of business to the extent such licenses restrict the transfer
of the license or the property licensed thereunder;
(5) in the case of clause (c) above, restrictions contained in security
agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements or mortgages;
(6) restrictions on the transfer of assets subject to any Lien permitted
under the Indenture imposed by the holder of such Lien;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so
acquired of the nature described in clause (c) above;
(8) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business;
(9) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition;
(10) any restriction arising under applicable law, regulation or order;
(11) any agreement or instrument governing Capital Stock (other than
Disqualified Stock) of any Person that is in effect on the date such
Person is acquired by the Company or a Restricted Subsidiary;
53
(12) any restriction on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business; and
(13) any restriction in any agreement that is not more restrictive than the
restrictions under the terms of the Credit Agreement as in effect on
the Recapitalization Closing Date.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
---------------------------------------------------
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market
value (including as to the value of all non-cash consideration), as
determined in good faith by the Board of Directors, of the shares and
assets subject to such Asset Disposition;
(2) at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or cash equivalents;
and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company or such Restricted Subsidiary,
as the case may be, pursuant to one or more of the following:
(A) to the extent the Company elects (or is required by the terms of
any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Issuer or Indebtedness (other than any
Disqualified Stock) of the Company or another Restricted
Subsidiary of the Company (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company) within one
year from the later of the closing date of such Asset Disposition
and the receipt of such Net Available Cash;
(B) to the extent the Company elects, to acquire Additional Assets
within one year from (or enter into a binding commitment to
acquire Additional Assets, provided that such commitment shall be
subject only to customary conditions (other than financing) and
such
54
acquisition shall be consummated within two years from) the later
of the closing date of such Asset Disposition and the receipt of
such Net Available Cash; and
(C) to the extent the Company elects, or to the extent of the balance
of such Net Available Cash after application in accordance with
clauses (A) and (B), to make an offer to the holders of the
Securities (and to holders of other Senior Subordinated
Indebtedness of the Issuer designated by the Issuer) to purchase
Securities (and such other Senior Subordinated Indebtedness)
pursuant to and subject to the conditions contained in the
Indenture;
provided, however, that in connection with any prepayment, repayment or purchase
- -------- -------
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall permanently retire such Indebtedness and, in the
case of any revolving facility, shall cause the related loan commitment, if any,
to be permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions of this
paragraph, the Company and the Restricted Subsidiaries shall not be required to
apply any Net Available Cash in accordance with this paragraph except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
are not applied in accordance with this paragraph exceeds $10.0 million.
Pending application of Net Available Cash pursuant to this covenant, such Net
Available Cash shall be invested in Permitted Investments or used to temporarily
reduce loans outstanding under any revolving credit facility.
For the purposes of this covenant, the following are deemed to be cash
or cash equivalents: (x) the assumption of Indebtedness of the Company or any
Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition, (y) securities, notes or other obligations received by the Company
or any Restricted Subsidiary from the transferee that are promptly converted by
the Company or such Restricted Subsidiary into cash and (z) any Additional
Assets (so long as such Additional Assets were acquired for fair market value in
connection with the transaction giving rise to such Asset Disposition, as
determined in good faith by the Board of Directors of the Company of such
Restricted Subsidiary, as
55
applicable), which Additional Assets shall be deemed to have been acquired
pursuant to clause (A) of the preceding paragraph in connection with such Asset
Disposition.
(b) In the event of an Asset Disposition that requires the purchase
of the Securities (and other Senior Subordinated Indebtedness) pursuant to
clause (a)(3)(C) above, the Issuer will be required to purchase Securities
tendered pursuant to an offer by the Issuer for the Securities (and other Senior
Subordinated Indebtedness) at a purchase price of 100% of their principal amount
(without premium) plus accrued but unpaid interest (or, in respect of such other
Senior Subordinated Indebtedness, such lesser price, if any, as may be provided
for by the terms of such Senior Subordinated Indebtedness) in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in the Indenture. If the aggregate purchase price of the Securities (and any
other Senior Subordinated Indebtedness) tendered exceeds the Net Available Cash
allotted to the purchase thereof, the Issuer will select the Securities (and any
other Senior Subordinated Indebtedness) to be purchased on a pro rata basis but
in denominations of $1,000 or multiples thereof. The Issuer shall not be
required to make such an offer to purchase Securities (and other Senior
Subordinated Indebtedness) pursuant to this covenant if the Net Available Cash
available therefor is less than $10.0 million (which lesser amount shall be
carried forward for purposes of determining whether such an offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Issuer
becomes obligated to make an Offer, the Issuer shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the Issuer
either in whole or in part (subject to prorating as hereinafter described in the
event the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Issuer which the Issuer in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Issuer, the most recent subsequently filed
Quarterly Report on Form
56
10-Q and any Current Report on Form 8-K of the Issuer filed subsequent to such
Quarterly Report, other than Current Reports describing Asset Dispositions
otherwise described in the offering materials (or corresponding successor
reports), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such Reports, and (iii) if material,
appropriate pro forma financial information) and all instructions and materials
necessary to tender Securities pursuant to the Offer, together with the
information contained in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Issuer shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Issuer shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Issuer is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments, maturing on the last day prior to the
Purchase Date or on the Purchase Date if funds are immediately available by open
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Issuer shall
deliver to the Trustee for cancellation the Securities or portions thereof which
have been properly tendered to and are to be accepted by the Issuer. The
Trustee shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the Securities delivered by the Issuer to the Trustee is less
than the Offer Amount applicable to the Securities, the Trustee shall deliver
the excess to the Issuer immediately after the expiration of the Offer Period
for application in accordance with this Section.
(3) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Issuer at the address specified in the notice at least three Business Days prior
to the Purchase Date. Holders shall be entitled to withdraw their election if
the Trustee or the Issuer receives not later than one Business Day prior to the
Purchase Date, a telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a
57
statement that such Holder is withdrawing his election to have such Security
purchased. If at the expiration of the Offer Period the aggregate principal
amount of Securities (and any other Senior Subordinated Indebtedness included in
the Offer) surrendered by holders thereof exceeds the Offer Amount, the Issuer
shall select the Securities other Senior Subordinated Indebtedness to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuer so that only Securities and the other Senior
Subordinated Indebtedness in denominations of $1,000, or integral multiples
thereof, shall be purchased). Holders whose Securities are purchased only in
part shall be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
(4) At the time the Issuer delivers Securities to the Trustee which
are to be accepted for purchase, the Issuer shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Issuer
pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Issuer shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Issuer shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this covenant by virtue thereof.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The Company
-------------------------------------
shall not, and shall not permit any Restricted Subsidiary to, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property, employee compensation arrangements or the rendering of any
service) with any Affiliate of the Company involving aggregate consideration in
excess of $2.5 million (an "Affiliate Transaction") unless the terms thereof:
(1) are no less favorable to the Company or such Restricted Subsidiary
than those that could be obtained at the time of such transaction in
arm's-
58
length dealings with a Person who is not such an Affiliate;
(2) have been approved by a majority of the disinterested members of the
Board of Directors; and
(3) if such Affiliate Transaction involves an amount in excess of $10.0
million, have been determined by (A) a nationally recognized
investment banking firm to be fair, from a financial standpoint, to
the Company and its Restricted Subsidiaries or (B) an accounting or
appraisal firm nationally recognized in making such determinations to
be on terms that are not less favorable to the Company and its
Restricted Subsidiaries than the terms that could be obtained in an
arms-length transaction from a Person that is not an Affiliate of
the Company.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(1) any Restricted Payment permitted to be paid pursuant to Section 4.04;
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors;
(3) the grant of stock options or similar rights to employees and
directors of the Company or its Restricted Subsidiaries pursuant to
plans approved by the Board of Directors;
(4) loans or advances to employees, directors, officers or consultants (A)
in the ordinary course of business or (B) otherwise in an aggregate
amount not to exceed $5.0 million in the aggregate outstanding at any
one time;
(5) reasonable fees, compensation or employee benefit arrangements to and
indemnity provided for the benefit of employees, directors, officers
or consultants of the Company or any Subsidiary in the ordinary course
of business;
59
(6) any transaction exclusively between or among the Company and its
Restricted Subsidiaries or between or among Restricted Subsidiaries;
provided, however, that such transactions are not otherwise prohibited
-------- -------
by the Indenture;
(7) the payment of management, consulting and advisory fees and related
expenses made pursuant to the Advisory Agreements as in effect on the
Recapitalization Closing Date and the payment of other customary
management, consulting and advisory fees and related expenses to the
Principals and their Affiliates made pursuant to any financial
advisory, financing, underwriting or placement agreement or in respect
of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which fees and
expenses are made pursuant to arrangements approved by the Board of
Directors of the Company or such Restricted Subsidiary in good faith;
(8) pursuant to written agreements in effect on the Recapitalization
Closing Date and as amended, renewed or extended from time to time;
provided, however, that any such amendment, renewal or extension shall
-------- -------
not contain terms which are materially less favorable to the Company
and its Restricted Subsidiaries than those in the agreements in effect
on the Recapitalization Closing Date;
(9) any agreement with the Company or any Restricted Subsidiary as in
effect as of the Recapitalization Closing Date or any amendment or
replacement thereto or any transaction contemplated thereby (including
pursuant to any amendment or replacement thereto) so long as any such
amendment or replacement agreement is not more disadvantageous to the
Company or such Restricted Subsidiary in any material respect than the
original agreement as in effect on the Recapitalization Closing Date;
(10) the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of its obligations under the terms of, the
Shareholders Agreement and any similar agreements which it may enter
into thereafter; provided,
--------
60
however, that the existence of, or the performance by the Company or
-------
any of its Restricted Subsidiaries of obligations under, any future
amendment to any such existing agreement or under any similar
agreement entered into after the Recapitalization Closing Date shall
only be permitted by this clause (10) to the extent that the terms of
any such amendment or new agreement are not disadvantageous to the
Company or any such Restricted Subsidiary in any material respect;
(11) transactions with customers, clients, suppliers, joint venture
partners or purchasers or sellers of goods or services, in each case
in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with
the terms of the applicable Indenture which are fair to the Company
and its Restricted Subsidiaries, in the reasonable determination of
the Board of Directors of the Company or the senior management
thereof, or are on terms at least as favorable as might reasonably
have been obtained at such time from an unaffiliated party; and
(12) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company.
SECTION 4.08. Change of Control. (a) Upon the occurrence of a
------------------
Change of Control, each Holder shall have the right to require that the Issuer
repurchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus any accrued and unpaid interest to the date of
purchase (subject to the right of holders of record on the relevant record date
to receive interest on the relevant interest payment date), in accordance with
the terms contemplated in Section 4.08(b). In the event that at the time of such
Change of Control the terms of the Senior Indebtedness of the Issuer restrict or
prohibit the repurchase of Securities pursuant to this Section, then prior to
the mailing of the notice to Holders provided for in Section 4.08(b) below but
in any event within 30 days following any Change of Control, the Issuer shall
(i) repay in full all such Senior Indebtedness or offer to repay in full all
such Senior Indebtedness and repay such Senior Indebtedness of each lender who
has accepted such offer or (ii) obtain the requisite consent under the
agreements governing such Senior Indebtedness to permit the repurchase of the
Securities as provided for in Section 4.08(b).
61
(b) Within 30 days following any Change of Control, the Issuer shall
mail a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuer to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof plus
any accrued and unpaid interest to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest
on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuer, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Issuer
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Issuer receives not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Issuer
under this Section shall be delivered by the Trustee for cancellation, and the
Issuer shall pay the purchase price plus accrued and unpaid interest, if any, to
the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the
Issuer will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in Section
applicable to a Change of Control Offer
62
made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.
(f) The Issuer shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.09. Limitation on Assets of Non-Subsidiary Guarantors. The
--------------------------------------------------
Company shall not permit its Restricted Subsidiaries that are not Subsidiary
Guarantors, excluding ChipPAC Assembly and Test (Shanghai) Company, Ltd. and
ChipPAC (Shanghai) Company Ltd. or any successors thereto, to collectively hold
at any one time more than 33 1/3% of the consolidated assets of the Company and
its Restricted Subsidiaries.
SECTION 4.10. Limitation on Sale of the Capital Stock of the Issuer.
------------------------------------------------------
For so long as any of the Securities are outstanding, the Issuer will continue
to be, directly or indirectly, a Wholly Owned Subsidiary of the Company.
SECTION 4.11. Future Guarantors. In the event that, after the Issue
------------------
Date, the Company forms or otherwise acquires, directly or indirectly, any
Restricted Subsidiary, the Company shall cause such Restricted Subsidiary to
Guarantee the Notes pursuant to a Subsidiary Guaranty on the terms and
conditions set forth in the Indenture and the Subsidiary Guaranty Agreement;
provided, however, in the event the Company or a Restricted Subsidiary forms or
- -------- -------
otherwise acquires, directly or indirectly, a Restricted Subsidiary organized
under the laws of a jurisdiction other than the United States and such
jurisdiction prohibits by law, regulation or order such Restricted Subsidiary
from providing a Guarantee, the Company shall use all commercially reasonable
efforts (including pursuing required waivers) over a period up to one year, to
provide such Guarantee; provided further, however, that the Company shall not be
-------- ------- -------
required to use such commercially reasonable efforts with respect to such
subsidiaries for more than a one-year period or such shorter period as the
Company shall determine in good faith that it has used all commercially
reasonable efforts. If the Company or such Restricted Subsidiary is
63
unable during such period to obtain an enforceable Guarantee in such
jurisdiction, then such Restricted Subsidiary shall not be required to provide a
Guarantee of the Securities pursuant to the Subsidiary Guaranty so long as such
Restricted Subsidiary does not Guarantee any other Indebtedness of the Company
and its Restricted Subsidiaries.
SECTION 4.12. Withholding Taxes. All payments made under or with
------------------
respect to the Securities or under or with respect to the Company Guaranty must
be made free and clear of and without withholding or deduction for or on account
of any present or future tax, duty, levy, impost, assessment or other
governmental charge of whatever nature (including penalties, interest and other
liabilities related thereto) imposed or levied by or on behalf of any
jurisdiction from or through which payment is made or in which the payor is
organized, resident or engaged in business for tax purposes or any province or
territory thereof or by any taxing authority therein (hereinafter "Taxes"),
unless the Issuer or the Company is required to withhold or deduct such Taxes by
law or by the interpretation or administration thereof. If the Issuer or the
Company is so required to withhold or deduct any amount for or on account of
Taxes from any payment made under or with respect to the Securities or under or
with respect to the Company Guaranty, the Issuer or the Company, as the case may
be, will pay such additional amounts ("Additional Amounts") as may be necessary
so that the net amount received by each Holder after such withholding or
deduction (including any withholding or deduction with respect to Additional
Amounts) will not be less than the amount the Holder would have received if such
Taxes had not been withheld or deducted; provided, however, that no Additional
Amounts will be payable with respect to payments made to a Holder (an "Excluded
Holder") to the extent such Holder is subject to such Taxes by reason of its
being connected with the British Virgin Islands or any province or territory
thereof otherwise than by the mere holding of the Securities or the receipt of
payments thereunder or the enforcement of its rights and obligations under the
Securities or the Company Guaranty. The Issuer and the Company will make such
withholding or deduction and remit the full amount deducted or withheld to the
relevant authority as and when required in accordance with applicable law. The
Issuer or the Company will furnish to the Holder, within 30 days after the
payment of any Taxes, certified copies of tax receipts evidencing such payment
by the Issuer or the Company. The Issuer will upon written request of each
Holder (other than an Excluded Holder), reimburse each such Holder for the
amount of (i) any Taxes (including penalties, interest and
64
expenses arising therefrom or with respect thereto) imposed or levied and paid
by such Holder as a result of payments made under or with respect to the
Securities or under or with respect to the Company Guaranty and (ii) any Taxes
so levied or imposed and paid by such Holder with respect to any reimbursement
under the foregoing clause (i), but excluding any such Taxes on such Holder's
net income, so that the net amount received by such Holder after such
reimbursement will not be less than the net amount the Holder would have
received if Taxes (other than such Taxes on such Holder's net income) on such
reimbursement had not been imposed.
At least 30 days prior to each date on which payment under or with
respect to the Securities or the Company Guaranty is due and payable (unless
such obligation to pay Additional Amounts arises shortly before or after the
30th day prior to such date, in which case promptly thereafter), if the Issuer
or the Company is obligated to pay Additional Amounts with respect to such
payment, the Issuer or the Company will deliver to the Trustee an Officers'
Certificate stating the fact that such Additional Amounts will be payable and
the amounts so payable and setting forth such other information as necessary to
enable the Trustee to pay such Additional Amounts to Holders of the Securities
on the payment date.
The Issuer or the Company will pay any present or future stamp, court
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise in any jurisdiction from the execution, delivery, enforcement
or registration of the Securities or the Company Guaranty, the Indenture or any
other document or instrument in relation thereof, or the receipt of any payments
with respect to the Securities or the Company Guaranty, excluding such taxes,
charges or similar levies imposed by any jurisdiction other than (i) the British
Virgin Islands, (ii) any other jurisdiction in which any of the Issuer or the
Company is organized, resident or engaged in business for tax purposes, (iii)
any jurisdiction in which any successor to the Issuer or the Company is
organized, resident or engaged in business for tax purposes or (iv) any
jurisdiction in which a paying agent is located. In addition, the Issuer and
the Company will agree to indemnify the Holders (on an after-tax basis) for any
such taxes paid by such Holders.
The obligations described under this heading shall survive any
termination, defeasance or discharge of the Indenture.
65
SECTION 4.13. Compliance Certificate. The Company shall deliver to
-----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA (S) 314(a)(4).
SECTION 4.14. Further Instruments and Acts. Upon request of the
-----------------------------
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company, Issuer, and Subsidiary Guarantors May
---------------------------------------------------
Merge or Transfer Assets. (a) Neither the Issuer nor the Company shall
- -------------------------
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of related transactions, all or substantially all its
assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
British Virgin Islands or the United States of America, any State thereof
or the District of Columbia and the Successor Company (if not the Company
or the Issuer) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Issuer or Company, as applicable, under the
Indenture and the Company Guaranty or the Securities, as applicable;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Subsidiary as a result of such transaction as having been Incurred by
such Successor Company or such Subsidiary at the time of such transaction),
no Default shall have occurred and be continuing;
66
(3) immediately after giving effect to such transaction, (A) the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a) or (B) the Consolidated Coverage
Ratio for the Successor Company and its Restricted Subsidiaries would be
greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such transaction;
(4) the Issuer or Company, as applicable, shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and any supplemental indenture
comply with this Indenture;
(5) In the event that the merging corporation (i.e., the Company or
the Issuer, as applicable) is organized and existing under the laws of the
British Virgin Islands and the Successor Company is organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia or in the event that the merging corporation is
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company is
organized and existing under the laws of the British Virgin Islands (any of
the foregoing events are referred to herein as a "Foreign Jurisdiction
Merger"), the Issuer or the Company, as applicable, shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Holders will not
recognize income, gain or loss for U.S. Federal income tax purposes as a
result of such transaction and will be subject to U.S. Federal income tax
on the same amounts and at the same times as would have been the case if
such transactions had not occurred; and
(6) In the event of a Foreign Jurisdiction Merger, the Issuer or the
Company, as applicable, shall have delivered to the Trustee an Opinion of
Counsel in the British Virgin Islands (or other applicable jurisdiction) to
the effect that (A) any payment of interest or principal under or with
respect to the Notes or the Guaranties will, after the consolidation,
merger, conveyance, transfer or lease of assets, be exempt from the Taxes
described under Section 4.12, and prepared by the Issuer and (B) no other
taxes on income (including capital gains) will be payable under the laws of
the British Virgin Islands or any other jurisdiction where the Successor
Company is or becomes
67
organized, resident or engaged in business for tax purposes in respect of
the acquisition, ownership or disposition of the Notes, including the
receipt of interest or principal thereon, provided that such Holder does
not use or hold, and is not deemed to use or hold the Notes in carrying on
a business in the British Virgin Islands or other jurisdiction where the
Successor Company is or becomes organized, resident or engaged in business
for tax purposes.
provided, however, that clause (3) above shall not apply (X) if, in the good
- -------- -------
faith determination of the Board of Directors, whose determination shall be
evidenced by a resolution of the Board of Directors, the principal purpose and
effect of such transaction is to change the jurisdiction of incorporation of the
Issuer or the Company or (y) in the case of a merger of the Issuer or the
Company with or into a Wholly Owned Subsidiary of the Company. In addition,
notwithstanding clauses (2)-(6) above, the Issuer may merge into ChipPAC
Operating Limited and the Company may merge into ChipPAC, Inc, in each case on
the Recapitalization Closing Date.
The Successor Company shall be the successor to the Company or the
Issuer, as the case may be, and shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer or the Company under the
Indenture, and the predecessor Issuer or Company, except in the case of a lease,
shall be automatically released from its obligations under the Company Guaranty,
the Securities and this Indenture.
(b) The Company will not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless:
(1) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of
the United States of America, or any State thereof or the District of
Columbia, and such Person shall expressly assume, by executing a
supplemental indenture or Guaranty Agreement, as applicable, all the
obligations of such Subsidiary under the Indenture or its Subsidiary
Guaranty and under the Securities and this Indenture;
68
(2) immediately after giving effect to such trans action or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture or Guaranty Agreement, if any,
complies with this Indenture.
The provisions of clauses (1) and (2) above shall not apply to any one or more
transactions involving a Subsidiary Guarantor which constitute an Asset
Disposition if the Company has complied with the applicable provisions of
Section 4.06.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
------------------
(1) the Issuer defaults in any payment of interest or any Additional
Amounts on any Security when the same becomes due and payable, whether or
not such payment shall be prohibited by Article 10, and such default
continues for a period of 30 days;
(2) the Issuer (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration or otherwise, whether or not such payment
shall be prohibited by Article 10 or (ii) fails to redeem or purchase
Securities when required pursuant to this Indenture or the Securities,
whether or not such redemption or purchase shall be prohibited by Article
10;
(3) the Company, the Issuer or any Subsidiary Guarantor fails to
comply with Section 5.01;
(4) the Company or any Restricted Subsidiary fails to comply with
Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 (other
than a failure to
69
purchase Securities when required under Section 4.06 or 4.08) and such
failure continues for 30 days after the notice specified below;
(5) the Company or any Restricted Subsidiary fails to comply with any
of its agreements in the Securities or this Indenture (other than those
referred to in clause (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company, the Issuer or any Significant
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $10.0
million, or its foreign currency equivalent at the time;
(7) the Company, the Issuer or any Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company, the Issuer or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, the Issuer or any
Significant Subsidiary or for any substantial part of its property; or
70
(C) orders the winding up or liquidation of the Company, the
Issuer or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$10.0 million or its foreign currency equivalent at the time is entered
against the Company or any Significant Subsidiary, remains outstanding for
a period of 60 days following the entry of such judgment or decree and is
not discharged, waived or the execution thereof stayed within 10 days after
the notice specified below; or
(10) the Company Guaranty or any Subsidiary Guaranty of a Significant
Subsidiary ceases to be in full force and effect (other than in accordance
with the terms of the Company Guaranty or such Subsidiary Guaranty) or any
Significant Subsidiary that is a Subsidiary Guarantor denies or disaffirms
its obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
------------------
similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
outstanding Securities notify the Issuer and the Company of the Default and the
Issuer or the Company does not cure such Default within the time specified after
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
The Issuer or the Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of
71
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
-------------
Event of Default specified in Section 6.01(7) or (8) with respect to the Company
or the Issuer) occurs and is continuing, the Trustee by notice to the Company or
the Issuer, or the Holders of at least 25% in principal amount of the Securities
by notice to the Company or the Issuer and the Trustee, may declare the
principal of and accrued but unpaid interest on all the Securities to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default specified in Section 6.01(7) or (8)
with respect to the Company or the Issuer occurs, the principal of and interest
on all the Securities shall ipso facto become and be immediately due and payable
---- -----
without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
72
principal of or interest on a Security (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to this Indenture or
(iii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
--------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
reasonably satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
--------------------
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction
73
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
--------------------------
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Issuer for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Issuer, its creditors or its
property and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
74
SECOND: to holders of Senior Indebtedness of the Issuer to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Issuer.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Securityholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
---------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Issuer (to the
--------------------------------
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Issuer (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
75
ARTICLE 7
Trustee
-------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgement made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
76
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
-----------------
document believed by it to be genuine and to have been signed or presented by
the proper per son. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
-------- -------
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here under
in good faith and in accordance with the advice or opinion of such counsel.
77
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuer's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Issuer or the Company in the Indenture or in any document
issued in connection with the sale of the Securities or in the Securities other
than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
-----------------------------
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to May 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as May 15 that complies with
TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Issuer agrees to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuer shall pay to
--------------------------
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee
78
upon request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Issuer promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Issuer shall not
relieve the Issuer of its obligations hereunder. The Issuer shall defend the
claim and the Trustee may have separate counsel and the Issuer shall pay the
fees and expenses of such counsel. The Issuer need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Issuer's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Issuer's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(7) or (8) with respect to
the Issuer, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
----------------------
time by so notifying the Issuer. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Issuer shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
79
If the Trustee resigns, is removed by the Issuer or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
---------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
80
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
-----------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuer are
out standing if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
-------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
-------------------------------------------------
When (i) the Issuer delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Issuer or the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.07), and if in either case the Issuer pays all
other sums payable hereunder by the Issuer, then this Indenture shall, subject
to Sections 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer.
81
(b) Subject to Sections 8.01(c) and 8.02, the Issuer or the Company
at any time may terminate (i) all the obligations of the Issuer and the Company
under the Securities and this Indenture ("legal defeasance option") or (ii) the
Company's obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08,
4.09, 4.10 and 4.11 and the operation of Sections 6.01(4), 6.01(6), 6.01(7),
6.01(8) and 6.01(9) (but, in the case of Sections 6.01(7) and (8), with respect
only to Significant Subsidiaries) and the limitations contained in Sections
5.01(a)(3) ("covenant defeasance option"). The Issuer and the Company may
exercise the legal defeasance option notwithstanding any prior exercise of the
covenant defeasance option.
If the Issuer or the Company exercises the legal defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
with respect thereto. If the Issuer or the Company exercises the covenant
defeasance option, payment of the Securities may not be accelerated because of
an Event of Default specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and
6.01(9) (but, in the case of Sections 6.01(7) and (8), with respect only to
Significant Subsidiaries) or because of the failure of the Company to comply
with Section 5.01(a)(3). If the Issuer or the Company exercises the legal
defeasance option or the covenant defeasance option, the Company and each
Subsidiary Guarantor shall be released from all their obligations with respect
to the Company Guaranty or its Subsidiary Guaranty, as the case may be.
Upon satisfaction of the conditions set forth herein and upon request
of the Issuer, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Issuer's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Issuer's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. Each of the Issuer and the
------------------------
Company may exercise its legal defeasance option or its covenant defeasance
option only if:
(1) the Issuer or the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of principal
of and
82
interest on the Securities to maturity or redemption, as the case may be;
(2) the Issuer or the Company delivers to the Trustee a certificate
from a nationally recognized firm of independent accountants expressing
their opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(7) or (8) with respect to the
Issuer occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuer and is not prohibited by Article 10;
(5) the Issuer or the Company delivers to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Issuer or the
Company shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Issuer or the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the date
of this Indenture there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal
Revenue Service or other change in applicable U.S. Federal income tax law)
and (iii) an Opinion of Counsel in each of the British Virgin Islands and
any other jurisdiction in which the Issuer or the Company is organized,
resident or engaged in
83
business for tax purposes to the effect that (A) Holders of the Notes will
not recognize income gain or loss for purposes of the tax laws of such
jurisdiction as a result of such legal defeasance or covenant defeasance,
as applicable, and will be subject for purposes of the tax laws of such
jurisdiction to income tax on the same amounts, in the same manner and at
the same times as would have been the case if such legal defeasance or
covenant defeasance had not occurred and (B) payments from the defeasance
trust will be free of exempt from any and all withholding and other taxes
of whatever nature of such jurisdiction or any political subdivision or
taxing authority thereof or therein, except in the case of a payment made
to a Holder which is subject to such tax by reason of its carrying on a
business in the British Virgin Islands or such other jurisdiction;
(7) in the case of the covenant defeasance option, the Issuer or the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and
(8) the Issuer or the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as contemplated
by this Article 8 have been complied with.
Before or after a deposit, the Issuer may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
--------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Issuer. The Trustee and the Paying Agent
-------------------
shall promptly turn over to the Issuer
84
upon request any excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Issuer upon request any money held by them for the
payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Issuer for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Issuer
-------------------------------------
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
-------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer's obligations under this
Indenture and the Securities and the Company's obligations under this Indenture
and the Company Guaranty shall be revived and reinstated as though no deposit
had occurred pursuant to this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with this Article 8; provided, however, that, if the Issuer has made
-------- -------
any payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Issuer shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company, the Issuer
--------------------------
and the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
85
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
-------- -------
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities, including any
Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company and the Restricted
Subsidiaries of the Company for the benefit of the Holders or to surrender
any right or power herein conferred upon the Company and the Restricted
Subsidiaries of the Company;
(6) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(7) to secure the Notes; or
(8) to make any change that does not adversely affect the rights of
any Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or 12 (or Article 3 of the Subsidiary
Guaranty Agreement) of any holder of Senior Indebtedness then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Issuer
shall mail to Securityholders a notice briefly describing such amendment.
Notwithstanding the foregoing sentence, the Issuer shall not be required to mail
to Securityholders a notice with respect to the First Supplemental Indenture,
dated as of the Recapitalization Closing Date, by and among ChipPAC
International Company Limited, ChipPAC, Inc. and the Trustee, pursuant to which
each of ChipPAC International Company Limited and ChipPAC, Inc. assume
obligations under this Indenture. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section.
86
SECTION 9.02. With Consent of Holders. The Company, the Issuer and
-----------------------
the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may or shall be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Section 6.04 or 6.07 or the second sentence of
this Section;
(7) make any change in any Guaranty (including the subordination
provisions of such Guaranty) that would adversely affect the
Securityholders; or
(8) make any change in the provisions of paragraph 6 of the
Securities.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
Notwithstanding this Section 9.02, any amendment to Article 10 or 12
(or Article 3 of the Subsidiary Guaranty Agreement) that adversely affects the
rights of any Securityholder under Article 10 or 12 (or Article 3 of the
Subsidiary Guaranty Agreement) will require the consent of Holders of at least
75% in aggregate principal amount of the Securities then outstanding. An
amendment under this Section may not make any change that adversely affects the
87
rights under Article 10 or 12 (or Article 3 of the Subsidiary Guaranty
Agreement) of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Issuer
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
-----------------------------------
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
-------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
88
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company, the Issuer or the Trustee so determines,
the Issuer in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
--------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment
the Trustee shall be entitled to receive indemnity reasonably satisfactory to it
and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Issuer nor any
-------------------
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination
-------------
SECTION 10.01. Agreement To Subordinate. The Issuer agrees, and each
------------------------
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment of all Obligations with
respect to Senior Indebtedness of the Issuer and that the subordination is for
the benefit of and enforceable by the holders of such Senior Indebtedness. The
Securities shall in all respects rank pari passu with all other Senior
---- -----
Subordinated Indebtedness of the Issuer and only Indebtedness of the Issuer
which is Senior Indebtedness shall rank senior to the Securities in accordance
with the provisions set forth herein. All
89
provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of the Issuer to creditors upon a total or partial
liquidation or a total or partial dissolution of the Issuer or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Issuer or its property:
(1) the holders of Senior Indebtedness of the Issuer shall be
entitled to receive payment in full in cash of all Obligations with respect
to such Senior Indebtedness (including all interest accruing subsequent to
the filing of a petition in bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) before Securityholders shall be
entitled to receive any payment or distribution with respect to the
Securities; and
(2) until such Senior Indebtedness is paid in full in cash, any
payment or distribution to which Securityholders would be entitled but for
this Article 10 shall be made to holders of such Senior Indebtedness as
their interests may appear, except that Securityholders may receive shares
of stock and any debt securities that are subordinated to such Senior
Indebtedness, and to any debt securities received by holders of Senior
Indebtedness, to at least the same extent as the Securities are
subordinated to Senior Indebtedness of the Issuer.
SECTION 10.03. Default on Senior Indebtedness. The Issuer may not pay
------------------------------
(in cash, property or other assets) the principal of or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not repurchase,
redeem or (except for Securities delivered to the Trustee pursuant to the second
sentence of paragraph 6 of the Securities) otherwise retire any Securities
(collectively, "pay the Securities") if either of the following occurs (each, a
"Payment Default") (i) any Obligations with respect to Senior Indebtedness of
the Issuer are not paid in full when due or (ii) any other default on Senior
Indebtedness of the Issuer occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded in writing or (y) such Senior Indebtedness has been paid in full in
cash; provided, however, that the Issuer may pay the Securities without regard
-------- -------
to the foregoing if the Issuer and
90
the Trustee receive written notice approving such payment from the
Representative of such Senior Indebtedness. During the continuance of any
default (other than a default described in clause (i) or (ii) of the preceding
sentence) with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Issuer may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Company and the Trustee of written notice (a "Blockage Notice")
of such default from the Representative of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because no defaults continue in existence which
would permit the acceleration of the Designated Senior Indebtedness at such
time) or (iii) because such Designated Senior Indebtedness has been repaid in
full in cash. Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness or
the Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, or any Payment Default otherwise exists, the
Issuer may resume payments on the Securities after termination of such Payment
Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during such period; provided, however, that if
-------- -------
any Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness (other than the Bank Indebtedness),
the Representative of the Bank Indebtedness may give another Blockage Notice
within such period; provided further, however, that in no event may the total
---------------- -------
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360-consecutive-day period. For
purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such default or event of default shall have been
91
cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
-------------------------------------
the Securities is accelerated because of an Event of Default, the Issuer or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration. If any Designated Senior
Indebtedness is outstanding at the time of such acceleration, neither the
Company nor any Subsidiary Guarantor may pay the Securities until five Business
Days after the Representatives of all the issues of Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Securities only if the Indenture otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a distribution
-----------------------------------
is made to Securityholders that because of this Article 10 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Issuer and pay it over to them
as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
-----------
Issuer is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 10 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Issuer and Securityholders, a payment by the Issuer on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the relative
---------------
rights of Securityholders and holders of Senior Indebtedness of the Issuer.
Nothing in this Indenture shall:
(1) impair, as between the Issuer and Securityholders, the
obligation of the Issuer, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of
92
the Issuer to receive distributions otherwise payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired. No right of any
---------------------------------
holder of Senior Indebtedness of the Issuer to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Issuer or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 10. The Issuer, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
--------
however, that, if an issue of Senior Indebtedness of the Issuer has a
- -------
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Issuer with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any Senior Indebtedness of the Issuer which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Issuer, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Securities
- -------------------
by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Secu-
93
rityholders or the Trustee to accelerate the maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article 10, and none of the Securityholders shall
be obligated to pay over any such amount to the Issuer or any holder of Senior
Indebtedness of the Issuer or any other creditor of the Issuer.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Issuer for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Issuer, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Issuer to participate in
any payment or distribution pursuant to this Article 10, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
other facts pertinent to the rights of such Person under this Article 10, and,
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
-----------------------------------
Securityholder by accepting a Security author-
94
izes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination between
the Securityholders and the holders of Senior Indebtedness of the Issuer as
provided in this Article 10 and appoints the Trustee as attorney-in-fact for any
and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Issuer or any
other Person, money or assets to which any holders of Senior Indebtedness of the
Issuer shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Securityholder by accepting a Security
- ------------------------
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Issuer, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 11
Company Guaranty
----------------
SECTION 11.01. Guaranty. The Company hereby unconditionally and
--------
irrevocably guarantees to each Holder and to the Trustee and its successors and
assigns (a) the full and punctual payment of principal of and interest on the
Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Issuer under this Indenture
and the Securities and (b) the full and punctual performance within applicable
grace periods of all other obligations of the Issuer under this Indenture and
the Securities (all the foregoing being hereinafter collectively called the
"Obligations"). The Company further agrees that the Obligations may be extended
or renewed, in whole or in part, without notice or further assent from the
Company and that
95
the Company will remain bound under this Article 11 notwithstanding any
extension or renewal of any Obligation.
The Company waives presentation to, demand of, payment from and
protest to the Issuer of any of the Obligations and also waives notice of
protest for nonpayment. The Company waives notice of any default under the
Securities or the Obligations. The obligations of the Company hereunder shall
not be affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Issuer or any
other Person under this Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any such claim, demand, right or
remedy; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other guarantor of the Obligations; or
(f) any change in the ownership of the Company.
The Company further agrees that its Guaranty herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Obligations.
The Company Guaranty is, to the extent and in the manner set forth in
Article 12, subordinated and subject in right of payment to the prior payment in
full of the principal of and premium, if any, and interest on all Senior
Indebtedness of the Company, and the Company Guaranty is made subject to such
provisions of this Indenture.
Except as expressly set forth in Section 8.01(b) the obligations of
the Company hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
the Company herein shall not be discharged or impaired or otherwise affected by
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any remedy under this Indenture, the
96
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of the Company or would otherwise operate as a discharge of the Company as
a matter of law or equity.
The Company further agrees that its Guaranty herein shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Issuer or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Company by virtue hereof, upon the failure of the Issuer to pay the principal of
or interest on any Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Obligation, the Company hereby promises to and will, upon receipt
of written demand by the Trustee, forthwith pay, or cause to be paid, in cash,
to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
amount of such Obligations, (ii) accrued and unpaid interest on such Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders and the Trustee.
The Company agrees that it shall not be entitled to any right of
subrogation in respect of any Obligations guaranteed hereby until payment in
full of all Obligations and all obligations to which the Obligations are
subordinated as provided in Article 12 further agrees that, as between it, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the Obligations Guaranteed hereby may be accelerated as provided in
Article 6 for the purposes of the Company's Guaranty, herein, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Company for the purposes of this Section.
97
The Company also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section.
SECTION 11.02. Successors and Assigns. This Article 11 shall be
----------------------
binding upon the Company and its successors and assigns and shall enure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.03. No Waiver. Neither a failure nor a delay on the part of
---------
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.04. Modification. No modification, amendment or waiver of
------------
any provision of this Article 11, nor the consent to any departure by the
Company therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, 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 the Company in any case shall entitle the Company to any
other or further notice or demand in the same, similar or other circumstances.
ARTICLE 12
Subordination of Company Guaranty
---------------------------------
SECTION 12.01. Agreement To Subordinate. The Company agrees, and each
------------------------
Securityholder by accepting a Security agrees, that the Obligations of the
Company are subordinated in right of payment, to the extent and in the manner
provided in this Article 12, to the prior payment of
98
all Obligations with respect to Senior Indebtedness of the Company and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. The Obligations of the Company shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company and
- ---- -----
only Senior Indebtedness of the Company (including the Company's Guaranty of
Senior Indebtedness of the Issuer) shall rank senior to the Obligations of the
Company in accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of all Obligations with respect
to such Senior Indebtedness (including all interest accruing subsequent to
the filing of a petition in bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) before Securityholders shall be
entitled to receive any payment or distribution with respect to any
Obligations of the Company; and
(2) until the Senior Indebtedness of the Company is paid in full in
cash, any payment or distribution to which Securityholders would be
entitled but for this Article 12 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Securityholders may
receive shares of stock and any debt securities of the Company that are
subordinated to Senior Indebtedness, and to any debt securities received by
holders of Senior Indebtedness, of the Company to at least the same extent
as the Obligations of the Company are subordinated to Senior Indebtedness
of the Company.
SECTION 12.03. Default on Senior Indebtedness of the Company. The
---------------------------------------------
Company may not make any payment (in cash, property or other assets) pursuant to
any of its Obligations or repurchase, redeem or otherwise retire or defease any
Securities or other Obligations (collectively, "pay its Guaranty") if either of
the following Payment Defaults occurs: (i) any Obligations with respect to
Senior Indebtedness of the Company are not paid in full when due or
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(ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded in writing or (y) such Senior Indebtedness has
been paid in full in cash; provided, however, that the Company may pay its
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Guaranty without regard to the foregoing if the Company and the Trustee receive
written notice approving such payment from the Representatives of such Senior
Indebtedness. The Company may not pay its Guaranty during the continuance of any
Payment Blockage Period after receipt by the Company and the Trustee of a
Payment Notice under Section 10.03. Notwithstanding the provisions described in
the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section), unless the holders of Designated Senior
Indebtedness giving such Payment Notice or the Representative of such holders
shall have accelerated the maturity of such Designated Senior Indebtedness, the
Company may resume payments pursuant to its Guaranty after termination of such
Payment Blockage Period.
SECTION 12.04. Demand for Payment. If a demand for payment is made on
------------------
the Company pursuant to Article 11, the Trustee shall promptly notify the
holders of the Designated Senior Indebtedness (or their Representatives) of such
demand.
SECTION 12.05. When Distribution Must Be Paid Over. If a distribution
-----------------------------------
is made to Securityholders that because of this Article 12 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of the relevant Senior Indebtedness and pay it over to them or
their Representatives as their interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of the
-----------
Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
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SECTION 12.07. Relative Rights. This Article 12 defines the relative
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rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay the
Obligations to the extent set forth in Article 11 or the Company Guaranty;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by the Company under the Obligations,
subject to the rights of holders of Senior Indebtedness of the Company to
receive distributions otherwise payable to Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by Issuer. No right
-------------------------------------------
of any holder of Senior Indebtedness of the Company to enforce the subordination
of the Obligations of the Company shall be impaired by any act or failure to act
by the Company or by its failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 12.03, the Trustee or Paying Agent may continue to make payments on the
Company Guaranty and shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments unless, not less than
two Business Days prior to the date of such payment, a Trust Officer of the
Trustee receives written notice satisfactory to it that payments may not be made
under this Article 12. The Issuer, the Company, the Registrar or co-registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness of the
Company may give the notice; provided, however, that, if an issue of Senior
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Indebtedness of the Company has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not the Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 12 with respect to any Senior Indebtedness of the Company which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in
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this Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Defaults Under a Guaranty or
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Limit Right To Demand Payment. The failure to make a payment pursuant to a
- -----------------------------
Guaranty by reason of any provision in this Article 12 shall not be construed as
preventing the occurrence of a default under such Guaranty. Nothing in this
Article 12 shall have any effect on the right of the Securityholders or the
Trustee to make a demand for payment on the Company pursuant to Article 11 or
the relevant Guaranty.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 12, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness of the Company held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article 12, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to
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all actions or omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each
-----------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article 12 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness of the Company. The Trustee shall not be deemed to owe any
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fiduciary duty to the holders of Senior Indebtedness of the Company and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the Company or any other Person, money or assets to which
any holders of such Senior Indebtedness shall be entitled by virtue of this
Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Securityholder by accepting a Security
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acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 13
Miscellaneous
-------------
SECTION 13.01. Trust Indenture Act Controls. If any provision of
----------------------------
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
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writing and delivered in person or mailed by first-class mail or by telex,
telecopier or overnight air
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courier guaranteeing next day delivery, addressed as follows:
if to the Issuer or any Guarantor:
ChipPAC, Inc.
3151 Coronado Drive
Santa Clara, CA 95054
Attention of Chief Financial Officer
Telecopy: 408-486-5900
if to the Trustee:
Firstar Bank of Minnesota, N.A.
101 East Fifth Street
St. Paul, MN 55101
Attention of Corporation Trust Department
The Issuer or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
-------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuer, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Issuer to the Trustee to take or refrain
from taking any action under this Indenture, the Issuer shall furnish to the
Trustee:
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(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether
---------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuer, the Company or by
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
105
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
--------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
--------------
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture and the Securities shall
-------------
be governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 13.10. No Recourse Against Others. A director, officer,
--------------------------
employee or stockholder, as such, of the Issuer or the Company shall not have
any liability for any obligations of the Issuer or the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Issuer and the
----------
Company in this Indenture and the Securities shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number
------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
---------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted
106
for convenience of reference only, are not intended to be
107
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.
SECTION 13.14. Agent for Service; Submission to Jurisdiction; Waiver
-----------------------------------------------------
of Immunities. By the execution and delivery of this Indenture, the Issuer and
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the Company each (i) acknowledges that it has, by separate written instrument,
irrevocably designated and appointed CT Corporation System (and any successor
entity) ("CT"), 1633 Broadway, New York, New York 10019, as its authorized agent
upon which process may be served in any suit or proceeding arising out of or
relating to this Indenture, the Securities or the Guaranties that may be
instituted in any Federal or state court located in the Borough of Manhattan in
The City of New York or brought by the Trustee (whether in its individual
capacity or in its capacity as Trustee hereunder) or any Holder, and
acknowledges that CT has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding, and (iii) agrees
that service of process upon CT and written notice of said service to the Issuer
or the Company, shall be deemed in every respect effective service of process
upon the Issuer or the Company, as the case may be, in any such suit or
proceeding. The Issuer and the Company each further agree to take any and all
action, including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
CT in full force and effect so long as this Indenture shall be in full force and
effect.
The Issuer and the Company each hereby irrevocably and unconditionally
waive, to the fullest extent they may legally effectively do so, any objection
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Indenture, the Securities or
the Guaranties in any Federal or state court located in the Borough of Manhattan
in The City of New York. The Issuer and the Company each 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.
To the extent that the Issuer and the Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity
108
in this Indenture and the Securities, to the extent permitted by law.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
CHIPPAC INTERNATIONAL LIMITED,
by /s/ Tony Lin
________________________
Name: Tony Lin
Title: Chief Financial Officer
CHIPPAC MERGER CORP.,
by /s/ David Dominik
________________________
Name: David Dominik
Title: Chief Executive Officer
FIRSTAR BANK OF MINNESOTA, N.A.,
by /s/ Frank Leslie
________________________
Name: Frank Leslie
Title: Vice President