<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 7, 1999
REGISTRATION NO. 333-86199
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
NOTE EXCHANGE OFFER
ON
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
AMKOR TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3674 23-1722724
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KENNETH T. JOYCE
CHIEF FINANCIAL OFFICER
AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
DONNA M. PETKANICS, ESQ.
BRUCE M. MCNAMARA, ESQ.
THOMAS I. SAVAGE, ESQ.
LINDA Y. SUNG, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED DECEMBER 7, 1999
PROSPECTUS
AMKOR TECHNOLOGY, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING 9 1/4% SENIOR NOTES DUE MAY 1, 2006
FOR 9 1/4% SENIOR NOTES DUE MAY 1, 2006,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
ALL OUTSTANDING 10 1/2% SENIOR SUBORDINATED NOTES DUE MAY 1, 2009,
FOR 10 1/2% SENIOR SUBORDINATED NOTES DUE MAY 1, 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
The exchange offers will expire at 5:00 P.M., New York City time, on
January , 1999, unless we extend the deadline.
TERMS OF NEW SENIOR NOTES
- - MATURITY: The new Senior Notes will mature on May 1, 2006.
- - INTEREST PAYMENTS: Interest will be payable in cash in arrears semi-annually
on May 1 and November 1 of each year, commencing on November 1, 1999.
- - RANKING: The new Senior Notes will be our unsecured senior debt and rank
equally with all of our existing and future unsecured senior debt and rank
senior to all of our existing and future debt that expressly provides that it
is subordinated to the new Senior Notes, including the Senior Subordinated
Notes and our 5 3/4% Convertible Subordinated Notes due 2003. The new Senior
Notes will be effectively subordinated to all of our existing and future
secured debt, if any, to the extent of such security and to all existing and
future debt and other liabilities of our subsidiaries.
- - REDEMPTION: At any time, we may redeem some or all of the new Senior Notes at
redemption prices and on terms specified herein.
- - MANDATORY OFFER TO REPURCHASE: If we sell certain assets or experience
specific kinds of changes of control, we must offer to repurchase the new
Senior Notes at the prices and on the terms specified herein.
INVESTING IN THE NOTES INVOLVES RISKS.
SEE "RISK FACTORS" ON PAGE 12.
TERMS OF NEW SENIOR SUBORDINATED NOTES
- -MATURITY: The new Senior Subordinated Notes will mature on May 1, 2009.
- - INTEREST PAYMENTS: Interest will be payable in cash in arrears semi-annually
on May 1 and November 1 of each year, commencing on November 1, 1999.
- - RANKING: The new Senior Subordinated Notes will be our unsecured senior
subordinated debt and rank junior in right of payment to all of our existing
and future debt (other than our trade payables and our 5 3/4% Convertible
Subordinated Notes due 2003), including the Senior Notes, unless the terms of
that debt expressly provide that it ranks equal with, or is subordinated in
right of payment to the new Senior Subordinated Notes. The new Senior
Subordinated Notes will rank senior in right of payment to our 5 3/4%
Convertible Subordinated Notes due 2003.
- - REDEMPTION: At any time prior to May 1, 2002, we may redeem up to 35% of the
new Senior Subordinated Notes with the cash proceeds of offerings of our
common stock at redemption prices and on terms specified herein. On or after
May 1, 2004, we may redeem some or all of the new Senior Subordinated Notes at
redemption prices and on terms specified herein.
- - MANDATORY OFFER TO REPURCHASE: If we sell certain assets or experience
specific kinds of changes of control, we must offer to repurchase the new
Senior Subordinated Notes at the prices and on the terms specified herein.
TERMS OF THE EXCHANGE OFFERS
- - We will exchange all old Notes that are validly tendered and not withdrawn
prior to the expiration of the exchange offers.
- - We will not receive any proceeds from the exchange offers.
- - We will issue the new Notes promptly after the expiration of the exchange
offers.
- - You may withdraw tenders of original Notes at any time prior to the expiration
of the exchange offers.
- - We believe that the exchange of old Notes will not be a taxable event for
federal income tax purposes, but you should see "Federal Income Tax
Considerations" on page 81 for more information.
WE ARE MAILING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ON DECEMBER ,
1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the new Notes or determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December , 1999
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TABLE OF CONTENTS
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PAGE
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Available Information............................ ii
Documents Incorporated by Reference.............. ii
Disclosure Regarding Forward-Looking
Statements..................................... iii
Use of Certain Terms............................. iii
Prospectus Summary............................... 1
Risk Factors..................................... 12
Use of Proceeds.................................. 16
Our Indebtedness and Financing Agreements........ 16
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The Exchange Offers.............................. 17
Description of the Notes......................... 25
Additional Terms of the New Notes................ 82
Federal Income Tax Consideration................. 82
Plan of Distribution............................. 83
Legal Matters.................................... 83
Experts.......................................... 84
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THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS
INFORMATION IS AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM:
AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
ATTN: KEVIN HERON, ESQ.
PHONE: (610) 431-9600
In order to ensure timely delivery of documents, any request for documents
should be made no later than five (5) business days prior to the expiration date
of the exchange offer.
i
<PAGE> 4
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 covering the new Notes to be issued in the exchange
offers. This prospectus does not contain all of the information included in the
registration statement. Statements contained in this prospectus concerning the
provisions of any document are not necessarily complete. You should refer to the
copy of these documents filed as an exhibit to the registration statement or
otherwise filed by us with the SEC for a more complete understanding of the
matter involved. Each statement concerning these documents is qualified in its
entirety by reference to the copy of the document filed by us with the SEC.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance with the requirements of the Exchange
Act, we file reports and other information with the SEC. You may read and, for a
fee, copy any document that we file with the SEC: (1) at the public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, (2) at the regional office of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 or (3)
at the regional office of the SEC located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these
documents may also be obtained at prescribed rates from the Public Reference
Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain
the documents that we file electronically from the SEC's web site at
http://www.sec.gov. Information concerning us is also available for inspection
at the offices of the Nasdaq National Market, Reports Section, 1735 K Street,
N.W., Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC by us pursuant to the Exchange
Act are incorporated by reference in this prospectus:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed with the SEC on March 31, 1999, the amendment thereto filed with
the SEC on April 30, 1999 and the amendment thereto filed with the SEC on
May 20, 1999; (Note with respect to dissolution of Chong Un & Company: The
Company had an investment in Anam Semiconductor, Inc. ("ASI") as of December
31, 1997 and for the years ended December 31, 1996 and 1997. The Company
sold its investment in ASI on February 16, 1998. ASI had a consolidated
subsidiary, Anam Engineering and Construction Co., Ltd., that was audited by
Chong Un & Company ("Chong Un"). A copy of the Chong Un 1997 audit report is
included in the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998. The Company has been advised that Chong Un has been
dissolved and has ceased to perform accounting and auditing services. Chong
Un has not been and will not be available to perform any subsequent review
procedures with respect to its report. Further, as a result of its status,
Chong Un has not consented to the incorporation by reference of its report
into this registration statement. The Company has been advised that the
terms of Chong Un's dissolution require the preservation of its reserves in
escrow for claims of damages for the next three years and there is no
provision to distribute the firm's liquidation assets among its members. The
Company understands that judgments, if any, awarded in the US or Korea to
ATI investors rendered against Chong Un may be considered as a claim of
damages provided that the claim is appropriate under Korean law. The
discussion regarding certain effects of the Chong Un dissolution as set
forth in this registration statement is not meant and should not be
construed in any way as legal advice to any party and any potential
purchaser of the Company's securities should consult with his or her own
counsel with respect to the effect of the Chong Un dissolution on a
potential purchase of the Company's securities or otherwise.)
ii
<PAGE> 5
2. Our Quarterly Reports on Form 10-Q for the quarter ended March 31,
1999, filed with the SEC on May 17, 1999, the quarter ended June 30, 1999,
filed with the SEC on August 16, 1999 and for the quarter ended September
30, 1999, filed with the SEC on November 15, 1999; and
3. Our Current Report on Form 8-K, filed with the SEC on April 26, 1999,
and the amendments thereto filed on Form 8-K/A on June 1, 1999 and August 2,
1999, our Current Report on Form 8-K filed on June 11, 1999, our current
Report on Form 8-K filed on August 6, 1999, our Current Report on Form 8-K,
filed on November 12, 1999, and the amendment thereto filed on Form 8-K/A on
December 7, 1999, and our Current Report on Form 8-K, filed on November 30,
1999.
All documents filed by us with the SEC pursuant to Sections 13(a) and (c),
14, or 15(d) of the Exchange Act after the date of this prospectus and prior to
the termination of the offering of the new Notes offered pursuant to this
prospectus shall be deemed to be incorporated by reference in this prospectus
and to be a part of this prospectus from the date when we file such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this prospectus shall be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
As used herein, the term "prospectus" mean this prospectus, including the
documents or portions incorporated or deemed to be incorporated in this
prospectus by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of a
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of the contract or other document.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. You may find these statements under the sections entitled
"Summary" or "Risk Factors," or by the use of forward-looking terminology such
as "believe," "expect," "anticipate," "estimate," "plan," "project," "may,"
"will" or other similar words. We have based these forward-looking statements on
our own information and on information from other sources that we believe are
reliable. Our actual results may differ materially from those expressed or
implied by these forward-looking statements as a result of risk factors and
other factors noted throughout this prospectus. Given this level of uncertainty,
you should not place undue reliance on such forward-looking statements.
USE OF CERTAIN TERMS
All references in this prospectus to "Amkor," "we," "us," "our" or the
"company" are to Amkor Technology, Inc. and its subsidiaries. We refer to the
acquisition of the Kwangju Packaging Business ("K4"), a semiconductor packaging
and test factory, from Anam Semiconductor, Inc. ("ASI") as the "Acquisition." We
refer collectively to the Acquisition and the offering of the old Notes as the
"Transaction." We refer to the first $41.6 million installment of our equity
investment in ASI as the "Investment." We refer to the Republic of Korea, which
is also commonly known as South Korea, as "Korea." References to "won" or W are
to the currency of Korea. We collectively refer to the old and new Senior Notes
as the "Senior Notes" and collectively refer to the old and new Senior
Subordinated Notes as the "Senior Subordinated Notes." We collectively refer to
the new Senior Notes and the new Senior Subordinated Notes as the "new Notes"
and to the old Senior Notes and old Senior Subordinated Notes as the "old
Notes." We collectively refer to the Senior Notes Indenture and the Senior
Subordinated Notes Indenture as the "Indentures." We define "EBITDA" in footnote
(d) on page 10.
iii
<PAGE> 6
PROSPECTUS SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. You should
read this prospectus in its entirety for specific terms of the new Notes that we
are offering in exchange for the old Notes.
AMKOR TECHNOLOGY, INC.
Amkor is the world's largest independent provider of semiconductor packaging
and test services. We believe that we are also one of the leading developers of
advanced semiconductor packaging and test technology. We offer a broad and
integrated set of packaging and test services, which are the final procedures to
prepare semiconductor devices for further use. Our customers supply us with
semiconductor wafers, and through a series of complex steps we incorporate
individual semiconductor chips into protective packages that facilitate the
integration of the semiconductor devices into electronic products. We also
provide final testing and related services that validate the operating
specifications of the finished semiconductor device. In January 1998, we began
marketing wafer fabrication services provided by ASI's new semiconductor wafer
foundry. We have more than 150 customers, including many of the world's largest
semiconductor companies, who purchased more than 3 billion packaged
semiconductor devices from us in 1998. Our customers include, among others,
Advanced Micro Devices, Inc., Intel Corporation, International Business Machines
Corp., Lucent Technologies, Inc., Motorola, Inc., National Semiconductor Corp.,
Philips Electronics N.V., SGS-THOMSON Microelectronics N.V., Siemens AG and
Texas Instruments, Inc.
We provide packaging and test services through our three factories in the
Philippines. We source additional packaging and test services from three
factories located in Korea and owned by ASI, pursuant to a supply agreement with
ASI. We used the proceeds of the offering of the old Notes to acquire
substantially all of the assets of K4. K4 provides packaging and test services
for advanced leadframe and laminate packages that are used in high-performance
electronic products such as cellular telephones, laptop computers, digital
cameras and microprocessors. Opened in October 1996, K4 has been ramping up
production throughout 1997 and 1998 and provides us with significant
opportunities for capacity expansion as demand for advanced packages grows. For
the year ended December 31, 1998, we had $1,568.0 million in net revenues and
$241.3 million in EBITDA. Assuming the Acquisition had occurred on January 1,
1998, our EBITDA would have been $289.1 million. However, our net revenues for
1998 would have been substantially the same because during 1998 we sold
substantially all of K4's services under a supply agreement with ASI.
We have a long-standing relationship with ASI. For the year ended December
31, 1998, we derived 69% of our net revenues and 49% of our gross profit from
sales of services performed for us by ASI. Assuming the Acquisition had occurred
on January 1, 1998, these figures would have declined to 56% of our net revenues
and 40% of our gross profit. In addition, ASI derives nearly all of its revenues
from services sold to us. Mr. James Kim, our Chairman and Chief Executive
Officer, serves as Chairman and as a Director of ASI, and he and other members
of his family beneficially owned approximately 36.4% of ASI's outstanding common
stock as of July 31, 1999. We expect ASI to continue to be important to our
business. ASI has experienced financial difficulties and recently ASI and its
creditors have agreed on a workout arrangement. In April, 1999 we committed to
make an equity investment in ASI in installments of $41 million in each of 1999,
2000 and 2001 and $27 million in 2002, and in October 1999 we consummated the
first installment of this commitment. Our commitment to invest in ASI is subject
to: (1) execution of a definitive stock purchase agreement, (2) concurrent
conversion of debt by the creditor financial institutions, (3) the workout
remaining in effect and (4) the supply agreements between our company and ASI
remaining in effect.
Our principal executive offices are located at 1345 Enterprise Drive, West
Chester, PA 19380, and our telephone number at that address is (610) 431-9600.
1
<PAGE> 7
THE EXCHANGE OFFERS
Old Notes..................... On May 13, 1999, we completed the offering of
$425,000,000 aggregate principal amount of our
9 1/4% Senior Notes due 2006 and $200,000,000
aggregate principal amount of our 10 1/2%
Senior Subordinated Notes due 2009 to SG Cowen
Securities Corporation, Salomon Smith Barney
Inc., BT Alex. Brown Incorporated, NationsBanc
Montgomery Securities LLC, BancBoston Robertson
Stephens Inc. and Prudential Securities
Incorporated, as initial purchasers. The
initial purchasers sold the old Notes to
"qualified institutional buyers" as defined in
Rule 144A under the Securities Act of 1933. We
have filed the registration statement of which
this prospectus is a part to comply with a
registration rights agreement between us and
the initial purchasers.
Exchange Offers............... We are offering to exchange the old Senior
Notes for new Senior Notes in the aggregate
principal amount of up to $425,000,000 provided
that the old Senior Notes are properly tendered
and accepted for exchange. We are also offering
to exchange the old Senior Subordinated Notes
for new Senior Subordinated Notes in the
aggregate principal amount of up to
$200,000,000 provided that the old Senior
Subordinated Notes are properly tendered and
accepted for exchange. We will issue the new
Notes promptly after the expiration of the
exchange offers. If you are not prohibited from
participating in the exchange offers and you do
not tender your old Notes prior to the
completion of the exchange offers, you will
have no further exchange rights under the
registration rights agreements. Accordingly,
any old Notes that are not tendered for
exchange will continue to be subject to
restrictions on transfer. See "Risk
Factors -- Consequences of Not Tendering Old
Notes."
Expiration Date............... The exchange offers will expire at 5:00 p.m.,
New York City time, on January , 1999, or on
a later extended date and time as we may
decide.
Conditions to the Exchange
Offers........................ The exchange offers are subject to certain
customary conditions. The conditions are
limited and relate in general to proceedings or
laws that might impair our ability to proceed
with the exchange offers. As of the date of
this prospectus, none of these events had
occurred, and we believe their occurrence to be
unlikely. If any such conditions do exist prior
to the expiration date, we may take the
following actions:
- refuse to accept any old Notes and return all
previously tendered old Notes;
- extend the duration of the exchange offers;
or
- waive such conditions.
Procedures for Tendering Old
Notes......................... If you wish to participate in the exchange
offers, you must complete, sign and date the
letter of transmittal and send it, together
with your old Notes to be exchanged and any
other
2
<PAGE> 8
required documentation to State Street Bank and
Trust Company, as exchange agent, at the
address set forth in the letter of transmittal.
Brokers, dealers, commercial banks, trust
companies and other nominees may tender old
Notes which they hold as nominee by book-entry
transfer. Questions regarding the tender of the
old Notes or the exchange offer, generally,
must be directed to the exchange agent.
Special Procedures
for Beneficial Owners......... If you are the beneficial owner of old Notes
which are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee and you wish to tender the old Notes in
the exchange offers, you should contact such
registered holder promptly and instruct such
registered holder to tender the old Notes on
your behalf. If you wish to tender on your own
behalf, you must, prior to completing and
executing the letter of transmittal and
delivering the old Notes, either make
appropriate arrangements to register ownership
of the old Notes in your own name or obtain a
properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time and it may
not be possible to complete prior to the
expiration date.
Guaranteed Delivery
Procedures.................... If you wish to tender your old Notes and your
old Notes are not immediately available or you
cannot deliver your old Notes, the letter of
transmittal or any other documents required by
the letter of transmittal to the exchange
agent, or you cannot complete the procedure for
book-entry transfer, then prior to the
expiration date you must tender your old Notes
according to the guaranteed delivery procedures
set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures."
Withdrawal Rights............. Tenders of old Notes may be withdrawn at any
time before 5:00 p.m., New York City time, on
the expiration date by delivering a written
notice of such withdrawal to the exchange agent
in conformity with the procedures set forth
under "The Exchange Offer -- Withdrawal of
Tenders."
Acceptance of Old Notes and
Delivery of New Notes......... Subject to the satisfaction or waiver of the
conditions of the exchange offers, we will
accept for exchange any and all old Notes that
are properly tendered in the exchange offers
before 5:00 p.m., New York City time, on the
expiration date. We will deliver the new Notes
promptly following the expiration date. If we
do not accept any of your old Notes for
exchange, we will return them to you as
promptly as practicable after the expiration or
termination of the exchange offer without any
expense to you.
Certain Tax Considerations.... The exchange pursuant to the exchange offers
should not result in the recognition of income,
gain or loss to you or to us for federal income
tax purposes. See "Federal Income Tax
Consideration" for a discussion of the material
federal income tax consequences of the exchange
offers.
3
<PAGE> 9
Exchange Agent................ State Street Bank and Trust Company, the
trustee under the Indentures, is serving as
exchange agent in connection with the exchange
offers.
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
If you do not exchange your old Notes for new Notes, you will be unable to
offer, sell or otherwise transfer your old Notes except:
- in compliance with the registration requirements of the Securities Act and
any other applicable securities laws; or
- pursuant to an exemption therefrom; or
- in a transaction not subject to such securities laws.
Old Notes that you do not exchange for new Notes in the exchange offers will
continue to bear a legend reflecting such restrictions on transfer. In addition,
upon consummation of the exchange offers, you will not be entitled to any rights
to have old Notes registered under the Securities Act. We do not intend to
register under the Securities Act any old Notes that remain outstanding after
completion of the exchange offers (subject to limited exceptions, if
applicable).
To the extent that old Notes are tendered and accepted in the exchange
offers, any trading market for old Notes that remain outstanding after the
exchange offers could be adversely affected. See "Risk Factors -- Consequences
of Not Tendering Old Notes."
The new Senior Notes and any old Senior Notes that remain outstanding after
consummation of the exchange offers will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding principal amount thereof have taken certain actions or exercised
certain rights under the indenture. The new Senior Subordinated Notes and any
old Senior Subordinated Notes that remain outstanding after consummation of the
exchange offers will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding principal amount
thereof have taken certain actions or exercised certain rights under the
indenture.
TERMS OF NEW SENIOR NOTES
One offer applies to up to $425,000,000 aggregate principal amount of our
old Senior Notes. The new Senior Notes will evidence the same debt as the old
Senior Notes and will be entitled to the benefits of the same indenture as the
old Senior Notes. The terms of the new Senior Notes are the same as the terms of
the old Senior Notes in all material respects except that the new Senior Notes:
- have been registered under the Securities Act,
- do not include certain rights to registration under the Securities Act,
and
- do not contain transfer restrictions or terms with respect to additional
interest payments applicable to the old Senior Notes.
New Senior Notes Offered...... $425,000,000 in aggregate principal amount of
9 1/4% Senior Notes due 2006.
Maturity...................... May 1, 2006.
Interest...................... Interest on the new Senior Notes will accrue at
the rate of 9 1/4% per annum and will be
payable in cash in arrears semi-annually on
4
<PAGE> 10
May 1 and November 1 of each year, commencing
on November 1, 1999.
Ranking....................... The new Senior Notes will be our unsecured
senior debt and will have the same ranking as
the old Senior Notes:
N The new Senior Notes will be effectively
subordinated to all of our existing and
future secured debt, if any, to the extent of
such security and to all existing and future
debt and other liabilities of our
subsidiaries, including trade payables;
N The new Senior Notes will rank equally with
all of our existing and future unsecured
senior debt (including the old Senior Notes);
and
N The new Senior Notes will rank senior to all
of our existing and future debt that
expressly provides that it is subordinated to
the Senior Notes, including the Senior
Subordinated Notes and our outstanding 5 3/4%
Convertible Subordinated Notes due 2003 (the
"Convertible Notes").
At September 30, 1999, the old Senior Notes
were:
N effectively subordinated to $13.5 million of
senior secured debt and $242.1 million of
liabilities of our subsidiaries;
N ranked equally with no amount of senior debt;
and
N senior to $406.9 million of subordinated
debt, including the Senior Subordinated Notes
and the Convertible Notes.
Optional Redemption........... At any time prior to May 1, 2003, we may redeem
some or all of the new Senior Notes at
redemption prices equal to the greater of: (1)
100% of their principal amount or (2) the sum
of the present value of 100% of the principal
amount plus all required interest payments due
on such new Senior Notes (excluding accrued but
unpaid interest) discounted to the maturity
date using a discount rate equal to the
treasury yield plus 50 basis points plus
accrued and unpaid interest (including certain
additional interest) to, but excluding, the
date of redemption. See "Description of the
Notes -- Description of the Senior Notes" under
the heading "Optional Redemption."
On or after May 1, 2003, we may redeem some or
all of the new Senior Notes at any time at the
redemption prices listed, and subject to
certain limitations described, in the section
entitled "Description of the
Notes -- Description of the Senior Notes" under
the heading "Optional Redemption."
Mandatory Offer to
Repurchase.................... If we sell certain assets or experience a
Change of Control (as defined in the Senior
Notes Indenture), we must offer to repurchase
the new Senior Notes at the prices listed in
the section entitled "Description of
Notes -- Description of the Senior Notes" under
the heading "Repurchase at the Option of
Holders."
5
<PAGE> 11
Basic Covenants of the old and
new Senior Notes Indenture.... We will issue the new Senior Notes under an
indenture (the "Senior Notes Indenture") with
State Street Bank and Trust Company, as Senior
Notes Trustee. The Senior Notes Indenture will,
among other things, restrict our ability and
the ability of our subsidiaries to:
N incur additional indebtedness;
N pay dividends, repurchase stock, prepay
subordinated debt and make investments and
other restricted payments;
N create restrictions on the ability of our
subsidiaries to pay dividends or make other
payments;
N engage in sale and leaseback transactions;
N create liens;
N enter into transactions with affiliates; and
N sell assets or merge with or into other
companies.
These covenants are subject to important
exceptions which are described in the section
entitled "Description of the
Notes -- Description of the Senior Notes" under
the heading "Certain Covenants."
TERMS OF NEW SENIOR SUBORDINATED NOTES
The other exchange offer applies to up to $200,000,000 aggregate principal
amount of our old Senior Subordinated Notes. The new Senior Subordinated Notes
will evidence the same debt as the old Senior Subordinated Notes and will be
entitled to the benefits of the same indenture as the old Senior Subordinated
Notes. The terms of the new Senior Subordinated Notes are the same as the terms
of the old Subordinated Senior Notes in all material respects except that the
new Senior Subordinated Notes:
- have been registered under the Securities Act,
- do not include certain rights to registration under the Securities Act,
and
- do not contain transfer restrictions or terms with respect to additional
interest payments applicable to the old Notes.
New Senior Subordinated Notes
Offered....................... $200,000,000 in aggregate principal amount of
10 1/2% Senior Subordinated Notes due 2009.
Maturity...................... May 1, 2009.
Interest...................... Interest on the new Senior Subordinated Notes
will accrue at the rate of 10 1/2% per annum
and will be payable in cash in arrears semi-
annually on May 1 and November 1 of each year,
commencing on November 1, 1999.
Ranking....................... The new Senior Subordinated Notes will be our
unsecured senior subordinated debt and will
have the same ranking as the old Senior
Subordinated Notes:
N The new Senior Subordinated Notes will rank
junior to all of our existing and future debt
(other than our trade payables and $207
million of our Convertible Notes), including
the Senior Notes,
6
<PAGE> 12
unless the terms of that debt expressly
provide that it ranks equal with, or is
subordinated in right of payment to, the new
Senior Subordinated Notes; and
N The new Senior Subordinated Notes will be
effectively subordinated to all existing and
future debt and other liabilities of our
subsidiaries, including trade payables.
At September 30, 1999, the old Senior
Subordinated Notes were:
N subordinated to $438.5 million of senior
debt, including the Senior Notes;
N effectively subordinated to $242.1 million of
liabilities of our subsidiaries; and
N senior to $206.9 million of subordinated
debt, including the Convertible Notes.
Optional Redemption........... At any time prior to May 1, 2002, we may redeem
up to 35% of the new Senior Subordinated Notes
with the cash proceeds of equity offerings of
our common stock at a price equal to 110.50% of
the principal amount of the new Senior
Subordinated Notes so redeemed plus accrued and
unpaid interest, if any, subject to certain
conditions described in the section entitled
"Description of the Notes -- Description of the
Senior Subordinated Notes" under the heading
"Optional Redemption."
On or after May 1, 2004, we may redeem some or
all of the new Senior Subordinated Notes at any
time at the redemption prices listed, and
subject to certain limitations described, in
the section entitled "Description of the
Notes -- Description of the Senior Subordinated
Notes" under the heading "Optional Redemption."
Mandatory Offer to
Repurchase.................... If we sell certain assets or experience a
Change of Control (as defined in the indenture
governing the new Senior Subordinated Notes),
we must offer to repurchase the new Senior
Subordinated Notes at the prices listed in the
section entitled "Description of the Notes --
Description of the Senior Subordinated Notes"
under the heading "Repurchase at the Option of
Holders."
Basic Covenants of the old and
new Senior Subordinated Notes
Indenture................... We will issue the new Senior Subordinated Notes
under an indenture (the "Senior Subordinated
Notes Indenture") with State Street Bank and
Trust Company, as Senior Subordinated Notes
Trustee. The Senior Subordinated Notes
Indenture will, among other things, restrict
our ability and the ability of our subsidiaries
to:
N incur additional indebtedness;
N pay dividends, repurchase stock, prepay
subordinated debt and make investments and
other restricted payments;
N create restrictions on the ability of our
subsidiaries to pay dividends or make other
payments;
N create liens;
N enter into transactions with affiliates; and
N sell assets or merge with or into other
companies.
7
<PAGE> 13
These covenants are subject to important
exceptions which are described in the section
entitled "Description of the
Notes -- Description of the Senior Subordinated
Notes" under the heading "Certain Covenants."
TERMS COMMON TO NEW SENIOR NOTES AND NEW SENIOR SUBORDINATED NOTES.
Registration Rights........... Holders of the new Notes (other than as set
forth below) are not entitled to any
registration rights with respect to the new
Notes. Pursuant to the registration rights
agreement among the initial purchasers of the
old Notes and us, we agreed to file an exchange
offer registration statement with respect to an
offer to exchange the old Notes for the new
Notes. The registration statement of which this
prospectus is a part constitutes such exchange
offer registration statement. Under certain
circumstances, certain holders of old Notes
(including holders of old Notes who may not
participate in the exchange offer) may in
certain circumstances require us to file, and
cause to become effective, a shelf registration
statement under the Securities Act which would
cover resales of old Notes by such holders.
Use of Proceeds............... We will not receive any proceeds from the
exchange offer.
RISK FACTORS
You should carefully consider all the information set forth in this
prospectus and, in particular, you should evaluate the specific risk factors set
forth under "Risk Factors," beginning on page 11, for a discussion of certain
risks involved in making an investment in the new Senior Notes and the new
Senior Subordinated Notes.
8
<PAGE> 14
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth summary historical income statement and other
financial data determined in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"). We have derived the summary historical financial data
from our consolidated financial statements.
You should read the following table in conjunction with our Annual Report on
Form 10-K and the other documents incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues...................... $572,918 $932,382 $1,171,001 $1,455,761 $1,567,983
Cost of revenues -- including
purchases from ASI............... 514,648 783,335 1,022,078 1,242,669 1,307,150
-------- -------- ---------- ---------- ----------
Gross profit..................... 58,270 149,047 148,923 213,092 260,833
Selling, general and
administrative................... 41,337 55,459 66,625 103,726 119,846
Research and development.......... 3,090 8,733 10,930 8,525 8,251
-------- -------- ---------- ---------- ----------
Operating income................. 13,843 84,855 71,368 100,841 132,736
Interest expense, net............. 5,752 9,797 22,245 32,241 18,005
Foreign currency (gain) loss...... (4,865) 1,512 2,961 (835) 4,493
Other (income) expense, net....... (877) 6,523 3,150 8,429 9,503
-------- -------- ---------- ---------- ----------
Income before income taxes,
equity in income (loss) of ASI
and minority interest.......... 13,833 67,023 43,012 61,006 100,735
Provision for income taxes(a)..... 2,977 6,384 7,876 7,078 24,716
Equity in income (loss) of
ASI(b)........................... 1,762 2,808 (1,266) (17,291) --
Minority interest(c).............. 1,044 1,515 948 (6,644) 559
-------- -------- ---------- ---------- ----------
Net income (loss)(a)............. $ 11,574 $ 61,932 $ 32,922 $ 43,281 $ 75,460
======== ======== ========== ========== ==========
Basic net income per common
share(g)......................... $ .14 $ .75 $ .40 $ .52 $ .71
======== ======== ========== ========== ==========
Diluted net income per common
share(g)......................... $ .14 $ .75 $ .40 $ .52 $ .70
======== ======== ========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA(d)......................... $ 29,332 $104,946 $ 126,043 $ 174,276 $ 241,256
Depreciation and amortization..... $ 14,612 $ 26,614 $ 57,825 $ 81,864 $ 119,239
Capital expenditures, excluding
acquisition of K4 assets......... $ 68,926 $123,645 $ 185,112 $ 178,990 $ 107,889
Ratio of earnings to fixed
charges(e)....................... 2.0x 4.6x 2.4x 2.5x 4.4x
<CAPTION>
PRO FORMA
UNAUDITED(H)
NINE MONTHS ENDED ----------------------------
SEPTEMBER 30, NINE MONTHS
(UNAUDITED) YEAR ENDED ENDED
----------------------- DECEMBER 31, SEPTEMBER 30,
1998 1999 1998 1999
---------- ---------- ------------ -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues...................... $1,143,175 $1,371,698 $1,577,594 $1,374,927
Cost of revenues -- including
purchases from ASI............... 948,920 1,144,871 1,318,222 1,142,202
---------- ---------- ---------- ----------
Gross profit..................... 194,255 226,827 259,372 232,725
Selling, general and
administrative................... 87,671 105,499 127,046 107,843
Research and development.......... 6,104 8,084 9,417 8,620
---------- ---------- ---------- ----------
Operating income................. 100,480 113,244 122,909 116,262
Interest expense, net............. 16,503 29,429 84,005 54,177
Foreign currency (gain) loss...... 3,833 151 4,493 151
Other (income) expense, net....... 7,092 6,225 9,232 6,338
---------- ---------- ---------- ----------
Income before income taxes,
equity in income (loss) of ASI
and minority interest.......... 73,052 77,439 25,179 55,596
Provision for income taxes(a)..... 16,688 20,906 8,316 14,339
Equity in income (loss) of
ASI(b)........................... -- -- (71,633) (196)
Minority interest(c).............. 559 -- 559 --
---------- ---------- ---------- ----------
Net income (loss)(a)............. $ 55,805 $ 56,533 $ (55,329) $ 41,061
========== ========== ========== ==========
Basic net income per common
share(g)......................... $ .55 $ .48 $ (.52) $ .35
========== ========== ========== ==========
Diluted net income per common
share(g)......................... $ .53 $ .47 $ (.52) $ .35
========== ========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA(d)......................... $ 179,628 $ 232,059 $ 286,537 $ 256,400
Depreciation and amortization..... $ 86,998 $ 126,211 $ 176,670 $ 148,621
Capital expenditures, excluding
acquisition of K4 assets......... $ 80,494 $ 175,806 $ 134,885 $ 178,489
Ratio of earnings to fixed
charges(e)....................... 4.0x 2.9x 1.3x 1.9x
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, 1999 1999
1997 1998 (UNAUDITED) PRO FORMA UNAUDITED
------------ ------------ -------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 90,917 $ 227,587 $ 81,921 $ 40,321
Short-term investments............................. 2,524 1,000 205,871 205,871
Working capital (deficit).......................... (38,219) 191,383 214,951 173,351
Total assets....................................... 855,592 1,003,597 1,748,128 1,748,128
Total debt, including current maturities(f)........ 514,027 260,503 868,364 868,364
Stockholders' equity............................... 90,875 490,361 548,317 548,317
</TABLE>
9
<PAGE> 15
- ---------------------------
(a) Prior to our reorganization in April 1998, our predecessor, Amkor
Electronics, Inc. ("AEI"), elected to be taxed as an S Corporation under the
Internal Revenue Code of 1986 (the "Code") and comparable state tax laws. As
a result, AEI did not recognize any provision for federal income tax expense
from January 1, 1994 through April 28, 1998. In accordance with applicable
SEC regulations, we have provided in our consolidated financial statements
the pro forma adjustments for income taxes (unaudited) to reflect the
additional U.S. federal income taxes which we would have recorded if AEI had
been a C Corporation during these periods. We do not reflect these
adjustments in our Summary Historical Consolidated Financial Data. The pro
forma provision for income taxes would have been $3,177, $16,784, $10,776,
$10,691, $29,216 and $21,188 for the years ended December 31, 1994, 1995,
1996, 1997, 1998 and the nine months ended September 30, 1998, respectively.
Pro forma net income would have been $11,374, $51,532, $30,022, $39,668,
$70,960 and $51,305 for the years ended December 31, 1994, 1995, 1996, 1997,
1998 and the nine months ended September 30, 1998, respectively. Basic pro
forma net income per common share would have been $.14, $.62, $.36, $.48,
$.67 and $.50 for the years ended December 31, 1994, 1995, 1996, 1997, 1998
and the nine months ended September 30, 1998, respectively. Diluted pro
forma net income per common share would have been $.14, $.62, $.36, $.48,
$.66 and $.49 for the years ended December 31, 1994, 1995, 1996, 1997, 1998
and the nine months ended September 30, 1998, respectively. On a pro forma
basis to give effect to the Transaction and the Investment as if they had
occurred on January 1, 1998, net loss would have been $59,829 for the year
ended December 31, 1998. Basic and diluted pro forma net loss per common
share would have both been $(.56) for the year ended December 31, 1998 on a
pro forma basis to give effect to the Transaction and the Investment as if
they had occurred on January 1, 1998. Refer to Note (g) for share
information used to compute per share data.
(b) We disposed of our interest in ASI in February 1998. In 1997, we recognized
a loss of $17,291 resulting principally from the impairment of value of our
investment in ASI, which we sold in February 1998. On a pro forma basis, we
recognized a loss of $71,633 in 1998, principally due to ASI's impairment
loss on loans to affiliates and guarantee obligation loss.
(c) Represents ASI's 40% interest in the earnings of Amkor/Anam Pilipinas, Inc.
("AAP"), one of our subsidiaries in the Philippines. We purchased ASI's
interest in AAP with a portion of the proceeds from our initial public
offering in May 1998.
(d) We have calculated EBITDA by adding: (1) income before income taxes, equity
in income (loss) of ASI and minority interest, (2) foreign currency (gain)
loss, (3) interest expense, net and (4) depreciation and amortization. For
the nine months ended September 30, 1999, we have also added $1,340 of
equity in the loss of our investment in TSTC for purposes of calculating
EBITDA. We have included data concerning EBITDA because we understand that
investors use it to provide information regarding our historical ability to
service debt. EBITDA is not determined in accordance with U.S. GAAP. EBITDA
is not indicative of cash flows from operating activities, and you should
not consider EBITDA in isolation, or as an alternative to, or more
meaningful than, measures of performance determined in accordance with U.S.
GAAP. In addition, EBITDA, as defined here, may not be comparable to
similarly titled measures used by other companies.
(e) We have calculated the ratio of earnings to fixed charges by dividing: (1)
the sum of (a) income (loss) before income taxes, equity in income (loss) of
ASI and minority interest less (b) undistributed earnings in subsidiaries of
which we own less than 50% plus (c) fixed charges by (2) fixed charges.
Fixed charges consist of interest expense plus one-third of rental expense.
We believe that one-third of rental expense is representative of the
interest factor of rental payments under our operating leases.
(f) Includes short-term borrowings and current portion of long-term debt.
Balance as of December 31, 1997 includes amounts due to Anam USA, Inc.
("AUSA"), a wholly-owned financing subsidiary of ASI. Prior to our initial
public offering, we met a portion of our cash requirements from financing
obtained for our benefit by AUSA. At December 31, 1998 and September 30,
1999, we had no outstanding borrowings from AUSA.
(g) We used 82,610 shares of common stock and common stock and common stock
equivalents to compute both basic and diluted net income per common share
for the years ended December 31, 1994, 1995, 1996 and 1997. We used 106,221
shares of common stock and 116,596 shares of common stock and common stock
equivalents to compute basic and diluted net income per common share,
respectively, for the year ended December 31, 1998. We used 102,284 shares
of common stock and 110,933 shares of common stock and common stock
equivalents to compute basic and diluted net income per common share,
respectively, for the nine months ended September 30, 1998. We used 118,090
shares of common stock and 134,079 shares of common stock and common stock
equivalents to compute basic and diluted net income per common share,
respectively, for the nine months ended September 30, 1999. We used 106,221
shares of common stock to compute basic and diluted net income per common
share on a pro forma basis to give effect to the Transaction and the
Investment for the year ended December 31, 1998. We
10
<PAGE> 16
used 118,090 shares of common stock and 118,748 shares of common stock and
common stock equivalents to compute basic and diluted net income,
respectively, on a pro forma basis to give effect to the Transaction and the
Investment for the nine month period ended September 30, 1999.
(h) You should read other documents incorporated by reference in this prospectus
for information regarding the unaudited pro forma consolidated financial
information for the year ended December 31, 1998 and the nine months ended
September 30, 1999.
11
<PAGE> 17
RISK FACTORS
You should carefully consider the risks described below and the other
information contained or incorporated by reference in this prospectus before
tendering your old Notes for exchange. The risks and uncertainties described
below are not the only ones facing our company. Additional risks and
uncertainties that are presently unknown to us or that we currently deem
immaterial may also impair our business operations. We cannot assure you that
any of the events discussed in the risk factors below will not occur. If they
do, our business, financial condition or results of operations could be
materially adversely affected. In such case, the trading price of our securities
could decline, and you might lose all or part of your investment. You should
also carefully consider the risks described in "Risk Factors that May Affect
Future Operating Performance" in the section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operation" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and other
documents incorporated by reference in this prospectus.
This prospectus contains forward-looking statements made as of the date of
this prospectus regarding our expected performance that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
the risks faced by us described below and elsewhere in this prospectus.
RISKS RELATED TO AN INVESTMENT IN THE NOTES
HIGH LEVERAGE AND RESTRICTIVE COVENANTS -- OUR SUBSTANTIAL INDEBTEDNESS COULD
ADVERSELY AFFECT THE FINANCIAL HEALTH OF OUR COMPANY AND PREVENT US FROM
FULFILLING OUR OBLIGATIONS UNDER THE NEW NOTES.
Substantial Leverage
We have a significant amount of indebtedness. The following table shows
certain important financial data and credit statistics:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1999
---------------------
<S> <C>
Total debt, including current maturities.................... $868,364
--------
Stockholders' equity........................................ 548,317
--------
Ratio of total debt to stockholders' equity................. 1.6X
--------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
-----------------------------
<S> <C>
Ratio of EBITDA to cash interest expense, net............... 8.6X
--------
</TABLE>
Covenants in the Senior Notes Indenture, the Senior Subordinated Notes
Indenture and our future credit facilities may materially restrict our
operations, including our ability to incur debt, pay dividends, make certain
investments and encumber or dispose of assets. In addition, financial covenants
contained in agreements relating to our existing and future senior debt and
senior secured debt could lead to a default in the event our results of
operations do not meet our plans. In the event of any default under covenants
contained in agreements relating to our senior debt, including the Senior Notes,
we could be prohibited from making payments of interest or principal on the new
Senior Subordinated Notes.
Our substantial indebtedness could have important consequences to holders of
the new Notes. For example, it could:
N make it more difficult for us to satisfy our obligations with respect to the
new Senior Notes and the new Senior Subordinated Notes;
N increase our vulnerability to general adverse economic and industry
conditions;
12
<PAGE> 18
N limit our ability to fund future working capital, capital expenditures,
research and development and other general corporate requirements;
N require us to dedicate a substantial portion of our cash flow from operations
to service payments on our debt;
N limit our flexibility to react to changes in our business and the industry in
which we operate;
N place us at a competitive disadvantage to any of our competitors that have
less debt; and
N limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds.
Failing to comply with those covenants could result in an event of default,
which, if not cured or waived, could have a material adverse effect on us.
Ability to Service Debt
Our ability to make payments on and to refinance our debt, including the new
Senior Notes and the new Senior Subordinated Notes, and to fund planned capital
expenditures and research and development efforts will depend on our ability to
generate cash in the future. Our ability to generate cash may be subject to
general economic, financial, competitive, legislative and regulatory conditions
and other factors that are beyond our control.
We cannot assure you that our business will generate cash in an amount
sufficient to enable us to service our debt, including the new Senior Notes and
the new Senior Subordinated Notes, or to fund our other liquidity needs. We
expect that substantial amounts of our debt will come due prior to the final
maturity date of the new Senior Notes and the new Senior Subordinated Notes,
which we will be required to repay or refinance. The Convertible Notes will
mature prior to the new Notes on May 1, 2003 and will be payable in cash unless
the holders of the Convertible Notes elect to convert the principal amount of
such notes into our common stock. In addition, we may need to refinance all or a
portion of our debt, including the new Notes, on or before maturity. We cannot
assure you that we will be able to refinance any of our debt on commercially
reasonable terms or at all.
Additional Borrowings Available
Despite current debt levels, the terms of the Senior Notes Indenture and the
Senior Subordinated Notes Indenture do not prohibit us or our subsidiaries from
incurring substantially more debt. If new debt is added to our consolidated debt
level, the related risks that we now face could intensify.
EFFECTIVE SUBORDINATION OF THE NEW SENIOR NOTES TO SENIOR SECURED DEBT -- THE
NEW SENIOR NOTES ARE EFFECTIVELY SUBORDINATED TO OUR EXISTING SENIOR SECURED
DEBT.
The new Senior Notes are not secured. Holders of secured debt will have
claims that are prior to claims of holders of new Senior Notes to the extent of
the assets securing such other debt. At September 30, 1999, the old Senior Notes
were effectively subordinated to $13.5 million of secured debt without providing
holders of the Senior Notes or the Senior Subordinated Notes collateral on a
pari passu basis or at all. Under the terms of the Indentures, we are permitted
to incur additional secured debt without providing holders of the Senior Notes
or the Senior Subordinated Notes collateral on a pari passu basis or at all.
13
<PAGE> 19
EFFECTIVE SUBORDINATION OF THE NEW SENIOR NOTES AND THE NEW SENIOR SUBORDINATED
NOTES TO LIABILITIES OF OUR SUBSIDIARIES -- YOUR RIGHT TO RECEIVE PAYMENTS ON
THE NEW NOTES FROM FUNDS PROVIDED BY OUR SUBSIDIARIES IS JUNIOR IN RIGHT OF
PAYMENT TO THE CLAIMS OF THE CREDITORS OF OUR SUBSIDIARIES.
None of our subsidiaries will initially guarantee the new Senior Notes or
the new Senior Subordinated Notes, and we currently have no plans to have any
subsidiary guarantee the new Senior Notes or the new Senior Subordinated Notes.
Because a large portion of our operations are conducted through, and
substantially all of our assets are owned by, our subsidiaries, the new Senior
Notes and the new Senior Subordinated Notes will be effectively subordinated to
all existing and future liabilities of our subsidiaries. Earnings generated by
any of our subsidiaries, as well as the existing assets of such subsidiaries,
must be used by such subsidiaries to fulfill their debt service requirements and
other obligations before we can use them to repay our outstanding debts and
obligations. In the event of a bankruptcy, liquidation or reorganization of any
of our subsidiaries, holders of their debt and their trade creditors will
generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to us. At
September 30, 1999, the new Senior Notes and the new Senior Subordinated Notes
were effectively subordinated to $242.1 million of liabilities (including trade
payables) of our subsidiaries. Our subsidiaries generated approximately 57% of
our gross profit for the nine months ended September 30, 1999 and held
approximately 72% of our consolidated assets as of September 30, 1999. After
giving pro forma effect to the Transaction, our subsidiaries would have
generated approximately 58% of our gross profit for the nine months ended
September 30, 1999.
SUBORDINATION OF THE NEW SENIOR SUBORDINATED NOTES -- THE RIGHT OF THE HOLDERS
OF THE NEW SENIOR SUBORDINATED NOTES TO RECEIVE PAYMENTS ON THE NEW SENIOR
SUBORDINATED NOTES IS JUNIOR TO OUR SENIOR DEBT, INCLUDING THE SENIOR NOTES.
The new Senior Subordinated Notes will rank junior in right of payment to
all of our existing and future debt (other than our trade payables and the
Convertible Notes), including the Senior Notes, unless the terms of that debt
expressly provide that it ranks equal with, or subordinated in right of payment
to, the new Senior Subordinated Notes. As a result, upon any distribution to our
creditors in a bankruptcy, liquidation or reorganization or similar proceeding,
the holders of our senior debt, including the Senior Notes, will be entitled to
be paid in full before any payment may be made with respect to the new Senior
Subordinated Notes. In addition, all payments on the new Senior Subordinated
Notes will be blocked in the event of a payment default on senior debt,
including the Senior Notes, and may be blocked for up to 179 of 360 consecutive
days in the event of certain non-payment defaults on senior debt, including the
Senior Notes.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the new Senior Subordinated Notes will
participate with trade creditors and all other holders of our subordinated debt
in the assets remaining after we have paid all of the senior debt, including the
Senior Notes. However, because the Senior Subordinated Notes Indenture requires
that amounts otherwise payable to holders of the new Senior Subordinated Notes
in a bankruptcy or similar proceeding be paid to holders of senior debt until
the holders of senior debt have been paid in full, holders of the Senior
Subordinated Notes may receive less, ratably, than holders of trade payables in
any such proceeding. In any of these cases, we may not have sufficient funds to
pay all of our creditors, and holders of Senior Subordinated Notes may receive
less, ratably, than the holders of senior debt, including the Senior Notes.
At September 30, 1999, the new Senior Subordinated Notes were subordinate to
$438.5 million of senior debt, including the Senior Notes. We will be permitted
to borrow substantial additional senior debt in the future under the terms of
the Indentures.
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FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURES.
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding Senior Notes and
Senior Subordinated Notes. However, it is possible that we will not have
sufficient funds at the time of the change of control to make the required
repurchases of Senior Notes and Senior Subordinated Notes or that restrictions
in our future credit facilities may not allow such repurchases. If we do not
have sufficient funds to repurchase all of the Notes, we will be required to
repurchase the Senior Notes before offering to repurchase any of the Senior
Subordinated Notes. In addition, certain important corporate events, such as
leveraged recapitalizations that would increase the level of our indebtedness,
would not constitute a "Change of Control" under the Indentures.
CONSEQUENCES OF NOT TENDERING OLD NOTES -- IF YOU DO NOT TENDER YOUR OLD NOTES,
YOU WILL CONTINUE TO HOLD RESTRICTED SECURITIES.
Upon consummation of the exchange offers, we will have no further obligation
to register your old Notes, except under limited circumstances. Thereafter, if
you do not tender your old Notes in the exchange offer, you will continue to
hold restricted securities which may not be offered, sold or otherwise
transferred, pledged or hypothecated except pursuant to Rule 144 and Rule 144A
under the Securities Act or pursuant to any other exemption from registration
under the Securities Act relating to the disposition of securities, provided
that an opinion of counsel is furnished to us that such an exemption is
available. These restrictions will likely limit the trading market and price for
the old Notes.
LACK OF PUBLIC MARKET -- BECAUSE THERE IS NO PUBLIC MARKET FOR THE NEW NOTES,
YOU MAY FIND IT DIFFICULT TO SELL THE NEW NOTES.
The new Notes are being offered to the holders of the old Notes. Prior to
this exchange offer, there has been no existing trading market for any of the
old Notes, and a trading market may not develop for the new Notes. We do not
intend to apply for listing of the new Notes on any securities exchange or on
the Nasdaq National Market. The new Notes may trade at a discount from their
initial offering price, depending upon prevailing interest rates, the market for
similar securities, our performance and other factors. In connection with the
issuance of the old Notes, we were advised by the initial purchasers that they
intended to make a market in the new Notes. However, the initial purchasers are
not obligated to do so and any such market-making activities may be discontinued
at any time without notice. Therefore, we cannot assure you that an active
market for the new Notes will develop.
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USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new Notes
offered in exchange for old Notes. The old Notes will be exchanged for new Notes
of like principal amount. Old Notes that are exchanged will be retired and
canceled.
OUR INDEBTEDNESS AND FINANCING AGREEMENTS
As of September 30, 1999, the principal amount of all our indebtedness,
calculated on a consolidated basis, was approximately $868.4 million.
In June of 1997, Amkor Receivables Corp., our wholly-owned special purpose
subsidiary, entered into a receivables facility (the "Receivables Facility"),
with The First National Bank of Chicago and Falcon Asset Securitization Corp.
("Falcon"), a receivables conduit, for the purpose of selling receivables
originated by us. Pursuant to the Receivables Facility, all of our receivables
(but not including receivables of any of our subsidiaries) are sold to Amkor
Receivables Corp. for a discount to their face amount. Amkor Receivables Corp.
has the right to sell an undivided interest in the pool of receivables held by
it to Falcon for an aggregate purchase price not to exceed $100 million at any
one time (subject to eligible receivable and certain other requirements). The
Receivables Facility provides for receivables financings through December 29,
1999. The Receivables Facility has affirmative and negative covenants applicable
to us and our subsidiaries.
We have outstanding $128 million of aggregate principal of the Convertible
Notes as of November 5, 1999. The holders have the option to convert the
Convertible Notes into our common stock at any time prior to maturity on May 1,
2003 at $13.50 per share. As of August 23, 1999 the closing sale price of our
stock on the Nasdaq National Market was $16.56 per share. We have the right to
redeem the Convertible Notes on or after May 3, 2001 at the redemption prices
specified in the indenture governing the Convertible Notes, conditioned upon the
closing price of our common stock being at or above 125% of the conversion price
of the Convertible Notes for at least 20 trading days within a period of 30
consecutive days ending on the fifth trading day prior to the date we mail the
notice of redemption. The holders of the Convertible Notes will have the right
to require us to repurchase the Convertible Notes following the occurrence of a
change of control or a termination of trading of our common stock.
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<PAGE> 22
THE EXCHANGE OFFERS
PURPOSES OF THE EXCHANGE OFFERS
In issuing the old Notes, we agreed to use our commercially reasonable
efforts to cause to become effective a registration statement with respect to
the exchange offer (the "Exchange Offer Registration Statement") on or prior to
December 9, 1999.
We will file with the Securities and Exchange Commission (the "SEC") a shelf
registration statement (the "Shelf Registration Statement") if:
(1) the exchange offers are not permitted by applicable law or SEC
policy; or
(2) any holder of old Notes notifies us prior to the 20th day following
the consummation of the exchange offers that:
(a) it is prohibited by law or SEC policy from participating in the
exchange offers; or
(b) it may not resell the new Notes it acquired in the exchange
offers to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate
or available for such resales; or
(c) it is a broker-dealer and owns old Notes acquired directly from
us or one of our affiliates.
The Shelf Registration Statement will cover resales of old Notes by holders who
have provided certain information required by us in connection with the Shelf
Registration Statement.
We are making the exchange offers to satisfy our obligations under the
registration rights agreements into which we entered in connection with the sale
of the Old Notes. Once the exchange offers are complete, we will have no further
obligation to register any of the old Notes not tendered by the holders for
exchange. See "Risk Factors -- Consequences of Not Tendering Old Notes." We
filed a copy of the registration rights agreements as an exhibit to the
registration statement of which this prospectus is a part.
RESALE OF THE NEW NOTES
We believe that new Notes issued in the exchange offers in exchange for old
Notes may be offered for resale, resold and otherwise transferred by their
holders without compliance with the registration and prospectus delivery
provisions of the Securities Act. Our belief is based on an interpretation by
the staff of the SEC set forth in the staff's Exxon Capital Holdings Corp. SEC
No-Action Letter (available April 13, 1989), Morgan Stanley & Co., Inc. SEC
No-Action Letter (available June 5, 1991), Shearman & Sterling SEC No-Action
Letter (available July 7, 1993), and other no-action letters issued to third
parties. Any holder who is an "affiliate" of ours or who intends to participate
in the exchange offers for the purpose of distributing the new Notes:
(1) cannot rely on the interpretation by the staff of the SEC set forth
in the above referenced no-action letters,
(2) cannot tender its old Notes in the exchange offer, and
(3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or transfer
of the old Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
In addition, each broker-dealer that holds old Notes acquired for its own
account as a result of market-making or other trading activities (a
"Participating Broker-Dealer") that receives new Notes for its own account in
exchange for old Notes not acquired directly from us must acknowledge that it
will deliver a prospectus in connection with any resale of such new Notes. See
"Plan of Distribution."
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Except as described above, this prospectus may not be used for an offer to
resell, resale or other transfer of new Notes.
TERMS OF THE EXCHANGE OFFERS
General. Upon the terms and subject to the conditions of the exchange offers
described in this prospectus and the letter of transmittal, we will accept any
and all old Notes validly tendered and not withdrawn before 5:00 p.m., New York
City time, on the expiration date. We will issue $1,000 principal amount of new
Senior Notes in exchange for each $1,000 principal amount of outstanding old
Senior Notes accepted in the exchange offers and $1,000 principal amount of new
Senior Subordinated Notes in exchange for each $1,000 principal amount of old
Senior Subordinated Notes accepted in the exchange offers. You may tender some
or all of your old Notes pursuant to the exchange offers. Old Notes may be
tendered only in integral multiples of $1,000 principal amount.
As of August 24, 1999, there was $425,000,000 aggregate principal amount of
the old Senior Notes outstanding and one registered holder of old Senior Notes.
Also as of August 24, 1999, there was $200,000,000 aggregate principal amount of
the old Senior Subordinated Notes and one registered holder of Senior
Subordinated Notes. We are sending this prospectus, together with the letter of
transmittal to such registered holders as of December , 1999.
We arranged for the old Notes to be issued and transferable in book-entry
form through the facilities of The Depository Trust Company acting as
depositary. The new Notes will also be issued and transferable in book-entry
form through DTC. See "-- Book-Entry Transfer; Delivery and Form."
We will accept validly tendered old Notes by giving oral (confirmed in
writing) or written notice of acceptance to the exchange agent. The exchange
agent will act as agent for the tendering holders of old Notes for the purpose
of receiving the new Notes from us.
If any tendered old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, the certificates for any such unaccepted old Notes will
be returned, without expense, to the holder tendering them or the appropriate
book-entry transfer will be made, in each case, as promptly as practicable after
the expiration date.
You will not be required to pay brokerage commissions or fees or, subject to
the instructions in the letter of transmittal, transfer taxes with respect to
the exchange of old Notes tendered in the exchange offers. We will pay the
expenses, other than certain applicable taxes, of the exchange offers.
WE ARE NOT MAKING, NOR IS OUR BOARD OF DIRECTORS MAKING, ANY RECOMMENDATION
TO YOU AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF
YOUR OLD NOTES IN THE EXCHANGE OFFERS. FURTHERMORE, NO ONE HAS BEEN AUTHORIZED
TO MAKE ANY SUCH RECOMMENDATION. YOU MUST MAKE YOUR OWN DECISION WHETHER TO
TENDER YOUR OLD NOTES IN THE EXCHANGE OFFERS AND, IF SO, THE AGGREGATE AMOUNT OF
OLD NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL
AND CONSULTING WITH YOUR ADVISERS, IF ANY, BASED ON YOUR OWN FINANCIAL POSITION
AND REQUIREMENTS.
Expiration Date; Extensions; Amendments. The "expiration date" is January
, 1999. In our sole discretion, we may extend either or both of the exchange
offers, in which case the term "expiration date" means the latest date to which
either exchange offer is extended.
To extend the expiration date, we will notify the exchange agent and the
record holders of old Notes of any extension by oral (followed by written)
notice, before 9:00 a.m., New York City time, on the business day following the
previously scheduled expiration date. We may extend the exchange offer for a
specified period of time or on a daily basis until 5:00 p.m., New York City
time, on the date on which a specified percentage of old Notes are tendered.
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<PAGE> 24
We reserve the right to delay accepting any old Notes, to extend the
exchange offers, to amend the exchange offers or to terminate the exchange
offers and not accept old Notes not previously accepted if any of the conditions
described below in "-- Conditions" occurs and is not waived. Waiver must be
given by oral (confirmed in writing) or written notice to the exchange agent as
promptly as practicable. If the exchange offers are amended in a manner we
determine to be material, we will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of such amendment. We will also
extend the exchange offers in such circumstances for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to holders of the old Notes, if the exchange offers would
otherwise expire during such five to ten business day period.
We have no obligation to publish, advertise, or otherwise communicate any
public announcement of any delay, extension, amendment or termination of the
exchange offers, other than by making a timely release to the Dow Jones News
Service. We may make such announcement in any additional ways at our discretion.
INTEREST ON THE NEW NOTES AND THE OLD NOTES
The old Senior Notes and old Senior Subordinated Notes will continue to
accrue interest at the rate of 9 1/4% per annum and 10 1/2% per annum,
respectively, through (but not including) the date new Notes are issued in
exchange for tendered old Notes. Any old Senior Notes or old Senior Subordinated
Notes not tendered or accepted for exchange will continue to accrue interest at
the rate of 9 1/4% per annum or 10 1/2% per annum, respectively, in accordance
with their terms. From and after the date of issuance of the new Senior Notes
and new Senior Subordinated Notes, the new Senior Notes and new Senior
Subordinated Notes will accrue interest at the rate of 9 1/4% per annum and
10 1/2% per annum, respectively, from the last date to which interest was paid
on the old Notes. Interest on the new Notes and any old Notes not tendered or
accepted for exchange will be payable semi-annually in arrears on March 1 and
November 1 of each year, commencing on November 1, 1999.
PROCEDURES FOR TENDERING
To tender in the exchange offer, you must follow these steps:
(a) complete, sign and date the letter of transmittal, or a facsimile of
it;
(b) have the signatures on the letter guaranteed if required by
Instruction 3 of the letter of transmittal; and
(c) mail or otherwise deliver such letter of transmittal or such
facsimile, together with the old Notes and any other required documents, to
the exchange agent before 5:00 p.m., New York City time, on the expiration
date.
If delivery of the old Notes is made through book-entry transfer into the
exchange agent's account at DTC, you must tender the old Notes in accordance
with DTC's Automated Tender Offer Program (ATOP) procedures. See "-- Book-Entry
Transfer; Delivery and Form."
Your tender of old Notes will constitute an agreement between us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
You must deliver all documents for tender to the exchange agent at its
address set forth below. You may also request your brokers, dealers, commercial
banks, trust companies or nominees to effect the above transactions for you.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT YOUR OPTION AND YOUR SOLE RISK. DOCUMENTS ARE
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY
MAIL, WE RECOMMEND REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED,
OR AN OVERNIGHT DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME
TO INSURE TIMELY DELIVERY.
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Only a holder of old Notes may tender such old Notes in the exchange offer.
The term "holder" with respect to the exchange offer means any person in whose
name old Notes are registered on our books or any other person who has obtained
a properly completed bond power from the registered holder.
If your old Notes are registered in the name of your broker, dealer,
commercial bank, trust company or other nominee and you wish to tender your old
Notes, you should contact such registered holder promptly and instruct such
registered holder to tender on your behalf. If your old Notes are so registered
and you wish to tender on your own behalf, you must, prior to completing and
executing the letter of transmittal and delivering your old Notes, either make
appropriate arrangements to register ownership of the old Notes in your name or
obtain a properly completed bond power from the registered holder. The transfer
of record ownership may take considerable time.
Signatures on a letter of transmittal or notice of withdrawal must be
guaranteed by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the U.S. (an "Eligible
Institution"). Signatures do not need to be guaranteed if the old Notes are
tendered (1) by a registered Holder who has not completed the box entitled
"Special Payment Instructions" or "Special Delivery Instructions" on the letter
of transmittal or (2) for the account of an Eligible Institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old Notes listed on the letter, such old Notes must be endorsed or
accompanied by appropriate bond powers signed as the name of the registered
holder or holders appears on the old Notes.
If the letter of transmittal or any old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons must indicate their capacity when signing. Unless waived by us, you must
then submit evidence satisfactory to us of their authority to so act with the
letter of transmittal.
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt) and acceptance of tendered old
Notes and withdrawal of tendered old Notes. Our determination will be final and
binding. We reserve the absolute right to reject any and all old Notes not
properly tendered or any old Notes acceptance of which would, in the opinion of
our counsel, be unlawful for us to accept. We also reserve the right to waive
any defects, irregularities or conditions of tender as to particular old Notes.
Our interpretation of the terms and conditions of the exchange offers (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of old Notes must be cured within such time as we determine. No one is under any
duty to give notification of defects or irregularities with respect to tenders
of old Notes, nor will any person incur any liability for failure to give such
notification. Old Notes are not properly tendered until such irregularities have
been cured or waived. Any old Notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering holders
of such old Notes, unless otherwise provided in the letter of transmittal, as
soon as practicable after the expiration date.
In addition, we reserve the right in our sole discretion:
- to purchase or make offers for any old Notes that remain outstanding after
the expiration date;
- to terminate the exchange offers as described in "-- Conditions"; and
- to the extent permitted by applicable law, purchase old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers could differ from the terms of the exchange
offers.
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By tendering, you will represent to us, among other things, that:
- the new Notes you acquire in the exchange offers are being obtained in the
ordinary course of your business;
- you have no arrangement with any person to participate in the distribution
of such new Notes; and
- you are not an "affiliate," as defined under Rule 405 of the Securities
Act, of ours.
If you are a Participating Broker-Dealer that will receive new Notes for
your own account in exchange for old Notes that were not acquired directly from
us, by tendering you will acknowledge that you will deliver a prospectus in
connection with any resale of such new Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER; DELIVERY AND FORM
The old Notes were initially in the form of one or more registered global
notes without interest coupons and were registered in the name of the Depository
Trust Company ("DTC"). The new Notes exchanged for the old Notes represented by
the global old Notes will be represented by global new Notes in fully registered
form, registered in the name of the nominee of DTC.
The global new Notes will be exchangeable for definitive new Notes in
registered form, in denominations of $1,000 principal amount and integral
multiples of $1,000. The new Notes in global form will trade in DTC's same-day
funds settlement system, and therefore secondary market trading activity in the
new Notes will settle in immediately available funds.
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish an account with respect to the old Notes at
DTC for the purpose of facilitating the exchange offer. Subject to the
establishment of this account, any financial institution that is a participant
in DTC's system may make book-entry delivery of old Notes by causing DTC to
transfer such old Notes into the exchange agent's account with respect to the
old Notes in accordance with DTC's ATOP procedures for such book-entry
transfers. Although delivery of the old Notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the exchange for old Notes so
tendered will be made only after the following two conditions are met:
- First, DTC must timely confirm (a "Book-Entry Confirmation") such
book-entry transfer of the old Notes into the exchange agent's account.
- Second, the exchange agent must timely receive a Book-Entry Confirmation
with a message, transmitted by DTC and received by the exchange agent and
forming part of the Book-Entry Confirmation, which states that DTC has
received express acknowledgment from a participant tendering old Notes
that such participant has received and agrees to be bound by the terms of
the letter of transmittal, and that such agreement may be enforced against
such participant.
GUARANTEED DELIVERY PROCEDURES
If your old Notes are not immediately available or if you cannot deliver
your old Notes, the letter of transmittal or any other required documents to the
exchange agent prior to the expiration date, you may effect a tender if:
(1) the tender is made through an Eligible Institution;
(2) before the expiration date, the exchange agent receives from such
Eligible Institution a properly completed and duly executed notice of
guaranteed delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the old Notes, the
certificate number or numbers of such old Notes and the principal amount of
old Notes tendered, stating that the tender is being
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made thereby and guaranteeing that, within three New York Stock Exchange
trading days after the expiration date, the letter of transmittal (or
facsimile of such letter) together with the certificate(s) representing the
old Notes to be tendered in proper form for transfer and any other documents
required by the letter of transmittal, or a Book-Entry Confirmation, as the
case may be, will be delivered by the Eligible Institution to the exchange
agent; and
(3) such properly completed and executed letter of transmittal (or
facsimile of such letter), as well as the certificate(s) representing all
tendered old Notes in proper form for transfer and all other documents
required by the letter of transmittal, or a Book-Entry Confirmation, as the
case may be, are received by the exchange agent within three New York Stock
Exchange trading days after the expiration date.
Upon request of the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise described in this prospectus, tenders of old Notes may
be withdrawn at any time before 5:00 p.m., New York City time, on the expiration
date. To withdraw a tender of old Notes in the exchange offers, the exchange
agent must receive a written or facsimile transmission notice of withdrawal at
its address set forth in this prospectus before 5:00 p.m., New York City time,
on the expiration date. See "-- Exchange Agent." Any such notice of withdrawal
must:
(1) specify the name of the person having deposited the old Notes to be
withdrawn (the "Depositor");
(2) identify the old Notes to be withdrawn (including the certificate
number or numbers and principal amount of such old Notes);
(3) be signed by the holder in the same manner as the original signature
on the letter of transmittal by which the old Notes were tendered (including
any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the trustee with respect to the old Notes
register the transfer of the old Notes into the name of the person
withdrawing the tender; and
(4) specify the name in which any the old Notes are to be registered, if
different from that of the Depositor.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of such notices and our determination will be final
and binding on all parties. Any old Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the exchange offer and no new Notes
will be issued with respect thereto unless the old Notes so withdrawn are
validly retendered. Any old Notes which have been tendered but which are not
accepted for exchange will be returned to their holder without cost to such
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn old Notes may be
retendered by following one of the procedures, described above under
"-- Procedures for Tendering" at any time before the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offers, we will not be
required to accept for exchange, or exchange new Notes for, any old Notes not
accepted for exchange. We may terminate or amend either or both of the exchange
offers as provided in this prospectus before accepting old Notes, if any of the
following conditions exist:
(1) the exchange offers, or the making of any exchange by a holder,
violates applicable law or any applicable interpretation of the SEC;
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(2) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the exchange offer
which, in our sole judgment, might impair our ability to proceed with the
exchange offer;
(3) any law, statute, rule or regulation is adopted or enacted which, in
our sole judgment, might materially impair our ability to proceed with the
exchange offers;
(4) trading on the New York Stock Exchange or generally in the U.S.
over-the-counter market is suspended by order of the SEC or any other
governmental authority which, in our judgment, would reasonably be expected
to impair our ability to proceed with the exchange offers; or
(5) a stop order is issued by the SEC or any state securities authority
suspending the effectiveness of the registration statement or proceedings
are initiated or, to our knowledge, threatened for that purpose.
If any such conditions exist, we may
- refuse to accept any old Notes and return all tendered old Notes to
exchanging holders;
- extend the exchange offers and retain all old Notes tendered prior to the
expiration of the exchange offers, subject, however, to the rights of
holders to withdraw such old Notes (see "-- Withdrawal of Tenders"); or
- waive certain of such conditions with respect to the exchange offers and
accept all properly tendered old Notes which have not been withdrawn or
revoked.
If such waiver constitutes a material change to the exchange offers, we will
promptly disclose such waiver in a manner reasonably calculated to inform
holders of old Notes of such waiver.
The conditions described above are for our sole benefit. We may assert any
condition regardless of the circumstances giving rise to any such condition. We
may waive any condition in whole or in part at any time and from time to time in
our sole discretion. We are not waiving these rights by failing to exercise
them. These rights are ongoing and may be asserted at any time and from time to
time.
EXCHANGE AGENT
We appointed State Street Bank and Trust Company as exchange agent for the
exchange offers. Send letters of transmittal and notices of guaranteed delivery
to the exchange agent addressed as follows:
By Mail/Hand Delivery or Overnight Delivery:
State Street Bank and Trust Company
Attn: Ralph Jones, Corporate Actions
2 Avenue De Lafayette
Fifth Floor, Corporate Trust Window
Boston, Massachusetts 02111
By Facsimile: (617) 662-1452
To Confirm by telephone: (617) 662-1548
FEES AND EXPENSES
We will pay the expenses of soliciting tenders. The principal solicitation
is being made by mail. Additional solicitation may be made by telegraph,
telephone or in person by officers and regular employees of ours and our
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affiliates and by persons so engaged by the exchange agent. Also, we have
retained Skinner & Co. to assist us in soliciting tenders. The contact
information for the solicitor is as follows:
Skinner & Co.
Attn: Mike McReynolds
225 South Cabrillo Hwy.
Suite 206C
Half Moon Bay, CA 94019-173
By Facsimile: (650) 712-3933
To Confirm by telephone: (650) 712-3939
We will not make any payments to other brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay the exchange agent and solicitor
reasonable and customary fees for their services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith. We may also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this prospectus
and related documents to the beneficial owners of the old Notes, and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the exchange
offers. We estimate these cash expenses will aggregate approximately $150,000,
including fees and expenses of the exchange agent, the trustee under the
indenture, the solicitor and accounting and legal fees.
We will pay all transfer taxes, if any, applicable to the exchange of old
Notes in the exchange offers. The amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder if:
(1) certificates representing new Notes or old Notes for principal
amounts at maturity not tendered or accepted for exchange are to be
delivered to, or are to be registered in the name of, any person other than
the registered holder of the old Notes tendered;
(2) tendered old Notes are registered in the name of any person other
than the person signing the letter of transmittal; or
(3) a transfer tax is imposed for any reason other than the exchange of
old Notes in the exchange offers.
In such circumstances, you must submit satisfactory evidence of payment of
such taxes or exception from such taxes with the letter of transmittal or the
amount of such transfer taxes will be billed directly to you.
ACCOUNTING TREATMENT
The new Notes will be recorded at the same carrying value as the old Notes,
which is face value as reflected in our accounting records on the date of the
exchange offers. Accordingly, no gain or loss for accounting purposes will be
recognized upon completion of the exchange offers. The issuance costs incurred
in connection with the exchange offers will be capitalized and amortized over
the term of the new Notes.
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DESCRIPTION OF THE NOTES
GENERAL
The new Senior Notes will be issued pursuant to a Senior Notes Indenture
between the Company and State Street Bank and Trust Company, as trustee. The
terms of the new Senior Notes include those stated in the Senior Notes Indenture
and those made part of the Senior Notes Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The new Senior
Subordinated Notes will be issued pursuant to a Senior Subordinated Notes
Indenture between the Company and State Street Bank and Trust, as trustee. The
terms of the new Senior Subordinated Notes include those stated in the Senior
Subordinated Notes Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The new Notes are subject to all such terms, and
holders of new Notes are referred to the Senior Notes Indenture, the Senior
Subordinated Notes Indenture and the Trust Indenture Act for a statement of such
terms.
The following summary of the material provisions of the Senior Notes
Indenture, the Senior Subordinated Notes Indenture, the Senior Notes
Registration Rights Agreement and the Senior Subordinated Notes Registration
Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to such agreements, including the definitions in those
agreements of certain terms used below. Copies of such agreements have been
filed as exhibits to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, which has been incorporated by reference in this prospectus and
is available from the SEC or as set forth under "Available Information." The
definitions of certain terms used in the following summary are set forth below
under "-- Certain Definitions."
For purposes of the following summary, the term "Company" refers only to
Amkor Technology, Inc. and not to any of its Subsidiaries, the term "Senior
Notes" refers to the old and new Senior Notes, the term Senior Subordinated
Notes refers to the old and new Senior Subordinated Notes and the term "Notes"
refers to the old and new Notes.
DESCRIPTION OF THE SENIOR NOTES
RANKING
The Senior Notes:
N are general obligations of the Company;
N are effectively subordinated in right of payment to existing and future
secured debt, if any, to the extent of such security and to all existing and
future debt and other liabilities of our subsidiaries, including trade
payables;
N are equal in right of payment with all of our existing and future unsecured
senior debt;
N are senior in right of payment to all of our existing and future debt that
expressly provides that it is subordinated to the Senior Notes, including the
Senior Subordinated Notes and the Convertible Notes and are "Designated Senior
Debt" for purposes of the indenture governing the Convertible Notes.
As of September 30, 1999, the Company had total senior secured debt of
approximately $13.5 million. In addition, our Subsidiaries had total liabilities
of approximately $242.1 million. The Senior Notes Indenture will permit us to
incur additional senior secured debt.
We conduct a large portion of our operations through our Subsidiaries.
Accordingly, our ability to meet our cash obligations is dependent upon the
ability of our Subsidiaries to make cash distributions to us. Dividends from our
Subsidiaries are expected to be a large source of funds for payment of interest
on the Senior Notes. The claims of creditors (including trade creditors) of any
Subsidiary will generally have priority as to the assets
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<PAGE> 31
of such Subsidiary over the claims of the holders of the Senior Notes. In the
event of a liquidation of any of our Subsidiaries, our right to receive the
assets of any such Subsidiary (and the resulting right of the Holders of the
Senior Notes to participate in the distribution of the proceeds of those assets)
will effectively be subordinated by operation of law to the claims of creditors
(including trade creditors) of such Subsidiary and holders of such Subsidiary's
preferred stock and any Guarantees by such Subsidiary of Indebtedness of the
Company. If the Company were a creditor of such Subsidiary or a holder of its
preferred stock, we would be entitled to participate in the distribution of the
proceeds of such Subsidiary's assets. Our claims would, however, remain
subordinate to any Indebtedness or preferred stock of such Subsidiary which is
senior in right of payment to the Indebtedness or preferred stock held by us. In
the event of the liquidation, bankruptcy, reorganization, insolvency,
receivership or similar proceeding or any assignment for the benefit of our
creditors or a marshaling of our assets or liabilities, Holders of the Senior
Notes may receive ratably less than other such creditors or interest holders.
As of the date of this prospectus, all of our Subsidiaries are "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "-- Certain Covenants -- Designation of Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of our Subsidiaries as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the Senior Notes Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes Indenture is limited in aggregate principal amount to
$525.0 million of which $425.0 million was issued in the offering on May 13,
1999, and will mature on May 1, 2006. The Senior Notes Indenture provides for
the issuance of up to an additional $100.0 million aggregate principal amount of
additional notes having identical terms and conditions as the Senior Notes
offered hereby (the "Additional Senior Notes"), subject to the limitations set
forth under "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock." Any Additional Senior Notes will be part of the same issue of
Senior Notes issued on May 13, 1999 and will vote on all matters with the Senior
Notes issued on May 13, 1999. For purposes of this "Description of Notes,"
references to the Senior Notes do not include Additional Senior Notes.
Interest on the Senior Notes will accrue at the rate of 9 1/4% per annum and
will be payable semi-annually in arrears on May 1 and November 1, commencing on
November 1, 1999. The Company will make each interest payment to the Holders of
record of the Senior Notes on the immediately preceding April 15 and October 15.
Interest on the Senior Notes will accrue from the date of original issuance
or, if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
The interest rate on the Senior Notes will be subject to increase if the
registration statement of which this prospectus forms a part relating to the
Exchange Offer is not declared effective on a timely basis or if certain other
conditions are not satisfied, all as further described under the caption
"Provisions Common to Both Senior Notes and Senior Subordinated
Notes -- Registration Rights; Liquidated Damages." All references to interest on
the Senior Notes include any such Liquidated Damages that may be payable. The
Company issued the old Senior Notes in denominations of $1,000 and integral
multiples of $1,000 and will issue the new Senior Notes also in denominations of
$1,000 and integral multiples of $1,000.
OPTIONAL REDEMPTION
At any time prior to May 1, 2003, the Company may redeem all or a part of
the Senior Notes, upon not less than 30 nor more than 60 days prior notice, at a
redemption price (expressed as a percentage of principal
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amount) equal to 100% of the principal amount thereof plus the Applicable
Premium, if any, plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption.
The "Applicable Premium" of any redeemed Senior Note equals the excess of:
(1) the present value at the date of redemption of 100% of the principal amount
of such Senior Note plus all required interest payments due on such Senior
Note through its Stated Maturity date (excluding accrued but unpaid
interest), calculated using a discount rate equal to the Treasury Rate plus
50 basis points; over
(2) the principal amount of the Senior Note, if greater.
If the period from the date of redemption to the Stated Maturity date is
greater than one year, the "Treasury Rate" will be equal to the yield to
maturity as of such date of redemption of United States Treasury securities with
a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become publicly available at
least two business days prior to the date of redemption (or, if such Statistical
Release is no longer published, any publicly available source of similar market
data)) most nearly equal to the period from the date of redemption to the Stated
Maturity date.
If the period from the date of redemption to the Stated Maturity date is
less than one year, the "Treasury Rate" will be equal to the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year.
Except pursuant to the preceding paragraph, the Senior Notes will not be
redeemable at the Company's option prior to May 1, 2003.
On or after May 1, 2003, the Company may redeem all or a part of the Senior
Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, if any, to the applicable redemption date,
if redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003...................................................... 104.625%
2004...................................................... 102.313%
2005 and thereafter....................................... 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, each Holder of Senior Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of that Holder's Senior Notes pursuant to the
Change of Control Offer. In the Change of Control Offer, the Company will offer
a Change of Control Payment in cash equal to 101% of the aggregate principal
amount of Senior Notes repurchased plus accrued and unpaid interest thereon, if
any, to the date of purchase. Within 30 days following any Change of Control,
the Company will mail a notice to each Holder of Senior Notes describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Senior Notes on the date specified in such notice (the "Change of
Control Payment Date"), pursuant to the procedures required by the Senior Notes
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Notes as a result of
a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Senior Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
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(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Senior Notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Senior Notes Trustee the Senior
Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Senior Notes or portions thereof being
purchased by the Company.
The Paying Agent will promptly mail to each Holder of Senior Notes so
tendered the Change of Control Payment for such Senior Notes, and the Senior
Notes Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Senior Note equal in principal amount to any
unpurchased portion of the Senior Notes surrendered, if any; provided that each
such new Senior Note will be in a principal amount of $1,000 or an integral
multiple thereof.
The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the Senior Notes Indenture are
applicable. Except as described above with respect to a Change of Control, the
Senior Notes Indenture does not contain provisions that permit the Holders of
the Senior Notes to require that the Company repurchase or redeem the Senior
Notes in the event of a takeover, recapitalization or similar transaction.
The Company 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 the Senior Notes Indenture applicable to a Change of Control Offer made by
the Company and purchases all Senior Notes validly tendered and not withdrawn
under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a limited body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of Senior Notes to require the Company to
repurchase such Senior Notes as a result of a sale, lease, transfer, conveyance
or other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(2) such fair market value is determined by the Company's Board of Directors;
and
(3) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or other Qualified Proceeds.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(1) to repay Permitted Bank Debt, and if such Permitted Bank Debt is revolving
debt, to effect a corresponding commitment reduction thereunder;
(2) to acquire all or substantially all of the assets of, or a majority of the
Voting Stock of, another Permitted Business;
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<PAGE> 34
(3) to make a capital expenditure; or
(4) to acquire any other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Senior Notes Indenture.
Any Net Proceeds from any Asset Sale that are not applied or invested as
provided in the preceding paragraph within 365 days of such Asset Sale will
constitute Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company will make an Asset Sale Offer to all Holders of
Senior Notes and all holders of other Indebtedness that is pari passu with the
Senior Notes containing provisions similar to those set forth in the Senior
Notes Indenture with respect to offers to purchase or redeem with the proceeds
of sales of assets to purchase the maximum principal amount of Senior Notes and
such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of
principal amount plus accrued and unpaid interest, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Senior Notes Indenture. If the
aggregate principal amount of Senior Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Senior Notes Trustee shall select the Senior Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Selection and Notice
If less than all of the Senior Notes are to be redeemed at any time, the
Senior Notes Trustee will select Senior Notes for redemption as follows:
(1) if the Senior Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Senior Notes are listed;
or
(2) if the Senior Notes are not so listed, on a pro rata basis, by lot or by
such method as the Senior Notes Trustee shall deem fair and appropriate.
No Senior Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Senior Notes to be redeemed at
its registered address. Notices of redemption may not be conditional.
If any Senior Note is to be redeemed in part only, the notice of redemption
that relates to that Senior Note shall state the portion of the principal amount
thereof to be redeemed. A new Senior Note in principal amount equal to the
unredeemed portion of the original Senior Note will be issued in the name of the
Holder thereof upon cancellation of the original Senior Note. Senior Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest ceases to accrue on Senior Notes or portions of
them called for redemption.
CERTAIN COVENANTS
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests in their
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<PAGE> 35
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company
or a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
the Company) any Equity Interests of the Company or any direct or indirect
parent of the Company or any Restricted Subsidiary of the Company (other
than any such Equity Interests owned by the Company or any Restricted
Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the Senior Notes, including the Senior Subordinated Notes, except a
payment of interest or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Interest Expense Coverage Ratio test set forth in the
first paragraph of the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of the Senior Notes Indenture (excluding Restricted
Payments permitted by clauses (2), (3), (4), (7) and (9) of the next
succeeding paragraph), is less than the sum, without duplication, of
(a) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the Senior Notes
Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus
(b) 100% of the aggregate net cash proceeds received by the Company since
the date of the Senior Notes Indenture as a contribution to its
common equity capital or from the issue or sale of Equity Interests
of the Company (other than Disqualified Stock) (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), plus
(c) to the extent that any Restricted Investment that was made after the
date of the Senior Notes Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of such Restricted
Investment, plus
(d) the amount by which (i) Indebtedness (other than Disqualified Stock)
of the Company or any Restricted Subsidiary issued after the Issue
Date is reduced on the Company's consolidated balance sheet (if
prepared in accordance with GAAP as of the date of determination) and
(ii) Disqualified Stock of the Company issued after the Issue Date
(held by any Person other than any Restricted Subsidiary) is reduced
(measured with reference to its redemption or repurchase price), in
each case, as a result of the conversion or exchange of any such
Indebtedness or Disqualified Stock into Equity Interests (other than
Disqualified Stock) of the
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<PAGE> 36
Company, less, in each case, any cash distributed by the Company upon
such conversion or exchange, plus
(e) to the extent that any Investment in any Unrestricted Subsidiary that
was made after the date of the Senior Notes Indenture is sold for
cash or otherwise liquidated, repaid for cash or such Unrestricted
Subsidiary is converted into a Restricted Subsidiary, the lesser of
(i) an amount equal to the sum of (A) the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of assets, in each
case to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries, and (B) the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary, and (ii) the remaining amount of
the Investment in such Unrestricted Subsidiary which has not been
repaid or converted into cash or assets.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at the date of declaration no Default has occurred and is
continuing or would be caused thereby and such payment would have complied
with the provisions of the Senior Notes Indenture;
(2) the making of any payment on or with respect to, or in connection with, the
redemption, repurchase, retirement, defeasance or other acquisition of, any
Indebtedness of the Company or any Restricted Subsidiary that is
subordinated to the Senior Notes or of any Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Company) of, Equity Interests (other than Disqualified Stock) of the
Company or any Indebtedness of the Company that is subordinated to the
Senior Notes; provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (3) (b) of the preceding
paragraph;
(3) the making of any payment on or with respect to, or in connection with, the
defeasance, redemption, repurchase or other acquisition of Indebtedness of
the Company or any Restricted Subsidiary that is subordinated to the Senior
Notes with the net cash proceeds from the incurrence of Permitted
Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company to
the holders of its common Capital Stock on a pro rata basis;
(5) so long as no Default has occurred and is continuing or would be caused
thereby, the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any employee of the Company or any Restricted
Subsidiary pursuant to any employee equity subscription agreement, stock
ownership plan or stock option agreement in effect from time to time;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2.0 million in any
twelve-month period and $10.0 million in the aggregate;
(6) the making of any payment on or with respect to, or repurchase, redemption,
defeasance or other acquisition or retirement for value of the Convertible
Notes in connection with (i) so long as no Event of Default has occurred
and is continuing or would be caused thereby, an optional redemption of the
Convertible Notes on or after May 3, 2001 pursuant to the terms thereof, or
(ii) the honoring by the Company of any conversion request by a holder of
the Convertible Notes (including the payment by the Company of any cash in
lieu of fractional shares) in accordance with their terms;
(7) that portion of Investments the payment for which consists exclusively of
Equity Interests (other than Disqualified Stock) of the Company;
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(8) so long as no Default has occurred and is continuing or would be caused
thereby, other Restricted Payments in an aggregate amount not to exceed
$25.0 million;
(9) the repurchase of Equity Interests of the Company that may be deemed to
occur upon the exercise of stock options if such Equity Interests represent
a portion of the exercise price thereof;
(10) any payments to one or more shareholders of the Company in connection with
settling shareholder obligations in respect of tax periods ending prior to
the conversion of the Company from "S" corporation status to "C"
corporation status;
(11) in the case of an Asset Sale, any Asset Sale Offer after the Company has
complied with its obligations to the Holders of the Senior Notes under the
"Asset Sale" covenant contained in the Senior Notes Indenture; and
(12) in the case of a Change of Control, any Change of Control Offer to
repurchase the Senior Subordinated Notes after the Company has complied
with its obligations to the Holders of the Senior Notes under the "Change
of Control" covenant contained in the Senior Notes Indenture.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant with a fair market value in excess of $1.0 million but less than $5.0
million shall be evidenced by an Officer's Certificate which shall be delivered
to the Senior Notes Trustee. The fair market value of any assets or securities
that are required to be valued by this covenant with a fair market value in
excess of $5.0 million shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Senior Notes Trustee.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company and any Restricted Subsidiary that is a Guarantor may
incur Indebtedness (including Acquired Debt), and the Company may issue
Disqualified Stock, and any Restricted Subsidiary that is a Guarantor may issue
preferred stock, if the Consolidated Interest Expense Coverage Ratio for the
Company's most recently ended four full fiscal quarters (the "Reference Period")
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.5 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Company and any Restricted Subsidiary of any
Permitted Bank Debt; provided that the aggregate principal amount of all
Permitted Bank Debt at any one time outstanding shall not exceed $100.0
million plus 85% of the consolidated accounts receivable of the Company
plus 50% of the consolidated inventory of the Company;
(2) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
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(3) the incurrence by the Company and any Guarantor of Indebtedness represented
by the Senior Notes, the Senior Subordinated Notes and any Subsidiary
Guarantees;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of (a)
Indebtedness incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted Subsidiary
and (b) Capital Lease Obligations, in an aggregate amount at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (4), not to exceed 10% of the Company's Consolidated Net Assets;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace, Indebtedness (other than
intercompany Indebtedness) that was permitted by the Senior Notes Indenture
to be incurred under the first paragraph of this covenant or clauses (2),
(3), (5), (13) or (14) of this paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that:
(a) if the Company or any Guarantor is the obligor on such Indebtedness and
such Indebtedness is in favor of a Restricted Subsidiary other than a
Wholly Owned Restricted Subsidiary, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all Obligations
with respect to the Senior Notes, in the case of the Company, or the
Senior Subsidiary Guarantee, in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than the Company
or a Wholly Owned Restricted Subsidiary thereof and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Wholly Owned Restricted Subsidiary thereof; shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (6);
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate, commodity or currency risk in the ordinary course of
business for bona fide hedging purposes; provided that the notional
principal amount of any such Hedging Obligation with respect to interest
rates does not exceed the amount of Indebtedness or other liability to
which such Hedging Obligation relates;
(8) the Guarantee by the Company or any of the Guarantors of Indebtedness of
the Company or a Restricted Subsidiary of the Company that was permitted to
be incurred by another provision of this covenant;
(9) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse
Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary of
the Company that was not permitted by this clause (9);
(10) the incurrence of Indebtedness solely in respect of performance, surety and
similar bonds or completion or performance Guarantees, to the extent that
such incurrence does not result in the incurrence of any obligation for the
payment of borrowed money to others;
(11) the incurrence of Indebtedness arising from the agreements of the Company
or a Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price or similar obligations, in each
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case, incurred or assumed in connection with the disposition of any
business, assets or a Subsidiary; provided, however, that:
(a) such Indebtedness is not reflected as a liability on the balance sheet
of the Company or any Restricted Subsidiary of the Company; and
(b) the maximum assumable liability in respect of all such Indebtedness
shall at no time exceed the gross proceeds, including non-cash proceeds
(the fair market value of such non-cash proceeds being measured at the
time received and without giving effect to any subsequent changes in
value), actually received by the Company and its Restricted Subsidiaries
in connection with such disposition;
(12) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock; provided, in each such case, that the amount thereof is
included in Consolidated Interest Expense of the Company as accrued;
(13) the incurrence of Indebtedness by Foreign Subsidiaries in an amount not to
exceed 10% of the Total Tangible Assets of the Foreign Subsidiaries, taken
as a whole; and
(14) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (14), not to exceed $25.0
million.
Indebtedness or preferred stock of any Person which is outstanding at the
time such Person becomes a Restricted Subsidiary of the Company (including upon
designation of any Subsidiary or other Person as a Restricted Subsidiary) or is
merged with or into or consolidated with the Company or a Restricted Subsidiary
of the Company shall be deemed to have been incurred at the time such Person
becomes such a Restricted Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Restricted Subsidiary of the Company, as
applicable.
The Company will not incur any Indebtedness (including Permitted Debt) that
is contractually subordinated in right of payment to any other Indebtedness of
the Company unless such Indebtedness is also contractually subordinated in right
of payment to the Senior Notes on substantially identical terms; provided,
however, that no Indebtedness of the Company shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of any Liens, Guarantees, maturity of payments or structural
seniority.
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (14) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, the Company will be permitted
to classify or reclassify such item of Indebtedness (or any part thereof) in any
manner that complies with this covenant.
For purposes of determining any particular amount of Indebtedness under this
covenant, Guarantees, Liens or obligations in support of letters of credit
supporting Indebtedness shall not be included to the extent such letters of
credit are included in the amount of such Indebtedness.
Any increase in the amount of any Indebtedness solely by reason of currency
fluctuations shall not be considered an incurrence of Indebtedness for purposes
of this covenant.
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Liens
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind securing Indebtedness on any asset now owned or hereafter acquired,
except Permitted Liens, unless the Notes are equally and ratably secured with
the obligations so secured for as long as such Indebtedness will be so secured.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to the
Company or any of the Company's Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to the Company or any of the Company's Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of the Company's Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of the
Company's Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the Senior Notes
Indenture and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such Existing Indebtedness, as
in effect on the date of the Senior Notes Indenture;
(2) the Indentures and the Notes;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred;
(5) customary non-assignment provisions in leases, licenses or other contracts
entered into in the ordinary course of business and consistent with past
practices;
(6) purchase money obligations or Capital Lease Obligations for property
acquired in the ordinary course of business that impose restrictions on the
property so acquired of the nature described in clause (3) of the preceding
paragraph;
(7) any agreement for the sale or other disposition of a Restricted Subsidiary
that restricts dividends, distributions, loans, advances or transfers by
such Restricted Subsidiary pending its sale or other disposition;
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(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(9) agreements entered into with respect to Liens securing Indebtedness
otherwise permitted to be incurred pursuant to the provisions of the
covenant described above under the caption "-- Liens" that limit the right
of the Company or any of its Restricted Subsidiaries to dispose of the
assets subject to such Lien;
(10) 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;
(11) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(12) any Receivables Program; and
(13) any restriction imposed pursuant to contracts for the sale of assets with
respect to the transfer of the assets to be sold pursuant to such contract.
Merger, Consolidation, or Sale of Assets
The Company may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions, to another Person, unless:
(1) either: (a) the Company is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of the Company under the Senior Notes, the Senior Notes
Indenture and the Registration Rights Agreement applicable to the Senior
Notes pursuant to agreements reasonably satisfactory to the Senior Notes
Trustee;
(3) immediately after such transaction no Default or Event of Default exists;
(4) except in the case of the amalgamation, consolidation or merger of the
Company (a) with or into a Wholly Owned Restricted Subsidiary, or (b) with
or into any Person solely for the purpose of effecting a change in the
state of incorporation of the Company, the Company or the Person formed by
or surviving any such consolidation or merger (if other than the Company)
will, on the date of such transaction after giving pro forma effect thereto
and any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Expense Coverage Ratio test set forth in the first paragraph of
the covenant described above under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(5) the Company shall have delivered to the Senior Notes Trustee an Officer's
Certificate stating that such consolidation, merger, sale, assignment,
transfer, conveyance or other disposition complies with the Senior Notes
Indenture.
In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation, or Sale of
Assets"
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covenant will not apply to a sale, assignment, transfer, conveyance or other
disposition of assets by the Company to any of its Wholly Owned Restricted
Subsidiaries.
Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or Guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction (when viewed together with related Affiliate
Transactions, if any) is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and
(2) the Company delivers to the Senior Notes Trustee:
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of
Directors (of which there must be at least one); and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing;
provided that (i) the Company and its Restricted Subsidiaries may enter into
Affiliate Transactions pursuant to the Supply Agreement, the Foundry Agreement,
the Asset Purchase Agreement, the Transition Services Agreement and the
Intellectual Property Rights Licensing Agreement, and may amend, modify and
supplement such agreements from time to time, so long as the Company shall have
determined that any such amendment, modification or supplement will not have a
material adverse economic effect on the Company and its Subsidiaries, taken as a
whole, and (ii) the Company and its Restricted Subsidiaries may only enter into
transactions pursuant to the Supply Agreement, the Foundry Agreement, the Asset
Purchase Agreement, the Transition Services Agreement and the Intellectual
Property Rights Licensing Agreement, and amend, modify and supplement such
agreements from time to time, in circumstances in which clause (i) is not
applicable, if a majority of the disinterested members of the Board of Directors
(of which there must be at least one) shall have approved such transaction,
amendment, modification or supplement; provided, further, that in the case of
both clauses (i) and (ii), the Company shall deliver to the Senior Notes Trustee
within 30 days of such transaction, amendment, modification or supplement an
Officer's Certificate (A) describing the transaction, amendment, modification or
supplement approved, (B) in the case of transactions, amendments, modifications
and supplements to which clause (i) is applicable, setting forth the
determination of the Company required pursuant to clause (i), and (C) in the
case of transactions, amendments, modifications and supplements to which clause
(ii) is applicable, attaching a resolution of the Board of Directors certifying
that such Affiliate Transaction complies with this covenant.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraphs:
(1) any employment agreement or arrangement entered into by the Company or any
of its Restricted Subsidiaries or any employee benefit plan available to
employees of the Company and its Subsidiaries
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generally, in each case in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary;
(2) Affiliate Transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company and indemnity provided on behalf of officers,
directors and employees of the Company or any of its Restricted Subsidiaries
as determined in good faith by the Board of Directors of the Company;
(4) Any Affiliate Transactions pursuant to which the Company makes short-term
advances or otherwise makes short-term loans to ASI, which advances or loans
are to be repaid by ASI (i) within three months from the date of such
advance or loan and (ii) by offsets by the Company of amounts payable by the
Company to ASI pursuant to the Supply Agreements, if a majority of the
disinterested members of the Board of Directors (of which there must be at
least one) shall have approved such transaction, amendment, modification or
supplement; provided that the total amount of such advances and loans
outstanding at any one time shall not exceed $50.0 million; and
(5) Any Restricted Payments that are permitted by the provisions of the Senior
Notes Indenture described above under the caption "-- Restricted Payments."
For purposes of this "Transactions with Affiliates" covenant, any
transaction or series of related Affiliate Transactions between the Company or
any Restricted Subsidiary and an Affiliate that is approved by a majority of the
disinterested members of the Board of Directors (of which there must be at least
one to utilize this method of approval) and evidenced by a board resolution or
for which a fairness opinion has been issued shall be deemed to be on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and thus shall be
permitted under this "Transactions with Affiliates" covenant.
Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries acquires, creates or
capitalizes a Domestic Subsidiary after the date of the Indenture that is a
Significant Subsidiary, then that newly acquired, created or capitalized
Subsidiary must become a Guarantor and execute a supplemental indenture
satisfactory to the Senior Notes Trustee and deliver an Opinion of Counsel to
the Senior Notes Trustee within 10 Business Days of the date on which it was
acquired or created.
Sale and Leaseback Transactions
The Company will not, and will not permit any of its Subsidiaries to, enter
into any sale and leaseback transaction; provided that the Company or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:
(1) the Company or such Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt relating
to such sale and leaseback transaction (if the lease is in the nature of an
operating lease, otherwise the amount of Indebtedness) under the
Consolidated Interest Expense Coverage Ratio test in the first paragraph of
the covenant described above under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(2) the transfer of assets in that sale and leaseback transaction is permitted
by, and the Company applies the proceeds of such transaction in compliance
with, the covenant described above under the caption "-- Repurchase at the
Option of Holders -- Asset Sales."
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The foregoing restriction shall not apply to any sale and leaseback
transaction if (i) the transaction is solely between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries or (ii) the sale and
leaseback transaction is consummated within 180 days after the purchase of the
assets subject to such transaction.
No Amendment to Subordination Provisions
Without the consent of the Holders of at least a majority in aggregate
principal amount of the Senior Notes then outstanding, the Company will not
amend, modify or alter the Senior Subordinated Notes Indenture in any way to:
(1) increase the rate of or change the time for payment of interest on any
Senior Subordinated Notes;
(2) increase the principal of, advance the final maturity date of or shorten the
Weighted Average Life to Maturity of any Senior Subordinated Notes;
(3) alter the redemption provisions or the price or terms at which the Company
is required to offer to purchase any Senior Subordinated Notes; or
(4) amend the provisions of Article 10 of the Senior Subordinated Notes
Indenture (which relate to subordination).
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be an Investment made as of the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of the covenant described above under the
caption "-- Restricted Payments" or Permitted Investments, as applicable. All
such outstanding Investments will be valued at their fair market value at the
time of such designation. That designation will only be permitted if such
Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default.
Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted
Subsidiaries
The Company will not, and will not permit any of its Wholly Owned Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Wholly Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company), unless:
(1) such transfer, conveyance, sale, lease or other disposition is of all the
Equity Interests in such Wholly Owned Restricted Subsidiary or immediately
following such transfer, conveyance, sale, lease or other disposition, the
Wholly Owned Restricted Subsidiary is a Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above
under the caption "-- Asset Sales."
In addition, the Company will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company unless immediately following such issuance the Wholly
Owned Restricted Subsidiary is a Restricted Subsidiary.
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DESCRIPTION OF THE SENIOR SUBORDINATED NOTES
RANKING
The Senior Subordinated Notes:
N are general obligations of the Company;
N are subordinated in right of payment to all existing and future Senior Debt of
the Company, including the Senior Notes;
N are effectively subordinated in right of payment to all existing and future
liabilities of our Subsidiaries, including trade payables; and
N are senior in right of payment to any subordinated Indebtedness of the
Company, including the Convertible Notes and are "Designated Senior Debt" for
purposes of the indenture governing the Convertible Notes.
Assuming we had completed the offering of the Notes and applied the net
proceeds as intended, as of September 30, 1999, the Company would have had total
Senior Debt of approximately $438.5 million. In addition, our Subsidiaries would
have had total liabilities of approximately $242.1 million. As indicated above
and as discussed in detail below under the subheading "Subordination," payments
on the Senior Subordinated Notes will be subordinated to the payment of Senior
Debt, including the Senior Notes. The Senior Subordinated Notes Indenture will
permit us to incur additional Senior Debt.
We conduct a large portion of our operations through our Subsidiaries.
Accordingly, our ability to meet our cash obligations is dependent upon the
ability of our Subsidiaries to make cash distributions to us. Dividends from our
Subsidiaries are expected to be a large source of funds for payment of interest
on the Senior Subordinated Notes. The claims of creditors (including trade
creditors) of any Subsidiary will generally have priority as to the assets of
such Subsidiary over the claims of the holders of the Senior Subordinated Notes.
In the event of a liquidation of any of our Subsidiaries, our right to receive
the assets of any such Subsidiary (and the resulting right of the Holders of the
Senior Subordinated Notes to participate in the distribution of the proceeds of
those assets) will effectively be subordinated by operation of law to the claims
of creditors (including trade creditors) of such Subsidiary and holders of such
Subsidiary's preferred stock and any Guarantees by such Subsidiary of
Indebtedness of the Company. If the Company were a creditor of such Subsidiary
or a holder of its preferred stock, we would be entitled to participate in the
distribution of the proceeds of such Subsidiary's assets. Our claims would,
however, remain subordinate to any Indebtedness or preferred stock of such
Subsidiary which is senior in right of payment to the Indebtedness or preferred
stock held by us. In the event of the liquidation, bankruptcy, reorganization,
insolvency, receivership or similar proceeding or any assignment for the benefit
of our creditors or a marshaling of our assets or liabilities, Holders of the
Senior Subordinated Notes may receive ratably less than other such creditors or
interest holders.
As of the date of this prospectus, all of our subsidiaries are "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "Certain Covenants -- Designation of Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of our subsidiaries as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the Senior Subordinated Notes Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Senior Subordinated Notes Indenture is limited in aggregate principal
amount to $300.0 million, of which $200.0 million was issued in the offering on
May 13, 1999, and will mature on May 1, 2009. The Senior Subordinated Notes
Indenture provides for the issuance of up to an additional $100.0 million
aggregate principal amount of additional notes having identical terms and
conditions as the Senior Subordinated Notes offered hereby (the "Additional
Senior Subordinated Notes"), subject to the limitations set forth under
"-- Certain
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Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." Any
Additional Senior Subordinated Notes will be part of the same issue of Senior
Subordinated Notes issued on May 13, 1999 and will vote on all matters with the
Senior Subordinated Notes issued on May 13, 1999. For purposes of this
"Description of Notes," references to the Senior Subordinated Notes do not
include Additional Senior Subordinated Notes.
Interest on the Senior Subordinated Notes will accrue at the rate of 10 1/2%
per annum and will be payable semi-annually in arrears on May 1 and November 1,
commencing on November 1, 1999. The Company will make each interest payment to
the Holders of record of the Senior Subordinated Notes on the immediately
preceding April 15 and October 15.
Interest on the Senior Subordinated Notes will accrue from the date of
original issuance or, if interest has already been paid, from the date it was
most recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The interest rate on the Senior Subordinated Notes would have been subject
to increase if the Company did not file the registration statement of which this
prospectus forms a part relating to the Exchange Offer on a timely basis, if the
registration statement was not declared effective on a timely basis or if
certain other conditions are not satisfied, all as further described under the
caption "Provisions Common to Both Senior Notes and Senior Subordinated
Notes -- Registration Rights; Liquidated Damages." All references to interest on
the Senior Subordinated Notes include any such Liquidated Damages that may be
payable. The Company issued the old Senior Subordinated Notes in denominations
of $1,000 and integral multiples of $1,000 and will issue the new Senior
Subordinated Notes also in denominations of $1,000 and integral multiples of
$1,000.
SUBORDINATION
The payment of principal, premium and interest, if any, on the Senior
Subordinated Notes and all other payments in respect of the Senior Subordinated
Notes, whether in connection with a Change of Control, an Asset Sale, defeasance
or otherwise, will be subordinated to the prior payment in full in cash of all
Senior Debt of the Company, including the Senior Notes.
The holders of Senior Debt, including the Senior Notes, will be entitled to
receive payment in full in cash of all Obligations due in respect of Senior Debt
(including interest, expense reimbursements and indemnities after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not such claims are allowed, allowable or enforceable in
such proceeding and even if disallowed therein) before the Holders of the Senior
Subordinated Notes will be entitled to receive any payment with respect to the
Senior Subordinated Notes (except that Holders of Senior Subordinated Notes may
receive and retain Permitted Junior Securities and payments made from the trust
described under "Provisions Common to Both Senior Notes and Senior Subordinated
Notes -- Legal Defeasance and Covenant Defeasance"), in the event of any
distribution to creditors of the Company:
(1) in a liquidation or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshalling of the Company's assets and liabilities.
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The Company also may not make any payment in respect of the Senior
Subordinated Notes (except in Permitted Junior Securities or from the trust
described under "Provisions Common to Both Senior Notes and Senior Subordinated
Notes -- Legal Defeasance and Covenant Defeasance") if:
(1) a payment default on Senior Debt, including the Senior Notes, occurs and is
continuing; or
(2) any other default occurs and is continuing on Designated Senior Debt that
permits holders of the Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage Notice")
from the holders of any Designated Senior Debt or their agent or
representative.
Payments on the Senior Subordinated Notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity of
any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Senior Subordinated Notes Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been cured or waived for a period of not less than 180 days.
If the Senior Subordinated Notes Trustee or any Holder of the Senior
Subordinated Notes receives a payment in respect of the Senior Subordinated
Notes (except in Permitted Junior Securities or from the trust described under
"Provisions Common to Both Senior Notes and Senior Subordinated Notes -- Legal
Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions; and
(2) the Senior Subordinated Notes Trustee or the Holder has actual knowledge
that the payment is prohibited;
the Senior Subordinated Notes Trustee or the Holder, as the case may be, shall
hold the payment in trust for the benefit of the holders of Senior Debt,
including the Senior Notes. Upon the proper written request of the holders of
Senior Debt, including the Senior Notes, the Senior Subordinated Notes Trustee
or the Holder, as the case may be, shall deliver the amounts in trust to the
holders of Senior Debt or their proper representative.
The Company must promptly notify holders of Senior Debt, including the
Senior Notes, if payment of the Senior Subordinated Notes is accelerated because
of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of the Company, Holders of the
Senior Subordinated Notes may recover less ratably than creditors of the Company
who are holders of Senior Debt, including the Senior Notes. See "Risk Factors --
Subordination of the New Senior Subordinated Notes."
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<PAGE> 48
OPTIONAL REDEMPTION
During the first 36 months after the Issue Date, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Senior
Subordinated Notes originally issued under the Senior Subordinated Notes
Indenture at a redemption price of 110.50% of the principal amount thereof, plus
accrued and unpaid interest to the redemption date, with the net cash proceeds
of one or more Equity Offerings; provided that
(1) at least $130.0 million in aggregate principal amount of Senior Subordinated
Notes remains outstanding immediately after the occurrence of such
redemption (excluding Senior Subordinated Notes held by the Company and its
Subsidiaries); and
(2) the redemption must occur within 45 days of the date of the closing of such
Equity Offering.
Except pursuant to the preceding paragraph, the Senior Subordinated Notes
will not be redeemable at the Company's option prior to May 1, 2004.
On or after May 1, 2004, the Company may redeem all or a part of the Senior
Subordinated Notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004.................................................. 105.250%
2005.................................................. 103.500%
2006.................................................. 101.750%
2007 and thereafter................................... 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, each Holder of Senior Subordinated Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of that Holder's Senior Subordinated
Notes pursuant to the Change of Control Offer. In the Change of Control Offer,
the Company will offer a Change of Control Payment in cash equal to 101% of the
aggregate principal amount of Senior Subordinated Notes repurchased plus accrued
and unpaid interest thereon, if any, to the date of purchase. Within 30 days
following any Change of Control, the Company will mail a notice to each Holder
of Senior Subordinated Notes describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Senior Subordinated
Notes on the date specified in such notice (the "Change of Control Payment
Date"), pursuant to the procedures required by the Senior Subordinated Notes
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Subordinated Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Senior Subordinated Notes or portions thereof
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Senior Subordinated Notes or portions thereof so
tendered; and
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<PAGE> 49
(3) deliver or cause to be delivered to the Senior Subordinated Notes Trustee
the Senior Subordinated Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Subordinated
Notes or portions thereof being purchased by the Company.
The Paying Agent will promptly mail to each Holder of Senior Subordinated
Notes so tendered the Change of Control Payment for such Senior Subordinated
Notes, and the Senior Subordinated Notes Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Senior
Subordinated Note equal in principal amount to any unpurchased portion of the
Senior Subordinated Notes surrendered, if any; provided that each such new
Senior Subordinated Note will be in a principal amount of $1,000 or an integral
multiple thereof.
Prior to repurchasing the Senior Subordinated Notes following a Change of
Control, but in any event within 90 days following a Change of Control, the
Company will either repay all outstanding Senior Debt, including the Senior
Notes, or obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt, including the Senior Notes Indenture, to permit the
repurchase of Senior Subordinated Notes required by this covenant. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the Senior Subordinated Notes Indenture
are applicable. Except as described above with respect to a Change of Control,
the Senior Subordinated Notes Indenture does not contain provisions that permit
the Holders of the Senior Subordinated Notes to require that the Company
repurchase or redeem the Senior Subordinated Notes in the event of a takeover,
recapitalization or similar transaction.
The Senior Subordinated Notes Indenture will prohibit the Company from
purchasing any Senior Subordinated Notes. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and may provide that certain change of control
events with respect to the Company constitute a default under or require
repayment of those facilities. In the event a Change of Control occurs at a time
when the Company is prohibited from purchasing Senior Subordinated Notes, the
Company could seek the consent of its senior lenders to the purchase of Senior
Subordinated Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Senior
Subordinated Notes. In such case, the Company's failure to purchase tendered
Senior Subordinated Notes would constitute an Event of Default under the Senior
Subordinated Notes Indenture which would, in turn, constitute a default under
such Senior Debt. In such circumstances, the subordination provisions in the
Senior Subordinated Notes Indenture would likely restrict payments to the
Holders of Senior Subordinated Notes.
The Company 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 the Senior Subordinated Notes Indenture applicable to a Change of Control
Offer made by the Company and purchases all Senior Subordinated Notes validly
tendered and not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a limited body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of Senior Subordinated Notes to require the
Company to repurchase such Senior Subordinated Notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of the Company and its Subsidiaries taken as a whole to another Person or group
may be uncertain.
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<PAGE> 50
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(2) such fair market value is determined by the Company's Board of Directors;
and
(3) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or other Qualified Proceeds.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(1) to repay Senior Debt, and if such Senior Debt is revolving debt, to effect a
corresponding commitment reduction thereunder;
(2) to acquire all or substantially all of the assets of, or a majority of the
Voting Stock of, another Permitted Business;
(3) to make a capital expenditure; or
(4) to acquire any other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Senior Subordinated Notes
Indenture.
Any Net Proceeds from any Asset Sale that are not applied or invested as
provided in the preceding paragraph within 365 days of such Asset Sale will
constitute Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company will make an Asset Sale Offer to all Holders of
Senior Subordinated Notes and all holders of other Indebtedness that is pari
passu with the Senior Subordinated Notes containing provisions similar to those
set forth in the Senior Subordinated Notes Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets to purchase the maximum
principal amount of Senior Subordinated Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price
in any Asset Sale Offer will be equal to 100% of principal amount plus accrued
and unpaid interest, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer,
the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Senior Subordinated Notes Indenture. If the aggregate
principal amount of Senior Subordinated Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Senior Subordinated Notes Trustee shall select the Senior
Subordinated Notes and such other pari passu Indebtedness to be purchased on a
pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
Selection and Notice
If less than all of the Senior Subordinated Notes are to be redeemed at any
time, the Senior Subordinated Notes Trustee will select Senior Subordinated
Notes for redemption as follows:
(1) if the Senior Subordinated Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the
Senior Subordinated Notes are listed; or
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<PAGE> 51
(2) if the Senior Subordinated Notes are not so listed, on a pro rata basis, by
lot or by such method as the Senior Subordinated Notes Trustee shall deem
fair and appropriate.
No Senior Subordinated Notes of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Senior
Subordinated Notes to be redeemed at its registered address. Notices of
redemption may not be conditional.
If any Senior Subordinated Note is to be redeemed in part only, the notice
of redemption that relates to that Senior Subordinated Note shall state the
portion of the principal amount thereof to be redeemed. A new Senior
Subordinated Note in principal amount equal to the unredeemed portion of the
original Senior Subordinated Note will be issued in the name of the Holder
thereof upon cancellation of the original Senior Subordinated Note. Senior
Subordinated Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on
Senior Subordinated Notes or portions of them called for redemption.
CERTAIN COVENANTS
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
the Company) any Equity Interests of the Company or any direct or indirect
parent of the Company or any Restricted Subsidiary of the Company (other
than any such Equity Interests owned by the Company or any Restricted
Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the Senior Subordinated Notes, except a payment of interest or principal
at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Expense Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of the Senior Subordinated Notes Indenture
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<PAGE> 52
(excluding Restricted Payments permitted by clauses (2), (3), (4), (7) and
(9) of the next succeeding paragraph), is less than the sum, without
duplication, of
(a) 50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Senior Subordinated Notes Indenture to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus
(b) 100% of the aggregate net cash proceeds received by the Company since
the date of the Senior Subordinated Notes Indenture as a contribution to
its common equity capital or from the issue or sale of Equity Interests
of the Company (other than Disqualified Stock) (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), plus
(c) to the extent that any Restricted Investment that was made after the
date of the Senior Subordinated Notes Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (ii) the initial amount of such
Restricted Investment, plus
(d) the amount by which (i) Indebtedness (other than Disqualified Stock) of
the Company or any Restricted Subsidiary issued after the Issue Date is
reduced on the Company's consolidated balance sheet (if prepared in
accordance with GAAP as of the date of determination) and (ii)
Disqualified Stock of the Company issued after the Issue Date (held by
any Person other than any Restricted Subsidiary) is reduced (measured
with reference to its redemption or repurchase price), in each case, as
a result of the conversion or exchange of any such Indebtedness or
Disqualified Stock into Equity Interests (other than Disqualified Stock)
of the Company, less, in each case, any cash distributed by the Company
upon such conversion or exchange, plus
(e) to the extent that any Investment in any Unrestricted Subsidiary that
was made after the date of the Senior Subordinated Notes Indenture is
sold for cash or otherwise liquidated, repaid for cash or such
Unrestricted Subsidiary is converted into a Restricted Subsidiary, the
lesser of (i) an amount equal to the sum of (A) the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of assets, in each
case to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries, and (B) the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary, and (ii) the remaining amount of the
Investment in such Unrestricted Subsidiary which has not been repaid or
converted into cash or assets.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at the date of declaration no Default has occurred and is
continuing or would be caused thereby and such payment would have complied
with the provisions of the Senior Subordinated Notes Indenture;
(2) the making of any payment on or with respect to, or in connection with, the
redemption, repurchase, retirement, defeasance or other acquisition of, any
Indebtedness of the Company or any Restricted Subsidiary that is
subordinated to the Senior Subordinated Notes or of any Equity Interests of
the Company or any Restricted Subsidiary in exchange for, or out of the net
cash proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, Equity Interests (other than Disqualified
Stock) of the Company or any subordinated Indebtedness of the Company;
provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (3)(b) of the preceding
paragraph;
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<PAGE> 53
(3) the making of any payment on or with respect to, or in connection with, the
defeasance, redemption, repurchase or other acquisition of Indebtedness of
the Company or any Restricted Subsidiary that is subordinated to the Senior
Notes with the net cash proceeds from the incurrence of Permitted
Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company to
the holders of its common Capital Stock on a pro rata basis;
(5) so long as no Default has occurred and is continuing or would be caused
thereby, the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any employee of the Company or any Restricted
Subsidiary pursuant to any employee equity subscription agreement, stock
ownership plan or stock option agreement in effect from time to time;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2.0 million in any
twelve-month period and $10.0 million in the aggregate;
(6) the making of any payment on or with respect to, or repurchase, redemption,
defeasance or other acquisition or retirement for value of the Convertible
Notes in connection with (i) so long as no Event of Default has occurred
and is continuing or would be caused thereby, an optional redemption of the
Convertible Notes on or after May 3, 2001 pursuant to the terms thereof, or
(ii) the honoring by the Company of any conversion request by a holder of
the Convertible Notes (including the payment by the Company of any cash in
lieu of fractional shares) in accordance with their terms;
(7) that portion of Investments the payment for which consists exclusively of
Equity Interests (other than Disqualified Stock) of the Company;
(8) so long as no Default has occurred and is continuing or would be caused
thereby, other Restricted Payments in an aggregate amount not to exceed
$25.0 million;
(9) the repurchase of Equity Interests of the Company that may be deemed to
occur upon the exercise of stock options if such Equity Interests represent
a portion of the exercise price thereof; and
(10) any payments to one or more shareholders of the Company in connection with
settling shareholder obligations for income taxes in respect of tax periods
ending prior to the conversion of the Company from "S" corporation status
to "C" corporation status.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant with a fair market value in excess of $1.0 million but less than $5.0
million shall be evidenced by an Officer's Certificate which shall be delivered
to the Senior Subordinated Notes Trustee. The fair market value of any assets or
securities that are required to be valued by this covenant with a fair market
value in excess of $5.0 million shall be determined by the Board of Directors
whose resolution with respect thereto shall be delivered to the Senior
Subordinated Notes Trustee.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company and any Restricted Subsidiary that is a Guarantor may
incur Indebtedness (including Acquired Debt), and the Company may issue
Disqualified Stock,
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<PAGE> 54
and any Restricted Subsidiary that is a Guarantor may issue preferred stock, if
the Consolidated Interest Expense Coverage Ratio for the Company's most recently
ended four full fiscal quarters (the "Reference Period") for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.5 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Company and any Restricted Subsidiary of any
Permitted Bank Debt; provided that the aggregate principal amount of all
Permitted Bank Debt at any one time outstanding shall not exceed $100.0
million plus 85% of the consolidated accounts receivable of the Company
plus 50% of the consolidated inventory of the Company;
(2) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
(3) the incurrence by the Company and any Guarantor of Indebtedness represented
by the Senior Notes, the Senior Subordinated Notes and any Subsidiary
Guarantees;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of (a)
Indebtedness incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted Subsidiary
and (b) Capital Lease Obligations, in an aggregate amount at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (4), not to exceed 10% of the Company's Consolidated Net Assets;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace, Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(5), (13) or (14) of this paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that:
(a) if the Company or any Guarantor is the obligor on such Indebtedness and
such Indebtedness is in favor of a Restricted Subsidiary other than a
Wholly Owned Restricted Subsidiary, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all Obligations
with respect to the Senior Subordinated Notes and all Senior Debt, in
the case of the Company, or the Senior Subordinated Subsidiary Guarantee
and all Senior Debt of such Guarantor, in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than the Company
or a Wholly Owned Restricted Subsidiary thereof and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Wholly Owned Restricted Subsidiary thereof; shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (6);
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate, commodity or currency risk in the ordinary course of
business for bona fide hedging purposes; provided that the notional
principal amount of any such
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<PAGE> 55
Hedging Obligation with respect to interest rates does not exceed the
amount of Indebtedness or other liability to which such Hedging Obligation
relates;
(8) the Guarantee by the Company or any of the Guarantors of Indebtedness of
the Company or a Restricted Subsidiary of the Company that was permitted to
be incurred by another provision of this covenant;
(9) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse
Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary of
the Company that was not permitted by this clause (9);
(10) the incurrence of Indebtedness solely in respect of performance, surety and
similar bonds or completion or performance Guarantees, to the extent that
such incurrence does not result in the incurrence of any obligation for the
payment of borrowed money to others;
(11) the incurrence of Indebtedness arising from the agreements of the Company
or a Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price or similar obligations, in each case, incurred
or assumed in connection with the disposition of any business, assets or a
Subsidiary; provided, however, that:
(a) such Indebtedness is not reflected as a liability on the balance sheet
of the Company or any Restricted Subsidiary of the Company; and
(b) the maximum assumable liability in respect of all such Indebtedness
shall at no time exceed value of such giving effect to any Company and
its Restricted the gross proceeds, non-cash proceeds subsequent changes
Subsidiaries in including non-cash being measured at in value), actually
connection with proceeds (the fair the time received by the such
disposition;
(12) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock; provided, in each such case, that the amount thereof is
included in Consolidated Interest Expense of the Company as accrued;
(13) the incurrence of Indebtedness by Foreign Subsidiaries in an amount not to
exceed 10% of the Total Tangible Assets of the Foreign Subsidiaries, taken
as a whole; and
(14) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (14), not to exceed $25.0
million.
Indebtedness or preferred stock of any Person which is outstanding at the
time such Person becomes a Restricted Subsidiary of the Company (including upon
designation of any Subsidiary or other Person as a Restricted Subsidiary) or is
merged with or into or consolidated with the Company or a Restricted Subsidiary
of the Company shall be deemed to have been incurred at the time such Person
becomes such a Restricted Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Restricted Subsidiary of the Company, as
applicable.
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (14) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, the Company will be permitted
to classify or reclassify such item of Indebtedness (or any part thereof) in any
manner that complies with this covenant.
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For purposes of determining any particular amount of Indebtedness under this
covenant, Guarantees, Liens or obligations in support of letters of credit
supporting Indebtedness shall not be included to the extent such letters of
credit are included in the amount of such Indebtedness.
Any increase in the amount of any Indebtedness solely by reason of currency
fluctuations shall not be considered an incurrence of Indebtedness for purposes
of this covenant.
No Senior Subordinated Debt
The Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in right of
payment to the Senior Subordinated Notes. No Guarantor will incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt of such Guarantor
and senior in any respect in right of payment to such Guarantor's Senior
Subordinated Subsidiary Guarantee. The foregoing limitation shall not apply to
distinctions between items of Senior Debt that exist by reason of any Liens,
Guarantees, maturity of payments or structural seniority.
Liens
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind securing Indebtedness on any asset now owned or hereafter acquired,
except Permitted Liens and Liens securing Senior Debt that was permitted to be
incurred under the terms of the Senior Subordinated Notes Indenture, unless
(1) in the case of Liens securing Indebtedness that is expressly subordinate or
junior in right of payment to the Senior Subordinated Notes, the Senior
Subordinated Notes are secured by a Lien on such assets that is senior in
priority to such Liens; and
(2) in all other cases, the Senior Subordinated Notes are equally and ratably
secured with the obligations so secured,
in each case, for as long as such Indebtedness will be so secured.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to the
Company or any of the Company's Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to the Company or any of the Company's Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of the Company's Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of the
Company's Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the Senior Subordinated
Notes Indenture and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with
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respect to such dividend and other payment restrictions than those
contained in such Existing Indebtedness, as in effect on the date of the
Indenture;
(2) the Senior Subordinated Notes Indenture and the Senior Subordinated Notes
and the Senior Notes Indenture and the Senior Notes;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Senior
Subordinated Notes Indenture to be incurred;
(5) customary non-assignment provisions in leases, licenses or other contracts
entered into in the ordinary course of business and consistent with past
practices;
(6) purchase money obligations or Capital Lease Obligations for property
acquired in the ordinary course of business that impose restrictions on the
property so acquired of the nature described in clause (3) of the preceding
paragraph;
(7) any agreement for the sale or other disposition of a Restricted Subsidiary
that restricts dividends, distributions, loans, advances or transfers by
such Restricted Subsidiary pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(9) agreements entered into with respect to Liens securing Indebtedness
otherwise permitted to be incurred pursuant to the provisions of the
covenant described above under the caption "-- Liens" that limit the right
of the Company or any of its Restricted Subsidiaries to dispose of the
assets subject to such Lien;
(10) 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;
(11) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(12) any Receivables Program; and
(13) any restriction imposed pursuant to contracts for the sale of assets with
respect to the transfer of the assets to be sold pursuant to such contract.
Merger, Consolidation, or Sale of Assets
The Company may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions, to another Person, unless:
(1) either: (a) the Company is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer,
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conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof
or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if other
than the Company) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Senior Subordinated Notes, the Senior
Subordinated Notes Indenture and the Registration Rights Agreement
applicable to the Senior Subordinated Notes pursuant to agreements
reasonably satisfactory to the Senior Subordinated Notes Trustee;
(3) immediately after such transaction no Default or Event of Default exists;
(4) except in the case of the amalgamation, consolidation or merger of the
Company (a) with or into a Wholly Owned Restricted Subsidiary, or (b) with
or into any Person solely for the purpose of effecting a change in the state
of incorporation of the Company, the Company or the Person formed by or
surviving any such consolidation or merger (if other than the Company) will,
on the date of such transaction after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated Interest
Expense Coverage Ratio test set forth in the first paragraph of the covenant
described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(5) the Company shall have delivered to the Senior Subordinated Notes Trustee an
Officer's Certificate stating that such consolidation, merger, sale,
assignment, transfer, conveyance or other disposition complies with the
Senior Subordinated Notes Indenture.
In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation, or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets by the Company to any of its Wholly Owned Restricted
Subsidiaries.
Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or Guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction (when viewed together with related Affiliate
Transactions, if any) is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of
Directors (of which there must be at least one); and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing;
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provided that (i) the Company and its Restricted Subsidiaries may enter into
Affiliate Transactions pursuant to the Supply Agreement, the Foundry Agreement,
the Asset Purchase Agreement, the Transition Services Agreement and the
Intellectual Property Rights Licensing Agreement, and may amend, modify and
supplement such agreements from time to time, so long as the Company shall have
determined that any such amendment, modification or supplement will not have a
material adverse economic effect on the Company and its Subsidiaries, taken as a
whole, and (ii) the Company and its Restricted Subsidiaries may only enter into
transactions pursuant to the Supply Agreement, the Foundry Agreement, the Asset
Purchase Agreement, the Transition Services Agreement and the Intellectual
Property Rights Licensing Agreement, and amend, modify and supplement such
agreements from time to time, in circumstances in which clause (i) is not
applicable, if a majority of the disinterested members of the Board of Directors
(of which there must be at least one) shall have approved such transaction,
amendment, modification or supplement; provided, further, that in the case of
both clauses (i) and (ii), the Company shall deliver to the Senior Subordinated
Notes Trustee within 30 days of such transaction, amendment, modification or
supplement an Officer's Certificate (A) describing the transaction, amendment,
modification or supplement approved, (B) in the case of transactions,
amendments, modifications and supplements to which clause (i) is applicable,
setting forth the determination of the Company required pursuant to clause (i),
and (C) in the case of transactions, amendments, modifications and supplements
to which clause (ii) is applicable, attaching a resolution of the Board of
Directors certifying that such Affiliate Transaction complies with this
covenant.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraphs:
(1) any employment agreement or arrangement entered into by the Company or any
of its Restricted Subsidiaries or any employee benefit plan available to
employees of the Company and its Subsidiaries generally, in each case in the
ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary;
(2) Affiliate Transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company and indemnity provided on behalf of officers,
directors and employees of the Company or any of its Restricted Subsidiaries
as determined in good faith by the Board of Directors of the Company;
(4) Any Affiliate Transactions pursuant to which the Company makes short-term
advances or otherwise makes short-term loans to ASI, which advances or loans
are to be repaid by ASI (i) within three months from the date of such
advance or loan and (ii) by offsets by the Company of amounts payable by the
Company to ASI pursuant to the Supply Agreements, if a majority of the
disinterested members of the Board of Directors (of which there must be at
least one) shall have approved such transaction, amendment, modification or
supplement; provided that the total amount of such advances and loans
outstanding at any one time shall not exceed $50.0 million; and
(5) Any Restricted Payments that are permitted by the provisions of the Senior
Subordinated Notes Indenture described above under the caption
"-- Restricted Payments."
For purposes of this "Transactions with Affiliates" covenant, any
transaction or series of related Affiliate Transactions between the Company or
any Restricted Subsidiary and an Affiliate that is approved by a majority of the
disinterested members of the Board of Directors (of which there must be at least
one to utilize this method of approval) and evidenced by a board resolution or
for which a fairness opinion has been issued shall be deemed to be on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and thus shall be
permitted under this "Transactions with Affiliates" covenant.
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Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries acquires, creates or
capitalizes a Domestic Subsidiary after the date of the Indenture that is a
Significant Subsidiary, then that newly acquired, created or capitalized
Subsidiary must become a Guarantor and execute a supplemental indenture
satisfactory to the Senior Subordinated Notes Trustee and deliver an Opinion of
Counsel to the Senior Subordinated Notes Trustee within 10 Business Days of the
date on which it was acquired or created. Each Senior Subordinated Subsidiary
Guarantee will be subordinated to the prior payment in full of all Senior Debt
of that Subsidiary Guarantor, and senior in right of payment to any future
subordinated Indebtedness of such Subsidiary Guarantor.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be an Investment made as of the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of the covenant described above under the
caption "-- Restricted Payments" or Permitted Investments, as applicable. All
such outstanding Investments will be valued at their fair market value at the
time of such designation. That designation will only be permitted if such
Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default.
Limitation on Issuances and Sales of Equity Interests in Wholly Owned Restricted
Subsidiaries
The Company will not, and will not permit any of its Wholly Owned Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Wholly Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company), unless:
(1) such transfer, conveyance, sale, lease or other disposition is of all the
Equity Interests in such Wholly Owned Restricted Subsidiary or immediately
following such transfer, conveyance, sale, lease or other disposition, the
Wholly Owned Restricted Subsidiary is a Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above
under the caption "Repurchase at the Option of Holders -- Asset Sales."
In addition, the Company will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company unless immediately following such issuance the Wholly
Owned Restricted Subsidiary is a Restricted Subsidiary.
PROVISIONS COMMON TO BOTH SENIOR NOTES AND SENIOR SUBORDINATED NOTES
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to the Company, the Company
will make all principal, premium and interest payments on those Notes in
accordance with those instructions. All other payments on the Notes will be made
at the office or agency of the Paying Agent and Registrar within the City and
State of New York unless the Company elects to make interest payments by check
mailed to the Holders at their address set forth in the register of Holders.
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PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustees will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders of
the Notes, and the Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indentures.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is offered to be paid and is paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
REPORTS
Whether or not required by the Commission, so long as any Notes are
outstanding, the Company shall file with the Commission (if permitted) all of
the reports and other information as it would be required to file with the
Commission by Sections 13(a) and 15(d) under the Securities Exchange Act of
1934, as amended, as if it were subject thereto. The Company shall supply the
Trustees and each Holder of Notes, or shall supply to the Trustees for
forwarding to each Holder of Notes, without cost to any such Holder, copies of
such reports and other information (whether or not so filed).
EVENTS OF DEFAULT AND REMEDIES
With respect to each of the Senior Notes and the Senior Subordinated Notes,
respectively, each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on the Notes, (with
respect to the Senior Subordinated Notes, whether or not prohibited by the
subordination provisions of the Senior Subordinated Notes Indenture);
(2) default in payment when due of the principal of or premium, if any, on the
Notes, (with respect to the Senior Subordinated Notes, whether or not
prohibited by the subordination provisions of the Senior Subordinated Notes
Indenture);
(3) failure by the Company or any of its Subsidiaries to make any payment
required to be made under the provisions described under the captions
"Repurchase at the Option of Holders -- Change of Control" or "-- Asset
Sales";
(4) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of the other agreements in the Indentures is
provided to the Company by the Trustees or the Holders of at least 25% in
principal amount of then outstanding Notes;
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(5) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is
created after the date of the Indentures, in an aggregate principal amount
of $10.0 million or more, if that default:
(a) is caused by a failure to pay principal of such Indebtedness at the
Stated Maturity thereof (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to the Stated
Maturity thereof;
(6) failure by the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken together, would constitute a Significant
Subsidiary, to pay final judgments aggregating in excess of $10.0 million
(other than amounts covered by insurance), which judgments are not paid,
discharged or stayed for a period of 60 days; and
(7) certain events of bankruptcy or insolvency with respect to the Company or
any of its Significant Subsidiaries, or any group of Subsidiaries that,
taken together, would constitute a Significant Subsidiary.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency, with respect to the Company, any Subsidiary that is a Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
immediately without further action or notice. If any other Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately.
Holders of the Notes may not enforce their respective Indentures or the
Notes except as provided in the Indentures. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct a Trustee in its exercise of any trust or power. A Trustee may withhold
from Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to a Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the respective Indentures except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indentures, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs at any time (with
respect to the Senior Notes) or prior to May 1, 2004 (with respect to the Senior
Subordinated Notes), by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company to encourage or induce the Holders of the
Notes to accelerate the Notes to be due and payable immediately, then the
premium specified in the respective Indenture shall also become immediately due
and payable to the extent permitted by law upon the acceleration of the Notes.
The Company is required to deliver to the Trustees annually a statement
regarding compliance with the Indentures. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustees a statement
specifying such Default or Event of Default.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantors under the Notes, the Indentures, the Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to either or both of the outstanding Senior
Notes and Senior Subordinated Notes and all obligations of the Guarantors
discharged with respect to their Subsidiary Guarantees ("Legal Defeasance"),
except for:
(1) the rights of Holders of outstanding Notes to receive payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages on
such Notes when such payments are due from the trust referred to below;
(2) the Company's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indentures.
In addition, the Company may, at its option and at any time, elect to have
the Obligations of the Company and the Guarantors released with respect to
certain covenants that are described in the Indentures ("Covenant Defeasance")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (other than non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Liquidated Damages on the outstanding Notes on the stated maturity or on
the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(2) in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date of
the Indentures, 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 Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal 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 Legal Defeasance had not occurred;
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(3) in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes 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;
(4) no Default or Event of Default shall have occurred and be continuing either:
(a) on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit); or (b)
or insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than the Indentures) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) the Company must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring
the Holders of Notes over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others;
(8) the Company must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with; and
(9) release any Guarantor from any of its Obligations under its Guarantee of the
Notes or the Indentures, except in accordance with the terms of the
Indentures.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to the exceptions specified in the following paragraphs, the
Indentures may be amended with the consent of the Holders of a majority of the
aggregate outstanding principal amount of each of the Senior Notes or the Senior
Subordinated Notes, as applicable, and any Default or compliance with any
provision of the Indentures may be waived with the consent of the Holders of a
majority of the aggregate outstanding principal amount of each of the Senior
Notes or the Senior Subordinated Notes, as applicable.
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or alter
the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the captions
"-- Description of the Senior Notes -- Repurchase at the Option of Holders"
and "-- Description of the Senior Subordinated Notes -- Repurchase at the
Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any Note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
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(5) make any Note payable in money other than that stated in the Notes;
(6) make any change in the provisions of the Indentures relating to waivers of
past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(7) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the captions
"-- Description of the Senior Notes -- Repurchase at the Option of Holders"
or "-- Description of the Senior Subordinated Notes -- Repurchase at the
Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the Senior
Subordinated Notes Indenture relating to subordination that adversely affects
the rights of the Holders of the Senior Subordinated Notes will require the
consent of the Holders of at least 75% in aggregate principal amount of Senior
Subordinated Notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indentures or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to Holders of
Notes in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(4) to make any change that would provide any additional rights or benefits to
the Holders of Notes or that does not adversely affect the legal rights
under the Indentures of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indentures under the Trust Indenture Act.
CONCERNING THE TRUSTEE
If a Trustee becomes a creditor of the Company or any Guarantor, the
Indentures limit its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. Such Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to a Trustee, subject to certain
exceptions. The Indentures provide that in case an Event of Default shall occur
and be continuing, the Trustees will be required, in the exercise of their
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustees will be under no obligation to
exercise any of their rights or powers under the Indentures at the request of
any Holder of Notes, unless such Holder shall have offered to the Trustees
security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the registration
statement and the exhibits to the registration statement, which include the
Indentures and Registration Rights Agreements, without charge by
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writing to Amkor Technology, Inc., 1345 Enterprise Drive, West Chester,
Pennsylvania 19380, Attention: Kevin Heron, Esq.
GOVERNING LAW
The Indentures provide that they and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of laws to the extent that the
application of the law of another jurisdiction would be required thereby.
ENFORCEABILITY OF JUDGMENTS
Since most of the assets of the Company are outside the United States, any
judgments obtained in the United States against the Company, including judgments
with respect to the payment of principal, premium, interest, Liquidated Damages,
Change of Control Payment, offer price, redemption price or other amounts
payable under the Notes, may be not collectible within the United States.
The Company has been informed by its Korean counsel, Kim & Chang, that the
laws of the Republic of Korea permit an action to be brought in a court of
competent jurisdiction in the Republic of Korea (a "Korean Court") on any final
and conclusive judgment in personam of any federal or state court located in the
Borough of Manhattan in The City of New York ("New York Court") that is not
impeachable as void or voidable under the internal laws of the State of New York
for a sum certain in respect of the enforcement of the Indentures or the Notes
provided that (i) such judgment was finally given by the New York Court having
valid jurisdiction, (ii) the defendant against whom such judgment was awarded
received service of process in conformity with the laws of the jurisdiction of
the New York Court rendering judgment otherwise than by publication or responded
to the action without being served with process, (iii) recognition and
enforcement of such judgment is not contrary to public policy of Korea, and (iv)
judgments of the courts of Korea are accorded similar treatment under the laws
of the State of New York.
The Company has been informed by its Philippines counsel, Ortega, Del
Castillo, Bacorro, Odulio, Calma & Carbonell Law Offices, that the Rules of
Court of the Republic of the Philippines and jurisprudence related thereto
permit an action to be brought in a court of competent jurisdiction in the
Republic of the Philippines (a "Philippines Court") on any final and conclusive
judgment in personam of any New York Court that is not impeachable as void or
voidable under the internal laws of the State of New York for a sum certain in
respect of the enforcement of the Indentures or the Notes if (i) the court
rendering such judgment had jurisdiction over the subject matter and the
judgment debtor, as recognized by the Philippines Court (and submission by the
Company in the Indentures to the non-exclusive jurisdiction of the New York
Court will be sufficient for that purpose), (ii) such judgment was not obtained
by want of jurisdiction or lack of notice to any affected party or collusion or
fraud or clear mistake of law or fact and the enforcement thereof would not be
inconsistent with public policy, as these terms are interpreted by a Philippines
Court, (iii) the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of such foreign revenue, expropriatory or penal laws
and (iv) the action to enforce such judgment is commenced within the applicable
limitation period. Provided conditions (i) through (iv) as set forth above are
satisfied, the Company has been advised by Ortega, Del Castillo, Bacorro,
Odulio, Calma & Carbonell that it knows of no reason, based upon public policy
under the federal laws of the Republic of the Philippines for avoiding
recognition of a judgment of a New York Court to enforce the Indentures or the
Notes.
BOOK-ENTRY, DELIVERY AND FORM AND TRANSFER
The old Notes were initially in the form of one or more registered global
notes without interest coupons (collectively, the "old Global Notes"). Upon
issuance, the old Global Notes were deposited with the Trustee, as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name
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of DTC or its nominee for credit to the accounts of DTC's Direct Participants
and Indirect Participants (as defined below). Beneficial interests in all old
Global Notes and all old Certificated Notes (as defined below), if any, will be
subject to certain restrictions on transfer and will bear a restrictive legend.
See "Risk Factors -- Consequences of Not Tendering Old Notes." In addition,
transfer of beneficial interests in any Global Notes will be subject to the
applicable rules and procedures of DTC and its Direct or Indirect Participants,
which may change from time to time.
The new Notes initially will be in the form of one or more registered global
notes without interest coupons (collectively, the "new Global Notes"). Upon
issuance, the new Global Notes will be deposited with the Trustee as, custodian
for DTC, in New York, New York, and registered in the name of DTC or its nominee
for credit to the accounts of DTC's Direct Participants and Indirect
Participants. Transfer of beneficial interests in new Global Notes will be
subject to the applicable rules and procedures of DTC and its Direct or Indirect
Participants, which may change from time to time.
The old and new Global Notes may be transferred, in whole and not in part,
only to another nominee of DTC or to a successor of DTC or its nominee in
certain limited circumstances. Beneficial interests in the old and new Global
Notes may be exchanged for Notes in certificated form in certain limited
circumstances. See "-- Transfer of Interests in Global Notes for Certificated
Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The Notes may
be presented for registration of transfer and exchange at the offices of the
Registrar.
Depositary Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
other entities that clear through or maintain a direct or indirect, custodial
relationship with a Direct Participant (collectively, the "Indirect
Participants").
DTC has advised the Company that, pursuant to DTC's procedures, DTC will
maintain records of the ownership interests of Direct Participants in the old
and new Global Notes and the transfer of ownership interests by and between
Direct Participants. DTC will not maintain records of the ownership interests
of, or the transfer of ownership interests by and between, Indirect Participants
or other owners of beneficial interests in the old and new Global Notes. Direct
Participants and Indirect Participants must maintain their own records of the
ownership interests of, and the transfer of ownership interests by and between,
Indirect Participants and other owners of beneficial interests in the old and
new Global Notes.
Investors in the old and new Global Notes may hold their interests therein
directly through DTC if they are Direct Participants in DTC or indirectly
through organizations that are Direct Participants in DTC. All ownership
interests in any old or new Global Notes may be subject to the procedures and
requirements of DTC.
The laws of some states in the United States require that certain persons
take physical delivery in definitive, certificated form, of securities that they
own. This may limit or curtail the ability to transfer beneficial interests in
an old or new Global Note to such persons. Because DTC can act only on behalf of
Direct Participants, which in turn act on behalf of Indirect Participants and
others, the ability of a person having a beneficial interest in an old or new
Global Note to pledge such interest to persons or entities that are not Direct
Participants in DTC, or to otherwise take actions in respect of such interests,
may be affected by the lack of physical certificates evidencing such interests.
For certain other restrictions on the transferability of the Notes see
"-- Transfers of Interests in Global Notes for Certificated Notes."
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EXCEPT AS DESCRIBED IN "-- TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR
CERTIFICATED NOTES", OWNERS OF BENEFICIAL INTERESTS IN THE OLD AND NEW GLOBAL
NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE INDENTURES FOR ANY PURPOSE OTHER THAN WITH
RESPECT TO THE PAYMENT OF LIQUIDATED DAMAGES.
Under the terms of the Indentures, the Company and the Trustees will treat
the persons in whose names the Notes are registered (including Notes represented
by the old and new Global Notes) as the owners thereof for the purpose of
receiving payments and for any and all other purposes whatsoever. Payments in
respect of the principal, premium, Liquidated Damages, if any, and interest on
old and new Global Notes registered in the name of DTC or its nominee will be
payable by the Trustees to DTC or its nominee as the registered holder under the
Indentures. Consequently, neither the Company, the Trustees nor any agent of the
Company or the Trustees has or will have any responsibility or liability for (i)
any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Direct Participant's or Indirect
Participant's records relating to the beneficial ownership interests in any
Global Note or (ii) any other matter relating to the actions and practices of
DTC or any of its Direct Participants or Indirect Participants.
DTC has advised the Company that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the
Notes is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the old and new Global Notes as
shown on DTC's records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the Notes will be governed by standing
instructions and customary practices between them and will not be the
responsibility of DTC, the Trustee or the Company. Neither the Company nor the
Trustees will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the Notes, and the
Company and the Trustees may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
Notes for all purposes.
The old and new Global Notes will trade in DTC's Same-Day Funds Settlement
System and, therefore, transfers between Direct Participants in DTC will be
effected in accordance with DTC's procedures, and will be settled in immediately
available funds. Transfers between Indirect Participants who hold an interest
through a Direct Participant will be effected in accordance with the procedures
of such Direct Participant but generally will settle in immediately available
funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Direct
Participants to whose account interests in the old and new Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of the Notes to which such Direct Participant or Direct Participants has or have
given direction. However, if there is an Event of Default under the Notes, DTC
reserves the right to exchange old and new Global Notes (without the direction
of one or more of its Direct Participants) for Notes in certificated form, and
to distribute such certificated forms of Notes to its Direct Participants. See
"-- Transfers of Interests in Global Notes for Certificated Notes."
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the old and new Global Notes among Direct Participants, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustees shall have any responsibility for the performance by DTC or its Direct
and Indirect Participants of their respective obligations under the rules and
procedures governing any of their operations.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
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Transfers of Interests in Global Notes for Certificated Notes
An entire old or new Global Note may be exchanged for definitive Notes in
registered, certificated form without interest coupons ("Certificated Notes") if
(i) DTC (x) notifies the Company that it is unwilling or unable to continue as
depositary for the old and new Global Notes and the Company thereupon fails to
appoint a successor depositary within 90 days or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the appropriate Trustee in writing that it elects to cause the issuance
of Certificated Notes or (iii) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Notes. In any such case, the
Company will notify the appropriate Trustee in writing that, upon surrender by
the Direct and Indirect Participants of their interest in such Global Note,
Certificated Notes will be issued to each person that such Direct and Indirect
Participants and the DTC identify as being the beneficial owner of the related
Notes.
Beneficial interests in old and new Global Notes held by any Direct or
Indirect Participant may be exchanged for Certificated Notes upon request to
DTC, by such Direct Participant (for itself or on behalf of an Indirect
Participant), to the appropriate Trustee in accordance with customary DTC
procedures. Certificated Notes delivered in exchange for any beneficial interest
in any old or new Global Note will be registered in the names, and issued in any
approved denominations, requested by DTC on behalf of such Direct or Indirect
Participants (in accordance with DTC's customary procedures).
Neither the Company nor the Trustees will be liable for any delay by the
holder of any old or new Global Note or DTC in identifying the beneficial owners
of Notes, and the Company and the Trustees may conclusively rely on, and will be
protected in relying on, instructions from the holder of an old or new Global
Note or DTC for all purposes.
Same Day Settlement and Payment
The Indentures will require that payments in respect of the Notes
represented by the old and new Global Notes (including principal, premium, if
any, and interest and Liquidated Damages, if any) be made by wire transfer of
immediately available same day funds to the accounts specified by the holder of
interests in such old or new Global Note. With respect to Certificated Notes,
the Company will make all payments of principal, premium, Liquidated Damages, if
any, and interest by wire transfer of immediately available same day funds to
the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address. The
Company expects that secondary trading in the Certificated Notes will also be
settled in immediately available funds.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration Rights
Agreements on May 13, 1999. Pursuant to the Registration Rights Agreements, the
Company agreed to use commercially reasonable efforts to file with the
Commission the Exchange Offer Registration Statement on the appropriate form
under the Securities Act with respect to the Exchange Notes. The registration
statement of which this prospectus forms a part constitutes such Exchange Offer
Registration Statement. Pursuant to the Exchange Offer Registration Statement of
which this prospectus forms a part, the Company is offering to the Holders of
Transfer Restricted Securities who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for new Notes. As
described above, the terms of new Senior Notes will be identical in all material
respects to those of the old Senior Notes and the terms of the new Senior
Subordinated Notes will be identical in all material respects to those of the
old Senior Subordinated Notes, except that the new Notes will not contain terms
with respect to transfer restrictions, registration rights or payment of
Liquidated Damages. See "Additional Terms of New Notes."
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If (i) the Exchange Offer is not permitted by applicable law or Commission
policy or (ii) any Holder of Series A Notes which are Transfer Restricted
Securities notifies the Company prior to the 20th business day following the
consummation of the Exchange Offer that (a) it is prohibited by law or
Commission policy from participating in the Exchange Offer, (b) it may not
resell the new Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus, and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by it,
or (c) it is a broker-dealer and holds old Notes acquired directly from the
Company or any of the Company's affiliates, the Company will file with the
Commission a Shelf Registration Statement to register for public resale the
Transfer Restricted Securities held by any such Holder who provides the Company
with certain information for inclusion in the Shelf Registration Statement.
For the purposes of the Registration Rights Agreements, "Transfer Restricted
Securities" means each Note until:
(1) the date on which such Note has been exchanged by a Person other than a
broker-dealer for an Exchange Note in the Exchange Offer;
(2) following the exchange by a broker-dealer in the Exchange Offer of a Note
for an Exchange Note, the date on which such Exchange Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement;
(3) the date on which such Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement; or
(4) the date on which such Note is distributed to the public pursuant to Rule
144 under the Securities Act.
The Registration Rights Agreements provides that:
(1) the Company will use commercially reasonable efforts to file an Exchange
Offer Registration Statement with the Commission on or prior to September
10, 1999;
(2) the Company will use commercially reasonable efforts to have the Exchange
Offer Registration Statement declared effective by the Commission on or
prior to December 9, 1999;
(3) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Company will
(a) commence the Exchange Offer; and
(b) use commercially reasonable efforts to issue on or prior to 30 business
days, or longer, if required by the federal securities laws, after the
date on which the Exchange Offer Registration Statement was declared
effective by the Commission, Exchange Notes in exchange for all Notes
tendered prior thereto in the Exchange Offer; and
(4) if obligated to file the Shelf Registration Statement, the Company will use
commercially reasonable efforts to file the Shelf Registration Statement
with the Commission on or prior to 60 days after such filing obligation
arises and to cause the Shelf Registration to be declared effective by the
Commission on or prior to 120 days after such obligation arises.
If:
(1) the Company fails to file any of the registration statements required by
the Registration Rights Agreements on or before the date specified for
such filing; or
(2) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"); or
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(3) the Company fails to consummate the Exchange Offer within 30 business
days of the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement; or
(4) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each
such event referred to in clauses (1) through (4) above, a "Registration
Default"),
then the Company will pay Liquidated Damages to each Holder of Notes, with
respect to the first 90-day period immediately following the occurrence of the
first Registration Default, at a rate equal to 0.25% per annum. The rate of such
Liquidated Damages will increase by 0.25% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages for all Registration Defaults of 1.00%
per annum. If, after the cure of all Registration Defaults then in effect, there
is a subsequent Registration Default, the rate of Liquidated Damages for such
subsequent Registration Default shall initially be 0.25%, regardless of the
Liquidated Damages rate in effect with respect to any prior Registration Default
at the time of the cure of such Registration Default.
All accrued Liquidated Damages will be paid by the Company on each Damages
Payment Date to the Global Note Holder by wire transfer of immediately available
funds or by federal funds check and to Holders of Certificated Notes by wire
transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreements) in order to
participate in the Exchange Offer and will be required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreements in order to have their Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above. Holders of Notes will also be
required to suspend their use of the prospectus included in the Shelf
Registration Statement under certain circumstances upon receipt of written
notice to that effect from the Company. By acquiring Transfer Restricted
Securities, a Holder will be deemed to have agreed to indemnify the Company
against certain losses arising out of information furnished by such Holder in
writing for inclusion in any Shelf Registration Statement. Holders of Notes will
also be required to suspend their use of the prospectus included in the Shelf
Registration Statement under certain circumstances upon receipt of written
notice to that effect from the Company.
CONSENT TO JURISDICTION AND SERVICE
The Indentures provide that the Company will irrevocably appoint CT
Corporation System as its agent for service of process in any suit, action, or
proceeding with respect to the Indentures or the Notes and for actions brought
under federal or state securities laws in any federal or state court located in
the Borough of Manhattan in The City of New York, and submits to such
jurisdiction.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indentures. Reference
is made to the Indentures for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
Cross references to captions shall mean the respective caption, as appropriate,
under the subsections "-- Description of the Senior Notes" and "-- Description
of the Senior Subordinated Notes."
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether
or not such Indebtedness is incurred in connection with, or in
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contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"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 purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more, or an
agreement, obligation or option to purchase 10% or more, of the Voting Stock of
a Person shall be deemed to be control. For purposes of this definition, the
terms "controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"Asset Purchase Agreement" means that certain Asset Purchase Agreement dated
as of December 30, 1998, between the Company and ASI, as the same may be
extended or renewed from time to time without alteration of the material terms
thereof.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or rights,
other than sales of inventory in the ordinary course of business consistent
with past practices; provided that the sale, conveyance or other disposition
of all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
respective Indentures described above under the captions "Repurchase at the
Option of Holders -- Change of Control" and/or the provisions described
above under the captions "Certain Covenants -- Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries,
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that: (a) involves
assets having a fair market value of less than $2.0 million; or (b) results
in net proceeds to the Company and its Restricted Subsidiaries of less than
$2.0 million;
(2) a transfer of assets between or among the Company and any Restricted
Subsidiary;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or
to another Wholly Owned Restricted Subsidiary;
(4) the sale, lease, conveyance or other disposition of any Receivable Program
Assets by the Company or any Restricted Subsidiary in connection with a
Receivables Program;
(5) the sale, lease, conveyance or other disposition of any inventory,
receivables or other current assets by the Company or any of its Restricted
Subsidiaries in the ordinary course of business;
(6) the granting of a Permitted Lien;
(7) the licensing by the Company or any Restricted Subsidiary of intellectual
property in the ordinary course of business or on commercially reasonable
terms;
(8) the sale, lease, conveyance or other disposition of obsolete or worn out
equipment or equipment no longer useful in the Company's business; and
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(9) the making or liquidating of any Restricted Payment or Permitted Investment
that is permitted by the covenant described above under the captions
"Certain Covenants -- Restricted Payments".
"Attributable Debt" in respect of a sale and leaseback transaction involving
an operating lease means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than 12 months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of 12
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding 12 months and overnight bank deposits, in each
case, with any domestic commercial bank having capital and surplus in excess
of $500 million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing
within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
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"Change of Control" means the occurrence of any of the following:
(1) the adoption of a plan relating to the liquidation or dissolution of the
Company;
(2) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than a Permitted Holder, becomes the Beneficial Owner,
directly or indirectly, of more than 35% of the Voting Stock of the Company,
measured by voting power rather than number of shares, and such percentage
represents more than the aggregate percentage of the Voting Stock of the
Company, measured by voting power rather than number of shares, as to which
any Permitted Holder is the Beneficial Owner; or
(3) the first date during any consecutive two year period on which a majority of
the members of the Board of Directors of the Company are not Continuing
Directors.
For purposes of this definition, any transfer of an Equity Interest of an
entity that was formed for the purpose of acquiring Voting Stock of the Company
will be deemed to be a transfer of such portion of Voting Stock as corresponds
to the portion of the equity of such entity that has been so transferred.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision
for taxes was deducted in computing such Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net payments, if any, pursuant to Hedging Obligations), to the extent
that any such expense was deducted in computing such Consolidated Net
Income; plus
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; plus
(5) non-cash items (other than any non-cash items that will require cash
payments in the future or that relate to foreign currency translation)
decreasing such Consolidated Net Income for such period, other than items
that were accrued in the ordinary course of business, in each case, on a
consolidated basis and determined in accordance with GAAP; minus
(6) non-cash items (other than any non-cash items that will require cash
payments in the future or that relate to foreign currency translation)
increasing such Consolidated Net Income for such period, other than items
that were accrued in the ordinary course of business, in each case, on a
consolidated basis and determined in accordance with GAAP.
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Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Restricted Subsidiary of the Company shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Company only to the extent that
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 that Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments, if
any, pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus
(3) interest actually paid by the Company or any Restricted Subsidiary under any
Guarantee of Indebtedness of another Person; plus
(4) the product of all dividend payments, whether or not in cash, on any series
of preferred stock of such Person or any of its Restricted Subsidiaries,
other than dividend payments on Equity Interests payable solely in Equity
Interests of the Company (other than Disqualified Stock) or to the Company
or a Restricted Subsidiary of the Company.
"Consolidated Interest Expense Coverage Ratio" means with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of such
Person and its Restricted Subsidiaries for such period to the Consolidated
Interest Expense of such Person for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Consolidated Interest Expense Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Consolidated
Interest Expense Coverage Ratio is made (the "Calculation Date"), then the
Consolidated Interest Expense Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, Guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Consolidated Interest Expense
Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (3) of
the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded; and
(3) the Consolidated Interest Expense attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, but only
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to the extent that the obligations giving rise to such Consolidated Interest
Expense will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Consolidated Net Assets" means, with respect to any specified Person as of
any date, the total assets of such Person as of such date less (i) the total
liabilities of such Person as of such date, (ii) the amount of any Disqualified
Stock as of such date and (iii) any minority interests reflected on the balance
sheet of such Person as of such date.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or a Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or
its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded;
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified Person or one of its
Subsidiaries; and
(5) the cumulative effect of a change in accounting principles shall be
excluded.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of the Indentures; or
(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Convertible Notes" means the 5 3/4% Convertible Subordinated Notes due May
1, 2003 issued by the Company pursuant to that certain Indenture dated as of May
6, 1998, between the Company and State Street Bank and Trust Company, as
Trustee, in an aggregate principal amount outstanding not to exceed $207.0
million.
"Credit Facilities" means, with respect to the Company or any Subsidiary,
one or more debt facilities or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Designated Senior Debt" means any Senior Debt permitted under the
Indentures the outstanding principal amount of which is, or which provides for
commitments to extend Senior Debt, in the amount of $25.0 million
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or more and that has been designated by the Company as "Designated Senior Debt"
and shall include the Senior Notes.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the captions "Certain Covenants -- Restricted Payments."
"Domestic Subsidiary" means a Restricted Subsidiary that is (1) formed under
the laws of the United States of America or a state or territory thereof or (2)
as of the date of determination, treated as a domestic entity or a partnership
or a division of a domestic entity for United State federal income tax purposes;
and, in either case, is not owned, directly or indirectly, by the Company or an
entity that is not described in clauses (1) or (2) above.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any offering for cash of common stock of the Company
or options, warrants or rights with respect to its common stock so long as
shares of the common stock of the Company remain listed on a national securities
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System.
"Exchange Notes" means, collectively, the Senior Exchange Notes and the
Senior Subordinated Exchange Notes.
"Existing Indebtedness" means Indebtedness of the Company and its Restricted
Subsidiaries in existence on the date of the Indentures, until such amounts are
repaid.
"Foreign Subsidiary" means a Subsidiary of the Company that is not a
Domestic Subsidiary.
"Foundry Agreement" means that certain Foundry Agreement dated as of January
1, 1998, among the Company, AEI, CIL, ASI and AUSA, as the same may be extended
or renewed from time to time without alteration of the material terms thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, through letters of credit
or reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantor" means any future Domestic Subsidiary of the Company formed or
capitalized after the date of the Indentures that is a Significant Subsidiary
and that is required by the terms of the Indentures to execute a Senior
Subsidiary Guarantee or a Senior Subordinated Subsidiary Guarantee, as
applicable, in accordance with the provisions of the respective Indentures, and
its successors and assigns.
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"Hedging Obligations" means, with respect to any Person, the Obligations of
such Person under:
(1) swap agreements, cap agreements and collar agreements relating to interest
rates, commodities or currencies; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates, commodities or currencies.
"Indebtedness" means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) Hedging Obligations,
if and to the extent any of such indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability on a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person measured as the lesser of the fair market value of the
assets of such Person so secured or the amount of such Indebtedness) and, to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
The amount of any Indebtedness outstanding as of any date shall be the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount. In addition, the amount of any Indebtedness shall also include
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
Restricted Subsidiary of the Company, any preferred stock of such Restricted
Subsidiary.
"Intellectual Property Rights Licensing Agreement" means that certain
Intellectual Property Rights Licensing Agreement to be entered into by and
between the Company and ASI in connection with the Asset Purchase Agreement, as
the same may be extended or renewed from time to time without alteration of the
material terms thereof.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
captions "Certain Covenants -- Restricted Payments."
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"Lien" means, with respect to any asset, any mortgage, lien, pledge, fixed
or floating charge, security interest or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention
agreement, any lease in the nature thereof; provided that the term "Lien" shall
not include any lease properly classified as an operating lease in accordance
with GAAP.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however:
(1) any gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with: (a) any Asset Sale;
or (b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries;
(2) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss);
(3) any gain or loss relating to foreign currency translation or exchange; and
(4) any income or loss related to any discontinued operation.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case after taking into account any available tax credits or deductions and any
tax sharing arrangements and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any obligation that would
constitute Indebtedness), or (b) is directly or indirectly liable as a
guarantor or otherwise, other than in the form of a Lien on the Equity
Interests of an Unrestricted Subsidiary held by the Company or any
Restricted Subsidiary in favor of any holder of Non-Recourse Debt of such
Unrestricted Subsidiary;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries (other than against the Equity Interests of such
Unrestricted Subsidiary, if any).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
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"Permitted Bank Debt" means Indebtedness incurred by the Company or any
Restricted Subsidiary other than a Foreign Subsidiary pursuant to the Credit
Facilities, any Receivables Program, or one or more other term loan and/or
revolving credit or commercial paper facilities (including any letter of credit
subfacilities) entered into with commercial banks and/or financial institutions,
and any replacement, extension, renewal, refinancing or refunding thereof.
"Permitted Business" means the business of the Company and its Subsidiaries,
taken as a whole, operated in a manner consistent with past operations, and any
business that is reasonably related thereto or supplements such business or is a
reasonable extension thereof.
"Permitted Holder" means James J. Kim and his estate, spouse, siblings,
ancestors, heirs and lineal descendants, and spouses of any such persons, the
legal representatives of any of the foregoing, and the trustee of any bona fide
trust of which one or more of the foregoing are the principal beneficiaries or
the grantors or any other Person that is controlled by any of the foregoing.
"Permitted Investments" means:
(1) any Investment in the Company or in a Restricted Subsidiary;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment or in connection with the
transaction pursuant to which such Investment is made:
(a) such Person becomes a Restricted Subsidiary of the Company; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the
Company;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the captions "-- Repurchase at the Option of
Holders -- Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;
(6) any Investment in the TSTC Joint Venture; provided that the aggregate
amount of any such Investment, when taken together with all other
Investments made pursuant to this clause (6), does not exceed $30.0
million;
(7) any Investment in connection with Hedging Obligations;
(8) any Investments received (a) in satisfaction of judgments, or (b) as
payment on a claim made in connection with any bankruptcy, liquidation,
receivership or other insolvency proceeding;
(9) Investments in (a) prepaid expenses and negotiable instruments held for
collection, (b) accounts receivable arising in the ordinary course of
business (and Investments obtained in exchange or settlement of accounts
receivable for which the Company or any Restricted Subsidiary has
determined that collection is not likely), and (c) lease, utility and
worker's compensation, performance and other similar deposits arising in
the ordinary course of business;
(10) any Investment in ASI's Voting Stock pursuant to the general terms of the
commitment letter dated April 9, 1999, between the Company and ASI entered
into in connection with the consummation of ASI's "Workout" program with
certain of its creditors, together with such modifications thereto as shall
be approved by the Board of Directors of the Company; provided that the
aggregate amount of any such
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Investment, when taken together with all other Investments made pursuant to
this clause (10), does not exceed $150.0 million; and
(11) any Strategic Investment; provided that the aggregate amount of all
Investments by the Company and any Restricted Subsidiaries in Strategic
Investments shall not exceed $75.0 million; provided, further, that, except
with respect to the first $25.0 million of Strategic Investments made by
the Company, the Company would, at the time of such Strategic Investment
and after giving pro forma effect thereto as if such Strategic Investment
had been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Consolidated Interest Expense Coverage Ratio test set forth in the
first paragraph of the covenants described above under the captions
"Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock";
provided that, notwithstanding the preceding, any extension of credit or advance
by the Company or any of its Subsidiaries to a customer or supplier of the
Company or its Subsidiaries shall not be a Permitted Investment.
"Permitted Junior Securities" means securities (1) that are subordinated to
Senior Debt and any Guarantee in respect thereof, at least to the same extent as
the Notes are subordinated to Senior Debt, and all securities issued in exchange
for, or on account of, Senior Debt or any such Guarantee ("Reorganization Senior
Debt"), (2) that have a final maturity date and Weighted Average Life to
Maturity that is the same or greater than the Notes, (3) that are not subject to
any required principal payment, sinking fund payment or redemption prior to the
last scheduled final maturity date of any Reorganization Senior Debt, and (4)
that are not secured by any collateral.
"Permitted Liens" means:
(1) Liens on the assets of the Company and any Restricted Subsidiary securing
Permitted Bank Debt that was permitted by the terms of the respective
Indenture to be incurred;
(2) Liens on the assets of any Foreign Subsidiary securing Indebtedness and
other Obligations under Indebtedness of such Foreign Subsidiary that were
permitted by the terms of the respective Indenture to be incurred;
(3) Liens in favor of the Company or any Restricted Subsidiary;
(4) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with the Company or any Restricted Subsidiary
of the Company; provided that such Liens were not incurred in contemplation
of such merger or consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with the Company or the
Restricted Subsidiary;
(5) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided that such
Liens were not incurred in contemplation of such acquisition;
(6) Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in
the ordinary course of business;
(7) Liens to secure Obligations in respect of Indebtedness (including Capital
Lease Obligations) permitted by clause (4) of the second paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness, including
accessions, additions, parts, attachments, improvements, fixtures,
leasehold improvements or proceeds, if any, related thereto;
(8) Liens existing on the date of the Indentures;
(9) Liens securing Obligations of the Company and/or any Restricted Subsidiary
in respect of any Receivables Program;
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(10) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings; provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
(11) Liens imposed by law or arising by operation of law, including, without
limitation, landlords', mechanics', carriers', warehousemen's,
materialmen's, suppliers' and vendors' Liens, Liens for master's and crew's
wages and other similar Liens, in each case which are incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserves or other appropriate provisions, if any, as
shall be required by GAAP shall have been made with respect thereto;
(12) Liens incurred or pledges and deposits made in the ordinary course of
business in connection with workers' compensation and unemployment
insurance and other types of social security;
(13) Liens to secure any extension, renewal, refinancing or refunding (or
successive extensions, renewals, refinancings or refundings), in whole or
in part, of any Indebtedness secured by Liens referred to in the foregoing
clauses (4), (5), (7) and (8) of this definition; provided that such Liens
do not extend to any other property of the Company or any Restricted
Subsidiary of the Company and the principal amount of the Indebtedness
secured by such Lien is not increased;
(14) judgment Liens not giving rise to an Event of Default so long as such Lien
is adequately bonded and any appropriate legal proceedings that may have
been initiated for the review of such judgment, decree or order shall not
have been finally terminated or the period within which such proceedings
may be initiated shall not have expired;
(15) Liens securing obligations of the Company under Hedging Obligations
permitted to be incurred under clause (6) of the second paragraph of the
covenants entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock" or any collateral for the Indebtedness to which such Hedging
Obligations relate;
(16) Liens upon specific items of inventory or other goods and proceeds of any
Person securing such Person's obligations in respect of banker's
acceptances issued or credited for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or goods;
(17) Liens securing reimbursement obligations with respect to commercial letters
of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(18) Liens arising out of consignment or similar arrangements for the sale of
goods in the ordinary course of business;
(19) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation
of goods;
(20) Liens securing other Indebtedness not exceeding $10.0 million at any time
outstanding;
(21) Liens securing Permitted Refinancing Indebtedness, provided that such Liens
do not extend to any other property of the Company or any Restricted
Subsidiary of the Company and the principal amount of the Indebtedness
secured by such Lien is not increased; and
(22) Liens on the Equity Interests of Unrestricted Subsidiaries securing
obligations of Unrestricted Subsidiaries not otherwise prohibited by the
Indentures.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest or premium (including
any make-whole premium), if any, on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; provided that if the original maturity date of such Indebtedness
is after the Stated Maturity of the Senior Notes, then such Permitted
Refinancing Indebtedness shall have a maturity at least 180 days after the
Senior Notes;
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded is subordinated in right of payment to the Senior Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the
Senior Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Qualified Proceeds" means any of the following or any combination of the
following:
(1) any Cash Equivalents;
(2) any liabilities (as would be shown on the Company's or such Restricted
Subsidiary's balance sheet if prepared in accordance with GAAP on the date
of the corresponding Asset Sale), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases or
indemnifies the Company or such Restricted Subsidiary from further
liability;
(3) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash within 90 days after such
Asset Sale (to the extent of the cash received in that conversion);
(4) long-term assets that are used or useful in a Permitted Business; and
(5) all or substantially all of the assets of, or a majority of the Voting Stock
of, any Permitted Business;
provided, however, that in the case of clauses (4) and (5) above, the Asset Sale
transaction shall be with a non-Affiliate and the amount of long-term assets or
Voting Stock received in the Asset Sale transaction shall not exceed 10% of the
consideration received.
"Receivables Program" means, with respect to any Person, an agreement or
other arrangement or program providing for the advance of funds to such Person
against the pledge, contribution, sale or other transfer of encumbrances of
Receivables Program Assets of such Person or such Person and/or one or more of
its Subsidiaries.
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<PAGE> 84
"Receivables Program Assets" means all of the following property and
interests in property, including any undivided interest in any pool of any such
property or interests, whether now existing or existing in the future or
hereafter arising or acquired:
(1) accounts;
(2) accounts receivable, general intangibles, instruments, contract rights,
documents and chattel paper (including, without limitation, all rights to
payment created by or arising from sales of goods, leases of goods, or the
rendition of services, no matter how evidenced, whether or not earned by
performance);
(3) all unpaid seller's or lessor's rights (including, without limitation,
rescission, replevin, reclamation and stoppage in transit) relating to any
of the foregoing or arising therefrom;
(4) all rights to any goods or merchandise represented by any of the foregoing
(including, without limitation, returned or repossessed goods);
(5) all reserves and credit balances with respect to any such accounts
receivable or account debtors;
(6) all letters of credit, security or Guarantees of any of the foregoing;
(7) all insurance policies or reports relating to any of the foregoing;
(8) all collection or deposit accounts relating to any of the foregoing;
(9) all books and records relating to any of the foregoing;
(10) all instruments, contract rights, chattel paper, documents and general
intangibles relating to any of the foregoing; and
(11) all proceeds of any of the foregoing.
"Receivables Program Debt" means, with respect to any Person, the unreturned
portion of the amount funded by the investors under a Receivables Program of
such Person.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Debt" (will appear in the Senior Subordinated Notes Indenture only)
means:
(1) the Senior Notes and all Obligations under the Senior Notes Indenture;
(2) all Indebtedness outstanding under Permitted Bank Debt and all Hedging
Obligations with respect thereto;
(3) any other Indebtedness permitted to be incurred by the Company under the
terms of the Indentures, unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated
in right of payment to the Senior Subordinated Notes; and
(4) any Guarantee by the Company or any Guarantor of any Indebtedness of any
Foreign Subsidiary incurred in compliance with the Indentures;
(5) all Obligations with respect to the items listed in the preceding clauses
(1), (2), (3) and (4).
Notwithstanding anything to the contrary in the preceding, Senior Debt (other
than any Obligations with respect to Permitted Bank Debt) will not include:
(1) any liability for federal, state, local or other taxes owed or owing by the
Company;
(2) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates;
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<PAGE> 85
(3) any trade payables;
(4) the Convertible Notes;
(5) Indebtedness evidenced by the Notes and the Subsidiary Guarantees;
(6) Indebtedness that is expressly subordinate or junior in right of payment to
any other Indebtedness of the Company;
(7) any obligation that by operation of law is subordinate to any general
unsecured obligations of the Company; or
(8) any Indebtedness that is incurred in violation of the Indentures.
"Senior Exchange Notes" means the Company's 9 1/4% Senior Notes due 2006
issued pursuant to the Senior Notes Registration Rights Agreement.
"Senior Notes" means the Company's 9 1/4% Senior Notes due 2006.
"Senior Subordinated Exchange Notes" means the Company's 10 1/2% Senior
Subordinated Notes due 2009 issued pursuant to the Senior Subordinated Notes
Registration Rights Agreement.
"Senior Subordinated Notes" means the Company's 10 1/2% Senior Subordinated
Notes due 2009.
"Senior Subordinated Subsidiary Guarantee" means a Guarantee endorsed on the
Senior Subordinated Notes by a Guarantor.
"Senior Subsidiary Guarantee" means a Guarantee endorsed on the Senior Notes
by a Guarantor.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof assuming
that the Company were the "registrant" for purposes of such definition; provided
that in no event shall a "Significant Subsidiary" include (i) any direct or
indirect Subsidiary of the Company created for the primary purpose of
facilitating one or more Receivables Programs or holding or purchasing
inventory, (ii) any non-operating Subsidiary which does not have any liabilities
to Persons other than the Company or its Subsidiaries or (iii) any Unrestricted
Subsidiary.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Strategic Investment" means any Investment in any Person (other than an
Unrestricted Subsidiary) whose primary business is related, ancillary or
complementary to a Permitted Business, and such Investment is determined in good
faith by the Board of Directors (or senior officers of the Company to whom the
Board of Directors has duly delegated the authority to make such a
determination), whose determination shall be conclusive and evidenced by a
resolution, to promote or significantly benefit the businesses of the Company
and its Restricted Subsidiaries on the date of such Investment; provided that,
with respect to any Strategic Investment or series of related Strategic
Investments involving aggregate consideration in excess of $10.0 million, the
Company shall deliver to the Trustee a resolution of the Board of Directors of
the Company set forth in an Officer's Certificate certifying that such
Investment qualifies as a Strategic Investment pursuant to this definition.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the
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<PAGE> 86
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of
such Person (or any combination thereof).
"Supply Agreement" means that certain Packaging & Test Services Agreement
dated as of January 1, 1998, among the Company, AEI, CIL, ASI and AUSA, as the
same may be extended or renewed from time to time without alteration of the
material terms thereof.
"Total Tangible Assets of the Foreign Subsidiaries" means, as of any date,
the total assets of the Foreign Subsidiaries of the Company as of such date less
the amount of the intangible assets of the Foreign Subsidiaries of the Company
as of such date.
"Transition Services Agreement" means that certain Transition Services
Agreement to be entered into by and between the Company and ASI in connection
with the Asset Purchase Agreement, as the same may be extended or renewed from
time to time without alteration of the material terms thereof.
"TSTC Joint Venture" means the joint venture created by the Shareholders'
Agreement dated as of April 10, 1998, among Acer Incorporated, Taiwan
Semiconductor Manufacturing Company Ltd., Chinfon Semiconductor & Technology
Co., Ltd., Scientek International Investment Co. Ltd., ASI (as successor in
interest to Anam Industrial Co. Ltd.), and the Company, including all amendments
thereof through the date of the Indenture.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(3) has not Guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(4) has at least one director on its board of directors that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries
and has at least one executive officer that is not a director or executive
officer of the Company or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the captions
"Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indentures and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the captions "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," the Company shall be in default
of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding
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<PAGE> 87
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the captions "Certain Covenants -- Incurrence of Indebtedness and Issuance
of Preferred Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares or similar
shares required by law to be held by third parties) shall at the time be owned
by such Person and/or by one or more Wholly Owned Restricted Subsidiaries of
such Person.
ADDITIONAL TERMS OF THE NEW NOTES
The terms of the new Senior Notes will be identical in all material respects
to those of the old Senior Notes, and the terms of the new Senior Subordinated
Notes will be identical in all material respects to the old Senior Subordinated
Notes, except that the new Notes:
- will have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer applicable to the old
Notes; and
- will not be entitled to certain registration rights under the Registration
Rights Agreement, including the provision for Liquidated Damages of up to
1.00% per annum on the old Notes. Holders of old Notes should review the
information set forth under "Prospectus Summary -- Consequences of Failure
to Exchange Old Notes," "-- Terms of Senior Notes" and "-- Terms of New
Senior Subordinated Notes."
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of the material U.S. federal
income tax considerations relating to the exchange offers and to the purchase,
ownership and disposition of the new Notes. The discussion of the federal income
tax consequences set forth below is based upon the Internal Revenue Code of
1986, as amended (the "Code"), and judicial decisions and administrative
interpretations thereunder, as of the date hereof, and such authorities may be
repealed, revoked or modified or interpreted differently so as to result in
federal income tax consequences different from those discussed below. We cannot
assure you that the Internal Revenue Service will not successfully challenge one
or more of the tax consequences described herein, and we have not obtained, nor
do we intend to obtain, a ruling from the IRS or an opinion of counsel with
respect to the U.S. federal income tax consequences of acquiring or holding new
notes.
This discussion does not purport to deal with all aspects of U.S. federal
income taxation that may be relevant to a particular holder in light of the
holder's circumstances (for example, persons subject to the alternative minimum
tax provisions of the Code). Also, it is not intended to be wholly applicable to
all
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<PAGE> 88
categories of investors, such as foreign persons, dealers in securities, banks,
insurance companies, tax-exempt organizations, and persons holding new Notes as
part of a hedging or conversion transaction or straddle or persons deemed to
sell new Notes under the constructive sale provisions of the Code, some of which
may be subject to special rules. The discussion below is premised upon the
assumption that the new Notes and old Notes are held (or would be held if
acquired) as capital assets within the meaning of Section 1221 of the Code. The
discussion also does not discuss any aspect of state, local or foreign law.
EACH HOLDER OR PROSPECTIVE HOLDER OF NEW NOTES IS STRONGLY URGED TO CONSULT
ITS OWN TAX ADVISOR WITH RESPECT TO ITS PARTICULAR TAX SITUATION INCLUDING THE
TAX EFFECT OF ANY STATE, LOCAL, FOREIGN, OR OTHER TAX LAWS AND POSSIBLE CHANGES
IN THE TAX LAWS.
EXCHANGE OF NOTES
The exchange of old Notes for new Notes pursuant to the exchange offers
should not be a taxable exchange for U.S. federal income tax purposes.
Accordingly, a holder should have the same adjusted issue price, adjusted basis
and holding period in the new Notes as it had in the old Notes immediately
before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that holds any old Notes acquired for its own account as
a result of market-making or other trading activities (a "Participating
Broker-Dealer") may exchange old Notes for new Notes. Each Participating
Broker-Dealer receiving new Notes for its own account in connection with the
exchange offers must acknowledge that it will deliver a prospectus in connection
with any resale of such new Notes. Participating Broker-Dealers may use this
prospectus during the period referred to below in connection with resales of the
new Notes received in exchange for old Notes if such old Notes were acquired by
such Participating Broker-Dealers for their own accounts. We agreed that this
prospectus may be used by a Participating Broker-Dealer in connection with
resales of such new Notes for a period ending 180 days after the effective date
of the registration statement (subject to extension under certain limited
circumstances described herein) or, if earlier, when all such new Notes have
been disposed of by such Participating Broker-Dealer. See "The Exchange
Offer -- Terms of the Exchange Offer."
We will not receive any cash proceeds from the issuance of the new Notes
offered by this prospectus. New notes received by Participating Broker-Dealers
for their own accounts in connection with the exchange offers may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the new Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any resale of the new Notes may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any broker-dealer and/or the purchasers of any
new Notes. Any Participating Broker-Dealer that resells new Notes that were
received by it for its own account in the exchange offers and any broker or
dealer that participates in a distribution of such new Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act. Any profit on any
such resale of new Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Our counsel, Wilson Sonsini Goodrich & Rosati, Palo Alto, California will
issue a legal opinion regarding the legality of the new Notes and certain other
matters. Our Korean counsel, Kim & Chang, has advised us
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<PAGE> 89
regarding the matters set forth under the caption "Description of
Notes -- Enforceability of Judgements", and our Philippines counsel, Ortega, Del
Castillo, Bacorro, Odulio, Calma & Carbonell Law Offices, has advised us as to
the matters set forth under the caption "Description of Notes -- Enforceability
of Judgements".
EXPERTS
The consolidated financial statements of Amkor Technology, Inc. and its
subsidiaries as of December 31, 1997 and 1998, and for each of the years in the
three-year period ended December 31, 1998, included in our annual report on Form
10-K incorporated by reference in this prospectus and elsewhere in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their report dated February 10, 1999 (except
with respect to the Company's proposed investment in ASI pursuant to the
financial restructuring of ASI discussed in Note 14, as to which the date is
March 29, 1999) and is included herein in reliance upon the authority of said
firm as experts in giving said report. In that report, that firm states that
with respect to the investment in ASI its opinion is based on the report of
other independent public accountants, namely Samil Accounting Corporation.
The consolidated financial statements of ASI as of December 31, 1996 and
1997, and for each of the three years in the period ended December 31, 1997,
prepared in accordance with generally accepted accounting principles in Korea,
have been audited by Samil Accounting Corporation, independent accountants,
except as they relate to Anam Engineering & Construction Co., Ltd. ("AEC"),
audited by Chong Un & Company, independent accountants, and Anam USA Inc.,
audited by Sianna, Carr & O'Connor, LLP, independent accountants, and the
investment in Amkor/Anam Pilipinas, Inc. audited by SyCip, Gorres, Velayo & Co.,
independent accountants. Such ASI financial statements are incorporated in this
Prospectus by reference to our Annual Report on Form 10-K for the year ended
December 31, 1998 in reliance on the report of such independent accountants
given on the authority of such firms as experts in auditing and accounting. The
report regarding AEC includes an explanatory paragraph with respect to the
ability of AEC to continue as a going concern and the report regarding ASI
includes an explanatory paragraph regarding changes in accounting principles,
the impact of the Korean economic situation on ASI and the ability of ASI to
continue as a going concern.
The financial statements of the Kwangju Packaging Business (K4) of ASI as of
December 31, 1997 and 1998, and for each of the three years in the period ended
December 31, 1998, prepared in accordance with generally accepted accounting
principles in the United States, incorporated in this Prospectus by reference to
our Current Report on Form 8-K dated on April 21, 1999, have been so
incorporated in reliance on the report of Samil Accounting Corporation,
independent accountants, given on the authority of said firm in auditing and
accounting.
The consolidated financial statements of ASI as of December 31, 1997 and
1998, and for each of the three years in the period ended December 31, 1998,
prepared in accordance with generally accepted accounting principles in the
United States, have been audited by Samil Accounting Corporation, independent
accountants, except as they relate to Anam Engineering & Construction Co., Ltd.
("AEC"), audited by Ahn Kwon & Co., independent accountants, and Anam USA Inc.,
audited by Sianna, Carr & O'Connor, LLP, independent accountants. Such ASI
financial statements are incorporated in this Prospectus by reference to our
Current Report on Form 8-K/A dated December 7, 1999 -- in reliance on the
reports of such independent accountants given on the authority of said firms as
experts in auditing and accounting. The report regarding ASI includes an
explanatory paragraph with the respect to the Korean economic situation, the
Workout Program and revenues from Amkor. The report regarding AEC includes and
explanatory paragraph with respect to AEC's ability to continue as a going
concern and its voluntary petition in bankruptcy. The report regarding Anam USA,
Inc. includes an explanatory paragraph with respect to ASI's Workout Program.
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- --------------------------------------------------------------------------------
OFFER TO EXCHANGE
ALL OUTSTANDING 9 1/4% SENIOR NOTES DUE MAY 1, 2006
FOR 9 1/4% SENIOR NOTES DUE MAY 1, 2006,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
ALL OUTSTANDING 10 1/2% SENIOR SUBORDINATED NOTES DUE MAY 1, 2009,
FOR 10 1/2% SENIOR SUBORDINATED NOTES DUE MAY 1, 2009,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AMKOR TECHNOLOGY, INC.
PROSPECTUS
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any Notes in any jurisdiction where it is unlawful. The information in this
prospectus is current as of December , 1999.
- --------------------------------------------------------------------------------
<PAGE> 91
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law. The Company's Amended and
Restated Certificate of Incorporation provides for the indemnification of
directors to the fullest extent permissible under Delaware law. The Company's
Bylaws provide for the indemnification of officers, directors and third parties
acting on behalf of the Company if such person acted in good faith and in a
manner reasonably believed to be in and not opposed to the best interest of the
Company, and with respect to any criminal action or proceeding, the indemnified
party had no reason to believe his conduct was unlawful. The Company has entered
into indemnification agreements with its directors and executive officers, in
addition to indemnification provided for in the Company's Bylaws, and intends to
enter into indemnification agreements with any new directors and executive
officers in the future.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 Senior Notes Indenture dated as of May 6, 1999 between the
Registrant and State Street Bank and Trust Company,
including form of 9 1/4% Senior Note Due 2006.*
4.2 Senior Subordinated Notes Indenture dated as of May 6, 1999
between the Registrant and State Street Bank and Trust
Company, including form of 10 1/2% Senior Subordinated Note
Due 2009.*
4.3 Senior Notes Registration Rights Agreement dated as of May
13, 1999 among the Registrant and the Initial Purchasers.*
4.4 Senior Subordinated Notes Registration Right Agreement dated
as of May 13, 1999 among the Registrant and the Initial
Purchasers.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.**
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Samil Accounting Corporation.
23.3 Consent of SyCip Gorres Velayo & Co.
23.4 Consent of Siana Carr & O'Connor, LLP.
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1).
23.6 Consent of Kim & Chang.**
23.7 Consent of Ortega, Del Castillo, Bacorro, Odulio, Colma &
Carbonell.**
23.8 Consent of Ahn Kwon & Co.
24.1 Power of Attorney (Included on page II-6).
25.1 Statement of Eligibility of Trustee.**
99.1 Form of Letter of Transmittal with respect to Exchange
Offer.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Exchange Agent Agreement.**
</TABLE>
- -------------------------
* Incorporated by reference to the Company's Quarterly Report on Form 10-Q
filed May 17, 1999 (File No. 000-29472).
** Incorporated by reference to the Company's Registration Statement on Form S-4
filed August 31, 1999 (File No. 333-86199).
(b) Financial Statement Schedules
II-1
<PAGE> 92
Schedules not listed above have been omitted because the information to be
set forth therein is not applicable or is shown in the financial statements or
Notes thereto.
ITEM 22. UNDERTAKING
1. We hereby undertake that, for purposes of determining any liability under
the Securities Act of 1933, each filing of our annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
2. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than our payment of expenses
incurred or paid by one of our directors, officers or controlling persons in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
3. We hereby undertake to respond to requests for information that is
incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11 or
13 of this Form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of this registration statement through the date of responding to
the request.
4. We hereby undertake to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in this registration statement
when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we have duly
caused this registration statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in the City of West Chester, State of
Pennsylvania on December 7, 1999.
AMKOR TECHNOLOGY, INC.
By: /s/ JAMES J. KIM
------------------------------------
James J. Kim
Chairman and Chief Executive Officer
(Principal Executive Officer)
II-3
<PAGE> 94
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 7,
1999 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chief Executive Officer and Chairman
- ------------------------------------------------
James J. Kim
* President and Director
- ------------------------------------------------
John N. Boruch
/s/ KENNETH JOYCE Chief Financial Officer (Principal Financial and
- ------------------------------------------------ Accounting Officer)
Kenneth Joyce
* Director
- ------------------------------------------------
Winston J. Churchill
* Director
- ------------------------------------------------
Thomas D. George
* Director
- ------------------------------------------------
Gregory K. Hinckley
* Director
- ------------------------------------------------
John B. Neff
*By: /s/ KENNETH JOYCE
- ------------------------------------------------
Kenneth Joyce
Attorney-in-fact
</TABLE>
II-4
<PAGE> 95
AMKOR TECHNOLOGY, INC.
REGISTRATION STATEMENT ON FORM S-4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Senior Notes Indenture dated as of May 6, 1999 between the
Registrant and State Street Bank and Trust Company,
including form of 9 1/4% Senior Note Due 2006.*
4.2 Senior Subordinated Notes Indenture dated as of May 6, 1999
between the Registrant and State Street Bank and Trust
Company, including form of 10 1/2% Senior Subordinated Note
Due 2009.*
4.3 Senior Notes Registration Rights Agreement dated as of May
13, 1999 among the Registrant and the Initial Purchasers.*
4.4 Senior Subordinated Notes Registration Right Agreement dated
as of May 13, 1999 among the Registrant and the Initial
Purchasers.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.**
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Samil Accounting Corporation.
23.3 Consent of SyCip Gorres Velayo & Co.
23.4 Consent of Siana Carr & O'Connor, LLP.
23.5 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1).
23.6 Consent of Kim & Chang.**
23.7 Consent of Ortega, Del Castillo, Bacorro, Odulio, Colma &
Carbonell.**
23.8 Consent of Ahn Kwon & Co.
24.1 Power of Attorney (Included on page II-6).
25.1 Statement of Eligibility of Trustee.**
99.1 Form of Letter of Transmittal with respect to Exchange
Offer.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Exchange Agent Agreement.**
</TABLE>
- -------------------------
* Incorporated by reference to the Company's Quarterly Report on Form 10-Q
filed May 17, 1999 (File No. 000-29472).
** Incorporated by reference to the Company's Registration Statement on Form S-4
filed August 31, 1999 (File No. 333-86199).
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of our reports dated
February 10, 1999 (except with respect to the Company's proposed investment in
ASI pursuant to the financial restructuring of ASI discussed in Note 14, as to
which the date is March 29, 1999) included in Amkor Technology, Inc.'s Form 10-K
for the year ended December 31, 1998, as amended, and to all references to our
Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP.
Philadelphia, Pennsylvania
December 7 , 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Amkor Technology, Inc. of our reports:
- - dated June 5, 1999, except as to Note 25, which is as of October 29,
1999, and as to Note 31, which is as of November 29, 1999, relating to the
consolidated financial statements of Anam Semiconductor, Inc. (formerly
Anam Industrial Co., Ltd.) and its subsidiaries, prepared under generally
accepted accounting principles in the United States, appearing in Amkor
Technology, Inc.'s Form 8-K/A dated December 7, 1999;
- - dated March 20, 1998, except for Note 3 as to which the date is October 23,
1998, relating to the consolidated financial statements of Anam
Semiconductor, Inc. and its subsidiaries, prepared under generally accepted
accounting principles in Korea, appearing in Amkor Technology, Inc.'s,
Annual Report on Form 10-K for the year ended December 31, 1998; and
- - dated February 10, 1999, except for Note 4 as to which the date is March
18, 1999, relating to the financial statements of the Kwangju Packaging
Business of Anam Semiconductor, Inc., appearing in Amkor Technology, Inc.'s
Form 8-K dated April 21, 1999.
We also consent to the references to our firm under the caption "Experts" in
this Registration Statement.
/s/ SAMIL ACCOUNTING CORPORATION
Seoul, Korea
December 7, 1999
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of our reports dated
January 30, 1998 (except with respect to the Initial Public Offering discussed
in Note 1 which is dated May 8, 1998) included in Amkor Technology, Inc.'s Form
10-K for the year ended December 31, 1998 and to all references to our Firm
included in or made a part of this Registration Statement.
/s/ SyCip Gorres Velayo & Co.
Makati City, Philippines
December 6, 1999
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of Amkor Technology, Inc.
of our report dated February 13, 1998 (except as to Note 7 which is dated July
27, 1999) and our report dated March 30, 1999 (except as to Note 7 which dated
July 27, 1999) and to all references to our Firm included in this Registration
Statement.
/s/ SIANA CARR & O'CONNOR, LLP
---------------------------------------
SIANA CARR & O'CONNOR, LLP
Paoli, Pennsylvania
December 3, 1999
<PAGE> 1
Exhibit 23.8
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Current Report on Form S-4 of our report dated May 29, 1999
included in Amkor Technology Inc.'s Form S-4 for the years ended December 31,
1998, 1997 and 1996 and to all references to our firm included in this Current
Report.
/s/ Ahn Kwon & Co.
AHN KWON & CO.
Seoul, Korea
December 3, 1999
